The plundering of government finances - causes and solutions.

02 June 2018


The story of financial mismanagement in the public sector would be one of the more shocking chapters in the unwritten book on South Africa’s history. It goes back to pre-1994 when the apartheid government also gave jobs to pals and, through the Broederbond, made sure that tenders, contracts, political appointments and even many private sector initiatives were designed for the benefit of an elite group of people who “scratched each others backs” instead of acting in the best interests of the country as a whole. Many people who opposed the system at that time resented paying taxes to a knowingly corrupt government, just as many people are burning with frustration now at the way in which our hard-earned money is being either spent or not spent, whichever way you look at it.

The recent report by the Auditor General on financial management at the municipal level 2016-2017 makes for depressing reading: R12.6 billion in unauthorised expenditure (R13.8 billion in 2015-2016) coming from 161 municipalities out of a total of 257; R1.5 billion in fruitless and wasteful expenditure (R890 million in 2015-2106) from 204 municipalities; and R28.4 billion (R16.2 billion in 2015-2016) in irregular expenditure – spending outside or beyond their budgets - from 215 municipalities. Some of this relates to misspending in previous years but which was only uncovered in the past year. Household debt to municipalities increased to more than R128 billion and municipalities owed more than R44 billion to creditors such as water boards and Eskom. No wonder service delivery is at such low levels across the country.

So what is the real problem and what are the solutions?

The real problem is that public sector finances are a closed system. The Auditor General, himself a political appointee, receives information from his public sector departments and reports to a Parliament which is dominated by the very people who appointed him. Irregularities are referred to the Hawks, a Chapter 9 public sector organisation staffed by politically-appointed decision-makers. SCOPA – the supposed watchdog Standing Committee on Public Accounts – is made up of representatives from all the political parties but dominated by the ruling party, so its political will and muscle to sort out the mess is limited. Under Jacob Zuma, board and senior management appointments at SOE’s (state-owned enterprises) were made for all the wrong reasons, resulting in the meltdown of our country’s infrastructure as evidenced at Eskom, PRASA, the SABC and SAA. Clearly appointments at municipal level have been equally influenced by factors other than the required skills and competence of the appointees. One can go on for ever describing the incestuous nature of the entire public sector framework which completely undermines the effectiveness of controlling legislation such as the PFMA – Public Finance Management Act (1999) – and MFMA – Municipal Finance Management Act (2003), great ideas on paper but very weak on implementation.

The solution is twofold: coalition politics based on strong governance principles; and independent civil society monitoring at all levels of public sector decision-making.

In the past 100 years South African politics has effectively been a situation of one-party rule – the Smuts government before 1948, the Nationalist government after 1948 and the ANC after 1994. It did not take the Nationalist government long to become corrupt and it has taken the ANC equally little time to do so. Absolute power corrupts absolutely, as we have heard and seen many times the world over.

The evidence of this closed system has been seen in Parliament over the past decade when ANC members have stood firmly together and voted for legislation that has deliberately undermined the effectiveness of our protection agencies such as the Scorpions (replaced by the ineffective Hawks) and against opposition proposals such as the numerous no-confidence motions against Jacob Zuma, to halt the rape of the country’s public finances. Only when it became politically expedient for timid individuals to change their allegiance in December 2017 was anyone prepared to support a motion to remove the elephant in the room – the President himself - that, with the benefit of hindsight, should have been passed a decade ago. ANC leaders and members of Parliament will have to live with their guilty consciences, knowing that they condoned and even supported the mass impoverishment of their own people through Gupta-style decision and actions. A new Financial Truth and Reconciliation Commission will be needed one day to expose exactly what has gone on in the last twenty years to plunder money that should have gone to the poor but has instead found its way into the pockets of the politically-connected elite.

With the decline of ANC support to below 50% that is possibly going to happen in 2019, all this may change. For the first time in 100 years, a party that wants to rule may have to negotiate with other parties rather than make up its own agenda as it goes along. Difficult as this will be, it is incredibly exciting to think that even small parties may be able to exert a very strong influence over government decision-making. Leon Schreiber, in his well-researched book ‘Coalition Country’, covers many aspects of the challenges of coalitions but there is optimism that, in future – perhaps for a very long time (but not quite until the second coming of Jesus) – we as a nation will be able to prevent absolute power corrupting absolutely. The closed system will no longer be completely closed.

The NEW SOUTH AFRICA Party wants to be a part of the ruling coalition and to ensure that our good governance principles, one of the mainstays of our philosophy, are upheld and applied.

Our strong Constitution of the Republic of South Africa has been criticised for giving too much power to the President. Once the 50%-plus, one-party-dominated political structure is no longer in place, we will start to see the real power of that fantastic document which sets us apart from many other developing countries and should continue to give us strong hope for a brighter future.

Secondly, the accountability structure must be changed so that politicians and public servants at all levels are answerable to the people, not just around election time but on a continual basis. The NEW SOUTH AFRICA Party will push for the following important structural changes, amongst others:

  • All SOE boards will have active independent board members selected from civil society organisations with strong powers of inspection over every aspect of financial management – tenders, contracts, salaries and so on.
  • All senior public sector appointments will have to be verified by a suitably qualified external assessor from the private sector before the appointments are confirmed.
  • All wards will have a well-trained residents committee to which every councillor will report and which will drive budget decisions for that ward; each ward that demonstrates its ability to apply good governance will receive direct funding (by way of annual interest on a dedicated and untouchable trust investment) which will be under the control of this committee, in addition to the support for service delivery at the municipal level. See my other articles on this important topic.
  • All mayoral councils will have external observers made up of representatives from the ward committees with the same wide powers of inspection as the SOE board members.
  • All public sector schools, police units and health facilities will be inspected on a regular basis by trained inspectors who will report to a new chapter 9 Inspectorate which itself will have civil society representatives on its board. See my 2015 article on the future need for strong auditing skills.
  • All politicians and senior public servants will have comprehensive annual lifestyle audits.
  • The Speaker of Parliament will be someone who is not an office bearer or active member of any political party.

In the private sector, people who put capital into a business become owners and shareholders. They can attend meetings, ask difficult questions and force changes when things are not being properly done. They appoint their own board representatives and may campaign to get rid of those board members who do not perform well.

While the process of electing political representatives is somewhat different, the principle that government’s stakeholders – we the people – should be allowed to know and monitor exactly how our money is being spent is even more relevant, since we have been forced to pay taxes without any direct reward such as dividends. SANRAL (SA National Roads Agency) is a classic example of an organisation which is funded by ourselves but which has a board appointed by one person - the Minister of Transport. As toll-paying citizens, we should have the right to know exactly how our toll fees are being used. This is why the NEW SOUTH AFRICA Party’s policy is to scrap the current e-toll system in Gauteng unless there is far greater transparency about the manner in which it is run.

The solution to our appalling state of affairs in public sector spending is fundamentally a political one: we all need to exercise our free but extremely precious right to vote and thereby become an integral decision-maker in the election of leaders who will serve us rather than serving themselves. We should never have to admit that we got the government we deserved because we did not use our voice through the ballot box. 2019 is the year in which South Africa may experience the most exciting political change in the last 100 years apart from 1994. It is a time for optimism for a truly New South Africa like never before.

To play on the well-known revolutionary call for action: ‘A luta continua, vitoria e certa’ (‘the struggle continues, victory is certain’), a ‘loota’ continua - the looting continues and the longer it does so, the more certainty there is of a 2019 victory for the people who want politicians who serve them rather than a political elite looking mainly after themselves. We are so lucky that we can do it with our votes instead of with guns and bombs. It is time!

Ke nako!


Peter van Ryneveld

What can you do?

These ideas and the creation of a forum for discussion and action through the Party website and social media are a contribution to the absolutely critical debate we all need to have about the way forward for South Africa.

But change cannot be achieved alone and I am appealing to like-minded people out there to support this movement and its principles and to give the NEW SOUTH AFRICA PARTY a mandate through the ballot box. The country badly needs your support, your voice and in particular your vote at this crucial time in our history to create a more just society and build the winning nation that would have made Madiba very happy and proud.

What can you do about all of this that will cost you nothing? You can

  • visit the Party website and read the Manifesto, News articles and Constitution
  • make your comments and “like” what you read on social media
  • click to support our Good Governance Principles
  • volunteer to assist the Party in your field of expertise and interest
  • tell your friends about the NEW SOUTH AFRICA PARTY by passing on these articles
  • take an interest in what is going on in our country
  • above all, CAST YOUR VOTE for what you believe is best for you and for South Africa.