Coega project tends to ignore state's commitment to parliamentary oversight

THE Coega project, a grand plan to build an industrial development zone 20km from Port Elizabeth, has seen a flurry of activity in the past months.

Half the land for the proposed site has been acquired, residents have been removed, an international partner has been picked to help develop infrastructure, various contractors have been appointed, and an aggressive marketing campaign has been initiated.

All these activities are being conducted by a private company, the Coega Development Corporation (CDC), with the blessing of the executive arm of national and provincial government. All of the costs incurred are being met out of taxpayers' money.

What is quite remarkable about this arrangement is that the CDC has neither a constitutional nor legal mandate to conduct these activities or to represent itself as an industrial development zone operator. In terms of regulations for such zones, the CDC requires an operator's permit before it can even market the zone. It openly acknowledged last week that it has no permit.

Of course, however, CDC's response to its detractors will be that it was constituted by the trade and industry department, and that it is wholly owned by government. Its spin doctors will also attempt to assure the public that there is no conflict of interest in it acting as a zone operator without a legal permit.

Yet this response calls the entire purpose of regulating the establishment of these zones in SA into question. It also calls into question government's commitment to acting within the law, under the oversight of Parliament.

As the collapse of the Zimbabwean economy and society aptly show, consistent application of the law with equal force to citizens, government officials and cabinet ministers is a vital requirement for democratic order and sustained economic growth. In the case of the Coega project, two extremely disturbing precedents have been set by government which threaten the integrity of SA's constitutional order.

Firstly, the policy aims originally informing the proposed creation of the Coega zone have been subverted. Secondly, the oversight mechanisms of Parliament by which the CDC could be held to account for its use of public funds have been effectively bypassed.

In the first case, the policy aim of government's Spatial Development Initiative programme was to "encourage private sector involvement in the provision of infrastructure in areas of greatest need". Such initiatives were to be primarily private sector-financed, "with minimal government involvement".

Starting in 1998, the public was also assured the Coega zone's feasibility was beyond question because of a guaranteed investment inflow to Eastern Cape and to Coega as a result of SA's multibillion rand arms procurement deal and its offset accords. The deal's negotiators , including Jayendra Naidoo and Navan Pillay, sought to convince the public its R30bn cost was in their best interests.

Two years down the line, the arms deal has been signed and government has parted with considerable sums of taxpayers' money. Yet not a cent of private investment has been secured for Coega nor has the deal led to the creation of a single job at Coega.

Despite its failure to attract any firm commitment for private investment in the zone and harbour, in line with initiative policy, the CDC has been particularly successful in attracting public funding for the project.

It has managed to convince Transnet to foot the bill to develop the deep-water port which will form the hub of the zone. Transnet subsidiary Portnet will now build the harbour and infrastructure without which the zone cannot proceed. So, as things stand, the taxpayer would seem to be sole financier for the project. The CDC is a private firm, but will not risk a cent of private capital on the project.

Disturbing as this is, of far greater concern is the executive arm of government's effective bypassing of parliamentary oversight by setting up the CDC as a private firm supposedly tasked with implementing public policy.

Requests made by civil society groupings to government and the CDC for information on its channels of accountability, sources of funding and details of how it has spent taxpayers' money in the form of contracts it has awarded have fallen on deaf ears.

Yet what makes the CDC's dismissal of requests for information more disturbing is the realisation that the constitutional oversight bodies of Parliament have no guarantee of being treated any differently.

While the CDC might claim to be faithful and accountable to the executive, it has no obligation to account to Parliament and justify its activities in line with public policy. This development could signal the onset of the executive arm of government pursuing its own private policies albeit in the name of public interest. This, if unchecked, might see Parliament divested of its powers of oversight and reduced to an empty shell.

Allan is director of the Public Service Accountability Monitor at Rhodes University.  

With acknowledgment to Colm Allan and Business Day.