Limpopo Premier Stan Mathabatha has faced severe grilling for asking the provincial legislature to continue pouring money into financially mismanaged state-owned entities (SOEs) that are bleeding the provincial government’s coffers dry.
The Office of the Premier, under the leadership of Mathabatha, and the Provincial Treasury, led by MEC Seaparo Sekoati, have been invited to provide an account of the concerning information gathered during hearings involving different departments and State-Owned Enterprises (SEOs) in Limpopo.
According to Scopa chairperson Donald Selamolela, there were certain issues that were identified as requiring additional attention during their meeting with Mathabatha and his team in October.
Both the Office of the Premier and the Provincial Treasury were required to provide reasons for why the provincial government should continue funding parastatals that were experiencing financial mismanagement or not adhering to the legislation governing public finances.
Two key entities that required additional clarity and action are the Limpopo Development Agency (LEDA) and the Gateway Airport Authority Limited (GAAL).
“We need to indicate that we as public representatives conduct these hearings without fear, favor, or prejudice, meaning that we deal with issues as they are on the table. We will not fear who you are, whether you are the premier or the MEC. We will deal with your issues as soon as they are on the table.
We will also not do you any favor because you are wearing nice glasses,” said Selamolela. Selamolela emphasized that while MECs from other departments were present in the hearing, it was not their day to make presentations.
“We cannot determine who you bring or who you cannot bring. Their presence here must be understood in the context of having to support the premier. We cannot conduct a second hearing with them. The issues that we are elevating from these entities are issues that we feel must be dealt with at the level of the Provincial Treasury and the premier’s office,” he said.
Nape Nchabeleng, the director-general of the province, presented a turnaround strategy that emphasized the reasons why LEDA and GAAL should receive continued funding, despite their history of wasteful and unauthorized expenditure.
Nchabeleng stated that it is necessary for the provincial legislature to approve ongoing grants for the two entities until the financial year 2029/30. These grants amount to hundreds of millions of currency per year.
“Our projections indicate that by that time both entities would have been financially sustainable,” he said, during the three-hour engagement with the committee.
The committee expressed concern about the need for LEDA to have an extension of allocations for non-revenue-generating functions beyond the timeline of 2029/30. LEDA’s failure to become a sustainable business was attributed to the revelation that it had redirected funds intended for business development to activities outside its mandate.
The provincial government expects LEDA to achieve financial sustainability by the 2027/28 financial year, as stated by the government. However, committee member Rudolph Phala questioned the decision of LEDA to allocate R6.1 million for the procurement of office space, considering the organization’s current financial difficulties and the fact that they already had suitable office facilities.
“We know that LEDA inherited very good offices in Lebowakgomo that were being used by the entities that it has succeeded. These are very good offices that you are using there, and they are very spacious. But I was surprised that you want to be given money for a full five years, but you are issuing a tender bulletin for spacious offices in Polokwane for R6.1 million for 36 months.
“I am only being made aware now that this tender has already been awarded. I want you to connect the R6.1 million for new offices in Polokwane with the fact that you don’t have money and you want to remain in the provincial purse,” said Phala.
Phala requested an explanation for the characterization of LEDA as falling under both public entity schedules 3C and 3D in relation to the Public Finance Management Act, which posed an accounting challenge.
“What you are saying is that this is a bat: mankgakganyane. A bat is neither a rat nor a bird, but it is something in between the two. It is a rat that flies at night. This entity is a mankgakganyane; that is what you are telling us. Talk to that bat so that we understand it better,” he said.
The issue of discontinuing state funding for GAAL and LEDA originated from a resolution made by Scopa in 2018. However, it is only recently that proposals for their ongoing funding have been put forward. There is also a concern that government leaders frequently discuss turnaround strategies until they retire, passing on the responsibility to someone else who then repeats the cycle.
The committee required additional information regarding the justification for providing funding to these two entities for unrestricted operation until the 2029/30 financial year, encompassing two general elections.
“Next term they will not even talk about GAAL and LEDA. They will just pump money into it. The term will finish and it will only be after the elections of 2029 that these two entities will be sustainable and will be weaned from the public purse.
“If only we took steps from 2018 and said this one has a deadline, let us put our heads together and see what can be done. But all of us waited until now when we saw that the deadline is next year, and we are saying another full term must pass. The term that starts with the elections in May or whatever in 2024, up until the elections in 2029, for all that full term the situation should remain the same,” Phala said.
Phala strongly criticized the Office of the Premier and the Provincial Treasury for putting forth sustainability plans that fail to acknowledge the individuals responsible for carrying them out.
“What doing in relation to the performance of boards? This thing will not be done by an MEC, an HOD, or the premier, but it will be done by the boards. We are concerned about the performance of boards. Now that we have these sustainability plans for both LEDA and GAAL, what are you saying because you are quiet about the performance of the various boards?
“When GAAL collapsed, there was a board there and they disappeared. The same with Great North Transport, when they couldn’t pay almost R400 million in provident funds and pensions, they disappeared. When you talk about sustainability of LEDA and GAAL, what are you doing to enhance the performance of the boards? Those are the people who run the entities on a day-to-day basis. How do you say you will be sustainable after the 2029 elections?” asked Phala. “Mr. Nchabeleng, as a director-general of the provincial government, when you look at it using those spectacles, how sustainable and achievable is the turnaround strategy of LEDA and GAAL?”
The committee member raised concerns about the failure of Limpopo’s mining company, Mining Corridor, and found it peculiar for a mining company to experience such a setback.
“People who are involved in mining, whether chrome or platinum, are very rich. One of the guys threw a party of R15 million or whatever amount. He is just a human being. We are government; we have a mining company, but why are we not having money?
“How do you explain that we have mines and we are mining, but the people mining alongside us are making millions and some billions, but we must go to the government to get money from the treasury? There are 45 mines between Atok and Steelpoort. People who are mining in those 45 mines are making billions. We are supposed to be rich; very rich. Are these mining people consulting traditional healers or something?” Phala said.
The Office of the Premier and the Provincial Treasury have been granted a deadline until the end of this month to draft a letter clarifying the feasibility of their turnaround plans.