Question NW11 to the Minister of Public Enterprises

(1)

(a)

As a matter of clarity, the Minister, with the concurrence of Cabinet, appoints the Board of Directors of the State-Owned Companies (SOCs). He appoints the CEOs and CFOs on the recommendations of the Boards. Only where Boards seek the Minister’s concurrence on appointments of other Executives at subsidiary level, does the Minister express a view. There are various reasons for resignations at the SOCs, such as end of contract terms, personal reasons and the difficulties posed by the damage caused in the institutions.

(b)

The rot within SOCs is deep but can be overcome. This is demonstrated by among others, the following achievements that have been registered under the leadership of the current boards:

(i) Eskom

• McKinsey repaid R902 million against a civil claim Eskom instituted against the company.
• Eskom successfully pursued the recovery of R600 million that was illegally paid to Trillian. A full bench of the Gauteng High Court ordered that the funds be returned to Eskom to be used for the benefit of the country’s citizenry.
• SIU is currently in court on behalf of Eskom to set aside the Tegeta Brakfontein coal supply agreement to the value of R2.7bn.

(ii) Transnet

• China South Rail (CSR) repaid R618 million to Transnet in relation to an irregular prepayment for locomotive maintenance.
• Civil claims have been lodged against former Executives to recover losses that were incurred as a result of their irregular conduct.

(iii) State Capture Inquiry

• The Minister, the Chairs of the Boards of Eskom and Transnet and an executive within the DPE have led evidence at the Commission in order to shed light on events that led to some of the challenges that trace their lineage to State Capture and how the department is working hard to root corruption out of all SOCs.  
• Eskom: The current Board, led by the Chairperson Mr Jabu Mabuza, led evidence at the Commission.
• Transnet:  The current Board, led by the Chairperson Dr Popo Molefe, numerous executives and senior managers led evidence covering the Locomotive deals (95, 100 & 1064) and supporting contracts, such as advisory services; loan transaction services; consulting; funding; and Treasury functions. 
• Denel: Submissions were made to the Commission and the Board is waiting to lead evidence. Former officials have already led evidence that shed light on some of the irregular conduct that has resulted in the challenges the company is currently facing. 
• SAFCOL: Officials will be leading evidence in due course.
• SAA: Among others, previous Ministers, the former Chairperson of the Board (Cheryl Carolus) and former CFO and CEO (currently acting CEO of SAX) have appeared and/or will be appearing before the Commission to give evidence.
• Alexkor: Commission is investigating matters and the Board is fully cooperating with the investigators. 

(c)

The progress highlighted above and the preparedness of the current leaders in each SOC demonstrated that:

• there is a plan in place in each SOC to root out corruption;
• each Board, supported by other officials is heavily seized with executing the plan;
• the plans are beginning to yield tangible results; and

However, to be frank, overcoming the full impact of State Capture and corruption requires vigorous effort and courage from Boards and Management.

(2)

SOCs within DPE portfolio are experiencing financial difficulties. The process to turn-around SOCs is ongoing. This will culminate in the review of the operating models of the SOCs. Furthermore, in some SOCs Strategic Equity Partners (SEPs) will be brought in to partner with SOCs in improving some operations. In that vein, SOCs will provide the Minister with proposals on areas where private partnership are required. Denel has a few examples of this kind of partnerships