Scale of brazen looting of SOEs only now emerging - SACP

CC notes that there is now a nasty fight-back campaign led by recalcitrant elements

SACP 14th Congress Central Committee Fifth Plenary Session statement

The SACP Central Committee (CC) met in Ekurhuleni over the weekend of 17 – 19th August 2018. The Political Report to the CC by general secretary, Cde Blade Nzimande focused on the key challenges of the revolution in the current reality. The key challenges were identified as being two-fold:

-  the imperative of advancing a second radical phase of the national democratic revolution as the only way to break out of the vicious cycle of high levels of unemployment, poverty and inequality and poor economic growth; and

-  an absolutely necessary condition for this, the DEFENCE of our constitutional democracy, our progressive advances, and our broad movement, in the face of a desperate fight-back campaign by the parasitic looters within and beyond our movement.

These twin and inter-related tasks demand the active reconfiguration of our Alliance, the active formation of left popular fronts of all kinds, and the widest patriotic unity in defence of democracy and constitutionalism.   

It was therefore appropriate that the CC also discussed extensively the challenges facing the sustainability of our key strategic State Owned Corporations (SOCs) and local government – two major sites in which the challenges of parasitic looting have been concentrated.

State Owned Enterprises – Defend our Public Sector!

Minister of Public Enterprises, Cde Pravin Gordhan briefed the Central Committee on the massive challenges facing the new administration headed by President Ramaphosa to address the deep-seated and multi-faceted problems in many of our major State Owned Corporations. These problems relate to poor governance, weak capacity, failure to adapt to technological changes, bloated managerial structures, and, above all, the whole-sale parasitic plundering of our SOCs amounting to tens if not hundreds of billions of rand. The brazen nature and sheer scale of this looting is daily emerging. We expect more to emerge with ongoing criminal investigations and with the commencement this week of the Commission of Inquiry into State Capture, headed by Judge Zondo.

Those implicated in this plundering include members of company boards, politicians, senior managers, private companies, both established as well as some black-owned companies, often all operating in sophisticated syndicates. Much, but not all of it, is linked to the Gupta family and their associates. There is also evidence of collusion in all of this on the part of multinational auditing firms, and even on the part of elements within our regulatory entities like the SA Bureau of Standards, and of course, from elements formerly in the leadership of the SA Revenue Services.

The CC expressed appreciation for the work of those ministers, senior government administrators, and whistle-blowers now being undertaken to root out the cancer of corruption – new boards have been appointed, disciplinary measures undertaken against senior managers, life-style audits have commenced, and, with the pressure mounting there has been a string of hurried resignations. But even those resigning in an attempt to avoid internal disciplinary action must not be allowed to escape the full scrutiny of the criminal justice system. The crooks must all go to jail!

The clean-up endeavour is only just beginning, but as can be expected, given the huge stakes at play, there is now a nasty fight-back campaign led by recalcitrant elements within our movement and implicated senior SOC managers, and taken up by others, under the false-flag of black nationalism and a pretence at fighting neo-liberalism. Some of this degenerate fight-back has focused on Cde Gordhan personally and has even descended into black chauvinism and racist slurs.

But let us be under no illusion. This fight back campaign is essentially not directed at President Ramaphosa or Pravin Gordhan. It is directed against South Africa. The CC expressed its full support for all those who are standing up to state capture, sometimes at personal risk. The SACP pledges to be a steadfast ally in the struggle against parasitic looting.

However, it is also important to realise that dealing with endemic corruption in the SOCs and in our wider society, will not, on its own fix the problems within the state and specifically within the SOCs. Our key SOCs, among them Eskom, Transnet, SANRAL, PRASA, and SAA are, or should be, critical pillars of building a developmental state capable of driving the radical structural transformation of our society. The beginnings of problems within the SOC sector did not just begin with the Gupta associated, parasitic assault of the past decade. Many of the present problems can also be traced back to the ill-advised, neo-liberal turn taken by government in the mid-1990s.

Plans to privatise Eskom, to concession out Transnet port and rail operations, even to concession out parts of the Metrorail system in the late 1990s and early 2000s led to delays in recapitalisation, notably in the case of Eskom generation capacity, which were later to have a severe impact on the economy. Similarly, partial privatisation of SAA and misguided faith in imported private sector CEOs like Coleman Andrews led to short-term and superficial improvement in annual financial statements, but with a devastating impact on the long-term viability of our national airline. Likewise with the SA Post Office, which was left to languish without strategic political support leaving it stuck in the snail-mail era while its counterparts, like the publicly-owned Brazilian postal company, Correios, (now the largest employer in that country) expanded energetically on the back of advances in the technological and logistics sector, to dominate courier services and play a leading role in financial services. The neo-liberal disregard for the important economic potential and developmental responsibilities of the public sector, left our own SA Post Office, as with our many other SOCs, stranded, and under-capitalised. The government even handed over the public responsibility of delivering social grants to a Nasdaq-listed private company in a contract that the courts found irregular.

In a similar fashion, Eskom, once a world leader in energy, was allowed to let the revolution in renewables pass it by.

As we battle to save and rebuild our SOCs, there is much to be learnt from this recent past. The necessary task of returning our SOCs to sustainability cannot be a return to the costly neo-liberal errors and illusions of privatisation. If personnel budgets come under scrutiny, then it is the bloated, over-paid top management structures that must be targeted, not the tens of thousands of honest and hard-working rank-and-file workers. Restructuring must not involve the fire-sale of public assets, but rather consolidation of often scattered and fragmented public entities, notably the proliferation of DFIs. Eskom needs to change its approach to revenue, instead of huge increases in its charges, it should focus on expanding its market by lowering costs, creating South African jobs, not least among the many manufacturing enterprises that have shut up shop, or expatriated their operations because of electricity prices.

On a broader canvas, we need to open up a sober but urgent debate on the appropriateness of our current monetary policy. At present, the debate is dominated by the challenges of our fiscal constraints and the debt risks in our SOCs. But the majority of South Africa’s debt is denominated in our own sovereign currency, it is rand-denominated, unlike some other developing countries in our peer group. This suggests that there is at least some lee-way for state-provided re-capitalisation of debt-challenged SOCs. Further related to this is the question as to whether the Reserve Bank’s three to six percent inflation target is appropriate. This band is not an entrenched part of the Bank’s constitutional mandate, but is based on Treasury policy.

As the SACP we are not in denial about the difficult economic situation in which our country finds itself. However, we need to ensure that, in approaching this crisis, we do not choke off any prospect for real job-creating recovery through excessively conservative macro-economic policy, or the short-term disposal of key public assets.

Local Government

Minister of Cooperative Governance and Traditional Affairs, Cde Zweli Mkhize laid the basis for another important discussion in the CC, briefing the Party on government’s “Back to Basics, Municipal Recovery Programme”.  The CC agreed that there are serious structural and systemic challenges that impact upon the viability of many municipalities and that there is the need for a more structured approach to identifying and addressing the problem of municipal performance failures.

Some of these challenges are rooted in the very advances made in local governance since 1994 – the abolition of local governance based on race; the integrating of previously divided communities under one municipal authority and tax base; establishing democratically elected local government throughout the country; and extending service delivery to the majority of the population and the poor who had been deprived of access to services and infrastructure under apartheid.

However, the emphasis on municipal own-revenue, is an assumption based on an economic reality that simply does not exist in many localities, with high levels of unemployment and poverty, and the imperative of providing free basic services to the poor. The challenge of financial viability is further complicated by a plethora of grant funding allocations to municipalities with little integration among them. These allocations are also often a reflection of multiple but atomised projects into the local space by different national and provincial departments that are often at variance with local Integrated Development Plans. 

The SACP supports the urgent interventions that government is undertaking, including national assistance to municipalities that are unviable due to weak administrative practices, like oversized structures, and budgets that are not cash-backed, etc. However, medium- to longer-term solutions must include much greater alignment between different national economic investments (Special Economic Zones, Industrial Development Zones, Strategic Infrastructure Programmes) and poverty stricken areas, and a sober review of the structural arrangements, including the number of district municipalities and small local municipalities.

These are all systemic and structural challenges that call for much greater all-of-government cooperation. However, a major destabilising factor in local government is in political interference resulting in poor appointments, manipulation of tenders, the constant churn of personnel as a result of factional battles driven by moneyed-interests and corruption. These problems cannot be resolved simply through government intervention when it is the party political level that is at the source of much of the degeneration. This is a key context in which the SACP is actively engaging our Alliance partners around the imperative of a major alliance reconfiguration.

The CC resolved to focus on local government in this year’s Red October campaign. Amongst other things we will continue to expose corruption and bureaucratic indifference in local government.

In working closely with local communities, organising around legitimate local and sectoral grievances, the SACP condemns the wide-spread development of a lumpen-culture of destruction of public and community property. A local demand for a road leads to the destruction of a library or a clinic. Dozens of schools are burned down, supposedly to advance the call for a change in a municipal demarcation. Legitimate frustration with poor commuter rail services is exploited by hidden hands to actively sabotage dozens and dozens of coaches and infrastructure. Behind much of this senseless and self-defeating destruction of public property are counter-revolutionary, business interests manipulating community frustrations and particularly exploiting and in some cases funding alienated and anarchic youth. The absence of effective local level political leadership and local government aloofness and neglect feed into this wave of anarchic alienation.

Job losses in the mining sector

The CC strongly condemned the recently announced planned retrenchments of thousands of workers in the mining sector. The SACP pledges its unwavering solidarity with the workers and will actively join the trade union movement and labour for the unity of workers to confront the greedy capitalist mining bosses. The planned retrenchments are aimed at nothing but profit maximisation at the expense of the working class and our national development imperative to radically reduce unemployment, poverty and class inequalities and therefore ensure that the people share in the country’s wealth – including mineral resources.

The intervention announced by Cde Gwede Mantashe, the Minister of Mineral Resources to engage with the mining sector in order to find alternatives to the retrenchments is a step in the right direction by government. It is however evident that there is more that needs to be done. On this score the SACP will engage with its allies, worker and other formations and forge a progressive popular left front to achieve transformation and build democratic control of the mining sector.  

COSATU National Congress

The Central Committee wishes our alliance partner, COSATU, well in the run-up to its critical national congress next month. COSATU is traversing one of the most difficult periods in its history. The ravages of neo-liberal capitalism world-wide, with its deliberate offensive against the organised working class, has also impacted on South Africa, with mass retrenchments, casualization, labour brokering and much more. We note and condemn attempts in the media to fan factional interests in the union movement.  In our support for COSATU, the SACP commits to the important principle of respecting its organisation independence. The SACP will also continue to champion the cause of building working class unity both organisationally, and particularly in active practical struggle.


The CC noted the recent elections in Zimbabwe that, whatever shortcomings, were at least held in comparative peace relative to previous election. The CC condemned the incitement of violence and the killing of six people as a result of a dispute on the outcome of the elections. The CC further noted the postponement of the inauguration of Emmerson Mnangagwa as Zimbabwe’s President in order to observe due process after the dispute was referred to the country’s Constitutional Court. The CC has called on all the parties involved to abide by the determination that the Court will arrive at, to prevent the loss of life and to ensure that peace prevails.

Hambani kahle - Aretha Franklin, Samir Amin and Kofi Annan

The SACP joins progressives around the world in celebrating three outstanding giants of our epoch. Aretha Franklin’s powerful voice inspired pride and confidence in millions of South Africans in the darkest hours. Samir Amin was the greatest African Marxist of our times, his support of the anti-imperialist, national democratic line for the struggles of the South, and his active engagement with our Party at different times had a large influence on our strategic programmatic development. Kofi Annan was an outstanding UN secretary general. His example is especially important at this time when even more aggressive currents, led by US president Donald Trump, seek to further erode multi-lateral institutions.

Statement issued by SACP, 19 August 2018