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Senior officials say Treasury is captured

Oct 01 2017 06:00
Sipho Masondo

Johannesburg - Senior Treasury officials have accused Finance Minister Malusi Gigaba of “capturing” national Treasury, usurping the power of his director-general (DG) and establishing a parallel administration run by close aides in his office.

The claims were made by several senior Treasury executives and two other top government bureaucrats who work closely with the finance ministry.

They all raised red flags that appear to show how Gigaba, who was once a regular visitor to the Gupta family’s Saxonwold compound, has pointed Treasury in a radically different direction from his predecessors.

These include allegations that:

- He is sitting on a decision by director-general (DG) Dondo Mogajane to appoint a company to conduct a forensic audit into Eskom’s coal contracts with Tegeta Exploration and Resources, which was until August owned by the Gupta family and President Jacob Zuma’s son, Duduzane;

- Gigaba brought in nearly 20 staff who have set up a parallel administration in his office;

- Gigaba does not consult deputy directors-general (DDGs) and other technocrats when making important decisions;

- Key documents and memorandums which should be seen by Mogajane before they go to Gigaba, are first sent to Gigaba’s chief of staff Saki Mofokeng, legal advisor Kholeka Gcaleka and political advisor Thamsanqa Msomi for their perusal and input.

Msomi, a member of the Denel board, is reportedly close to the Gupta family.

His board took Treasury to court in March over its refusal to allow Gupta-linked company VR Laser’s joint venture with Denel to go ahead;

- The budgeting process, Treasury’s core function, is being moved to the presidency for the 2018/19 financial year’s budget; and

- There have been inexplicable delays in informing Water and Sanitation Minister Nomvula Mokonyane that her request to deviate from tender processes for the R16bn Mzimvubu water project has been declined.

THE PARALLEL ADMINISTRATION

Several senior Treasury officials to whom City Press spoke, have told of their initial impulse to resign when Pravin Gordhan was axed as finance minister.

However, they all said they decided to remain in their posts and hold the line until they were forced out.

All have accused Gigaba of bypassing experienced bureaucrats.

“They are running an administration that is parallel to the DG’s office. Matters which should be handled by the DG go to them,” said one.

Earlier this month, Gigaba was accused of purging officials perceived to be close to Gordhan when he removed Schalk Human from his position as acting chief procurement officer, and replaced him with Willie Mathebula.

Gigaba removed Jayce Nair as acting accountant-general, and replaced her with Zanele Mxunyelwa.

At the time, Gigaba’s spokesperson, Mayihlome Tshwete, said there was nothing sinister about the move.

One of the two government officials who work closely with Treasury said: “It is true that there are parallel structures.

"Things are up to a point where nothing goes to the minister if it is not first seen by one or two of the nearly 20 people Malusi brought with him.”

The other senior official said: “The intention is to have a Treasury that is pliable; that in many cases merely implements any decision – good or bad, affordable or unaffordable.

“It is also about putting a dead stop to the work Treasury has been doing to hold other parts of government – state-owned companies and departments – accountable for using public resources.”

THE BUDGET PROCESS

Last month, Cabinet announced that the budget allocation process would be shifted from Treasury to the presidency for the 2018/19 financial year, to ensure that the allocations were in line with the National Development Plan.

The sources said while Gigaba did not initiate this, it was one example of how Treasury was being captured. The shift was “meant to put a leash on Treasury and make sure that all the projects that President Jacob Zuma wants are funded”, one Treasury official said.

A government executive said the budgeting process involved highly technical research which the presidency had no capacity to undertake.

A Treasury official said the process to involve the presidency in budgeting started in 2015 “when [former finance minister Nhlanhla] Nene was fired because he was refusing to allocate money to certain projects”.

A senior government official said the nuclear power procurement deal, estimated at R1 trillion, the R57 billion Moloto rail development corridor and the Mzimvubu project were examples of programmes being funded despite negative feasibility studies.

For the nuclear deal, R200m had already been set aside. The last two projects are being financed with loans from a Chinese bank, which the taxpayer would repay.

Another government executive said shifting the budget process indicated the “highest degree of desperation” and would require the amendment of the Constitution and the Public Finance Management Act.

However, another senior Treasury official close to Gigaba said the minister was opposed to the idea of shifting the budgeting process to the presidency.

“You guys call him a Gupta deployee, but I can tell you now that they are extremely unhappy with him because he has refused to do some of the things they had asked him to do,” he said.

“You may have heard that his name was on a list of ministers to be removed, that is real.”

The source said Gigaba pushed for the official suspension of Eskom’s chief financial officer, Anoj Singh, who allegedly helped the Guptas siphon hundreds of millions of rands from Eskom and Transnet.

“If Gigaba had his way, he would have axed SAA chairperson Dudu Myeni a long time ago.

“Unfortunately, there are other dynamics at play,” he added.

HOW THE ‘CAPTURE’ IS UNFOLDING

Treasury officials accuse Gigaba of not consulting with deputy directors-general (DDGs) on critical decisions – including Friday’s R3 billion bailout for SAA.

One said Gigaba had not had any one-on-one meetings with them since he was appointed in March.

“He did not consult the DDGs on the emergency bailout of SAA. He did not consult widely on the 14-point plan [to solve the country’s economic woes],” the official said.

TREASURY RESPONDS

Gigaba’s spokesperson, Mayihlome Tshwete, said Gigaba brought 17 staff with him to Treasury.

“The ministry as a whole took five people from his predecessors’ team,” he said, adding that all appointments were in accordance with the Ministerial Handbook. 

Tshwete took issue with suggestions that Gigaba had allowed Treasury to be “captured”.

“We take offence and reserve our legal rights to any assertions that insinuate the slightest degree of criminality,” he said.

On claims that all Treasury documents bound for Gigaba’s office were first sent to Mofokeng, Gcaleka and Msomi for input and approval, he said: “Departments don’t work like that.

"The ministry’s staff report to the minister, and Treasury staff report to the DG. This is how all departments function and this is how the minister’s predecessors functioned.”

Tshwete denied claims that Gigaba did not consult his DDGs.

“This is a baseless fabrication. The minister is constantly in meetings with the DG and DDGs.

"There is no Treasury meeting that the minister attends without inviting his DG and related DDGs.

“DDGs report to and are directly accountable to the DG. The minister meets with DDGs frequently.”

Tshwete said DG Mogajane and procurement officer Mathebula were working on the appointment of a firm to investigate Tegeta’s Eskom coal contracts.

They were “applying their minds” to the Mzimvubu water project.

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