TRAINSPOTTER: Exclusive — Leaked letters expose fight over Border Management Authority

Imagine a large battleship sinking off the coast of Cape Town, slurping in seawater from a gash in its hull. Metal screams; rivets pop. As the boat emits a final, elegiac sigh, one hole becomes three, three become ten, until there no longer exists a means to distinguish the boat from the holes.

Pour yourself a glass of methylated spirits if you guessed that the boat in this metaphor represents the ANC.

As far as the holes are concerned, last week the Daily Maverick came to be in possession of two documents concerning the Border Management Authority Bill, a newly passed piece of legislation that I would love to describe as controversial, but one that has been largely ignored by both the media and the public. That’s because the political sewerage never stops flowing long enough for us to grasp complexity, a situation that should never be confused with commonplace chaos. The mess has been carefully curated: the intention is to disassemble the administrative state, and replace it with a perfectly calibrated extraction machine.

In the wrong (read: government) hands, the Border Management Authority is exactly that—a money-slurping megabot designed to destroy a relatively smooth bureaucratic process. According to a source familiar with the bill’s passage, the discussion over how best to manage the country’s borders has always come down to, well, who gets the cash. Inasmuch as the BMA concerns itself with security, the real fight has been over what is termed “revenue collection and customs function” at our various ports of entry. Just as crucially, it comes down to who manages the value added tax (VAT) rebate system that is essential to our export market.

South Africa’s borders are the bailiwick of eleven government departments and three parastatals. As far back as 1998, there was a discussion between the various players over how best to make disparate agencies work in consort. As things stand, there are three types of ports of entry, some of which are mere border posts—romantically isolated shacks staffed by a drowsy copper with a stamp and an extensive knowledge of all things Uzalo. The most sophisticated port of entries house a full complement of Home Affairs, the South African Police Services (SAPS), the State Security Agency (SSA), the Department of Agriculture, Forestry and Fisheries (DAFF), and other relevant departments. The second iteration is served only by Home Affairs. The third is the small, often lonely, crossings staffed by the police.

Since 2007, this arrangement has been overseen by the Border Control Operational Coordinating Committee (BCOCC), under the stewardship of SARS. The Committee describes itself as an “integrated border management structure.” Take a car over the border, the police will run the chassis number, and establish whether or not it’s stolen. Immigration scans passports. Customs sniffs the goods. SANDF shoots the terrorists. But critically, the money flow has been managed by SARS, and while our borders are hardly corruption free, billions of rands are pumped into the fiscus via the revenue service’s internationally renowned collection systems.

But even before the establishment of the BCOCC, there were complications. Since the 9/11 attacks, the management of international borders has changed significantly, especially as it pertains to the exchange of goods with the United States. These days, customs officers are sent by the Americans to pre-screen South African exports, a process that is standard regarding the US’s larger trade partners. Like many countries, South Africa runs a version of a customs “front office”—the cheerful muttonheads who glare at your passport and do unspeakable things to your prostate—and a back office, where other agencies are rolled into the border management matrix. It should go without saying that the State Security Agency floats above it all.

And so, in taking the lead on drafting the Border Management Authority Bill, Home Affairs, until only recently helmed by the current Finance Minister, Malusi Gigaba, was tasked with smooshing all of these various departments, parastatals and mandates into one coherent agency. The real question was, Why?, considering that the process functioned about as well as anything does in South Africa.

According to the Director General of Home Affairs, Mkuseli Apleni, with whom I had an extensive conversation last February, the BMA was not intended to be a vehicle for collecting revenue.

“Think of a house. What is the point of having a gate if you have no fence?” he asked me.

His contention was that our borders are, effectively, non-existent. And all of the really bad stuff—drugs, drug paraphernalia, non-White Monopoly Capital-owned tobacco, non-White economic migrants—is either missed or ignored by Customs, due in no small part to corruption.

“And yet people think Customs is only about tax [collection].”

As far as Apleni was concerned, it was important for the BMA to be able to open suitcases and containers, and to tighten the controls—“but based on a script from SARS. It’s called checks and balances,” he explained. The BMA would collect the penalties that accrued from dodgy cross-border activities, and as a “command and control organisation” would assume the “customs frontline functions at ports of entry”, excluding revenue collection.

Well, sort of excluding revenue collection. The bun fighting between Home Affairs and SARS, the latter aligned in this case with the National Treasury (two departments that have agreed on nothing else for the past few years), came down to one specific issue: customs function integral to the SARS-administered tax system. Certain exports are entitled to VAT rebates. But while imports are examined—wait for the catch!—exports are not. As a source noted drily, “Export refunds could result where they’re not due.”

And so, the (potential) money vortex comes perfectly into view. “In the case of the BMA, Treasury and SARS were looking at a qualification that we would set up the agency and, once stabilised, review which, if any, Customs functions should be incorporated,” explained Pravin Gordhan, during a phone interview conducted this week. “Given our record with managing key institutions in recent times, we were taking a more cautious approach.”

One can easily understand why this would get Home Affairs’ officials backs up—the National Treasury was basically insisting that until they were out of diapers, no new toys would be forthcoming. But imagine: a National Public Entity run by a Commissioner that reports exclusively to the Presidency and to Home Affairs, and that would require:

a) an orgy of tendering in order to get its systems up and running, and

b) the keys to important rooms the Customs castle, to say nothing of the potential ability to manipulate the VAT rebate process.

All of this would happen in an environment where state-owned operations serve as a means for rent-seekers like the Gupta/Zuma syndicate to funnel billions out of South Africa’s economy. Anyone who believes that this current government can either set up or maintain a National Public Entity of this nature is either drunk or dreaming. Our representatives have been resolutely, and I would say purposefully, lousy at this kind of thing.

* * *

And so, the aforementioned leaked letters, which provide a fascinating insight into the “negotiations” that led up to the BMA bill and it's rocky, but eventually successful, passage through parliament. The first letter, dated 9 February of this year, is signed by then-Home Affairs Minister Gigaba and addressed to Pravin Gordhan, who at the time was still administering our finances, albeit with a large Sword of Damacles hanging over his head.

In clipped prose, Gigaba reminded Gordhan that Cabinet had come to a consensus on the fact that the BMA would assume frontline Customs functions, and that any resistance from National Treasury would no longer be tolerated. It’s a harsh little missive, the second paragraph of which reads:

It was my understanding that as political principals we had constructive meetings and had reached consensus on the need for the BMA to assume customs frontline functions at Ports of Entry, but at the same time excluding revenue collection functions. […] Furthermore, Cabinet endorsed the principle of a single border law enforcement entity in the border environment, and that the BMA should be a command and control organisation.

This was, obviously, a reinforcement of the DG’s positions, which is not to say they were precisely accurate. Gigaba went on to reiterate the requirement for a broad, Homeland Security-style uber-service running all ports of entry:

For the record, I cannot agree that frontline customs functions of the South African Revenue Service (SARS) be excluded from the BMA and from the legislation currently before Parliament. As outlined extensively in previous correspondence to you, the recommendations from National Treasury on the BMA are contrary to the decisions of the ruling party and Cabinet.

Gigaba then informed Gordhan that he was turning the matter over to BL Mashile, the unlucky chairperson of the Portfolio Committee on Home Affairs, asking him to “proceed swiftly with the processing of the BMA Bill, 2016 in its current form.”

In response to which former Deputy Finance Minister Mcebisi Jonas drafted his own letter, dated 27 February 2017, addressed to Mashile. Jonas noted with appreciation the exertions of Deputy President Cyril Ramaphosa (the ANC’s Swiss Army knife, outfitted with blunt blades), who apparently tried very hard to close the breach between Home Affairs and the Treasury. But the breach was unbreachable, largely because Jonas and his department seemed to have a different view on the substance of what Cabinet had endorsed:

The [Cabinet] consensus was that the revenue collection and customs function, including trade facilitation functions [think VAT rebates], will not be affected by the Bill and will continue to be the sole function of the SARS. This will ensure that the customs value chain in SARS is not fragmented and that we do not risk the significant revenue (up to 30% of all tax revenue) collected from customs, excise and import VAT.

So who had it straight? Gigaba? Or Gordhan/Jonas? (Jonas had not replied to interview entreaties by press time.) It didn’t matter, because President Zuma takes the counsel of only his kitchen cabinet, and pretty much ignores the noise from those in the parlour who aren’t members of his faction. Still, Jonas gave it a shot: the Bill as it stood, he wrote, would create uncertainty for SARS, and he offered a Treasury-endorsed amendment, one that appears never to have been considered.

Stalemate.

And yet, the timing of this exchange is eerily pertinent to the eventual fates of Messrs Gordhan and Jonas, who were fired on 31 March during the infamous reshuffle—exactly one month after Jonas made his emphatic reply. And who were they replaced with?

Why no one less than the gentleman with whom they had engaged in so intractable a disagreement regarding the Border Management Authority matter.

Coincidence? Perhaps. Government departments have territorial pissing contests all the time. Except for the fact that there is no such thing as a coincidence in politics. While the letters by no means prove airtight cause and effect, there can be little question that there existed terminal disputes between those aligned closely with the Zuma/Gupta syndicate—Gigaba is alleged to be very much among them—and those in the National Treasury under Gordhan. Without question, the Border Management Authority Bill, with its tantalising ability to create a parallel revenue collection stream, was a fatal sticking point. The desperation on Home Affairs’ behalf to ram this through parliament was unseemly, to say nothing of unnecessary. Now, we can more clearly understand it as part of a much, much larger process. 

As Battleship ANC flounders further, popping more and more rivets on its passage towards a briny grave, love letters like these will continue to float to the surface. They adumbrate a governing party at war with itself, with different factions aiming for different outcomes—all guided by the shadowy hand of a president who seems committed to breaking even those institutions that tick along with a modicum of efficacy. The BMA Bill’s next encounter is with the National Council of the Provinces, the members of which will be lobbied hard to ratify it. But the fact that Zuma’s friends wanted it so desperately speaks to its ultimate utility, and why the NCOP, to say nothing of ordinary South Africans, should fear the BMA so. DM

Photo: (Left) Public Enterprises Minister Malusi Gigaba speaks at the Infrastructure Africa Business Forum in Sandton, Johannesburg on Tuesday, 16 July 2013. Picture: Werner Beukes/SAPA; (Right) South Africa's Deputy Finance Minister Mcebisi Jonas arrives for Finance Minister Pravin Gordhan's 2016 Budget address in Cape Town in this February 24 photo. (GCIS)