Rein in SOEs for poor admin
Frustration at failure to find solutions
THE acting director-general in the National Treasury, Ismail Momoniat, has expressed his frustrations at the continuous bail-outs made to SAA over the years.
Addressing the parliamentary standing committee on appropriations, Momoniat said there was a need for a mechanism to place failing state-owned enterprises and national departments under administration.
“It is extremely frustrating when an entity keeps coming again and again, and the problem is not solved,” he said.
The committee heard that SAA had been bailed out on several occasions by the government, from as far back as 2001.
The national carrier has suffered significant losses over the years, and this year has not been different, as National Treasury came to its rescue when it allocated a R10 billion guarantee in the adjustment budget.
R5.2 billion had already been paid out to offset its debts to banks, and a further R4.8bn would be paid out between December and March next year, when SAA met certain conditions.
These included implementing a five-year turnaround plan, addressing findings of forensic investigations, identifying non-core assets for disposal, and a framework for commencement and cessation of routes, among others.
Briefing the committee, Momoniat, who is acting in the position of Dondo Mogajane who is on an overseas trip, said it was important to look at why SAA had asked for bailouts.
He stated that a request for a government guarantee was a signal that there was a problem at a public entity.
This required the requests for guarantees to be closely scrutinised and public hearings held by Parliament.
“These guarantees are coming to haunt us when you see the reckless behaviour taking place,” Momoniat said.
He also said there was a need for people serving on the boards to understand their fiduciary duties, and for mechanisms to deal with failing entities and departments, just as was the case in local government.
“When people are corrupt, how do you deal with that? If an entity fails, how do you put it under administration... Those mechanisms need to be developed,” said Momoniat, who has been instrumental in formulating key finance-related legislation.
He also said internal audit bodies at the public entities needed to be looked into.
“What the heck do they do? When did they pick up the problems?” Momoniat asked when referring to identification of problems at public entities.
The DA’s Alan McLoughlin said the alarm bells at SAA should have rung a long time ago, had its performance been looked into. He questioned why the warning signals were not picked up much earlier in the latest episode. “They knew that the loans were payable,” McLoughlin said.
The ANC’s Ndabakayise Gcwabaza also wanted to know when SAA became aware it was due to make payments to the banks.
“It would be inconceivable that the institution was suddenly surprised by the lenders. It does not happen like that, otherwise its shows irresponsibility on the part of management of those institutions,” Gcwabaza said.
Momoniat said the challenge facing public entities was the need for them to operate on a business model.
Momoniat said the decision to bail out SAA was taken within the prescripts of law, but it opened the National Treasury to “moral hazards”.