Govt departments ‘underestimated’ costs to gain treasury’s approval – Fuzile

During his continued testimony at the first day of proceedings at the Zondo commission of inquiry into state capture this week, former treasury director general Lungisa Fuzile alleged that government departments would often purposefully underestimate the costs of projects in order to get budget approval from national treasury.

He used the Gauteng government’s Gautrain pitch as an example – it was estimated at R7 billion but really cost R25 billion.

Fuzile says the Gov departments would at times underestimate the costs to get approval from national treasury. He made example with Gauteng gov with the pitch of Gautrain – It was estimated at R 7 Billion, but the real cost was around R25 billion. #StateCaptureInquiry

— State Capture Commission (@StateCaptureCom) February 18, 2019

Fuzile called this practice “budget gaming” and said it happened on a regular basis.

Fuzile talks about “Budget gaming” – how govt departments understate costs to get approval. Department of Energy understated cost of nuclear deal by 40%. He says Gauteng government pitched the Gautrain at R7billion, when the real cost was around R25billion. #StateCaptureInquiry

— Ranjeni Munusamy (@RanjeniM) February 18, 2019

“Having worked with budgets for many years, I do know that people know that when you want approval for something you don’t say ‘it’s very expensive’,” said Fuzile.

This was revealed during the part of his testimony focused on a meeting where treasury and other stakeholders met with then-president Jacob Zuma in December 2015 to discuss the nuclear deal.

According to Fuzile, former finance minister Nhlanhla Nene raised concerns over the nuclear deal.

Fuzile says Mr Nene (Finance Minister at the time) had a concern with the cost of nuclear deal. #StateCaptureInquiry

— State Capture Commission (@StateCaptureCom) February 18, 2019

Based on the information he had access to, Fuzile testified that he was of the opinion that had the deal gone through, the country would have been in trouble.

“This was the biggest procurement ever in the history of the country, yet the processes were rushed … In my humble opinion, if nuclear had proceeded … actually, this country would have been in trouble,” said Fuzile.

#StateCaptureInquiry Fuzile says the Energy Department officials projected the costs of the nuclear deal based on a rand/dollar exchange of R10. Treasury had raised issues with this prior to the meeting, and it had seemed the Energy Dept had accepted this.

— POWER987News (@POWER987News) February 18, 2019

Fuzile says he registered his objection on the approached taken by the dept of Energy. He says President then looked at him and said,"in other countries finance minster do not tell the president that there is no money, they take the instruction."#StateCaptureInquiry

— State Capture Commission (@StateCaptureCom) February 18, 2019

Fuzile says the President further told him 'you and your former minister(Gordhan) stopped the Engen PetroSA deal'. Later that evening Minister Nene was removed and replaced with Van Rooyen.#StateCaptureInquiry

— State Capture Commission (@StateCaptureCom) February 18, 2019

Fuzile’s testimony continues at the state capture commission, with questioning being led by Advocate Vincent Maleka.

ALSO READ: Tariffs would have had to increase to service debt caused by nuclear deal – Fuzile

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