SOE bailouts soar to R400 billion as CEOs rake in lavish salaries

State-owned enterprises (SOEs) have sucked up almost R400 billion in bailouts in the past nine years alone, but despite their abysmal performance their CEOs have earned a combined average of R2 billion in salaries, bonuses and perks.

And the bailouts have got worse during President Cyril Ramaphosa’s term in office.

About 700 SOEs have sucked up R398 billion in taxpayer money to be rescued from 2013/2014 with Eskom accounting for 55% of that amount.

At the same time, executives and CEOs at these entities earned a combined total of R2 billion per year in salaries, according to the Democratic Alliance’s (DA) Shadow Minister of Public Enterprises Ghaleb Cachalia.

DA research showed SEO bailouts increased significantly in the past six years during President Cyril Ramaphosa’s time in office from 2018/19 to 2023/24 compared to the previous 10 years from 2008/09 to 2017/18.

According to the DA, the average annual bailout amount more than quintupled from R9.51 billion per year to R50.49 billion per year with Eskom being the largest recipient of bailouts, receiving almost five times as much as the second-largest recipient, South African Airways (SAA).

The top 5 SOEs for bailouts included:

• Eskom: R242.25 billion.
• SAA: R49.90 billion.
• SA National Roads Agency: R23.74 billion.
• SA Special Risk Insurance Association: R22 billion.
• SA Post Office: R14.19 billion (including the additional proposed R3.8 billion for this year).

The DA revealed the total of bailouts from 2008/09 to 2017/18 during former president Jacob Zuma’s tenure was R105.729 billion which averaged out to R9.43 billion per year.

Total bailouts from 2018/19 to 2023/24 during Ramaphosa’s tenure was R292.28 billion which averaged out to R30.42 billion per year.

“The salaries of top executives, such as those at Transnet, Prasa [Passenger Rail Agency of SA], Postbank and SABC reach astonishing figures, with compensation for CEOs at even higher amounts, regardless of dire performance and eye-watering losses posted by these entities and the absence in many instances of annual financial statements,” it stated.

“Moreover, reports of financial mismanagement and wasteful expenditure within these entities further emphasises the disregard for responsible governance.”

The DA added that SOE CEOs earning very high salaries included those at:

• Transnet: R8 500 000.
• Prasa: R6 800 000.
• Postbank: R5 049 993.
• SABC: R5 735 155.

“This situation is a clear affront to the citizens and exposes the ANC’s priorities, favouring politically connected individuals over the wellbeing of vulnerable South Africans,” it stated.

Political analyst Prof Andre Duvenhage said huge amounts of money were being spent not only on CEOs of these companies but in the system itself, which was a result of cadre deployment.

Duvenhage said the people involved were not performing accordingly and were taking the industries down the drain.

“I can understand if you pay the CEO of Sasol, in a good year, a bonus of a few millions but I cannot understand when you can do the same with the CEO of Eskom or SAA when they are in trouble. In that case, it is extremely problematic,” he said.

“There is huge political influence. It is cadres that are deployed to institutions and the legislation in terms of employment equity make the same rules applicable to the private and the corporate side besides the framework of the state.

“Legislation is going to make it even more possible to employ the cadres who are extremely problematic.”

Duvenhage said semi-state institutions were supposed to be independent from political influence, but that was not how it was.

“Good management and good governance is not the case anymore,” he said.

Business Unity South Africa president Bonang Mohale said the problems of South Africa’s SOEs is primarily due to state capture, corruption, bribery, stealing and cheating.

“It is about poor governance and cadre deployment.”

Mohale said after 29 years in democracy, SA should be talking to people with demonstrable track records of running complex state-owned comapnies.

“Even if 20% of them would have failed, that’s the lost opportunity. It doesn’t help that we also come up with confused mandates for these SOEs,” he said.

Mohale said lessons had not been learned from the National Party (NP) that SOEs could be powerful vehicles for nation-building and social cohesion.

He said the NP used SOEs to eliminate the “poor Afrikaner problem” and they did that very well.

“We are looking at tenders and not acting on the things which keep us awake at night, such as the stubbornly high levels of unemployment which lead to increasing levels of poverty and of inequality,” he said.

Mohale said politics would always get in the way because politicians were not interested in effectiveness and efficiency.

“The Afrikaners put their best foot forward. We are putting absolutely our worst forward,” he said.