Public enterprises probes to continue: Chabane


Performance management and monitoring minister Minister Colins Chabane says the work of a ministerial committee and another of outside experts, both probing state owned enterprises such as South African Airways and state arsenal Denel are complimentary and are continuing.

“The two complementary streams of work will be overseen and coordinated by the Presidency and the two reports will be synthesised into a final report that will serve in Cabinet before recommendations are adopted and implemented as government policy,” he says in a statement.

Chabane says he was commenting after media reports published since Sunday suggest the ministerial committee comprising Finance Minister Pravin Gordhan and Public Enterprises minister Barbara Hogan – will cease its work until another committee, headed by Mangwashi Phiyega, completed its work.

The minister reminded Zuma, during an oral reply to questions in Parliament last month said “I have decided to set up a two-pronged review of SOEs that will culminate in a united government position on the role of SOEs in supporting government’s developmental agenda in the period ahead. The two processes are complementary and will culminate in a single synthesised report for consideration and decision–making by Cabinet.”

Chabane adds the Medium Term Strategic Framework (MTSF) for 2009-2014 states the need to review the State Owned Enterprises as part of the economic transformation agenda. The MTSF also states the need for government to integrate SOEs into the planning processes and improve the monitoring and evaluation of their performance.

He reminds that to take the process forward, Cabinet established the Inter-Ministerial Committee co-chaired by Hogan and Gordhan “to conduct an internal government review of SOEs and among others determine how government can strengthen alignment between its development objectives and the strategic role to be played by SOEs in the economy.
“The President further appointed a Presidential SOE Review Committee chaired by Ms Mangwashi Phiyega to among others review the current governance arrangements relating to SOEs and undertake an audit of current practices regarding planning and decision making with SOEs as well as between SOEs and government. The committee will also undertake an assessment of the role SOEs have played in supporting government’s development objectives and make recommendations on how this can be improved.”

Meanwhile, Business Day today reports today Treasury is still “devising an appropriate capital structure and dividend targets for the major entities.” The aim of the work, Gordhan reportedly told Parliament yesterday, was to improve financial oversight, promote efficiency and impose financial discipline on the enterprises, several of which have had to get state aid to rescue them from the doldrums.

The first phase of the project — to be completed by December — would focus on Eskom, Transnet, Denel, the Development Bank of Southern Africa, the Industrial Development Corporation and Sentech. Depending on the results, a second phase dealing with the other state-owned enterprises would be launched. Gordhan said in a written reply to a parliamentary question by Democratic Alliance (DA) finance spokesman Dion George that the Treasury would engage with the executive authorities and state-owned entities on completion of the project “to agree on targets for three years in line with the entities’ planning cycles”. These agreements would form part of shareholder compacts. Gordhan added the review panel set up by Zuma would study remuneration of board members.

The Sunday Independent reported at the weekend the presidency had “confirmed” last week that the ministerial committee would cease its work. Instead, the panel made up of people from outside government named by Zuma last month would conclude its investigation first, Presidency spokesman Vincent Magwenya told the paper. “This is an about-turn on what Zuma told MPs in March, when he first mentioned plans to appoint a Presidential Review Committee over and above that of Hogan and Gordhan – an announcement that took the ministry by surprise,” the Sunday Independent said.

Magwenya reportedly also confirmed that all major restructuring at parastatals would be suspended, including staff and corporate overhauls, pending the outcome of the committee’s year-long review.

The paper said parastatals “are a significant site of struggle within the ruling party – as evidenced by the fierce boardroom battles that have rumbled into court, causing leadership vacuums and uncertainty in an unforgiving economic environment. Hogan has had a rough ride as the minister responsible for sorting out the governance and economic mess – and has come under fire from within her own party and its allies while trying to bring order and help put parastatals on a firmer financial footing.
“Billions have been paid out to parastatals in bailouts, loans and guarantees over recent years amid a spate of scandals over corruption and mismanagement, putting their governance and parastatal bosses’ huge remuneration packages and fat bonuses starkly in the spotlight. … The state-owned enterprise wars can be ascribed, in part, to competing patronage streams within the ANC, with Hogan caught in the crossfire dealing with the wrangles between their boards and executives in the battle to make them profitable. Factions are so entrenched that State Security minister Siyabonga Cwele has plans to send in the spooks to probe corruption, multi-billion-rand tender battles and leadership struggles at top parastatals, the paper added.