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Filling the trough so the pigs can scoff

By Craig McKune

As we sent this week’s front-page story — on how to rip off the government through state leasing — to the printers, a successful BEE property developer called us.

“I just want to give you a bit of perspective,” he said, before reading out a list of state leases in commercial buildings: national departments, state agencies, police.

  • Skimming off the fat: How to rip off the govt
  • He was trying to make two points.

    First, none of these leases was awarded using an open tender process. “Actually about 80% of state leases are awarded without an open tender process,” he claimed.

    Not all of these are corrupt; rather, the department of public works — responsible for state leases — is habitually taking short cuts in its procurement process, the developer said.

    Second, he said white-owned companies, not BEE companies, held 10 of the leases on his list. His point here was that bad procurement practice was not only a trend favouring black businessmen.

    In this week’s Mail & Guardian we describe how it is becoming trendy for BEE characters to siphon off state funds, using their political connections to secure inflated state leases, which they then use to secure unnecessarily large bank bonds, which then fill the trough so the pigs can feed while taxpayer money is used to replace the feedstock.

    Businessman Roux Shabangu might be one of the best examples of this, with the public protector’s investigation showing how he was awarded two massive state leases by being allowed to negotiate his tenders with public works. Whether or not he used political links was not clearly demonstrated however.

    If it turns out to be true that most state leases were awarded without a tender process, while that doesn’t mean all the leases were corrupt, it means that in each case the window was opened for government officials — often pressured by their political bosses — to favour a certain businessman for whatever reason.

    “They should always be doing open tenders,” the property developer ranted. While he was at pains to point out that all developers are not corrupt BEE cronies, he was pissed off that people like Shabangu had made such a public and political mess of the state leasing game.

    If public works would just follow the book and run open tenders — advertising, comparing bids, and choosing the best-qualified property owners — business could run smoothly and cleanly, he said.

    “All of us do well off state leases.” Government leases longer than any other tenant, and needs the most space. It is lucrative, yes, but it need not be dirty.

    Now our developer source claims to be considering getting out of state leasing entirely — we know of two major state leases in his buildings — as bad publicity like Shabangu’s case, brings too much risk to his business.

    Craig McKune is an investigator with amaBhungane, the M&G Centre for Investigative Journalism.