VINOTHAN NAIDOO: Treasury’s strong spine averted attempts at takeover

The Zondo commission reports have given us a window into attempts to commandeer the Treasury to financially enable the capture of state-owned enterprises. 

The fourth part of the report exposed how the capture project targeted institutions in the core bureaucracy (cabinet departments), which regulate and oversee the vast network of public enterprises and entities in the state.

The focus on the Treasury is a reflection on the role of ministries of finance as the designated “first among equals” in cabinet; the holder of the purse strings. It is the entity to which other departments must appeal for budgetary allocations.

In the eyes of many South Africans the Treasury has largely remained a bastion of stability, prudence and integrity, despite the significant political pressure it sustained during the Jacob Zuma presidency.

Yet the Treasury’s reputation for advocating fiscal discipline over the years has not shielded it from criticism, including from political formations and organised labour, which have pressed for a more expansionary fiscal policy. The significance of these criticisms is that they were grounded in policy differences, not in brazen attempts to internally orchestrate the misdirection of funds on a mass scale.

The story of the Treasury’s role in state capture has clearly highlighted the institution’s resilience in the face of considerable political pressure. But what can we attribute this to, and is there any reason to believe the Treasury possesses unique institutional qualities?

I recently completed a study of the internal structural characteristics of a sample of national departments, which included the Treasury. The study evaluated changes in internal departmental structures or units between 2009 and 2021. How a department internally organises itself is somewhat akin to how architects plan the internal design of a house; there is room for choice and for different configurations to satisfy the liveability preferences of its occupants.

In the case of a government department, design choices can have a profound effect on operational and financial efficiencies, internal oversight and accountability processes and communication flows, which can improve or undermine its work. My study observed that the Treasury exhibited some unique structural properties that might partly explain its resilience in the face of attempted capture.

A key tactic for trying to capture the Treasury was appointing and reshuffling into the job ministers who could be relied on to approve dubious transactions. The Treasury experienced no fewer than six ministerial changes between 2009/2010 and 2018/2019, which includes the first year of Cyril Ramaphosa’s administration. This was the most among the sample of departments I looked at, and included ministerial changes every year between 2014 and 2019.

One possible motive behind leadership change is to facilitate structural reorganisation from the top, to remould an organisation and make it more pliable to implement executive decisions. When I compared the years in which a department changed ministers with the number of structural changes it experienced in that year I found that ministerial changes by and large did not coincide with or trigger a large number of internal structural changes. Though this was not unique to the Treasury, its relatively larger number of ministerial changes shows that its administration was able to maintain remarkable organisational stability in the midst of significant executive volatility.

The organisational stability of the Treasury was also visible in other ways. The department had the largest number of units when compared with others in the sample. It has a relatively large and dispersed configuration of structures compared with other departments that perform a mainly policy-making, oversight and regulatory function. This is probably due to its broad financial governance oversight and fiscal policy mandate.

In fact, the Treasury’s internal structure is similar to the expansive shape of the department of home affairs, which unlike the Treasury has a more delivery-intensive function that requires the management of a complex on-the-ground network of service centres.

But this is where the similarity with home affairs ends, because though it is not a small operation by any means, the Treasury also displayed a relatively robust and more centrally co-ordinated strategic core, with the fewest large structural changes occurring in the period when compared with similarly configured departments.

In other words, the structural spine of the Treasury, which is defined by how it organises its strategic priorities, seems to have been able to weather the onslaught of predatory pressures remarkably well. This includes thwarting what the Zondo commission described as pressure to move the budget planning process to the presidency, which would have resulted in the disbandment of a key strategic unit within the Treasury.

Fortunately, the various political machinations at the executive level to embroil the Treasury in nefarious dealings were never able to penetrate its structural foundation. For that we should be enormously grateful.

• Naidoo is associate professor of public policy & administration at the University of Cape Town.