Amid a litany of board resignations at SOEs such as Transnet, Eskom and other entities as well as their poor state of finances, calls for Minister of Public Enterprise, Pravin Gordhan, to step down continue to grow.
This past week, Popo Molefe became the latest board member in one of the country’s biggest parastatals, Transnet, to resign just days after the resignation of Eskom board chairperson, Mpho Makwana, who announced his resignation the previous weekend.
Both these resignations were preceded by the resignation of Transnet CEO, Portia Derby, whose resignation was precipitated by a year of lobbying by business and organised labour due to non-performance of the rail entity.
Last week, the DA described Gordhan as a “national and economic liability”.
“Given the devastating report card by the Auditor General (A-G) on the financial performance of the Department of Public Enterprises (DPE) and the entities that report to it - Minister Pravin Gordhan’s resignation letter should have been on President Cyril Ramaphosa’s desk this morning,” DA MP Ghaleb Cachalia said.
Cachalia added: “Gordhan has literally collapsed the finances of the DPE after the A-G gave the department a qualified audit outcome with findings.
“He has extended and mirrored this failure to State Owned Enterprises (SOEs) reporting to him, with five of the seven that report to him still not having finalised their financial statements six months after the close of the financial year.”
This is not the first time that the non-performance of SOEs were also the subject of Auditor-General Tsakani Maluleke, who in 2021 expressed concern about audit outcomes of State-owned Entities saying they had regressed.
At the time, the SABC and Transnet received qualified audits while state arms manufacturing company, Armscor and Airports Company of South Africa (Acsa) received unqualified audits. This left the Development Bank of Southern Africa as the only SOE with a clean audit.
In spite of Gordhan’s and the department’s assurances that Molefe’s resignation has nothing to do with operational challenges at Transnet, many believe that the minister who is accused of interference is to blame for most of the mass resignations and the state of paralysis that has become SA’s SOEs.
The latest challenges to SOEs come amid reports that after costing the economy at least $26.7 billion since 2010, the South African Presidency has handed over the state-run ports and freight-rail sector to the private sector in the hope that the private sector will be able to fix them.
This has resulted in speculation that these SOEs were being run into the ground in order to make it possible for the private sector to privatise them.
The DA said that in the past five years, Gordhan “has triggered unprecedented governance chaos at executive and board levels” across SEOs, adding that most entities were either operating with interim boards, acting CEOs, or with no executive heads at all.
“The damage inflicted by Gordhan’s disastrous tenure goes beyond board and management levels and also extends to the financial health of SOEs.
“DA research has revealed that, over the past 5 years, the seven SOEs that fall under the Department of Public Enterprises, namely – Eskom, Transnet, Denel, Safcol, Alexkor, SAA and SA Express – have incurred R300 billion in irregular expenditure, and R1.3 billion in fruitless and wasteful expenditure,” DA spokesperson on public enterprises, Farhat Essack, said.
Speaking to “The Star” on Monday, political commentator, Mzoxolo Mpolase said there was a time when the country’s SOEs were its pride and joy, but following years of mismanagement over the past 29 years that pride has gone up in flames.
“The past five years under Pravin Gordhan is no different from the almost 25 years preceding his tenure. Minister after minister under ANC rule has allowed wittingly, or otherwise, the disembowelment of state enterprises,” Mpolase said.
At the heart of SOEs, according to Mpolase, is political interference and meddling and the appointment of unqualified executives.
“Political interference and the appointment of unqualified individuals as executives, senior managers, and indeed, as board members as well as ructious and fractious labour relations coupled with outsourcing of key functions of SOEs to third parties through lucrative tenders, have only hastened the demise of many SOEs,” he said.
Attempts to get comment from the minister of enterprises were unsuccessful at the time of going to print.