Governance Watch

The costs of political meddling, cronyism and cadre deployment

Mxolis Nxasa, part of long list of golden handshakes
Mxolis Nxasa.jpeg

Apart from the reputational damage caused to vital institutions of state and state enterprises, the financial costs of political meddling, cronyism and cadre deployment are reaching astronomical figures.

It has arrived at the stage where some commentators are starting to refer to South Africa as the “land of the golden handshake”.

One of the latest examples of the costs on both the reputational and financial fronts, is the deal President Jacob Zuma struck with departing National Director of Public Prosecutions (NDPP) Mxolis Nxasa.

The fact of the deal was announced on the day that a commission of inquiry into Nxasa’s fitness to hold that office, set up a year ago, was due to start its work.

The deal is reported to be worth at least R6 million.

Nxasana had two previous convictions of assault and charges for acts of violence. He was acquitted of murder on the grounds of self-defence. Some of the charges were allegedly not revealed when he was granted his security clearance.

And at the NPA the troubles are not over, with the revolving door likely to keep turning on a similar axis. The security clearance of the newly appointed acting head of the National Prosecuting Authority (NPA), Silas Ramaite, expired in 2011 – the same year he was charged with drunken driving after his luxury car had collided with another vehicle. (The charges were withdrawn before the case could make it to court.)

The NPA now has had eight heads, four permanent and four acting, in the ten years since Bulelani Ngcuka, its first head, was replaced by Vusi Pikoli.

A ‘normal term’ in office would have been 10 years, meaning that just in terms of permanent heads, 40 years of service were crammed into 10.

Earlier in May it was announced that two controversial senior officials of the South African Revenue Service (SARS) were departing amid accusations of criminal activity, among other things. Again, charges were dropped as part of the deal, which included ‘golden handshake’ severance packages, reportedly worth almost R10 million each.

Eskom example

At just about the same time it became known that the former boss of beleaguered Eskom, Tsediso Motana, will be leaving the utility. He was placed on suspension in March this year after only seven months in the position.

On 1 June it was announced that Eskom’s Group Executive for Group Capital, Dan Marokane, was also leaving.

Details of the deals under which these Eskom officials left were not made public, but Motana’s predecessor, Brian Dames, left in 2014, pocketing R22.78 million in total pay, including a R5 million package at the end of his contract, plus R1.9 million in ‘back pay’ and R1.92 million in ‘long-term incentives’, adding up to just short of R27 million.

Dames’ predecessor, Jacob Maroga, in turn, departed in October 2009 after only seven months in the job, earning over that period in total just over R4,7 million, including a salary of R3,5 million and a ‘short-term bonus’ of about R1,3 million.

This has become a pattern in recent years in state-owned enterprises:

  • Coleman Andrews left the financially struggling South African Airways in 2001, R232 million the richer, while the airline posted a loss of R700 million that year;
  • In 2009, SAA’s then-CEO, Khaya Ngqula, received an R8 million settlement after being fired for his role in a tender-rigging saga;
  • Former Denel chief executive, Victor Moche, who was fired by Public Enterprises Minister Alec Erwin, got a golden handshake of about R3 million in 2005;
  • Land Bank CEO, Alan Mukoki, received R4.5 million after he quit in 2007 amid allegations of fraud totalling R2 billion;
  • The chief executive officer of the Mpumalanga parastatal organisation, the Economic Growth Agency (Mega), advocate Boyce Mkhize, got a R4.4 million golden handshake last year, following his sudden resignation under a cloud of irregularities.
  • A former SABC CEO, Lulama Mokhobo, during the 2013/14 financial year was paid just over R8 million for 11 months of service. Former executive Phil Molefe received R4.8 million; and the list goes on and on.

Local government and law enforcement

It was recently reported that golden handshakes for departing municipal managers across the country are costing municipalities millions, mostly due to political interference.

The municipality of the Nelson Mandela Bay metro (NMBM) has not seen a single municipal manager complete his term since it had been established in 2000.

These handshakes also individually reach the six-figure mark, with one NMBM manager, Graham Richards, paid R6 million after he had been fired twice.

On the national level it has been especially in instruments of law enforcement where this trend has become prominent in recent years: 

  • Former Gauteng crime intelligence head Joey Mabasa was paid R1.1 million in 2011 to depart, after his name was associated with that of Czech fugitive, Radovan Krejcir, in connection with the murder of Lolly Jackson;
  • In the last month, Hawks boss Anwa Dramat got a deal to resign, believed to have been worth R13 million, based on a R3 million severance payment and R60 000 a month until he turns 60; and
  • The eight heads of the NPA in the 17 years since its establishment in 1998, and the events at SARS, mentioned above, must also be included here.

How it works

It is difficult to pin down the details of how each golden handshake is calculated, but it is clear that it often has a goal of at least ensuring the future silence of the recipient.

Nxasana’s lawyer, Busani Mabunda, at a recent face-to-face with the media, gave some insight into how some of the deals are reached. When asked what his client’s deal entailed, he said: It was “no less than what he would have got had he remained in his position for the full term”.

The normal term of an NDPP is 10 years – Nxasana served a mere one year and eight months and thus effectively gets paid more than eight years’ remuneration for doing nothing – or maybe for keeping quiet.

Adding up

By the very nature of most of these deals, it becomes extremely difficult to calculate their total cost.

But, as far back as January 2010, well before the wave of such deals, Defence Web reported that the pay-outs by Denel and SAA alone, over the previous decade, amounted to R246.6 million.

Just the deals dealt with in this report, which is far from a complete list, add another R345.4 million to the figure mentioned by DefenceWeb, adding up to a staggering R592.1 million.

And, in January this year we already reported that  the Seriti Commission’s costs (in to the controversial arms deal), Nkandla and a conservative R30 million of estimated legal costs of the string of court cases associated with all the Zuma-linked controversies, add up to a massive R268-plus million. This excludes the salaries and incidental costs of officials involved in all of this and all the linked departmental and other internal investigations.

Besides these financial costs, there is the comment by political analyst Mzoxolo Mpolase to bear in mind. He recently said the scandals pointed to the politicisation of the institutions concerned, and “what’s worrying is that you can be in an organisation such as (the) Independent Police Investigative Directorate or the Hawks and receive a golden handshake for being fired for incompetence”.

He added that since President Jacob Zuma had come to power, there had been a greater personalisation of state institutions.

“It seems to have spiralled out of control, with the impact being that vital duties cannot be carried out by state institutions”. People were selected despite their inexperience and ineptitude, he said, and the incompetence was spread through state institutions by the recycling of controversial executives.

by Piet Coetzer

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