‘Congratulations’ for turning SOEs into a financial wasteland

Dear Editor

On Tuesday last week, the DA exposed how – in the past 5 years, the Minister of Public Enterprises, Pravin Gordhan, has triggered an unprecedented governance chaos at Executive and Board levels in State-Owned Enterprises (SOEs), as 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 7 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.

This regression is consistent with the findings made by the Auditor General in her presentation to Parliament on Wednesday last week, where she sounded alarms on recurring losses, failure to implement audit recommendations, continued failure to meet targets and overall inability to meet service delivery objectives.

The breakdown in financial controls and prudent financial management is a direct indictment to Gordhan’s avowed promise to clean up SOEs that were ravaged by State Capture and wholesale looting under Jacob Zuma. Not only has Gordhan failed to stop the bleeding, he has made it worse by failing to provide a clear plan to fix the precarious financial health of these entities.

In the 5 years under review, the 7 SOEs have – between them, only been able to muster 6 unqualified audits. The majority of audit outcomes have been on the negative side, with 9 qualified audits and 2 disclaimers. During that period – Eskom, Alexkor, SAA and Denel have either submitted their financial reports late or have outstanding audit reports dating back to 2020.

Despite the shambolic state of affairs, the South African taxpayer has forked out R195 billion in bailouts to these failing SOEs from 2019 to date. Gordhan has been a willing emissary for SOE bailouts and has chosen not to stand idly by while taxpayer money is mismanaged or worse, stolen through corruption.

Gordhan’s inexcusable performance has had real world consequences. The precipitous decline of Transnet’s freight rail system has robbed the country of the much needed export receipts – which has left Treasury struggling to balance the budget.

Eskom’s terminal decline, mirrored in rolling blackouts, has stalled South Africa’s economic growth. With this overwhelming evidence of failure, Gordhan should not be kept in office any minute longer and must be fired as a matter of urgency.

Regards

Farhat Essack MP
DA Deputy Shadow Minister of Public Enterprises