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Theft of infrastructure at SOEs has reached pandemic levels

IT would be counter- productive to prevent the export of scrap metal collected and traded by honest diligent people to punish the thieves, says the author. Picture: Supplied.

IT would be counter- productive to prevent the export of scrap metal collected and traded by honest diligent people to punish the thieves, says the author. Picture: Supplied.

Published May 16, 2022

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MINISTER of State Enterprises Pravin Gordhan stated during an economics cluster question-and-answer session in Parliament earlier this month: “It is my firm view that the export of scrap must be banned for a while. That will ensure that there is no market externally for the theft of infrastructure.”

These words bring little comfort and do not inspire any faith that things will change. This approach to the problem originated on November 28, 2014. New export regulations came into effect on September 16, 2014.

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The Metal Recyclers Association of South Africa (MRA) opposed the new regulations, imposed by Ebrahim Patel and SA’s International Trade Administration Commission (Itac).

It was also supported by the National Union of Metalworkers of South Africa, the then trade and industry minister Rob Davies, and the then water and environmental affairs minister Edna Molewa.

Patel said: "I appeal to all role-players to use the new framework to rebuild the steel manufacturing industry, including the foundry sector, create more jobs and strengthen the government’s R1-trillion national infrastructure build programme.“

He was referring to the first phase of the government’s R4 trillion public infrastructure roll-out plan for the next 15 years.

"The government had an obligation to make policy interventions to reverse the decline in the local foundry and scrap-processing sector which resulted in more than 10 000 job losses,"

Fast forward to 2022 and the situation has escalated out of control, despite the discount offered to South African buyers that was raised to 30 percent before an export permit can be obtained.

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To make an appeal to all role players is well short of decisive action. What we need is proper consequence management. This can be achieved by jailing people stealing from the state. Such action should be considered treason against the state and its people. Treason is defined as “a crime of attacking a state authority to which one owes allegiance”. Weakening state infrastructure is tantamount to bringing the government down.

Raymond Suttner, in an article in Daily Maverick on May 4, made a plea, which I fully endorse although from a different starting point: “The notion of treason must be rethought in our discourse if not yet possible in law. In the current context, it must include acting systematically, violently, illegally and unconstitutionally against the people of South Africa. A person or groups of people in organised form who do that, especially against the poor and vulnerable, for whom this new state was created, are performing an act of treason. And one may add that it is an especially grave form of treason.”

Oscar van Heerden completed his PhD and master’s studies at the University of Cambridge (UK). His undergraduate studies were at Turfloop and Wits. He is currently a deputy vice-chancellor at Fort Hare University and says the following.

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“Now, when one sets out to defraud the state and engage in corrupt practices to defraud the state, this is treason. When you incite persons in the executive arm of government to rebel against the authority of the state, such as when you engage in illegal tender allocation and/or stealing from the police, Eskom, SAA, Transnet and so on, these are treasonous acts,” Van Heerden said.

Itac is a schedule 3A public entity established in terms of the International Trade Administration Act, No. 71 of 2002, and came into force on June 1, 2003. Itac replaced its predecessor, the Board of Tariffs and Trade (BTT), which was established in 1986.

Itac states: “This requires promotion of increased value addition into non-traditional tradeable goods that compete in export markets as well as against imports. High value-added goods, besides operating in dynamic high-growth markets, are also more labour intensive. The New Growth Path (NGP) identifies manufacturing as one of the employment drivers."

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Itac adopted a strategic use of international trade instruments in its alignment to prevailing trade and industrial policy imperatives. Itac executes its mandate within a set policy framework. The NGP, in setting out the trade policy trajectory, places employment at the centre of economic policy and calls for developmental trade policies.

Out of the approximately 6 650 tariff lines in the South African version of the International Harmonised Commodity Description and Coding System, there are 276 tariff lines under import control and 177 tariff lines under export control.

Patel had issued a policy directive on scrap metal exports in May in 2016 and followed by Itac’s announcement in August of new export permit guidelines. In terms of the guidelines, exporters of scrap metal had to first offer domestic foundries, mini-mills and secondary smelters scrap metal at a price discounted by 20 percent to international prices, before qualifying for an export permit.

This was intended to improve the security of supply of affordable and quality scrap metal feedstock to the local metal industry, meet carbon emission targets, and support the public infrastructure plan, which relies on large steel procurements

Sometimes certain policy decisions can have unintended consequences. The man in the picture displayed with this article is homeless and unemployed. He does sweep chores at a garage, and they allow him to sleep outside on the premises.

He collects scrap metal from discarded old spares from the garage workshop and then sets off on a 10 kilometre walk with his trolley to exchange the metal collected for a few rand to buy food. It would be counter productive to prevent the export of scrap metal collected and traded by honest diligent people to punish the thieves.

What would be more appropriate would be to police the purchase of scrap metal properly at the scrap yards and ensure harsh sentences for buyers of government infrastructure scrap metal such as railway infrastructure and cables belonging to Eskom, Transnet and Telkom. Sellers of scrap must provide proof of origin, and payments must be made into legitimate bank accounts for traceability.

With reputational risk so important for banks, I am convinced Standard Bank employees would prefer making their sales target legally and in terms of bank policy (30 employees were fired and a further 67 are being investigated for creating ghost accounts).

News 24 reported on May 11: “The Bethulie Regional Court has sentenced three men to 30 years' imprisonment each for damaging infrastructure as well as theft. Patrick Chirambandare, 34, Washington Khoza, 32, and Cliff Hove, 28, were sentenced to 15 years each for tampering with a Vodacom tower near Springfontein, and an additional 15 years for stealing 12 Narada batteries valued at R78 000 belonging to Vodacom.”

This is the appropriate way to deal with the infrastructure destruction under the watch of our current ministers in charge of these portfolios. Get people in jail with harsh sentences when caught stealing or dealing in stolen goods that belonged to government SOE’s.

Now, Minister Fikile Mbalula, currently minister of transport, is calling on jail sentences for 15 years for scrap metal dealers. The problem with calls and statements like this is that it sounds familiar and hollow. Mbalula was minister of police in the cabinet of Jacob Zuma in May 2009, and later became the minister of sport and recreation after then president Jacob Zuma changed his cabinet.

On March 31, 2017, following a controversial reshuffling in the cabinet, Mbalula was appointed as minister of police, taking over from Nathi Nhleko. He has been in his current position as minister of transport since In May 2019, when President Cyril Ramaphosa appointed Mbalula to the post, succeeding Blade Nzimande. What has he done in 13 years to protect state assets over which he had authority?

Any theft from the government hurts the poor the most and should be considered as treason against the government.

Corrie Kruger is an independent analyst.

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