‘Irregular’ Zuma ‘led way to abuses at SOEs’ – Hogan

Former public enterprises minister Barbara Hogan yesterday wrapped up her three-day testimony before the Commission of Inquiry into State Capture by tabling a set of recommendations of a rigorous process to appoint board members and chief executives in state-owned enterprises (SOEs).

Having faced constant interference from former president Jacob Zuma in her executive role as shareholder representative, Hogan said she believed that at the core of her axing from Cabinet in 2010 was her strong resistance to the appointments Zuma wanted.

“Zuma’s actions were irregular. He undermined boards, management and staff of SOEs like Transnet and Eskom – something which affected their effective functioning.

“Due to this, we saw a litany of maladministration and abuse of state resources at these SOEs.

“I regret that former president Zuma’s actions had an impact on the careers and reputation of some fine South African business leaders,” said Hogan.

Referring to her recommendations, she told Deputy Chief Justice Raymond Zondo that future SOE board and management appointments had to “be rigorous”.

She said: “The kind of scrutiny envisaged is very strong and extends to setting up an independent nomination committee to look at the suitability of the candidate, conflict of interest and requirements of the board.

“It is important that we insulate appointed directors from undue influence.

“The public should have confidence in those appointed.

“Boards have an advisory role to play, with an institutional experience, which we cannot afford to lose.”

She said more rules, guidelines and procedures on corporate governance contained in the King Report should be introduced into the running of SOEs by government.

“The nominations committee should examine the values of a candidate.

“The primary responsibility of a board member is the health of the company.

“We failed to come up with a framework which is rigorous enough.

“There is need for an honest appraisal, with ministers effectively monitoring the performance of boards and companies.

“Departments like public enterprises need professional expertise to avoid the wool being pulled over their eyes by company executives.

“Government needs to look at the shareholder role. Boards and management should be insulated from political interference to avoid executives finding themselves in the middle of a powerplay.

“There is need to do a role clarification exercise to spell out the powers and limits of the minister and the president.”

Hogan said there was a high level of disillusionment in most SOEs due to interference.

“Shareholder compact is the only mechanism we have at our disposal,” she said.

Zondo asked Hogan to prepare a document on how to address current governance weaknesses in SOEs, which would contribute to the inquiry’s final report.

– brians@citizen.co.za

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