Centurion Aerospace Village: R95 million of public funds squandered with nothing to show

17 September 2015

This statement was delivered to members of the media at a press briefing hosted by the DA’s Shadow Deputy Minister of Economic Development, Patrick Atkinson MP, outside the Centurion Aerospace Village in Tshwane this morning. He was joined by DA Mayoral Candidate for Tshwane, Solly Msimanga MPL and DA Shadow Deputy Minister of Trade and Industry, Dean Macpherson MP. A press pack with supporting documentation can be accessed here.

Ladies and gentleman,

Corruption is one of the biggest enemies of job creation. It takes away opportunities from those who need them, and gives them to those who are politically connected to the ANC.

Today we witness yet another example of this job-killing corruption. Behind us lies the location of the once highly promising and innovative Centurion Aerospace Village (CAV), a primary incubator of innovation and opportunity for growth and job creation.

Initiated by the Department of Trade and Industry in 2006, the Centurion Aerospace Village would see the development of a strategically located high-tech manufacturing, aero-mechanical and defence cluster adjacent to the Waterkloof Airforce Base in Centurion, Tshwane. 

This sub-tier supply chain would aim to integrate the local aerospace and defence companies into the global supply chains and becoming suppliers of choice to Original Equipment Manufacturers (OEMs) such as Boeing, Airbus, Spirit Aviation and Labinal.

The potential this project had to create thousands of high-skilled niche job opportunities cannot be overstated, as the village was set to become a key feature of the South African aerospace industry.

At the official “launch” of the CAV in 2008, then Minister of Trade and Industry, Mandisi Mpahlwa, was full of optimism and declared that “not only will a significant number of jobs be created, but also the integration of small companies into the industry will be advanced significantly.”

Sadly, all that exists 7 years later is a vacant plot of barren land, characterized only by a few piles of sand and enclosed by a rusted barbed wire fence.

I first became aware of the CAV after a parliamentary oversight visit to Aerosud, a privately owned aircraft components manufacturer, in January this year, were MP’s were told about the adjacent Centurion Aerospace Village that the Department of Trade and Industry has been promising to create.

I then submitted a parliamentary question to the Minister of Trade and Industry, Rob Davies, asking the annual breakdown of the costs of establishing the CAV since its inception. The figure totaled R95 002 million.

I submitted a further parliamentary question asking the Minister who the first so-called tenant was that allegedly moved in to the village in January 2012, in which he responded by saying Aerosud. A senior executive at Aerosud denied such a claim, stating that Aerosud is a private company that has owned the land which is adjacent to the CAV for the past 15 years and does not form part of it.

The same reply revealed the existence of a DTI mandated forensic report following a forensic investigation by private company Nexus, into the financial and administrative irregularities at the CAV. After an application in terms of the Promotion of Access to Information Act, the DA was furnished with a heavily redacted and censored forensic report. Despite efforts by the DTI to erase the names of implicated companies, contractors, and department officials, the report still finds maladministration and unauthorized expenditure running into the millions under the DTI’s watch.

It is yet another example of the ANC-government placing the interests of a few connected cadres ahead everyday South Africans. 

The report, which is dated 18 June 2014, makes an array of damning findings ranging from financial irregularities to possible tender fraud and corruption. The report also makes recommendations that both CAV and government officials be held civilly, and in at least one instance, criminally liable. Some of the most egregious examples are as follows:

-Reckless tender appointment - 11.89 of the report: The forensic report makes several damning findings, including a R65 million tender for bulk earthworks and infrastructure being irregularly awarded as 10 of the 11 bidders were disqualified for spurious reasons. The report states that the reasons for disqualification of other tenderers (10 of the 11) will “not withstand scrutiny if challenged in a court of law in terms of the Promotion of Administrative Justice Act (PAJA).” The disqualifications border on “reckless behaviour” and the report recommends the contract be immediately rescinded. The report established that the works were suspended in June 2011 for failure to comply with section 217 of the Constitution in ensuring a procurement system that us fair, equitable, transparent, competitive and cost effective. Regulation 30 of the CID (Construction Industry Development) regulations makes any person or organ of state that fails to comply with these regulations or awards a construction works contract contrary to these regulations guilty of an offence and is liable to a fine not exceeding R100 000.00. The forensic report recommends that the DTI institute criminal charges against the relevant individuals for contravention of this regulation.

-Appointment of service providers - 7.3.11 of the report: The investigation could not locate approval by any of the three decision-making bodies of the CAV – the Board, the EXCOM, or Management - for the appointment of 5 service providers to the approximate value of R84 998 950.10. 

-Recovery of R642 698.82 unaccounted funds spent – 6.2.5 of the report: It was found that the CAV was in contravention of section 12.4 of the MOU it signed with the DTI as it could not provide invoices or cheque stubs for a total amount of R 642 698.82. In other words, this expenditure cannot be accounted for. The report recommends that the DTI recovers the unaccounted amount of R642 698.82 from the CAV.

-Fraud and corruption charges – 11.104.2 of the report: The report found a reasonable suspicion of fraud and corruption in total expenditure on catering to the value of R1 142 177.02. It was recommended that in terms of section 34 of the Prevention and Combating of Corrupt Activities Act, the DTI has a legal duty to report this to the South African Police Service (SAPS). 

According to Minister Davies, a “turn-around strategy” has subsequently been put in place encompassing a strengthened management and financial framework, the imminent appointment of a suitable CEO, and the strengthening of the Board. It is thus incumbent on Minister Davies to present this turnaround strategy to a Special Joint Committee on Trade and Industry and Economic Development in Parliament. 

This presentation must also include definitive answers to the following questions:

-Where the R65 million spent on bulk earthworks and infrastructure has gone as there is nothing to show on site. 

-What has he or his department done to recover such funds from the CAV or the implicated contractors and department officials;

-How many officials have been brought to book for their involvement in the financial irregularities;

-How many of the recommendations in the forensic report have been actioned;

-What steps has the DTI taken to ascertain who signed off the R84 998 950.10 of unauthorised expenditure, and what steps have been taken to recover the money;

-And whether the DTI has fulfilled its legal duty to report this “reasonable suspicion of fraud and corruption” to the South African Police Service (SAPS). Minister Davies must either provide evidence of this being reported, or an explanation as to why it was not reported.

Moreover, Minister Davies must commit to a date by which this essential development project will be put into full flight. 

The CAV is often highlighted in presentations to both the committees on Trade and Industry and Economic Development as one of this government’s success stories. This is entirely disingenuous as we can with our own eyes today that not only is this project a complete flop, but has also become another trough from which ANC cadres can feed while 8.4 million South Africans remain trapped in unemployment. 

The scourge of corruption and maladministration that happens at every level of government under the ANC’s watch is the single biggest enemy to creating job opportunities in South Africa. Instead of opening up opportunity to all South Africans, the ANC is hell-bent on providing fat handouts to the politically connected few. This is in stark contrast to the DA’s values of Freedom, Fairness and Opportunity. That is why in the DA-run Western Cape, we have the lowest levels of unemployment in the country, while consistently achieving clean audits across multiple departments. This is the clean government which we want to bring to the rest of the country.

The DA will continue to ensure that every cent of public money is spent on improving the lives and creating opportunities for all South Africans, and that job-killing corruption is eradicated, once and for all. 

Statement issued by Patrick Atkinson, DA Shadow Deputy Minister of Economic Development, 17 September 2015