Gordhan starts big crackdown at SOEs
THE crackdown on some of the state-owned enterprises (SOEs) that were alleged to be havens of looting by the Guptas and their allies has began in earnest.
Yesterday Public Enterprises Minister Pravin Gordhan announced wholesale changes to the board of stateowned arms manufacturer Denel, which he said faced collapse unless urgent action was taken.
Gordhan also warned in the next weeks the clean-up would be extended to more SOEs.
“In the coming weeks I will be reviewing the composition of boards at other SOCs (stateowned companies) under the authority of the Department of Public Enterprises, as well as the executive management teams, to ensure that SOCs are set on a new path,” Gordhan said.
This comes days after President Cyril Ramaphosa ordered the Special Investigating Unit to probe allegations of graft at Transnet and power utility Eskom, where the Guptas were awarded lucrative coal contracts.
Gordhan announced former Airports Company of SA chief executive Monhla Hlala as the new board chairperson, taking over from Daniel Mantsha, who resigned last month under a cloud after being implicated in state capture allegations.
During his tenure as finance minister, Gordhan was embroiled in constant battles with the previous Denel board over Denel Asia, a controversial joint venture between the entity and VR Laser Asia – a company owned by Gupta associate Sallim Essa.
Gordhan yesterday slammed the entity’s previous leadership, blaming them for the deterioration at Denel.
“The Denel Asia saga in 2016 deeply tarnished the Denel brand – the insistence by the previous board to proceed with the venture despite evidence showing it was a bad strategic move.
“Denel now faces the real threat of collapse unless far-reaching decisions are taken urgently,” Gordhan said.
Denel has previously battled to pay workers and suppliers on time due to liquidity challenges.
“The immediate priorities for the new interim board will be to restore sound corporate governance, review the effectiveness of the management team, review major contracts
and review the company’s financial position with the view to creating sustainability,” Gordhan said.
He said the changes, which still need to be endorsed by the cabinet, were in line with the call for restoration of financial positions of state-owned companies to ensure they fulfil their mandates.
Earlier this year, Ramaphosa announced drastic, similar changes at power utility Eskom, where similar allegations of impropriety against board members and executive management have been reported, including looting and implications in state capture.
“A number of SOCs have large government guarantees, and their long-term viability is a concern.
“Capital markets have reduced lending to some because of serious governance concerns and the lack of credible reforms to boards and executive management,” Gordhan said.
Other members of the new 12-member board include ANC stalwart and former SAA chairperson Cheryl Carolus, University of Johannesburg vice-chancellor Tshilidzi Marwala, Zoli Kunene, General TT Matanzima, Gloria Serobe, Talib Sadiq, Sue Rabkin, Dr Sibusiso Sibisi, Nokuzola Siyotula, Thami Magazi and Martin Mmusi.
Hlala said she would work with her team to help restore governance and credibility within the entity.
“We feel honoured to have been asked to play a role at this time of our country. The experiences here are brilliant.
“The only caution I would put to everyone is that coming to play a role in such an old institution and coming within April, which is the first month of the new financial year, it means that for the next few months this board will be focused on nothing else but the financial statements of 2017/2018 and getting to understand the core business of Denel,” she said.