Good business basics: State infrastructure and services have been taken hostage
No ransom is going to be big enough to ensure its release.
It has become patently clear that government procurement, in all its forms, including investment decisions by state owned entities (SOEs) has become nothing more than a vehicle for staggering enrichment and rent seeking by well connected individuals.
It has just come to light that a R1.7bn investment in an unlisted company, one Bounty Brands, by the Unemployment Insurance Fund (UIF) has had to be written down to a mere R2m over a period of less than five years.
This investment was ostensibly done by the Public Investment Company (PIC) on behalf of the UIF. While we have become accustomed, almost blasé about SOEs shedding billions through poor investment decisions, it has been revealed that a ‘finders fee’ of R47m was paid to one Lawrence Mulaudzi, in 2018.
Worse still, Mulaudzi was a director of the company that sold part of its holdings in Bounty Brands to the UIF. Of course, we remember that the PIC has not covered itself in glory over the past few years with some of its (to be diplomatic) less than stellar deals like the one with Iqbal Surve’s Ayo Technology Group.
Then of course, all the seedy details were revealed at the Zondo Commission of the goings on at Transnet and Eskom under the watch of Brian Molefe and Anoj Singh.
The two that stand out amongst many is the debt swaps that were supposed to save Transnet millions, but did nothing but enrich the likes of Trillian’s Salim Essa, and Regiments Capital’s Eric Wood by the hundreds of millions.
Then we have the procurement of locomotives, the tender amounts for which doubled and trebled over 12 months, scoring Gupta acolytes commissions in the hundreds of millions as well. It must be noted that eight years after the awarding of the tenders, the full complement of locomotives is yet to be received.
A few years back, the Strategic Fuel Fund, under the watch of Minister Joemat Petterson decided to sell millions of barrels of the country’s strategic fuel stocks ostensibly for ‘rotation’ purposes. It turned out that the oil was sold at a much lower price than the prevailing market prices to three trading companies.
Of interest here is that the newly minted CEO (three months in the post) scored in excess of R20m into his personal bank accounts soon after the transactions. Finally, we have the wonderful concept of the ‘unsolicited bid’ , where service providers approach government departments with products or services that they believe will benefit the country and its citizens in some way.
This was the vehicle that Edwin Sodi and his merry band of thieves (allegedly including then Premier, and more recently suspended ANC Secretary General Ace Magashule) used to extract over R250m from the Free State government to audit and replace asbestos roofs on existing government housing stock.
The provision of state infrastructure and services has been taken hostage. No ransom is going to be big enough to ensure its release.
Vijay Naidoo is the CEO of the Port Shepstone Business Forum. He writes in his personal capacity. The views expressed are the author’s own and do not necessarily reflect those of this publication.
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