Donwald Pressly
Public Enterprises Minister Malusi Gigaba has ordered that all chief executives and board members of state-owned enterprises (SOEs) not receive pay increases until a proper remuneration policy has been put in place. The directive “has been in place for a while now”, Gigaba’s spokesman, Mayihlome Tshwete, said yesterday.
While a report on this is expected to be put to cabinet shortly, Gigaba told MPs on Parliament’s standing committee on public accounts (Scopa) that it was not good enough for an executive merely to turn up for work “365 days a year minus 21 days leave” and then demand a bonus and other incentives.
He was responding to a host of questions from ANC and opposition MPs about the high levels of remuneration at SOEs. Those under his charge include Denel, Eskom and Transnet.
While the MPs focused on Transnet, Gigaba said the guiding principle of the appointment to SOE boards was that directors should serve on as few other boards as possible. The difficulty arose, however, at Transnet where the calibre of people sought by the government for board positions meant quite often that “it doesn’t always happen that you will achieve that objective”.
DA Scopa member Dion George spoke of board member Peter Malungani, who served on 63 boards or trusts, including Transnet. In the 2010/11 financial year he only attended four of the eight meetings. Nevertheless, in that year he was paid R138 000 for attending the meetings. That translated to R34 500 a meeting, George said.
“Transnet’s board must therefore interrogate whether Mr Malungani, as well as other board members holding multiple directorships, are adding value to the board and whether they are making a sufficient contribution to the success of the entity and integrity of its governance structures.”
Malungani is the executive chairman and founder of the Peu Group, chairman of Phumelela Gaming and Leisure, and a director of Investec.
Mafika Mkwanazi, the Transnet chairman, said Malungani was “a property mogul” who bought up properties and then on-sold them. In many cases he served on the boards of these companies before they were sold, he explained.
IFP MP Narend Singh said payment of executives was “often the elephant in the room” when considering financial statements of parastatals. “Whilst we must not begrudge those who earn well… I would like to know what informs these kinds of incentives (at Transnet).”
He was referring to R63 million paid in incentives to top executives in 2011 including R2.5m in long-term incentives to Siyabonga Gama, who was fired and then rehired as Transnet Freight Rail chief. He also received R1.4m in short-term incentives.
Gigaba said a decision had been taken not to increase salaries and benefits of SOE non-executive directors while policies were being reviewed. At Transnet, 21 non-executive directors were paid R5.7m in total in 2011. On long- and short-term incentives of top executives, he said that was “something we need to look at in state-owned companies… we are not taking it as a given”.
Gigaba acknowledged that Gama had received the payments when he was reinstated. “He was backdated,” he said.
Mkwanazi noted that King 3 evaluations of the Transnet board and individual directors for the current year would be completed shortly. – Additional reporting by Bloomberg