Writing is on the wall for SOEs

Some form of gross, chronic financial mismanagement, kleptocracy and cronyism has made state-owned enterprises (SOEs) such as South African Airways and Eskom reach financial disasters.

How could such large entities with such huge incomes be in such pathetic fiscal positions?

This entire mess at Eskom and SAA and, possibly, other SOEs raises several questions.

Didn’t the board of directors, accountants and auditors notice the slide towards the red flag? And why did they not put intervention mechanisms in place to address this timeously?

Take, for example, Eskom. Almost every household, business and other establishments pay for electricity, so where is all that income? What information was being fed to the directors? Were they really so badly informed or detached from reality in order not to see where it was heading?

According to the King Report on Corporate Governance and under the Companies Act, the board of directors is legally accountable and responsible for the solvency, corporate governance and fiduciary affairs of the company – irrespective of whether it is private, public or state-owned.

South Africa’s hard-pressed, struggling and small pool of taxpayers can no longer afford to foot the bill to rescue or bailout these failing SOEs.

An independent assessment of all failing SOEs is needed and the board of directors needs to be personally held accountable.