If I had a secret slush fund

Gareth Stokes, FAnews Online Editor

Over the past few days the media has come alive with rumours of a South African National Defence Force “secret” – until recently anyway – slush fund. Most mainstream newspapers reported that Finance Minister, Pravin Gordhan, exempted three years of expend

The word “secret” is a bit misleading because the SDA is common knowledge. It was established in 1974 by the dreaded Apartheid government and has been in use since. But “secret” is a good enough description for Joe Average, the long suffering South African taxpayer, who wants to know what he and other taxpayers got for their R86 billion and change. Given government’s recent expenditure track record it seems pointless to ask. And if we do, the answer will probably be biting and arrogant. We expect some minister will scold: “Who are you – the taxpayer – to know about this. It is critical to the security of South Africa. Do you not know what a ‘secret’ is?”

Introducing the prince of slush funds

The closest you and I will get to an answer is vague ledger entries such as “other procurement”, a useful tagline used to explain away R1.2 billion in 2008/9. The use of “secret” accounts is not reserved for defence expenditure only… And the phrase “other procurement” perfectly describes the R200 000 spent on building a wall around Police Minister Nathi Mthethwa’s private home. Auditor General Terence Nombembe found that Mthethwa’s wall was funded out of the crime intelligence services slush fund which we assume is administered with as much transparency as the SDA.

The crime intelligence unit seems to have perfected the “slush fund for personal benefit” technique. Writing for Media 24 Investigations Jacques Pauw and Adriaan Basson reported widely on the alleged (I loathe the word) antics of embattled and currently suspended crime intelligence boss Richard Mdluli. At the time (April 2010) some R5 million of the organisation’s “slush fund” had been diverted to employ seven members of Mdluli’s family and provide them with luxury vehicles. The seven were employed as secret agents...

Corporations have secrets too (think MTN and Iran) but due to stricter accountability standards the chief executives at these firms are more often guilty of using legitimate expenditures to create secrets and perpetuate myths. This legitimate expenditure is known as the marketing budget.

Money buys image, and defence

I encountered a fantastic example of subterfuge through marketing recently. Paper giant Sappi Limited is running an advertising campaign that suggests consumers should go ahead and print that email because they plant more trees each year than they chop up for paper… Although their argument makes sense it doesn’t sit well. Why should consumers use more of a globally scarce natural resource than absolutely necessary? State-owned electricity giant Eskom is in the same boat. The entity spends plenty of money trumpeting its ‘green’ initiatives despite having one of the highest carbon emission footprints in the world!

In the financial services sector South Africa’s direct insurers have spent billions of rand over the past decade perpetuating the myth that consumers are better off without financial advice. Their campaigns have toned down in recent years, but the damage is already done. Ordinary consumers are loathe to transact with brokers because they believe they are being taken for a ride by “fat cats”, “middle men” and “thieves’! The bottom line is that money – and that goes for slush fund money too – is an amazing camouflage. It allows villains to masquerade as heroes and terrorists to transform into saints.

Given enough money and time you can turn Saddam Hussein into Mother Theresa, or Gaddafi into a Florence Nightingale. And if you repeat a message enough times you can turn a crumbling institution into the picture of strength. Eskom is a case in point. The company has created a fantastic PR machine to respond to power outages and other allegations. It has also jacked up its auditing and accounting function to produce annual reports on par with the best firms in the private sector. Everyone believes Eskom is on track and ready to tackle any power distribution challenges.

Illusion or genuine efficiency

Is Eskom genuinely efficient – or have we been hoodwinked by clever marketing? Eskom has already lowered its satisfaction hurdle in the eyes of most consumers. Thanks to the 2008 “rolling blackout” debacle the utility company has benefited from thousands of column inches of positive press for doing nothing more than providing South Africa with a constant supply of electricity. Reality check people: Eskom exists to produce a consistent supply of electricity to the country, anything less and it is failing!

I have an uneasy feeling about Eskom. I get the sense the executive is flogging its production and distribution assets to keep the lights on… And I get the sense the company’s efficient public relations department; strong management team; impressive Website and award-winning 2012 Annual Report are hiding a shocking operational reality. Rumour has it that “on the ground” human resources controls are in a shambles and that the new build projects have been beset by costly and unnecessary delays and errors. The institution may get a life line when new power comes on stream late next year… But until then all we can do is hope that the status quo holds.

Editor’s thoughts: South Africa’s free press should be commended for keeping the public informed of the numerous questionable and corrupt activities at municipal, provincial and national government level. But it should also be criticised for its willingness to perpetuate myths for large private sector advertisers. Do the media have a duty to consider the truthfulness of advertising and advertorial content? Please add your comment below, or send it to gareth@fanews.co.za