How to save our SOES billions

The tax-paying public should be told about consultants

At the risk of creating fee income opportunities for an as yet unidentified category of consultancy work it might be time to start demanding disclosure of what it is the armies of consultants are doing in our economy, and what it’s costing us.

They are almost everywhere, except in the small, privately owned companies that do so much of the work to keep the wheels of our economy turning. Consultants soak up hundreds of millions of rand from large listed companies and billions from state-owned entities.

Just as you again thought it impossible to feel more outrage over the Gupta-related goings-on, out comes news of yet another layer of consultants at Eskom. Oliver Wyman is a management consultancy headquartered in New York that Anoj Singh, Eskom’s chief financial officer, engaged to see if there was any value from payments made by Eskom to two other consultancy firms, Mckinsey and Trillian.

But Singh chose to ignore the findings, which were that the payments were dodgy and should be reviewed. Presumably that review would have involved another firm of consultants.

It’s not just the common or garden version of consultants like Mckinsey and Bain that thrive on inadequate governance; law firms and auditors also get a whack of business out of corruption and incompetence.

How is it possible that SA Airways has been the subject of 16 forensic investigations and not one of them has seen the light of day? Presumably appointing a consultant to investigate something is what passes for executive management at our state entities.

So when an overpaid, incompetent and decision-averse executive is challenged about what action was taken she can reply with great indignation that she has launched an investigation.

SOES should be obliged to disclose to the tax-paying public details of consultancy work costing above R1m: who made the engagement decision, why, what firm was engaged and how long will the work take?

It might introduce an element of discipline into the process, though the SOES seem to be dominated by such a feckless bunch that even this might not be enough to rein them in.

Of course it’s not just SOES that ensure management consultants enjoy the high life; large listed companies also use them to make decisions and construct strategies — what we thought we were paying executives huge remuneration packages to do.

It is certainly useful to get a smart outside perspective on your business, but the danger lies in creating a codependency and a parallel decisionmaking structure. The most extreme example of this was the Bain-run period at Edcon, when consultants, with close access to decision makers, second-guessed management.

Listed companies also need to provide more disclosure about their use of outside helpers.

In an ideal world the remuneration committee should include that information in its deliberations. But in our world the remuneration consultants, who control the process, probably wouldn’t let them.

How is it possible that SA Airways has been the subject of 16 forensic investigations and not one of them has seen the light of day?