Trevor Manuel: We have to put SA back on track | Fin24
 
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Trevor Manuel: We have to put SA back on track

Sep 24 2017 06:00
Riana De Lange

Johannesburg - South Africa is busy untying the proverbial Gordian knot, and it is a good thing that it’s happening now because we have to put the country back on a footing that offers certainty to people who do the right thing, said former finance minister Trevor Manuel, who is now the chairperson of Old Mutual.

The resignation of various senior managers at auditing firm KPMG because of the firm’s ties to the businesses of the controversial Gupta family, as well as the questionable report it submitted about a so-called rogue unit operating at the SA Revenue Service (SARS), showed that tangible things were happening, he said.

Manuel used as an example the Greek king Alexander the Great, one of history’s most successful military commanders, to show that determined and brave action was required when facing a difficult problem.

The legend about the Gordian knot goes like this: An ancient Greek king preceding Alexander the Great, named Gordius, tied a complex knot to an oxcart and, according to prophecy, the person who untied the knot would be greatly empowered. Alexander simply cut the knot in half with his sword.

“Whether it is a sword or an avalanche of leaked Gupta emails … maybe it is a good thing that it’s happening now,” Manuel said. He was speaking at the SA Tomorrow conference, a business networking platform hosted annually by Old Mutual, held in Sandton this week.

Last Friday, KPMG announced that it was withdrawing the conclusions in its report about the rogue unit at SARS. This report was used to put pressure on former finance minister Pravin Gordhan and led to the departure of various senior SARS personnel.

SARS commissioner Tom Moyane hit back at the auditing firm during a press conference this week, insisting that SARS stood by the findings of the report and saying it would sue KPMG for damages.

According to News24, Gordhan earlier this week said KPMG still had to admit to exactly what went on between its senior forensic investigators and the SARS bosses from 2015 onwards.

In a no-holds-barred response to KPMG, Gordhan lambasted the auditing firm for its report, saying it “directly contributed to state capture and gave legitimacy to the victimisation of good, honest professionals and managers”.

On the subject of KPMG’s revelations, Manuel said some of the country’s institutions had been weakened.

“The bulk of us want a strong, competent revenue administration that can deal with issues equitably,” he said.

He pointed out that, a few years ago, SARS had succeeded in ensuring a downward-moving tax rate because it had focused on broadening the tax base. “That was because the administration was competent and effective.”

He said SARS had been weakened and compromised, and that this was leading to its growing underperformance when it came to tax collection targets.

“What it does is take money needed for investment and growing the economy off the table,” said Manuel.

Experts predict that SARS could miss its tax collection target by R50 billion.

Manuel said that some of the institutions in the criminal justice system were also implicated, and questioned why no criminal probe was being undertaken into the #GuptaLeaks.

“We cannot live in an environment where the institutions of criminal justice are compromised, or where a state unit investigates the former minister of finance but does nothing about all the information contained in the #GuptaLeaks,” he said.

Manuel emphasised the importance of taking into account environmental, social and corporate governance when making investment decisions.

Referring to the battering endured by the US and the Caribbean as a result of hurricanes Harvey, Irma and Maria, he said: “Are we going to continue to pretend that carbon emissions do not matter?

"How do we deal with people in Megawatt Park [Eskom’s head office in Gauteng] who insist on dirty coal as the only means of generating power?”

Decisions about the country’s energy needs and supply were crucial, he said.

“That we are expected to accept nuclear as a matter of course ... Well, it’s cheaper than coal, but what about safety concerns?

"It is of the utmost importance that government is asked to explain its investment choices, because it could extinguish every aspect of life if government rushes into committing to a big fleet of nuclear power stations before all social and economic considerations are tested,” said Manuel.

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