27 January 2013

South Africa: Minister Gigaba Must Answer to Parliament for Bullying Tactics

Democratic Alliance leader, Helen Zille has written to President Jacob Zuma asking for a Judicial Commission of Inquiry to investigate how the New ... ( Resource: The Democratic Alliance Seeks Inquiry into Funding for The New Age Newspaper )

press release

Recent reports in the media suggest that Minister of Public Enterprises, Malusi Gigaba, put pressure on state-owned enterprises (SOEs) to support the New Age newspaper. The DA will therefore be requesting that the Minister appear before Parliament to answer questions on this matter.

It is reported that the Minister's special legal adviser, Siyabonga Mahlangu, put pressure on SOEs to do business with the New Age. Mahlangu, a former ANC lawyer, had reportedly initiated discussions early last year with SAA which resulted in the state-backed carrier increasing their monthly subscription to the New Age from 40 770 to 63 000, making it SAA's largest subscription. Mahlangu has also been accused of coercing SAA to increase advertising expenditure with the newspaper.

Parliamentary replies to questions from the DA, requesting details of the advertising expenditure of the Department of Public Enterprises (DPE) and its entities on the New Age from December 2010 to October 2012, are quite telling in this regard.

The DPE chose not to answer the questions in full and instead only disclosed its figures for 2012, which amounted to nearly R1.3 million in advertising expenditure with the New Age. The DA interprets this selective disclosure as an attempt to cover up what was most likely a steep increase in advertising expenditure in the newspaper from 2011.

I have every reason to believe this is the case given that SAA's own marketing staff were reportedly against the proposal to increase their exposure in the New Age. They allegedly argued that the newspaper was poor value for money, owing to the fact that its rates were not justified by its relatively lower circulation when compared to its competitors. The marketers went on to admit that the only real value offered by the newspaper was with "government marketing".

Given the fact that SAA requires periodic bail-outs from government just to keep afloat, it is hard to justify this unnecessary expense.

The replies to our questions suggest that the Minister's influence has been felt at both Transnet and Eskom as well, which recorded figures close to R8.65 and R4.4 million, respectively, on advertising expenditure with the New Age since its inception.

If this is indeed the case, then the Minister's coercive actions are in contravention of the provisions set out in the Public Finance Management Act (PFMA), which delineates the fiduciary duties of accounting authorities within public entitles. In particular:

Section 50 (1)(b) requires the accounting authority to act with fidelity, honesty, integrity and in the best interest of the public entity in managing the financial affairs of the public entity.

Section 51 (2)(b)(ii) states that an accounting authority for a public entity must take effective and appropriate steps to prevent fruitless and wasteful expenditure and expenditure not complying with the operational policies of the public entity.

I will therefore be writing to the Chairperson of the Portfolio Committee on Public Enterprises, Mr Holmes Maluleka, to request that the Minister and the relevant accounting authorities appear before the committee to:

Reassure South Africans that the Minister has not bullied SOEs into embarking upon fruitless and wasteful expenditure to serve his own interests;

Give an explanation as to how public entitles can justify relatively high levels of expenditure on a newspaper with no official circulation figures and a relatively low readership of 87 000.

If there is any truth in these allegations, then the Minister is guilty of an unjustifiable abuse of power and the wasteful expense of public funds that could have been put to better use in serving the people of this country.

Natasha Michael, DA Spokesperson on Public Enterprises

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