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DEPARTMENT: PUBLIC ENTERPRISES

REPUBLIC OF SOUTH AFRICA

NATIONAL ASSEMBLY

QUESTION FOR WRITTEN REPLY

QUESTION NO.11

QUESTION:

11. Inkosi E M Buthelezi (IFP) to ask the Minister of Public Enterprises:

(1) Whether, with reference to his interventions by appointing senior managers that have
subsequently resigned, he has found that the rot within the state-owned entities runs
too deep for it to be reclaimed; if not, what is the position in this regard; if so,

(2) Whether he intends to introduce public-private partnerships; if not, why not; if so, what
are the relevant details? NW959E

REPLY:

(1) (a) As a matter of clarity, the Minister, with the concurrence of Cabinet, appoints the Board
of Directors of the State-Owned Companies (SOCs). He appoints the CEOs and CFOs
on the recommendations of the Boards. Only where Boards seek the Minister’s
concurrence on appointments of other Executives at subsidiary level, does the Minister
express a view. There are various reasons for resignations at the SOCs, such as end
of contract terms, personal reasons and the difficulties posed by the damage caused
in the institutions.
(b) The rot within SOCs is deep but can be overcome. This is demonstrated by among
others, the following achievements that have been registered under the leadership of
the current boards:
i. Eskom
 McKinsey repaid R902 million against a civil claim Eskom instituted against
the company.
 Eskom successfully pursued the recovery of R600 million that was illegally
paid to Trillian. A full bench of the Gauteng High Court ordered that the
funds be returned to Eskom to be used for the benefit of the country’s
citizenry.
 SIU is currently in court on behalf of Eskom to set aside the Tegeta
Brakfontein coal supply agreement to the value of R2.7bn.

ii. Transnet
 China South Rail (CSR) repaid R618 million to Transnet in relation to an
irregular prepayment for locomotive maintenance.
 Civil claims have been lodged against former Executives to recover losses
that were incurred as a result of their irregular conduct.

iii. State Capture Inquiry


 The Minister, the Chairs of the Boards of Eskom and Transnet and an
executive within the DPE have led evidence at the Commission in order to
shed light on events that led to some of the challenges that trace their
lineage to State Capture and how the department is working hard to root
corruption out of all SOCs.
 Eskom: The current Board, led by the Chairperson Mr Jabu Mabuza, led
evidence at the Commission.
 Transnet: The current Board, led by the Chairperson Dr Popo Molefe,
numerous executives and senior managers led evidence covering the
Locomotive deals (95, 100 & 1064) and supporting contracts, such as
advisory services; loan transaction services; consulting; funding; and
Treasury functions.
 Denel: Submissions were made to the Commission and the Board is waiting
to lead evidence. Former officials have already led evidence that shed light
on some of the irregular conduct that has resulted in the challenges the
company is currently facing.
 SAFCOL: Officials will be leading evidence in due course.

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 SAA: Among others, previous Ministers, the former Chairperson of the
Board (Cheryl Carolus) and former CFO and CEO (currently acting CEO of
SAX) have appeared and/or will be appearing before the Commission to
give evidence.
 Alexkor: Commission is investigating matters and the Board is fully
cooperating with the investigators.

(c) The progress highlighted above and the preparedness of the current leaders in
each SOC demonstrated that:
 there is a plan in place in each SOC to root out corruption;
 each Board, supported by other officials is heavily seized with executing the
plan;
 the plans are beginning to yield tangible results; and

However, to be frank, overcoming the full impact of State Capture and corruption
requires vigorous effort and courage from Boards and Management.

(2) SOCs within DPE portfolio are experiencing financial difficulties. The process to turn-around
SOCs is ongoing. This will culminate in the review of the operating models of the SOCs.
Furthermore, in some SOCs Strategic Equity Partners (SEPs) will be brought in to partner
with SOCs in improving some operations. In that vein, SOCs will provide the Minister with
proposals on areas where private partnership are required. Denel has a few examples of
this kind of partnerships

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