Stabilising state-owned enterprises could take six months or longer, depending on the extent of corruption, said Public Enterprises Minister Pravin Gordhan.
The minister on Wednesday briefed the portfolio committee on public enterprises on the progress made in addressing governance challenges at state-owned enterprises (SOEs) in his portfolio.
Overall revenue generated by the six entities, Eskom, Denel, Transnet, SA Exress, Safcol and Alexkor amounted to R284bn. The assets are worth R1.1trn. In aggregate, the entities have made a R1.6bn loss, which must change, Gordhan said.
He explained that the mandate of the new boards at SOEs is to deal with the issues of the past, mainly addressing corruption. Presently they have to try get businesses back on their feet, ensuring enough revenue is generated to cover operational expenses for their financial sustainability. Finally, boards have to consider the future sustainability of the entities so that they can stay on track with developments with industry and not fall behind.
“In the five-month period the basic theme has been to deal with the past, survive the present and create a basis for sustainability for the future,” he said.
“Cleaning up the past won’t be easy, we also have the challenges of the past to deal with,” Gordhan said about the prolific corruption. He expressed faith in the judicial commission of inquiry into state capture. He believes that consequences will follow.
Gordhan said that the full consequences of the seven or eight years of State Capture still needs to be understood. “How to eradicate it will be a big challenge.”
The department of public enterprises will establish a whistleblower hotline, separate from others established at entities, in order for more information to come to light so that the “nonsense” at institutions can be uncovered, he told MPs. He believes there are still good, honest South Africans at these entities who want them to fulfill their mandates, which are within the national interest.
Corruption enabled by past board members and mismanagement has led to entities being in a position where not enough revenue is generated to cover operational costs, such as paying salaries and creditors, Gordhan explained.
“Eradicating corruption is a difficult exercise,” he said. Those who are guilty are trying to find ways to evade taking responsibility for their actions, by drumming up certain narratives in political spaces, in an effort to have others spring at their defense.
“Corruption is not just about stealing a few rands. It has a devastating impact on institutions,” Gordhan explained. Competent managers have been removed, and replaced with people who have the wrong intentions – to acquire wealth for themselves and partners.
“Corruption means less housing, less money for education and facilities many people don’t have, especially given the fiscal constraints we face," he added.
The focus is now to ensure those who benefited from corruption in the past, lose out as reforms are introduced. “In reform processes there will be winners and losers. In the reform process we must make sure the majority of South Africans be winners.”
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