Special Hearings — Business Hearings — 1997-11-13

CHAIRPERSON: Thank you, Dr Goldman.

BONGANI FINCA: Mr Golden, I hear from your submission that you are in fact part of the new face of DBSA so you will not be able to assist with the problem of what happened in the past which we are dealing with in this hearing.
 I will ask just a few general questions, but before I do, could I perhaps just comment you for the manner in which you have taken a position where you feel you must apologise for things that you were yourself not responsible for.
 When there are people in this country who were directly responsible and do not feel so moved, we comment you for that.
 I don't know whether you've seen the submission which had been made by a certain Mondesemema to the TRC.  He is a former financial specialist of the DBSA.  In that submission he makes very serious allegations of gross corruption which he says happened in the DBSA. 
 Will you care to comment on that and to just - we will make our own decision, but just to give us an indication whether you'd consider that this is a matter that is worth being taken seriously by the Commission and being referred to the President for enquiry if it's necessary?

DR GOLDMAN: Thank you, Chairperson.  I will to the best of our understanding from looking at the evidence respond to the question.  I have not seen the submission by Mr Mondesemema, but I am aware from other documents which I've seen which he showed to me after my arrival at the bank;  I believe of the general issues that are of concern to him.
 If I'm correct, he's main concern is concerning this so-called inside story, particularly in the period 1994 to 1995 and I'm not sure if that is what is being referred to in the documents referring to.
 From what I, in my personal assessment have been able to ascertain, there were certain individuals in the bank, as I've indicated including on the board and in management, who might have said some things which I certainly would strongly disagreed with about the RDP.
 I have not been able to follow up with the person on the board.  He has not responded to any of my attempts to contact him and has long since left the bank and the board.
 The staff - the managers concerned and other staff concerned I have spoken to about the allegations and their view is that they were taken out of context.  I do believe that it is inevitable in an institution where a large number of staff certainly did support the Apartheid system, that one would not expect the staff to change over night, their spots, however they might declare it.
 I firmly believe that from 1994 the institution have been in line with the RDP.  I have spoken about this matter.  Also with the Minister of RDP, Jay Naidoo, and he has indicated that he did not consider the bank to be undermining the RDP in a significant way, although he was aware that certain individuals might have been attempting to do so.
 As to corruption, I have not become aware in any of the evidence that I have looked at of gross corruption within the bank.  We have an internal audit function, we have risk management committees and as far as I'm - and of course it has always been externally audited by external auditors.  
 As far as I'm aware there's never been an uncovering of gross corruption.  I am aware of course that the homelands were grossly corrupt and therefore we were lending to grossly corrupt institutions.  How one tallies these two different things, I cannot say, but as far as I'm aware within the institution itself, our control structures, our audit trails and so on have been in order over this time and that there's been no significant gross corruption as far as I'm aware.

BONGANI FINCA: Thank you, Mr Golden.  The second question is directly linked to your comments about the homelands.  It is not clear to some of us the - how the relationship is structured between DBSA and its manifestations in the homelands.
 I know that in Transkei they used to be TDC.  Was there a direct relationship with DBSA?  Is there a level of accountability for - in DBSA for what happened in those Bantu (indistinct) manifestations.

MR GOLDEN: Thank you, Chair.  I believe there was a very direct relationship at a number of levels.  At a financial level the DBSA was a major funder of the homelands.  Sometimes the tap was turned off and sometimes it was turned on and that of course is something we'd like to understand much better as well.  How that related to political pressures and so on.
 There was also as I've indicated, a very strong policy dimension where the bank staff provided policy advice to the homeland governments or to sub-structures within the homeland governments like the development corporations that were established.
 So, I believe that both at the economic level and at the policy level, there were very strong connections.  I don't know if you'd like me to elaborate on this, Chair?

BONGANI FINCA: Not really.  I think that's sufficient.
On page 17 of your main submission, paragraph five, you deal with the funding of projects and you say at times which the leadership of the time says were the exception, not the rule, the DBAS implemented development projects and programmes for political reasons.
 In the perception of a number of people it will be the opposite.  It will be - it appears to us to have been the rule rather than the exception that the DBSA was politically motivated in its funding.  Again going back to Bantu (indistinct) area where I come from, it seemed to be the order of the day that those who were aligned to the Government, those who supported Bantu stand authorities, those who were related, those who were friends, those who were girl friends, those who were vocal in support of (indistinct), qualified for loans and those who were in opposition, most of the time failed to qualify.
 Is it true that this was an exception rather than the rule?

MR GOLDEN: Chair, I do not say this was the exception and not the rule.  This was the views of those that I interviewed.
 As I've tried to indicate, the whole framework of the DBSA and perhaps each and every project must be viewed in the political context and it would be difficult, I believe, to find any projects which would have taken place outside the homeland system or the homeland structures.
 I believe the institution and all its activities were framed by the political context and particularly the support for the homelands.  However, it is also true that there is, for example, an operational manual and I did read the article of agreement which specifically indicates that there should not be direct political motivation in the choice of projects.
 I think this is the sort of Alice in Wonderland situation which we see in so much of the Apartheid system;  that the system is totally framed politically and is a abuse of human rights, but within it people are trying to operate or said they're trying to operate in what they considered to be rational ways and even in the case of the DBSA they said they were applying those practise and believed it in many cases I think.
 So it is a contradiction.  I believe that the projects were all politically motivated myself in a broad sense, because they supported a political motivated system.  So, I also do know that the choice of projects of course because there was no democracy was not democratically constituted and determined by those that there were meant to be the recipients.  
 So, clearly the leadership of the homelands, the officials who had to sign off on these projects and in the end the Goverment's had to guarantee them, I believe, would have made the key decisions.