SOE boards need to behave impeccably
PETER BRUCE
Sometimes corruption in government in SA is so blatant it is almost impossible to comprehend. In Nelson Mandela Bay recently, opposition parties combined to oust mayor Athol Trollip. The very next day, city officials came under pressure from the new “administration” to furnish the new mayoral committee with details of all tenders currently under negotiation and to make no decisions on them until further instructed.
When city manager Johann Mettler instructed officials to ignore the instruction, he was first put on a precautionary suspension. Then the new mayor tried to have him charged for fraud. Then the Hawks declined to prosecute, saying there was no case. At the time of writing, the new mayor was going to suspend him anyway and pursue the charges.
It’s a typical South African story. Mettler is in the way of the new council executive eating. But the saga is still a cautionary tale because as President Cyril Ramaphosa pushes his fight-back against corruption in the public sector, it is vital that new state-owned enterprise (SOE) boards change the way they behave.
The conspiracy between the Zuma presidency and the Gupta family was built around twisting procurement and tendering — to such an extent that not only were Zupta-era SOE executives appointed to grease the wheels of the state-capture plan, but the boards themselves became activist thieves.
The boards at Eskom, Transnet and Denel had procurement committees. Why? Boards in real companies don’t have subcommittees like this. They were there to facilitate graft. Those sub-committees have to go, if they haven’t already. They obliterate every Chinese Wall imaginable. New boards have to be exemplary in everything they do in the faint hope they might be able to set an example that sticks.
Even public enterprises minister Pravin Gordhan, one of SA’s greatest public servants, needs to tread carefully. Every word he utters, no matter what his mood, needs to be impeccable. He cannot lose his temper and threaten people as he is being reported to have done at Transnet.
Basically, if you don’t want to see something you do in the news, don’t do it. This is easy life advice I often give to public figures but which, I confess, is hard to stick to. But try anyway.
Here’s a case in point. Gordhan appointed a new board at Transnet in May. Transnet had been cruelly savaged by the Zuptas and shoulders there were sagging.
One of its divisions, Transnet Engineering (TE), makes rolling stock. Recently Botswana said it wanted to acquire soda mineral powder hopper cars for its railways. TE wished to tender for the contract. To do so, the government in Gaborone wanted to know what Transnet was and who, pray, made up its board of directors.
Such is the slog of procurement. But it fell to someone in Transnet Corporate to ask a small favour of the members of the board: “Dear Board Member,” began an e-mail to the board and senior executives on July 5. “We trust that you are well. Transnet Engineering is responding to a tender issued by Botswana Railways for the provision of Soda Mineral Powder Hopper Car. We kindly request that you give permission to the group company secretary to certify a copy of your identity document that we have on file, for onward transmission to TE to respond to the above-mentioned tender. Thanking you in advance.”
Nothing wrong with that. Paperwork. But, in my humble opinion, what happened a few hours later crossed a line. One of the new nonexecutive directors replied, copying in all the recipients: “Good morning,” she wrote. “Thank you for the e-mail and insight into new work. I appreciate the great work TE is putting in, and I would keenly support the request. Please just give us the following FIRST: 1. Summary of the tender docs 2. What are we supplying? (Is it just hopper trucks or finance and/or maintenance/lease agreements, etc.) 3. Who are our likely competitors? 4. What partners does TE require to deliver? 5. We are faced with serious challenges of the 1,064 locomotives deal in SA presently, in TE’s view, how could this bid impact on Transnet from that angle? 6. Have we done a preliminary analysis of other benefits to SA economy [with regards to] localisation, job creation, etc. Please appraise the board as such for all similar new work so we consent to something we understand. Kind regards, …..”
I have no experience sitting on boards but I always thought directors didn’t interfere with management and, certainly, in our environment why would a director want to know the details of a tender? I am pretty sure the director meant nothing underhand with the note, but given the abuse of tenders by the previous Transnet board, the optics are obviously not good.
Let us all try to be impeccable all the time. And when we fail, as we will, it’ll be the exception and not the norm.
LET US ALL TRY TO BE IMPECCABLE ALL THE TIME. AND WHEN WE FAIL, AS WE WILL, IT’LL BE THE EXCEPTION AND NOT THE NORM
Bruce is a former editor of Business Day and the Financial Mail