Political interference in SOEs ‘bad for business’

It is inappropriate for the shareholder to interfere in the dayto-day running of the business, according to CEO of the Efficient Group Heiko Weidhase.

Things can go wrong for which a special meeting could be called, but it was normal for shareholders to want to appoint the best board members who would appoint the best CEO for the job and expect good results.

In a state-owned enterprise (SOE), the government which was elected by the people represented the shareholders and the elected government then appointed the board and the board appointed the CEO.

The CEO was then left to run the business on a day-to-day basis.

Weidhase said politics however would always get in the way because the government or politicians very often had different agendas for the primary objective of a business – which was to make a profit.

“No profit, no business. It is therefore inevitable if politicians interfere in SOEs instead of letting that SOE be run as a business that it will have an impact on that SOE,” he said.

“What is clear in our South African case is the government has seemingly done everything in its power to not let the SOEs be run as businesses. The result is inevitably bankruptcy. This will always be the case.”

Weidhase said the same could be said for politicians making laws which impact non-SOEs or privately and publicly held companies.

READ: SOEs are crucial for South Africa’s economic security

He said there was a point at which a profit-seeking investor would not invest in a business where the “politicians do things, say things or implement laws” which made it too difficult to do business.

“There is a huge difference between a businessman and a politician. They think very differently,” he said.

Weidhase said a business and its CEO operated in a free market and there was permanently someone out there who “wants to do what we do cheaper, better and faster”.

“We face an uncertain economic environment with no growth, well qualified and experienced human resources shortages, rising inputs costs and consumers who are really struggling,” he said.

Weidhase said a CEO needed to be a people’s person, be prepared to listen and learn while also making the difficult decisions.

“My job as CEO is to execute the board approved strategy and do everything I need to do to ensure that it delivers the expected result.

“It is also my duty to do this in the best interests of all stakeholders and with the necessary corporate governance and compliance with legislation in place,” he said.

“It is my job to engage with all stakeholders and take them on this journey with the company, to keep them updated, to share the bad news with them when there is bad news and to ensure that they have a clear understanding of what is going on in the business and the industry we operate in.”