Minister Gordhan being Economical with the Truth

23 October 2018

I note with concern reports in the media about a recent reply by the Minister of Public Enterprises, Mr Pravin Gordhan, in Parliament.

In his response Minister Gordhan indicated that the R290 million unsecured loan from Regiments Capital (The City of Johannesburg’s sinking fund management company) to Denel was entirely legal.

However, Minister Gordhan’s willingness to pronounce on a very limited assessment of the legality of this loan misses the most fundamental point for someone charged with overseeing the prudent use of public money.

The City of Johannesburg’s sinking fund is derived from the rates and taxes paid for by the residents of Johannesburg. It is their money, placed in a sinking fund, which the multi-party government uses to redeem the City’s inherited creditors book, totalling over R18 billion.

For R290 million of these funds to be offered through an unsecured loan without the knowledge of the City of Johannesburg to Denel, a State Owned Entity with a less then reputable record of financial management, is an indictment on the principles of prudent use of public money. The fact that Denel could not repay the loan when it became due, is evidence of this fact.

It still awaits to be seen, through our forensic investigation, who profited from this loan by way of the facilitation fees that appear to have become all too common with Gupta-linked entities.

The legality of this unsecured loan is still being investigated by the City of Johannesburg and we will await the outcome of the forensic investigation before we share Minister Gordhan’s confidence in the legality of this loan.

Minister Gordhan’s willingness to pronounce on the legality of this loan is as premature as it is insensitive to the residents of our City who have every right to expect that public monies are used to their benefit. How is the use of R290 million to Denel serving the residents of Johannesburg?

The City of Johannesburg will await the results of the forensic investigation, however we call upon Minister Gordhan to exercise greater concern for the abuse of public money in the City of Johannesburg.

Issued Luyanda Mfeka, Director, Mayoral Communications, 23 October 2018