Changes ahead for selection of SOE leadership
The cabinet has adopted stringent guidelines for the appointment of boards and CEOs of state-owned enterprises (SOEs), generally regarded as entry points for state capture. Appointments at state utilities were at the heart of state capture, which allowed for large-scale looting, during former president Jacob Zuma’s term of office. In his first state of the nation address in February, President Cyril Ramaphosa said the government would change the way boards were appointed so that “only people with expertise, experience and integrity serve in these vital positions”.
The cabinet has adopted stringent guidelines for the appointment of boards and CEOs of state-owned enterprises (SOEs), generally regarded as entry points for state capture.
Appointments at state utilities were at the heart of state capture during former president Jacob Zuma’s term of office.
Deputy chief justice Raymond Zondo’s state capture commission of inquiry heard from former public enterprises minister Barbara Hogan how Zuma unlawfully interfered in appointments at state entities.
During his first state of the nation address in February, President Cyril Ramaphosa said the government would change the way boards are appointed so that “only people with expertise, experience and integrity serve in these vital positions”.
Last week, the cabinet, led by Ramaphosa, adopted the guidelines. According to the guidelines, seen by Business Day, it was found that board appointments were not done in a transparent manner and there was no central unit or authority to “institutionalise” appointment processes.
The objectives of the guidelines include providing qualifying principles for board appointments and limiting multiple memberships to boards.
The guidelines also specify the roles and responsibilities of those involved in the appointment process. According to the guidelines, the disclosure of interests by board members will be integrated into the appointment process. This will ensure that direct or indirect conflict of interest is identified and managed upfront, before board members are appointed.
The new guidelines will be applicable to national and provincial state institutions and entities. According to the guidelines, the composition of a SOE board will be determined by the complexity of the mandate and the competencies required.
The chair and CEO will be separate positions. The term of office of nonexecutive board members will be three years and a maximum of two consecutive terms may be served. The reappointment for a second term is subject to performance and independence evaluation.
“Worldwide, boards are shifting from their role as oversight bodies entrusted with ensuring compliance towards driving performance, setting strategies and co-operation with management to implement those strategies,” the document states.
“When the government requests experts from a particular community of interest to serve on a board, it does so with the expectation that they will use their expertise, skills and knowledge in a manner that will improve access to services and service delivery to citizens and advance the interests of SA.”
The document notes that it is important that proper appointment systems and processes are in place to ensure the interests of the government and the public in these entities are managed effectively.