Lynne Brown calls for board overhauls

2014-10-05 15:00

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Seven boards named as needing new members or possibly a complete change after public enterprises reviews state-owned companies in minister’s ambit

The public enterprises minister has asked for nominations for board members for seven state-owned companies on her watch.

This follows a review conducted by Minister Lynne Brown and her department that led her to conclude the boards, including those at Eskom, Transnet and South African Airways, needed bolstering.

It is not clear whether the current boards will be given the chop. Nominations close next week.

Asked whether Brown was cleaning house, Peter Attard Montalto, an analyst at Nomura, said: “Maybe, but the ANC has such a tightly controlled pro-cess of cadre deployment that the best we could really hope for is cadres with a better grasp of the technicalities and with business acumen, who are still loyal to the party and policy.

“The reality is that the number of people ‘authorised’ by the ANC with that skill set is probably not huge.”

Colin Cruywagen, Brown’s spokesperson, did not directly answer questions on the influence of the ANC’s deployment committee, but he said Brown’s statement was clear about what she was looking for.

“We will not add to the statement,” he said.

Attard Montalto said Brown’s move was a signal that Treasury was having a serious influence across government in showing “the sheer impossibility of the current path of parastatals”.

Treasury officials earlier told Parliament some parastatals were operating unsustainably, with some of them borrowing cash to fund operations instead of infrastructure.

This week, Brown held back the annual reports of South African Airways and SA Express because the law requires them to prove they will be able to continue operating for a year after signature of the financial statements. Neither airline could do this – they were already in talks with Treasury for further state guarantees.


Financial snapshot:

Government guarantee: R350bn

Shortfall in Eskom’s projected costs (based on 16% tariff increase) vs Nersa allowances (8% tariff increase) between 2016/17 and 2017/18: R129.1bn

The Eskom board, chaired by Zola Tsotsi, has 13 members. Most of them were appointed in June 2011 and they have presided over ballooning costs. The National Energy Regulator refused to grant Eskom the tariff increase it wanted, and only budged this week, granting a 12.69% one-off tariff while sticking to its guns on the 8% increase for the rest of the period. The board was also responsible for a cash crunch that put the utility’s credit rating at risk, forcing an interministerial task team to come up with a rescue package last month.


Financial snapshot:

Gearing ratio:

2010: 39.8%

2014: 45.9%

The Transnet board, chaired by Mafika Mkwanazi, has 12 members. All except four were appointed in 2010. They presided over growth in revenue from R35.6?billion to R56.6?billion between 2010 and the year to March 2014. However, its aggressive capital investment programme, although mostly funded with cash from operations, has taken a toll on its gearing ratio, bringing it precariously close to its 50% cap.


Financial snapshot:

2013/14 revenue: R4.58 billion

Exports as % of revenue: 50%

Profit: R194m

Government guarantee:R1.85bn

The defence company’s board is chaired by long-serving board member Zoli Kunene. Eight of its 15 members were appointed in 2011, five years after the group embarked on a turnaround strategy and asked for a R5.3?billion bailout from government. Denel only made a profit in the year to March 2012.


Financial snapshot:

2012/13 revenue: R2.3bn

Pretax loss: R157.7m

Government guarantee:R539m

The regional airline, led by Andile Mabizela, has ten directors. All but two were appointed last year. And all presided over the company’s inability to prove it was able to continue as a going concern this week – forcing Brown to hold back its financial statements for the year to March.

“SA Express is currently unable to demonstrate such ability without government financial support,” Brown said in a note to Parliament. “The airline has applied for a going concern guarantee and this is being assessed by government.”


Financial snapshot:

2012/13 revenue: R27.1bn

Pretax loss: R1.2bn

Government guarantee:R5bn

The airline’s board, led by Duduzile Myeni, comprises 11 relatively new members. But it has been riven by squabbles that have spilt over into the media and prompted Brown to hold a frank meeting with the board in June.

In a note to Parliament this week, Brown said she could not table SAA’s 2013/14 annual report as the airline had applied for an additional going-concern guarantee from Treasury.


Financial snapshot:

2012/13 revenue: R855.6m

Profit: R70m

The board of this little-known timber and logging company is chaired by Veronica Magwentshu and has five other members, most appointed in 2010.

In the year to March 2013, the entity was slapped with a qualified audit opinion, its first in four years.


Financial snapshot:

2012/13 revenue: R93.9m

Operating loss: R20.7m

The state diamond miner has an eight-member board led by Rafique Bagus. Most are new, installed recently by former Public Enterprises Minister Malusi Gigaba to fix Alexkor, which has lurched from loss to loss.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.