How to ruin an SOE: take a politician on board
Having political appointees chair stateowned companies is a recipe for disaster, which is why it could be a calamitous decision for the Public Investment Corporation (PIC) to continue with a tradition that does not yet have a basis in law.
The PIC is the only stateowned entity that has a deputy minister chairing its board.
The debate over who should chair the PIC was the main topic at the commission of inquiry into governance at the entity this week, when a former board director, Vuyo Jack, presented arguments against the appointment of a political chair.
Not wanting to miss the opportunity for reform, he emphasised that if the government insists on appointing a political chair, an independent nonpolitical deputy chair must be installed to balance the competing interests of the political with the fiduciary needs of the organisation.
Either way, the government will have to make radical decisions to fully restore the reputation of the PIC — and appointing another minister as chair should not be one of those decisions.
The deputy finance minister has always been the chair of the PIC. Current deputy finance minister Mondli Gungubele will be replaced when a new board is appointed. This comes after he resigned, along with the rest of the board, last month following allegations of impropriety.
When Pravin Gordhan was finance minister it was on his wish list to appoint an independent individual to chair the PIC, most likely to keep it safe from greedy politicians who had an eye on the PIC kitty.
Gungubele’s recent comments are further evidence of the need for an independent chair. Gungubele told reporters the PIC was considering buying Eskom’s debtors book to relieve the debt pressures the power utility faces. This would be unprecedented and not in the PIC’s mandate. Possibly Gungubele was motivated to make this reckless statement to prove — ahead of the May polls — that the ANC-led government is hard at work.
In a surprise move, parliament last week approved the PIC Amendment Bill.
To the dismay of some political parties, the bill seals the appointment of the deputy finance minister, or another deputy minister in the economic cluster, as the PIC’s chair.
Had the chair and the board effectively performed their duty there would not have been a need for a commission of inquiry.
For further evidence of the havoc that a politically linked individual can cause, look no further than SAA.
The airline’s financial and operational recovery will be long and painful after the political interference it endured while Jacob Zuma was president.
At partially state-owned Telkom, weak leadership was susceptible to political meddling, inviting perpetual chaos. The current leadership has since restored the company to financial stability.
Political appointees are costly mistakes for the government.
The bill seals the appointment of the deputy finance minister as the PIC’s chair