POLITICS

Malusi Gigaba Zooms In On Treasury's Nerve Centre

The office of the chief procurement officer was established to ensure strict adherence to policy. The new minister of finance wants this to change.

08/05/2017 20:11 SAST | Updated 10/05/2017 06:44 SAST

ANALYSIS

Minister of Finance Malusi Gigaba is zooming in on one of National Treasury's nerve centres: the office of the chief procurement officer (OCPO) and government's R500-billion annual spend on goods and services.

Aides to Gigaba told HuffPost South Africa at last week's meeting of the World Economic Forum in Durban he will drive the transformation of the economy "more forcefully." Spending will be done in township economies and in favour of manufacturers over the financial sector.

Gigaba – who tried hard to steer away from controversial and uncomfortable talking points during his interaction with international power-brokers – added the OCPO shouldn't only be tasked with compliance, but should also be used "politically" to ensure transformation.

That'll be sure to set the alarm bells ringing – as Razia Khan, Standard Chartered Bank's chief economist for Africa, noted immediately – because any institution tasked with managing public money, and then being told to act "politically" in driving preferential procurement, runs the risk of becoming the subject of another "State of Capture" investigation.

The OCPO was established in 2013, during Pravin Gordhan's first stint as minister of finance and after his years as commissioner of the South African Revenue Service, where he saw first-hand how irregular, illegal and fruitless and wasteful expenditure led to corruption, poor service delivery and massive losses to the fiscus.

Poor supply chain management is what got the SABC into its current mess. Bad planning and spend led to the construction of thousands of unusable, open toilets in Free State townships. And the aforementioned "State of Capture" report is a monument to what goes wrong if Treasury's strict procedures aren't followed.

Treasury officials say the OCPO was established exactly to remove the word "political" from sentences where the words "public purse" and "tenders" are also used. The OCPO has a purely technocratic function and its actions are guided by the Constitution and the Public Finance Management Act (PFMA). Senior staff say the beauty in the functioning of the office is that its only allegiance is to the country's founding law, subsequent legislation and enabling rules and regulations.

We're not here to frustrate the process. We're here to ensure government gets value for money.Treasury official.

The OCPO doesn't consider political connections, it ignores political pressure, it is unencumbered by political considerations and jettisons political loyalty or expediency when ensuring that government spend is put to good use. "Political" doesn't enter into the equation when business plans, departmental strategic objectives, balance sheets, cash flow statements and Treasury instructions are concerned.

If money is misappropriated, the PFMA guides corrective action.

If a tendering process is flawed, the OCPO's three-tiered adjudication system will act as safety net.

And if there is deviation from or abuse of Treasury's supply chain management systems, schedules to the PFMA and a raft of Treasury circulars provide ample clarity.

"We're not here to frustrate the process," a Treasury official tells HuffPost SA. "We're here to ensure government gets value for money."

Kenneth Brown, the country's first chief procurement officer and tender czar, retired last year. Schalk Human, a senior Treasury official who has been in the system for more than 11 years, has acted in his position ever since. It is uncertain who will be appointed permanently, or when an appointment is made.

If Treasury under Gordhan was the last bulwark against rentseekers, grand corruption and industrial-scale looting of the public purse, then the OCPO was the command post.

It's easy to see why the onslaught on Treasury – led by the Guptas, bolstered by #PaidTwitter and ministers Nomvula Mokonyane and Bathabile Dlamini and ruthlessly executed by President Jacob Zuma – had the OCPO as target. Government spends about R1,5-trillion every three years – that's a lot of goods and services to supply the state with if you know the right people. And with Gordhan and his allies now out of the way, it seems the strict controls that were put in place are about to be loosened, in favour of "political" decisions.

Gigaba's aides – speaking in Durban – made the leap in logic that a clampdown on corruption and an adversity to state capture is used as a smokescreen to frustrate the transformation of the economy. The new minister, we are told, will "aggressively" promote transformation and will be driving preferential procurement.

READ:

1. National Treasury: Slick, Organised, Polished And Smelling Of Brillo

2. Treasury Officials Fear What Economic Future Holds Under Gigaba

3. Gordhan's Gambit: Taking On The Guptas

4. Carnage: The Anatomy Of Pravin Gordhan's Political Execution

5. Smart Gordhan Boxes Clever, Restores Treasury . . . For Now

This is all said as if the previous management at 40 Church Square – Treasury's fort-like head office in Pretoria – did not drive transformation or preferential procurement.

If might come as surprise to Gigaba and his fellow-travellers, but preferential procurement guidelines and strict black economic empowerment (BEE) requirements have been part of supply chain management and public spend regulations enforced by Treasury for years.

As has inclusive growth, regulation of the financial sector and transformation.

But flashy Team Gigaba – bespoke three-piece suits, designer specs, woke Instagram accounts and cognac ad campaigns in tow – have been trying to talk a big game, subtly needling their predecessors by saying they'll *really* accelerate growth and that they'll *really* be the ones to drive transformation. And now public procurement must become "political".

If Treasury under Gordhan was the last bulwark against rentseekers, grand corruption and industrial-scale looting of the public purse, then the OCPO was the command post.

Treasury's walls have been breached. And now the OCPO is in the cross-hairs of the new management.