Part of the charm of Public Enterprises Minister Pravin Gordhan is his ability to be frank and honest about the perilous state of the government’s assets and businesses.
His assessments pull no punches about what needs to be done and what it will take to get things done.
This and the fact that he’s dealing with state-owned enterprises (SOEs) destroyed by years of corruption and a deliberate project to run out capable executives who stood in the way of questionable decisions designed to siphon money out of them.
But the state’s major companies — Eskom, Transnet and Denel — are starting to stabilise. And the state airline, SAA, is now under business rescue. It’s too soon to know whether it can be saved.
According to the department’s presentation to Parliament’s portfolio committee on public enterprises, Eskom and Transnet have, for the past two years, had qualified audit findings, while Denel had an audit disclaimer (which means auditors do not have enough information to make an audit finding).
Normally, these outcomes would be distressing — and should still be — but if one considers that Denel, for instance, did not have enough money to pay salaries or even buy toilet paper just 12 months ago, one understands that stability is a big feat.
Both Eskom and Transnet recorded reportable irregularities in their financials for the period that ended in 2018, and none this year.
SAA has not presented audited financials before Parliament for two consecutive fiscal periods. Unofficial numbers shown to the standing committee on public accounts reflect that the airline lost a cumulative R10-billion in that period.
The department has achieved 50% of its annual performance plan targets for the third quarter, which ended in September. Some of the work outstanding is related to the troubled SOEs and problems with governance and procurement processes. The department says some of the delays — to programmes such as reporting on Eskom’s implementation of its turnaround plan, a review report on the performance of its power stations and a monitoring report on SOEs’ compliance with the norms and standards on memorandum of incorporation — were caused by factors out of its control.
But what is encouraging is that the department is much more focused on the problems at the SOEs and seems seized with helping the companies get the right policies on procurement, dealing with risk and operations that underpin a turnaround.
With Denel the intervention is starting to take shape and the company is looking at luring back clients and is taking action to protect its prized intellectual property.
Gordhan has also spoken about the need to develop capacity in his department and ensure there are more specialists in fields such as energy, engineering and aviation.
But not everyone appreciates Gordhan’s frank approach. In interactions about what needs to be done, some executives have complained that the minister crosses the line and meddles in the running of SOEs.
The problem with that is manifest in SAA and Eskom, where executives believe the board, because of pressure from the shareholder, gets far too involved in operational matters.
The appointment of Jabu Mabuza as Eskom’s executive chairperson amounted to Gordhan appointing someone he knows will follow his thinking. It also presented a grey area in as far as conflict of interest is concerned, because Mabuza’s companies provided services to Eskom.
A similar move took place at SAA. The airline actually had an acting chief executive, and the previous chief executive had left because of meddling and inadequate support from the shareholder.
Another aspect of the interference was uncovered when Eskom board member Busisiwe Mavuso said the company’s plan to implement planned outages to deal with maintenance backlogs at power stations was undermined by Gordhan’s political considerations of not wanting to shed the load ahead of and during the May elections.
For consistency’s sake it is important that corporate governance be respected. Because of this Gordhan’s work — which deserves a C — is getting a D.