SABS needs to restore institutional integrity and good corporate governance

THE SA BUREAU of Standards (SABS) is bleeding customers and potential revenue.

It has lost 1 052 customers since its 2015/16 financial year, including 401 customers since April this year, resulting in a loss of revenue to the bureau of almost R50 million in this period. In addition, the SABS had to refund 41 customers a total of R1.03m.

It also requires an investment of R1.6 billion to upgrade its current laboratories’ infrastructure and testing areas to enable full testing to be conducted at every laboratory.

This investment estimate was based on a laboratory equipment analysis report completed by SABS management that listed details of equipment that was 10 years and older, in each business unit, that needed to be replaced.

The analysis confirmed “the equipment profile throughout the SABS laboratories are on average well beyond the useful lifespan recommended for OEMs (original equipment manufacturers)”.

This was confirmed by trade and industry minister Rob Davies in a written parliamentary reply to questions posed by Dean Macpherson, the DA’s spokesperson for Trade and Industry.

The DA’s questions stemmed from the SABS irregularly certifying substandard coal by Gupta-linked mines to facilitate the suspension imposed by Eskom on another supplier to pave the way for the Guptaowned Tegeta contract to go ahead.

The SABS last year reported a R44.3m loss for its 2016/17 financial year and received widespread criticism from many industries about the level of service these industries were receiving from the bureau.

Macpherson said the drop in quality and standards offered by the SABS not only posed risks to consumers on product quality, but created barriers for business attempting to gain local and international market access with an absence of world class verification.

Davies said the peak in customer losses was in the SABS’ 2016/17 financial year and due to customers cancelling their permits and certificates with it.

The reasons for the cancellations included the suspension of SABS certification programmes by the SA National Accreditation System, the only national body responsible for carrying out accreditations for conformity assessment; customers moving to competitors; and expired certificates and/ or permits.

Davies also confirmed the SABS Mark, a voluntary product permit and revenue generator for the SABS, had fallen into disarray. He said a project was implemented from May last year to address the 2 600 expired SABS Mark permits.

Davies recently gave instructions to the SABS board to urgently oversee a detailed process to develop a turnaround strategy for the SABS.

However, Macpherson said any attempt to turn around the fortunes of the SABS must start with the removal of the current board and the placement of the bureau under administration, because it had proven that it was unable to restore institutional integrity and good corporate governance at the institution.

Business Report last year published a report about the SA Paint Manufacturing Association, criticising SABS and stressing that the SABS quality approval mark was essential for any government contract.

Two members of the executive committee of the SABS left their positions, according to an internal SABS email, following the publication of the article.