Phumelela has misused R30m of public moneyComment on this story
The article on Phumelela in Business Report refers. The truth is that Phumelela has used over R30 million of public money for the benefit of its shareholders.
Upon dissolution of the Horseracing Development Fund (HRDF), Phumelela received about R16m of unallocated funds and R17.5m in the form of a grant for stabling and grooms’ accommodation.
The HRDF Dissolution Account clearly stated that the R17.5m grant had to be used for the purposes for which it was granted and that Phumelela undertook to make good any shortfall that may arise in fulfilling the conditions of the grant. Phumelela placed the R17.5m into a capital reserve.
Clause 8.2 of the “stakes agreement” between Phumelela and the Racing Association clearly stated that the R17.5m grant had to be used for the purposes for which it was granted in conjunction with the Racing Association.
Despite this condition, Phumela used R3.6m of the grant to upgrade stabling at the Vaal racecourse and put the balance of R13.9m into their accumulated profits.
How the Racing Association allowed this to happen has never been explained, but there was a massive conflict of interest as the then chairman of the Racing Association and some of its directors were also directors of and shareholders in Phumelela.
Riaan du Plessis is being disingenuous by saying that a “legal audit was carried out by a firm of attorneys and Phumelela had been cleared”.
What actually happened was that after objections were raised about the allocation of these funds, Phumelela commissioned its attorneys to provide a report on the matter.
The attorney responsible for the report obviously could not have read the HRDF dissolution document or clause 8.2 of the stakes agreement.
She relied entirely on a letter purportedly from Javu Moleketi, the then MEC, giving Phumelela permission to use the proceeds of the fund for strategic purposes.
None of the objecting parties have seen this letter and even if Javu Moleketi did in fact do this, he could only have been referring to the R16m surplus and not the other money that was granted subject to special terms and conditions.
In any event it is highly questionable how even the R16m of public money could be given to a company for the benefit of its shareholders and Javu Moleketi should be called to account for his actions.
Likewise the directors of Phumelela and the Racing Association should be called to account for their actions as well.
Given the above very unsatisfactory situation, the questions surrounding the sale of the Gosforth Park and Newmarket racecourses and numerous other misgivings over the conduct and control of horseracing, the appropriate minister should appoint a long-overdue judicial inquiry.
Oil industry fuels glittering gold price
The gold price has been sustained at $1500 for some years now and we have to begin to accept this value as not a short-term ramp but a true value. Why would gold have elevated from the $350 of 2002 to $1500 over such a short interval?
Remembering here that gold most likely represents free-market spine rather than anything intrinsically to do with gold metal, I believe we have to find the answers in the oil industry.
Drilling a 200m shelf is relatively cheap (using shore-attached barges) and this was sustainable for many years. Easily accessible oil has now virtually been extracted (with some political anomalies like the DRC), and it seems the oil well “mean” has shifted to 400m depth or perhaps more. Cost of extraction as seen in the gold price (South Africa, gold holder, having no oil) appears to have escalated by 500% over even this (relatively) small shift.
So when gold traders inform you they’re “taking on” platinum when you query the gold price, I suggest the true answer lies elsewhere; gold is sustaining fundamental value as the dollar (oil) fluctuates with extraction costs.
Telkom monopoly hinders growth
Ann Crotty’s article stating that regulation of prices may be necessary (BR 9 May) strikes a particular chord in regard to the ongoing price gouging by Telkom, especially regarding their prohibitive cost of high-speed internet connectivity – the last mile.
Low communication cost is a major economic driver and gateway for innovative growth.
The Wacs, Seacom and Eassy cables are opening up vast data pipes, at low cost.
Internet service providers have slashed product prices for speed and quantity.
Everything is working except for Telkom, whose prices continue to keep us uncompetitive. All Telkom provides is the last mile/local loop connection, with some simple switchgear. How can this be twice as expensive as phone connectivity? Why not allow for a once-off purchase for the gear, not insane monthly rentals?
The sale of a portion of Telkom to Korean KT Corporation, that nation’s biggest telcoms provider, may be good or bad news. Korea has among the highest speed and cheapest internet connectivity in the world – this is good. But perhaps KT sees Telkom as a cash cow where consumers remain constrained by a de facto monopoly?
It is incumbent on our present minister of communications to demonstrate boldness and take long overdue action to regulate broadband wire provision to internationally competitive levels.
SA has no rands left to buy dollars
Thank you, Mr Stiglitz, for those wonderful words of wisdom. While we are well aware that the thrust of your message centred on the macro scenario it was nevertheless a pity you did not have a close look at our punitive tax structure before urging our tax-hungry Receiver of Revenue to introduce further taxes, for he certainly needs no urging.
The advice to buy dollars to stabilise the rand would not find any takers because South Africa is borrowing “hand over fist” and has no spare rands available to buy dollars. And what can be said about unemployment, apart from the fact that it has brought down many a complacent and maladministered government.
E-tolling case could increase e-toll fees
I do not support e-tolling. However I question what the Opposition to Urban Tolling Alliance has achieved now that they have won their court case.
The legal expenses relating to the alliance’s opponents in the court case should be paid by the taxpayer.
Moody’s Investors Service has cut the foreign currency rating for the SA National Roads Agency Limited (Sanral) after the levying of e-tolls was delayed, creating uncertainty about the company’s revenue.
This could increase the cost of Sanral’s debt, which in turn could increase the e-toll fees.
Gauteng road users should pay legal fees
THE Opposition to Urban Tolling Alliance’s successful lodgment to halt Sanral in its tracks obviously meant a massive legal bill was going to be forthcoming.
Because of their (and others’) untiring efforts resulting in the suspension, motorists, both Gautengers and other users, owe these fighters a great deal!
So, as a way of thanking them, their appeal to meet legal fees should be heeded – with a R10 (minimum) contribution by every vehicle owner – as legal bills in fighting the second stage of the case will also amount to millions!
Big-hearted Gauteng’s three million registered owners will surely rally!
Productivity claim doesn’t hold water
SACTWU’s General Secretary, Andre Kriel, claims productivity in SA’s clothing industry has increased by 73% in the past five years according to statistics supplied by Productivity SA. I am concerned that Kriel did not have the data independently verified and quantified before embarking on a 13% pay hike.
His assertion does not stack up. If that was the case, why would an organisation like Seardel be retrenching over 1 000 workers, of whom Sactwu is a major shareholder? Likewise, Trubok, a Bargaining Council member in Newcastle, is also in the process of retrenching.
He seems to be insinuating that employers are exploiting the increased productivity but he fails to inform the public that clothing prices have reduced substantially in the past five years due to economies of scale, subsidisation and lower wage costs in Asia.
Furthermore, notwithstanding the fact that the SA clothing industry enjoys a 45% tariff barrier, over 70%-80% of clothing is still imported. If productivity has so improved why is there a need for protective barriers and why is such a high percentage of apparel still imported?
Our own experience also shows a different picture to that portrayed by Kriel and Productivity SA. We find that skills in our area, formerly a hub of clothing and textile manufacturers, are poor, and the acceptance and understanding of productivity is non-existent. For example we experience a hardcore daily absenteeism of over 10%, compared to Mauritius at 1.5%.
According to the General Sewing Data evaluation of global productivity in the apparel industry, where data is captured by international software companies that supply productivity models to do costing, SA’s productivity in this industry sector is dismal compared to that of our major competitors.
Such facts are further endorsed by the World Competitive Report for 2011/2012 that ranked South Africa 50 out of 142 countries.
Less than a year ago in responding to this report Productivity SA said, “South Africa is falling behind in terms of its competitiveness against other countries”.
The divide between rates paid by compliant and non-compliant companies will increase with the proposed increases by Sactwu. This will simply suffocate compliant companies, leading to their ultimate closure, or forcing them to migrate to Lesotho and Swaziland, which in turn will see an increased level of imports back into South Africa from these countries.
Instead of embarking on increases based on non-credible information, Kriel and his union should address the various challenges facing compliant and non-compliant companies. They should strive to find a new remuneration solution that will result in a sustainable co-existence between the sectors of the industry.