Tito Mboweni comes to Parliament to talk VBS scandal and multiple failures that made it possible

EFF Deputy President and Chief Whip Floyd Shivambu missed Tuesday’s meeting of the finance committee for obvious reasons – the VBS fightback was on at EFF HQ. At that press conference to respond to the South African Reserve Bank (SARB) report by Advocate Terry Motau, SC, and Werksmans which outlined looting of R2-billion, the EFF said it was nothing but a smear campaign to say that either the EFF or Shivambu got any money in any untoward way from VBS Mutual Bank. Action would be taken if anything was proven.

Also dismissed were claims of conflicts of interest – the DA has complained to Parliament’s ethics committee under the parliamentary code of conduct – over Shivambu’s failure to disclose his brother Brian Shivambu’s dealings with VBS when the finance committee discussed the mutual bank in at least two meetings in March and May 2018.

And so Shivambu missed Finance Minister Tito Mboweni’s maiden appearance before the finance committee.

“When I left in 2009 I thought that was it… someone called President Cyril Matamela Ramaphosa had a different idea…,” Mboweni told MPs after being given the protocol moment to say something.

“I hope you will be nice to me to the end of the year. There is something in the English tradition, the maiden-ness. I hope you’ll be nice….”

DA MP and finance spokesperson David Maynier quickly quipped back to say that as a recycled minister, as the minister himself put it, “the honeymoon will be short”.

The ANC could not let that stand.

“David Maynier, speaking after the minister, I can’t be quiet,” said ANC MP Dikeledi Mahlangu, adding in reference to the hit song: “I want to stylishly welcome the minister in the words of Cassper Nyovest – Tito Mboweni, sha-sha!”

(Which, of course, was a reference to Zapiro's cartoon which appeared in Daily Maverick last week - Ed)

That out of the way, Mboweni, who seemed a little uncomfortable about the protocol obsessions and more than once made reference to how things are done differently in the private sector, got his say about the VBS debacle. It comes in handy that Mboweni served a decade as Reserve Bank Governor, given surging criticism of why the banks regulator, the SARB, did not step in earlier in the VBS scandal.

“In this case, I think we were failed by both the internal auditor, clearly in cahoots with management, and the external auditor. I can’t give any credit to (the board) sub-committee on compliance because they were part of the bank heist,” said Mboweni, adding later: “When you have a large auditing firm failing us in the manner this one has, it is a huge concern. Also for the country.”

There was no way SARB staff could be everywhere all the time, including conducting inspections.

“A huge amount of trust is put on the internal and external auditors,” Mboweni said earlier in the committee meeting. “What the regulator can hope for is for law enforcement agencies … to move with speed, no dilly-dallying, because we need to reassure the public we take depositors seriously. Political parties must move with speed to deal with their members who are found wanting.”

Many things had gone wrong at VBS, the finance minister said.

“We will have quite a lot to say next week when we are doing the MTBPS (Medium-Term Budget Policy Statement)…”

The VBS debacle is just one of the things in his in-tray, or the “huge folder with documentation” he had to read instead of an electronic document collection, Mboweni told MPs. Among those documents was a preliminary report on the Public Investment Corporation (PIC), the managing of around R2-trillion in workers’ savings and government employees’ pensions.

A probe was instituted in July 2018 by former finance minister Nhlanhla Nene after concerns over governance at the PIC were raised publicly following, among other matters, a series of questioned investments in Steinhoff, where “auditing irregularities” eviscerated the share value in December 2017, and VBS.

“That (PIC) report give some indication of what needs to be done,” said Mboweni, who added that his list of reports also included “the interim report from SARS (South African Revenue Service) that’s been made available… We cannot afford mishaps at SARS.”

In that interim report, posted on the Presidency website, Judge Robert Nugent recommended the removal of suspended SARS Commissioner Tom Moyane from office, and his immediate replacement.

“We stress that the replacement of Mr Moyane is not a panacea, but only the first necessary measure without which there is no possibility of rectifying the damage that has been done to SARS, and any further recommendations will be fruitless, hence our recommendation at this stage, without awaiting the Commission’s final report,” said the interim report.

That report and the PIC preliminary report and the final crossing of t’s and dotting of i’s for the MTBPS on 24 October are a handful. But Mboweni may well also have to step up defending his department, National Treasury. The EFF is continuing to keep a sharp and critical eye on Treasury, as emerged on Tuesday.

EFF leader Julius Malema, at the same briefing where he expressed confidence in Shivambu regarding non-involvement in VBS, told journalists that irregular expenditure at National Treasury demonstrated “weak controls”, the excuse of a missing memo was “unacceptable” and the party would continue to expose failings.

“We’ve exposed the shenanigans of the Treasury because when they come to Parliament to account they behave like a law unto themselves…”

In the informal and formal social media networks, that message reached those in Parliament quickly. And Treasury officials on more than two occasions emphasised that they were at the national legislature to account, including on the incurred R769.2-million irregular expenditure and the R67-million in fruitless and wasteful expenditure.

“We should certainly not be in this space. We should be a model of excellence,” National Treasury Director-General Dondo Mogajane told MPs.

Just under half that irregular expenditure, or R369.88-million, was noted by the auditor-general because of a “mislocated” 2014 memorandum on the Municipal Financial Improvement Programme (MFIP). That memo would have justified the expenditure, but the memo was only discovered after the audit cut-off date of 31 August. Because of that, the National Treasury accepted the auditor-general’s findings.

The remaining more than R399-million relates to overtime not in keeping with public service and administration regulations (R272,000), back office software, and the IT contracts that are currently also under scrutiny at Parliament’s public spending watchdogs, the Standing Committee on Public Accounts (Scopa), and the Integrated Financial Management System (IFMS).

The plan is to work out snags by the 2020/21 financial year, although in June National Treasury told Scopa it had commissioned a forensic probe, putting tighter governance systems and IT skills in place, according to transcripts of the Parliamentary Monitoring Group (PMG). Daily Maverick understands the 400-page forensic report is currently being worked through by National Treasury.

It was not necessarily a comfortable session, and questions by DA MP Alf Lees around SAA’s battle to maintain “going concern” status were not answered. To date R23.4-billion has effectively been written off, but there is another R21-billion in the SAA corporate plan that’s needed. Lees said he was disappointed there was no clear answer as to whether National Treasury is getting ready to make that money available.

Deputy Finance Minister Mondli Gungubele had stepped in to say SAA was a public enterprises entity, and that committee would be more appropriate to deal with the troubled national airliner.

But as Mboweni gets ready for his maiden MTBPS on 24 October, the list of headaches may well include SAA – alongside PIC and VBS – and pressure, including from the finance committee on Tuesday, to undo the damage caused by the unprecedented hike of value-added tax (VAT) to 15% by announcing an expanded, pro-poor list of zero-rated goods. DM