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Dear Corruption Watch, There seems to be a pattern in the turmoil erupting in our state-owned enterprises between boards and ministers.

Inevitably this leads to corruption allegations against one or more of the parties and to allegations of interference from the government in these enterprises. What is the responsibility of each of these actors in relation to governance issues?

Seeking Clarity

Dear Seeking Clarity

Sadly, the tales of subterfuge and boardroom drama at state-owned enterprises resemble the story lines of soap operas such as Egoli and Isidingo. These stories would be almost farcical if the news about the goings-on were not followed by the sobering losses incurred by these enterprises.

For instance, a R14.9-billion loss at PetroSA coincided with a vicious dispute on the board that seems to have pitted suspended executive directors against the board chairwoman, Nonhlanhla Jiyane, apparently resulting in the latter’s resignation.

The bailouts and guarantees required by state-owned enterprises have escalated to the point that they have recently been identified by the Treasury as one of three major threats to South Africa’s fiscal future.

Many commentators agree that the chaos in state-owned enterprises has resulted, at least partly, from little clear understanding of the responsibilities of ministers and the delineation between these and the responsibility of the boards of state-owned enterprises.

While there certainly are legislative frameworks to govern these responsibilities, there are around 130 different state-owned enterprises governed by different acts and regulations, depending on their activities.

As always, the applicable framework is only practically relevant in so far as there is the political will to investigate transgressions and to actively enforce the law.

Boards intended to prevent COI, promote good governance

The purpose of setting up independent boards for state-owned enterprises managing state-owned commercial assets and interests was to prevent conflict of interest and to ensure good governance. Such corporate governance would, under King 3, entail that directors of state-owned enterprises owe certain duties to the shareholders of the enterprise – the South African public – and may be removed from office should they fail in these duties.

As such, the role of the relevant minister or state official should be limited to that of representing such stakeholders – the South African public – rather than his or her own political interest or the interests of a specific political or economic grouping.

However, it appears that considerations of governance and public interest have been swept aside as we see ministers interfering in the affairs of state-owned enterprises when they should not do so, and failing to do so when their intervention is patently required.

Ironically, ministers often cite legislation for this failure, or call for additional laws.

It remains to be seen how the government will respond to the deluge of stories of bad governance and political interference in state-owned enterprises, but these issues should have been high on the agenda at the mid-year cabinet lekgotla held at the end of last month.

The government also tried to intervene in 2012 when a presidential review committee on state-owned enterprises reported on reforming, among other things, the appointment of boards and the roles of executives. These reforms clearly did not have the desired effect.

We suspect that what are required are not more laws or codes, but rather the clear political will to enforce the applicable law in the interests of us, the shareholders. Otherwise, the soap opera may very well continue.

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• This article was first published in Sunday Times: Business Times