Executive Mayor of Johannesburg, Parks Tau, joined Alec Hogg on CNBC Africa’s Power Lunch to discuss the arrest of 22 people for fraud, collusion and corruption. The arrests relate to over 100 cases of criminal activity that have defrauded the city’s coffers of up to R200m. The direct collusion is as far reaching as big business, and includes dirty-dealings between wayward city officials and businessmen. Parks and Alec have a frank discussion about the far-reaching corruption as well as the state of Johannesburg, its operations and service delivery. – LF
ALEC HOGG: Well, the Executive Mayor of Johannesburg, Parks Tau, has announced that 22 arrests have been made relating to over 100 cases of corruption, collusion, fraud, and tampering with the city systems that resulted in R200m worth of losses on the city’s revenue collections. He’s with us in the studio. Parks, it’s nice to have you here. As a resident, as a ratepayer, as a citizen of this world-class city…maybe…perhaps… Are we becoming world-class?
PARKS TAU: The City of Johannesburg is continuously improving the way in which it operates, in the way in which the organisation serves the people of Johannesburg, that we’re able to support business to ensure that infrastructure is available and supportive to enterprises, development, and prosperity. We will continue to attract…
ALEC HOGG: That’s a good politician’s answer. I was in Cape Town this week and I saw people working on the robots. I’m in Johannesburg every day and I don’t see people working on the robots.
PARKS TAU:Â People are.
ALEC HOGG:Â Get them visible.
PARKS TAU: In fact, we’ve increased the JRA’s capital budget from about R300m to more than R1bn in the past two years, so you’d be able to see the actual increased investment in infrastructure from the Johannesburg Roads Agency. The Johannesburg Roads Agency announced an app where you’re able to report potholes and traffic lights – literally online – and they’ll be able to respond. We’re getting very good reviews about how we deal with that. Of course, that’s dealing reactively with the problem that has built up over time. We’re now looking at an approach that says we need to recapitalise the infrastructure. We need to rebuild the infrastructure to ensure long-term reliability.
ALEC HOGG: Well, we have the Gautrain and now we have an app where we can report it – active citizens can get involved. You’ve been very involved in rooting out corruption. It’s something that one hears a lot about, but you’ve actually managed to finger some of the miscreants.
PARKS TAU: We’ve identified a few people – some of them were in the City’s employ – in our Revenue Department. Many of them are actually private citizens, private contractors to the City, and in fact, individuals out there who have colluded to defraud the City and the residents of Johannesburg. An amount is estimated at this stage to be standing at around R200m, and that’s in terms of the case we’re currently investigation.
ALEC HOGG:Â How did they get this?
PARKS TAU: What people do is they either go to individual repairs (and in this instance, this would be large power users), and entice them to change their meters into fraudulent meters. These meters would be installed as prepaid meters for large power users but in fact, the regulations do not allow for prepaid meters for large power users. This would bring it to our attention when you see the levels of consumption dropping significantly amongst certain property owners.
ALEC HOGG: So there’s absolute collusion here between some businesses that are using power, and the crooks.
PARKS TAU: There’s direct collusion. It involves members of staff. It involves contractors. It involves property managers and businesses that have been involved in an elaborate scheme to defraud the City.
ALEC HOGG:Â Name and shame.
PARKS TAU: Well, at this stage, we think we’ll deal with the individual arrests. As soon as we can say we’ve arrested many of the employees and contractors over the next two weeks… We anticipate the arrest of property managers, business owners and enterprises and at that point, I think it would be more appropriate to name and shame the individual companies involved.
ALEC HOGG:Â Any significant size businesses?
PARKS TAU: Well, at this stage you have certain investigations with some of the shopping centres – medium sized shopping centres – in Johannesburg. We have some of the large estates that are involved, both commercial as well as domestic estates.
ALEC HOGG:Â Good glory.
PARKS TAU: Really, it’s a scheme that’s been designed to defraud the residents of Johannesburg. In reality, those of us who are paying diligently are actually subsidising people who are using the energy freely (or at pretty much ten percent or 15 percent of what they should actually be paying).
ALEC HOGG: That R3bn, which is often quoted as the amount municipalities owe Eskom. Is any of it from Johannesburg?
PARKS TAU: Certainly not, Alec. The City of Johannesburg has been able to keep up to date with its requirements. All bulk service providers, from Eskom to Rand Water, are paid on a regular basis without any default from the City of Johannesburg.
ALEC HOGG: You have such great pockets of excellence within the Metro, but there are still pockets that are not that great. What are you doing about a process to make sure that you do manage a world-class city in the future? Is there a turnaround process? Are you halfway into it?
PARKS TAU: I can say we’re halfway into a number of things and initiatives that we’re undertaking. The first was about a competent financial strategy in the City of Johannesburg. We realised there would be a need (when we came into office in 2011) to invest about R100bn in capital infrastructure investment in the City of Johannesburg in order for the city to be competitive. In addition, the City would need to be able to meet its needs in terms of people who don’t have access to services, addressing backlogs of communities that have inadequate services, as well as replenishing our infrastructure that has aged over time. When we came in, our capital budget was standing at just about R3.6bn. We’ve been able to push it up to R10.4bn.
We estimate that our annual expenditure would be in excess of R10bn in capital investment per capita. This would be the highest capital investment program in the country for any sub-national government, including local and provincial governments.
ALEC HOGG: Well, I love living in a world-class city. We have pockets of world-class and with Parks Tau telling us what you told us today – a trebling of capital investment in a few years’ time – I’m sure, Johannesburg will stand back for no one in the future. Thank you for joining us on the program today. That was the Executive Mayor of Johannesburg, Parks Tau. Remember, you can email us on [email protected]. After the break, we’ll unpack Liberty’s results. More Power Lunch right after this.
