SOEs, and a 1% whistleblower levy
During the state capture years, the well-resourced law firms, auditors and banks employed by the SOEs should surely have spotted that something was afoot
One of the grim aspects of the first Zondo report is how thuggish and bumbling the perpetrators behind state capture appear to have been. SAA’s one-time chair Dudu Myeni comes across as the archetypal villain in some B-rated Hollywood comedy.
Not even the indomitable Zodwa
Ntuli could rein her in. Myeni chose to disregard not only the advice of her acting CEO and head of procurement, but also BEE commissioner Ntuli when she tried to force through her own “transformation” policy at SAA.
Ntuli, who has a robust approach to transformation and is not shy of confrontation when it comes to protecting the law, wrote to Myeni pointing out that the plan was not in line with the Broad-Based BEE Act and codes of good practice. If she was determined to proceed, Myeni would first have to apply for, and receive, authorisation for an official deviation from the act.
“I do not want to hear anything from that woman,” was Myeni’s response to Ntuli’s letter. She instructed her sidekick Yakhe Kwinana to reply that it was not for Ntuli to tell SAA what to do about transformation, which was a national agenda, so there could be nothing illegal about Myeni’s proposal. Mathulwane Mpshe, acting CEO at the time, refused to send the letter, instead writing to Ntuli to say that as a state-owned enterprise (SOE), SAA would obey the laws of the land. But Myeni had no intention of doing so and continued to push her illegal transformation plan.
Her management of SAA reads like a villainous version of the Keystone Cops. Of course its devastating consequences for SA in general and key individuals such as Mpshe and chief procurement officer Masimba Dahwa in particular meant it was anything but entertaining.
So here’s the thing. Given the bumbling manner in which the perpetrators were capturing the state, unlike the sophisticated and subtle way Markus Jooste was white-anting Steinhoff, why is there no sign that any of the large and well-resourced law firms, auditors and banks employed by the SOEs spotted that something was afoot? It does seem that Myeni employed — at SAA’s expense — small players to do some of the dirty work, but who was doing the big deals for the SOEs?
Surely some of the big firms were involved when Transnet was hammering together its R54.5bn purchase of 1,064 locomotives from China in 2014? And which of the big firms were involved in Eskom’s deals such as the controversial one with Hitachi back in 2006?
Nedbank, Standard Bank, Bain & Co and PwC did make an appearance in Zondo’s first report, but none of the big law firms or other banks and audit firms does, even as evidence givers.
Perhaps Zondo’s recommendation that all state contracts with consultancy firm Bain be reviewed should be extended to cover all law, banking, auditing and consulting firms with state contracts. They should all be given an opportunity to explain why they didn’t suspect there was anything amiss during the time they were advising a particular SOE.
Meanwhile, as a gesture of goodwill these big, wealthy companies could set up a fund to support the many brave individuals who stood up to the state capturers. Most lost their jobs after suffering intimidation.
Longer term, perhaps consideration should be given to imposing a 1% levy on the income earned by all SOE service providers. This levy, which should be administered by an entity such as Corruption Watch, would be used to reward and protect whistle-blowers. Zondo has called for whistle-blowers to be rewarded.
For all the noble statements made by the government and corporate SA, whistle-blowers are subjected to appalling bullying and worse. In most cases no amount of money could compensate for what they’re put through and most whistle-blowers are not motivated by money. But they should at least be protected from penury.
In the US the whistle-blower programme launched by the Securities & Exchange Commission (SEC) in 2011 has had a significant impact on the regulator’s ability to track wrongdoing. In 2021 the SEC received 76% more tips than in 2020, helping it to curb market manipulation, corporate disclosure and financial statement misconduct, and attempted fraud.
We may have to wait until Zondo’s third report for signs that the country’s best-resourced private sector companies were in fact trying to fend off the state capturers.
Myeni employed small players to do some of the dirty work, but who was doing the big deals for the SOEs?