The irregularities surrounding contracts entered into by the Gauteng Motorsport Company were not enough to warrant a forensic probe, Gauteng economic development minister Firoz Cachalia said on Wednesday.
”Without the facts before me to suggest these contracts are tainted by corrupt conduct. I will not go on a fishing expedition,” he said at a media briefing in Johannesburg.
This followed a Democratic Alliance briefing on Tuesday in which the party’s spokesperson on corruption, Jack Bloom highlighted what he described as a number of irregularities in deals made by the Gauteng Motorsport Company (GMSC).
Cachalia said that if the DA placed facts before him which indicated corruption, he would act on them.
He conceded that the department had not complied with Section 51 (1)(g) of the Public Financial Management Act (PFMA) in setting up the Gauteng Motorsport Company, in that it had not sought the necessary approval from the Treasury on time.
”Permission should have been sought beforehand … compliance with the PFMA was not adequate.”
He also conceded there was a failure to obtain exchange control clearance from the South African Reserve Bank.
The Gauteng Motorsport Company would continue to manage contracts on the A1 GP, the SBK World Superbike Championships and SuperStars.
However, he said the legislature would no longer proceed with hosting the Formula One, as he had previously announced. He said he did not believe a project such as the F1 could be undertaken by a provincial government acting on its own.
He added that a complete review of all the existing motorsport contracts would be done to show how these multimillion-rand deals would benefit the broader Gauteng community.
Originally, the three contracts combined cost R137-million a year. After some work was done, this was revised downwards to R117-million.
”I have asked the CEO of Blue IQ and the GMSC to go back and apply their minds about how to ensure in practical terms how these contracts are going to speak to the poorest of the poor.”
Cachalia said it could not yet be determined whether these costs were justified. The value of the contracts to the province would only emerge in time.
The motorsport projects were being ”reprioritised and rationalised” to align them with the new electoral mandate and the immediate priorities of the African National Congress.
This review process was also a response to the effects of the global financial crisis on the province, he said.
GMSC chief executive officer Stephen Watson said he believed the positive net effect on the Gauteng economy would range from R1,8-billion to R2-billion.
”If you look at that across the cost of the events, its easily a four-to-one return.”
The DA alleged that the use of ”a mysterious local company called Nightsbridge Investments” — contracted to assist with management and consultancy services — went against the PFMA.
However, Cachalia said the department had contracted the company to ”assist in securing rights to host international motorsport events and to advise on all subsequent operational and competition obligations set out in the rights agreements”.
”Since establishing [Gauteng provincial government’s] own capacity with GMSC, the Nightsbridge agreement has been renegotiated,” he said.
Cachalia said it was common practice to outsource expertise to private companies and Nightsbridge had the contacts and experience.
In response to Cachalia’s explanation, Bloom — who was present at the briefing — said there was not enough accountability.
”Clearly, massive mistakes were made and the MEC [provincial minister] is still re-negotiating these contracts. I’m very disappointed there is no accountability whatsoever. Nobody is being disciplined and I think we still need more details to come out.
”Really, I think there has been a lot of waste of public money,” he said. – Sapa