North West government must account for missing mining royalties
The veil of secrecy around the development funds of poor mining communities must be lifted
American novelist and social critic James Baldwin once said: “Not everything that is faced can be changed, but nothing can be changed until it is faced.” But what happens when that which must be faced is hidden beneath layers of bureaucratic agendas, politically motivated decisions and personal interests? Looting and corruption of the grandest scale, that’s what.
Since the dawn of democracy in SA, the mining sector has been driven by a transformative agenda with the objective of ensuring equitable access to and sustainable development of the nation’s mineral and petroleum resources. The current legal framework recognises that extractives are finite and that the industry must contribute to sustainable investment in the socioeconomic development of communities to ensure SA residents benefit from the extraction and use of these resources.
The dispensation of mining royalties — in the form of monies paid by mining companies directly to mine-affected communities — is one such area of the sector that looks to bridge the gap of economic inequality and social exclusion prevalent in mining communities and allow them to realise the benefits of activities taking place on their communal land.
Historically, the management and administration of these royalties has always had a great measure of government involvement, dating back to the infamous development accounts (or D-accounts) that have been overseen by the provincial government in the North West and the then Lebowa government, tasked with custodianship of the Lebowa Minerals Trust. The post-1994 government set out legislative prescripts that delineated the roles of provincial government, mining houses, traditional communities, traditional councils and royal family members in the administration of mining royalties.
Corruption Watch’s recent study into improving transparency and accountability in the management of mining royalties revealed various vulnerabilities in the system. We found that many of the aforementioned players are often complicit in the maladministration and misappropriation of mining royalties. This has left communities in a state of abject poverty, with very little, if any, development.
High on the list of vulnerabilities is the role of provincial government, particularly the North West government, in relation to D-accounts.
In the North West, all community revenue is to be paid into D-accounts administered by the premier and provincial government officials. By 1992, the North West government was custodian of about 947 D-accounts belonging to mining communities in the province. These accounts contained about R2.03bn of community money. To date, the provincial government has kept all records and flows of money relating to D-accounts under a thick and perplexing veil of secrecy. Communities do not know how much money is in their D-accounts, nor do they know how the money is spent.
Various investigations have regularly reported on the “missing millions”. In 2010, the Hendler commission estimated that R300m had been looted from the Bakwena ba Mogopa accounts. In her 2017 report, the public protector estimated that R600m was siphoned out of the Bapo ba Mogale community accounts and, in the same year, the Maluleke commission estimated that about R800m went missing from the Bakgatla ba Kgafela accounts.
The people of these traditional communities feel the full brunt of this state of affairs — living with extreme levels of poverty, unemployment, no development, lack of access to basic services and, importantly, the reality of the stolen millions they have never seen.
A systemic form of corruption and grand misappropriation of funds has been allowed to thrive for years as a result of the provincial government’s stance of withholding financial information from communities and non-disclosure to national oversight bodies.
The large-scale embezzlement of funds has resulted in grinding poverty in the midst of vast mineral wealth. In an interview, one community member likened their predicament to standing in a river and dying of thirst. Traditional communities are at a standstill, waiting for questions to be answered and processes of accountability to take place where needed.
However, the reality is that with the venomous culture of impunity that runs through the provincial government with regard to mining royalties and traditional affairs, communities may never get these answers. It is therefore the responsibility of national oversight bodies such as parliament’s standing committee on public accounts to seriously place this issue on their agenda and hold public officials to account.
The role of public officials in the administration of mining royalties is and will continue to be a significant impediment for mine-affected communities achieving the intended aims of mining policy — which is to ensure they are economically equipped to be genuine beneficiaries of and partners in the extractives industry.
• Masutha and Mutemwa-Tumbo are with Corruption Watch.