Gordhan vows to 're-capture' state-owned companies
16 May 2018 - by
Public Enterprises minister Pravin Gordhan on Tuesday said he would work to "re-capture" South Africa's debt-laded state-owned companies after years in which they had been milked of billions of rands by politically connected businessmen.
"We will work to 're-capture' the state-owned companies, putting in place strong and ethical boards, re-establishing good governance. We will ensure that the companies function in line with their mandates, and halt the vicious looting and theft," he said in his department's budget vote speech, in a word play on state capture, shorthand for corruption linked to mainly the Gupta family.
Gordhan said he planned to ensure parastatals had competent management teams and viable business plans and were re-orientated to their core functions, which included providing critical infrastructure and creating much-needed jobs.
"Improvements in operational performance, and engendering confidence among lenders and the bond market is critical," he added.
Gordhan said that government would seek to recover public money lost to corruption but conceded that the companies' borrowing capacity had been weakened and they would need further funding from the state's coffers.
"Unfortunately, during my short time in this office, it has become evident that several of the state-owned companies will not be able to trade and borrow their way out of their financial difficulties and some funding will be required from government."
Turning to individual companies, Gordhan said the power utility had been brought to the "brink of collapse through state capture", facilitated by a compromised board.
He said the new board, appointed in January, would seek to root out corruption and hand cases of wrongdoing over for prosecution.
A whistle blowing facility has led to the investigation of 250 cases, and in 42 of those corruption, fraud and irregularity were confirmed.
He said lifestyle audits of employees had begun and this process would be finalised by the end of July. Lifestyle audits have commenced and the process is projected to be finalised by the end of July.
The minister said Eskom had gradually showed signs of returning to stability.
"There has been a positive change in investor sentiment and increased appetite for Eskom bonds. The company raised R43 billion between January and March 2018, providing sufficient liquidity for the company. This has allowed Eskom to recommence with its normal borrowing activities with the aim of securing a total of R72 billion over the 2018/19 financial year to enable ongoing implementation of its investment programme," he said.
"Whilst it is still too early to celebrate the full re-capture of this institution, the experience shows how, under the leadership of a committed board and executive management team who take decisive action, confidence and staff morale can quickly be re-established. But much still needs to be done."
He had harsh words for the state of Transnet, where he appointed a new interim board on Monday, headed by African National Congress (ANC) veteran and former chairman of the Passenger Rail Agency of South Africa, Popo Molefe.
"At Transnet, governance structures were repurposed to enable corruption and rent-seeking," he said.
"There is evidence that contracts were awarded to people with close links to some of the Transnet officials; there were clear conflicts of interest. The directors of Transnet as well as senior executives were derelict in their duties and there were regular violations of the Public Finance Management Act, Companies Act and the Prevention of Corruption and Criminal Activities Act."
He said Transnet was critical to growing the economy and much more needed to be done to improve the efficiency of the freight rail entity.
At both Transnet and arms manufacturer Denel, Gordhan said, new boards had been instructed to act on the findings of investigations to seek to undo corruption that flourished under weak boards.