Making Tshwane capture proof

If you thought that one or two families had a monopoly on state capture, you’d be wrong. Neither is state capture limited to national departments and parastatals. The usurpation of public processes for private profit, and the simultaneous destruction of value, is probably happening in your own municipality. In Tshwane we have launched a number of forensic investigations to find out if our local body politic has been so possessed. 

One of the tenders being probed is for supply, maintenance and repair of the City’s fleet of service delivery vehicles. The deal is structured as a public private partnership with three different suppliers. A PPP, as it is generally known, transfers operational risk from a municipality to its private partners. At least, that is what the Municipal Finance Management Act requires. And because National Treasury signs-off on all municipal PPPs, there is at least a check against local irregularities. 

Tshwane’s fleet PPP was approved by the municipal council in January 2016, a few months before the ANC was voted out of power in Tshwane. At the time the DA warned the former executive mayor that councillors did not have enough information to support the multi-billion rand, five-year deal. Only when the DA led multi-party government took power in August last year could we piece together the missing information, starting with a fleet that was in shambles.

By intent or neglect our predecessors had booby-trapped service delivery. It was clear that at least one supplier under the fleet PPP never had the ability to deliver on its obligations. Another supplier had previously employed the head of the City’s fleet division. The PPP was put together shortly after he had left their employ to work for the City (he subsequently resigned).

Two further signs prompted our probe into the deal. First, contractual provisions are so heavily biased against the City that no business would put itself in the same position. If municipal officials weren’t driving a hard bargain with suppliers, what exactly were they doing when these massive contracts were negotiated? How, and by whom, were the bid specifications drafted? 

Under one category of the fleet deal, Tshwane paid the same supplier for new vehicles, the service and repair of old ones and hoc rentals while we wait for new deliveries, services and repairs. The profits on rentals being far higher, especially if the rental stock is old, the supplier had a perverse incentive to delay its other obligations. In turn the supplier itself leased the City's ad hoc rentals from previous City suppliers. So when the fleet deal was concluded, Tshwane simply kept many vehicles already in its possession, while paying the new supplier an inflated rate.

Second, the City’s fleet division had grown completely reliant on the “expertise” of suppliers, its own base of knowledge and skill having been eroded over many years. Internal controls had also collapsed. We asked officials why they had recommended such a bad deal, and their response was that the City lacked internal “capacity”. The same capacity-shy officials were bizarrely expected to squeeze value for ratepayers’ money from the expert suppliers.

After Mayor Solly Msimanga and I demanded that officials put a delinquent fleet supplier on terms, it took them months to take action. And even then they botched the job on a contractual technicality. To her credit, the City's new acting chief legal counsel then discovered that the delinquent supplier had failed to furnish the City with a guarantee for the performance of its duties. The matter is now in court. 

Of course by themselves these facts do not constitute state capture, and neither are the suppliers under Tshwane’s fleet PPP necessarily compromised. Corruption has to be proved in court. The burden of proof is usually very heavy. And so we await the outcome of the forensic report. But accountability does not start and end on the steps of the court. 

To capture-proof Tshwane, and to prevent generally bad deals at public expense, we have opened the City’s tender adjudications for public scrutiny. But because the rot often starts long before the adjudication phase, this is not enough. The long-term solution is a corps and a culture of incorruptible municipal officials who can outsmart would-be “capturers”, and ensure value for public money in other instances. In short, a capable state under responsible leadership. This is our mission as we fill a number of vacancies in the City’s top management in the months ahead.

Cilliers Brink is MMC Corporate and Shared Services, City of Tshwane.

This article first appeared in the Pretoria News.