SOEs at risk of recapture as interference persists — Zondo

The power of politicians to appoint board members of state-owned enterprises (SOEs) should be diluted to avoid their recapture, the Zondo commission recommends.

The commission, which sat for four years since 2018 and was chaired by chief justice Raymond Zondo, found there was a symbiotic relationship between the ANC and politically connected individuals and private companies.

SOEs such as SAA, Transnet and Eskom and government departments were rendered dysfunctional in order to divert public funds for private benefit.

In the final volume of the state capture report, which was released on Wednesday, the commission recommends the establishment of “a truly independent and transparent process free from political manipulations so that the ultimate appointment made by a minister is genuinely the result of a meritbased selection process”.

This includes the establishment of a standing appointment and oversight committee to oversee public hearings of boards and executives at SOEs to ensure “the professional, reputational and eligibility requirements for such a position”. It says the public enterprises department’s discussion document on the possible reform of SOEs, which proposes that appointees to their boards be done through a public process, is insufficient to ensure that there is no political interference because the selection and nomination of candidates would still lie with the relevant minister.

“It is difficult to see why the proposed system will be any better placed to deal with state capture than it was before. There are no effective mechanisms which would prevent cronyism and cadre deployment from continuing to dominate appointment to the boards and to senior executive officer [positions],” the commission says.

Senior lecturer at the Wits School of Governance TK Pooe says SOEs should be allowed to operate more like businesses, but there is also a need to “create political oversight models or systems that address critical national interventions like transformation and development of public goods. In this regard the ANC, whether faction X or Y, will resist such options and possible solutions and developments.”

During state capture, the handpicking of loyal ANC members, regardless of experience or qualifications, to senior administrative and political posts allowed crony capitalism and corruption to flourish, eroding SA’s economic prospects, the commission found. Those who aided state capture were rewarded with money, homes and other gifts, while those who opposed it, such as whistleblowers or government officials, were either removed or ostracised by the party, the report found.

At state-owned arms firm Denel, the commission found that former CEO Riaz Saloojee was suspended for more than a year without a disciplinary hearing and was ultimately “pushed out” to make way for another CEO who was prepared to work with the Gupta family and their associates. The Guptas, the report found, were able to unlawfully secure lucrative government tenders through their proximity to former president Jacob Zuma.

Referring to SAA, Denel, Eskom, SABC and the Passenger Rail Agency of SA, “ministers either appoint the board that appoints the CEO or the minister appoints the board and the CEO or he or she has to approve the appointment of the CEO”.