Get a grip on state companies
Late in 2016, the Cabinet approved a new framework for the governance of state-owned enterprises that aimed to bring more professionalism and integrity to the way in which the boards of directors were appointed and to ensure that the chairpersons and directors exercised their duties in a way that was best for our state-owned enterprises and for SA.
Details of the new framework have yet to be published but it was one of the reforms that was marketed as progress when the ratings agencies reviewed SA’s credit ratings in November and December. All three ratings agencies have expressed concerns about the financial situation of the state-owned enterprises — and the potential risks this poses to the fiscus — as well as about their questionable governance.
That the Cabinet had seemingly found some consensus on a new governance framework that had the potential to halt the political interference, cronyism and corruption that have plagued our state-owned enterprises was one of the factors that helped to persuade the ratings agencies not to downgrade SA’s credit rating to junk status — at least this time.
But SA cannot get away with promises forever without any discernible action. And events of recent months have done little to suggest that anyone in the Cabinet is serious about reforming the governance at state-owned enterprises to curb the political interference or to tackle the allegations of cronyism and corruption.
A new board was appointed at ailing South African Airways in 2016 and the Treasury is trying hard to fix the rot, but the airline’s controversial chairwoman, Dudu Myeni, friend of the president, seems as entrenched and destructive as ever.
Events at Eskom have raised more questions than ever about the chairman, board and management of the company, with disclosures in the Financial Mail of attempts to sanitise a 2014 report by law firm Dentons that laid bare some of the procurement and supply chain horrors that went on at Eskom. And now we have the Airports Company SA (Acsa), with reports that Transport Minister Dipuo Peters is seeking to oust four board members in a move seen as an attempt to shield CEO Bongani Maseko from being suspended and disciplined. The four board members were due to meet the minister to discuss a board resolution to suspend Maseko with immediate effect and to launch disciplinary action.
The background to this is a series of reports of alleged corruption in Acsa’s supply chain that have emerged in recent months. They have already led to the suspension of various management officials who were said to have been implicated.
The allegations of corruption remain just that and the dynamics at Acsa remain murky.
But while it may not be clear just what is going on at Acsa, or indeed at some of our other state-owned enterprises, the constant stream of damaging and disturbing reports about their procurement and supply chain practices and the question marks over the role of board members in tender decisions cannot possibly be good for those enterprises or for SA.
Our state-owned enterprises are responsible for hundreds of billions of rand of public procurement spending and wield huge power in the market. There is plenty of potential for corruption in those supply chains and it is crucial that these enterprises have boards of directors and chairpersons whose ethics are beyond reproach and who have the experience and integrity to prevent even the suggestion that procurement decisions are being used to enrich a favoured few.
SA urgently needs reform of state-owned enterprises, not only to persuade ratings agencies but to prevent damage to its economy.
SA CANNOT GET AWAY WITH PROMISES WITHOUT ANY DISCERNIBLE ACTION