Question NW3289 to the Minister of Public Enterprises

Reply:

1. (a) State capture was characterized by intensive levels of political interference, with Eskom and Transnet emerging as focal points of this concerning phenomenon. These SOEs faced undue external influence, compromising their governance structures, decision-making processes, and overall operational integrity. Political interference led to the appointment of key executives and board members who were compromised, resulting in leadership that was not best suited to address the complex challenges the SOEs faced.

However, various interventions were made to ensure operational viability and sustainability of Eskom and Transnet.

The interventions to date include:

​1.1 Eskom

I have instructed the Board to expeditious address the following issues:

• 1.1.1  Management Structure / Skills
• Review and enhance leadership team to capacitate all subsidiaries for effective objective execution.
• Expedite filling critical vacancies.
• 1.1.2 Restructuring - Eskom Roadmap 2 and Implementation
  • Develop a revised Eskom Roadmap guiding the restructuring process.
  • Ensure the plan addresses external dependencies.
  • Capacitate the executive team with the right skills.

• 1.1.3 Finance
  • Develop a comprehensive allocation policy for assets and debts post-restructuring.
  • Continue cost-cutting exercises with defined targets discussed with the Department.
  • Capacitate the Treasury team to ensure compliance with debt relief conditions for loan-to-equity conversion.

• 1.1.4 Forensic Investigations
• Conduct robust forensic investigations to isolate irregularities.
  • Implement consequence management for those found in the wrong.
  • Test the internal control universe to ensure timely detection and prevention of irregularities.

1.2 Transnet

On 1 September 2023, I directed the Transnet Board to urgently address and report on its decisions and recommendations in respect of, inter alia the following:

• 1.1.1 Operational transformation: Develop or enhance a turnaround plan to radically transform the operational performance of each of the business areas, including the restructuring of the entity to deliver on its mandate more effectively and efficiently.
• 1.1.2 Root causes: Identify the root causes of the inability of management and staff to meet the performance targets and a plan to deal with the deficiencies.
• 1.1.3 Stringent / rigorous accountability Oversight: Transnet to develop, with the DPE and National Logistics Crisis Committee (NLCC), a new framework for transparency and accountability through detailed reporting on the successful execution of the turnaround strategy.
• 1.1.4 Digitisation of systems: Mechanisms to speed up the automation and digitisation of performance reporting systems to prevent deliberate and wrongful manipulation of data.
• 1.1.5 Rigorous system of controls: Implement urgently the controls identified by the Auditor General reports.
• 1.1.6 Private sector participation: Transnet is in the process of getting private sector involved in various capital projects. For example, a reputable international private sector partner has already been identified for the development and operation of a container terminal at the port of Durban.

2. There is no leadership vacuum at both SOEs as there is an adequate complement of the Board with Acting Group Chief Executive Officers and Acting Chief Financial Officers. Of importance is that in respect of Transnet the focus is on operational and financial performance that the Minister needs to address as per the statement dated 1 September 2023.

3. In relation to Eskom, it is noteworthy that the former Group Chief Executive Officer (GCEO) operational performance has deteriorated under his watch.

4. It is important to indicate that the recruitment process for the Group Chief Executive Officer (GCEO) is carried out by the Board in accordance with the provisions outlined in the Memorandum of Incorporation, which aligns with the standard procedures across the Department of Public Enterprises (DPE) portfolio. The Board will run the recruitment process including the advertisement, shortlisting and interviewing of candidates. The Board will then present to the shareholder three appointable candidates. The shareholder will then approve the appointment of a candidate.

Remarks: Reply: Approved / Not approved

Jacky Molisane PJ Gordhan, MP

Acting Director-General Minister

Date: Date: