Premier Corporate Governance Conference Public sector governance From

  • Slides: 37
Download presentation
Premier Corporate Governance Conference Public sector governance: From Transnet Stephen Sadie (MBA, M. Ed)

Premier Corporate Governance Conference Public sector governance: From Transnet Stephen Sadie (MBA, M. Ed) CEO Armscor to

Outline 1. Armscor 2. Blue IQ 3. Eskom 8. Transnet 4. Petro. SA 7.

Outline 1. Armscor 2. Blue IQ 3. Eskom 8. Transnet 4. Petro. SA 7. Telkom 6. SABC 5. SAA

Types of State-owned Enterprises • Schedule 1: Constitutional Institutions Public Protector, HRC, IEC •

Types of State-owned Enterprises • Schedule 1: Constitutional Institutions Public Protector, HRC, IEC • Schedule 2: Major Public Entities Eskom, SABC, Telkom, Transnet, DBSA, CEF, ACSA • Schedule 3: Other Public Entities • National – Accounting Stds Board, ARC, Competition Board, CCMA (PFMA 1999)

Provincial Public Entities X 9 • • • Gauteng Economic Development Agency Gauteng Gambling

Provincial Public Entities X 9 • • • Gauteng Economic Development Agency Gauteng Gambling Board Gauteng Tourism Authority Gauteng Consumer Affairs Court Gauteng Development Tribunal Gauteng Education & Training Board Gauteng Municipal Demarcation Board Gauteng Provincial Housing Board Gauteng Services Appeal Board (PFMA 1999)

Legislation • • Public Finance Management Act Municipal Finance Management Act Companies Act Protocol

Legislation • • Public Finance Management Act Municipal Finance Management Act Companies Act Protocol on Corporate Governance in the Public Sector • King 3 • President’s Review of SOEs

Legislation • Government is the shareholder and its powers are exercised through the responsible

Legislation • Government is the shareholder and its powers are exercised through the responsible minister • In PFMA, accounting authority = board, executive authority = minister • Although Dept of Public Enterprises is only responsible for 6 entities, it formulates policy and guidelines for all SOEs.

1. ARMSCOR

1. ARMSCOR

Armscor Directors (Dept of Defence)

Armscor Directors (Dept of Defence)

CEO fired • CEO Sipho Thomo & 2 senior officials suspended in 2005 after

CEO fired • CEO Sipho Thomo & 2 senior officials suspended in 2005 after recommendations by First Consulting • They were found not guilty and reinstated • CEO asked by board to resign in Nov 2009 • Suspended in Nov 2009 • Airbus A 400 risen to R 47 bn from R 17 bn • Late for portfolio committee, fell asleep at table • Chairman Popo Molefe “you are pulling us all down with you” • Fired on 7 January 2010 (M&G online 20/01/10)

2. BLUE IQ

2. BLUE IQ

Blue IQ Investment Holdings Directors (Dept of Economic Development, Gauteng) • • • Mr

Blue IQ Investment Holdings Directors (Dept of Economic Development, Gauteng) • • • Mr Phakathi – Chairman Mogopodi Mokoena – Deputy Chairman Amanda Nair – Executive Director Joe Tsotetsi - Non Executive Director Johnny Sexwale - Non Executive Director Younaid Waja - Non Executive Director Doris Dondur - Non Executive Director Abel Mawela - Non Executive Director S'celo Mahlalela

Remuneration • Firoz Cachalia, MEC for Economic Development, cuts fees • R 4 m

Remuneration • Firoz Cachalia, MEC for Economic Development, cuts fees • R 4 m paid in 2009/10 • Chairman from R 25 000 to R 10 000 per scheduled meeting (10 pa) • Board members from R 20 000 to R 7 500 (BD 24/08/10) • Eskom R 477 000 pa • Private sector average R 362 000 pa • 2 employed by other govt entities - to be recovered (BD 26/05/10)

3. ESKOM

3. ESKOM

Eskom Directors (Dept of Public Enterprises) PM Makwana Chairman BA Dames Chief Executive LCZ

Eskom Directors (Dept of Public Enterprises) PM Makwana Chairman BA Dames Chief Executive LCZ Cele NED SD Dube NED LG Josefsson NED H Beom Lee NED WE Lucas-Bull NED B Mehlomakulu NED JRD Modise NED P O’Flaherty Financial Director U Zikalala NED BL Fanaroff NED J Mirenge NED

Chairman resigns, CEO fired • • • Eskom Conversion Act 2002 Tussle between CEO

Chairman resigns, CEO fired • • • Eskom Conversion Act 2002 Tussle between CEO and chairman Maroga resigns, Godsell resigns President intervenes Maroga fired “CEO didn’t complete 41 tasks” “Chairman is racist” BMF vs COSATU “Who is in charge? ” “Do we need boards? ” Vytjie Mentor Maroga wants R 85 million

Underlying problems • PFMA – the government can directly appoint both board and CEO

Underlying problems • PFMA – the government can directly appoint both board and CEO • Abolish boards or give up appointing CEOs • Government wields power without responsibility. • Board has responsibility without power • Key issue is relationship between government and parastatal

4. PETROSA

4. PETROSA

Petro. SA Directors (Dept of Minerals & Energy) • • • Adv L. Makatini

Petro. SA Directors (Dept of Minerals & Energy) • • • Adv L. Makatini – Acting Chairperson Mr M. Damane – CEO of CEF Dr Z. Rustomjee – Board of CEF Mr D. R. Zihlangu – Former CEO of Alexkor and Impala Plat Mr M. Y. Kajee – CEO Sekunjalo Investments Ms N. Medupe – Founding Director of Indyebo Consulting Mr Y. Tenza – Former COO of Foskor Mr Z. Mavuso – Chief Director, Dept of Energy Mr N. G. Nika – Chief Financial Officer Ms P. S. V. Ngaba – Company Secretary

CEO fired • Sipho Mkhize, CEO, fired in Sept 10 • No reasons given

CEO fired • Sipho Mkhize, CEO, fired in Sept 10 • No reasons given by chairman, Popo Molefe (BD 24/08/10) • Tender irregularities • Based on Gobodo auditors report (FM 3/09/10) • CEO to challenge dismissal (BD 30/08/10)

5. SAA

5. SAA

SAA Directors (Dept of Public Enterprises) • • Cheryl Carolus – Chairperson Sizakela Mzimela

SAA Directors (Dept of Public Enterprises) • • Cheryl Carolus – Chairperson Sizakela Mzimela - CEO Cyril Jantjies - HR professional Russell Loubser – CEO, JSE Duduzile Miyeni – CEO, Skills Dynamics Bonang Mohale – Chairman of Shell SA Lindi Nkosi-Thomas – Advocate of High Court Margie Whitehouse – Marketing professional

Exceeded authorisation • Former CEO Khaya Ngqula left under a cloud (family tenders) •

Exceeded authorisation • Former CEO Khaya Ngqula left under a cloud (family tenders) • New Chairwoman, Cheryl Carolus, taking action • Audit by KPMG • 1 st summons R 27 m for retention bonuses • 2 nd summons for R 24. 8 m for sponsorships • Angel Cabrera, Argentinian golfer & other sponsorships • SAA wants R 52 m back

Reviewing processes to appoint board members • Acting director general, Andrew Shaw of DPE,

Reviewing processes to appoint board members • Acting director general, Andrew Shaw of DPE, told Scopa in Sept 10: • Relevant skill sets • Assessing potential conflicts of interest • Sufficient time to dedicate to company • Excluded previous SAA board members from all boards under DPE • Could charge other employees as well. (M&G 3/09/10)

6. SABC

6. SABC

SABC Directors (Dept of Communications)

SABC Directors (Dept of Communications)

The best soapie in town • SABC Ltd in 2004 • Dali Mpofu, CEO,

The best soapie in town • SABC Ltd in 2004 • Dali Mpofu, CEO, caught up in Mbeki/Zuma conflict • Gab Mampone, acting CEO, March 09 • SOS – Save our SABC May 09 • Prevent political interference in board – Prof Harber (BD 27/05/09) • Outgoing chairwoman, Irene Charnley appoints Solly Mokoetle as CEO • Zuma appoints new board Jan 10 • Ngubane unpopular with board over unilateral decision to appoint Phil Molefe, head of news

Chairman/CEO vs Board • Mokoetle complains to Ngubane of pressure from board. 524 emails

Chairman/CEO vs Board • Mokoetle complains to Ngubane of pressure from board. 524 emails from board Jan – July 2010 • Board is beginning to manage SABC (M&G 20/08/10) • Board launches disciplinary action against Mokoetle. Provide reasons why he should not be suspended (M&G 27/08/10) • Robin Nicholson, CFO appointed acting CEO • MK Military Veterans Assoc backing Mokoetle vs COSATU & SACP (The Times 1/09/10)

Board and management • Once the board has established the values, vision and purpose

Board and management • Once the board has established the values, vision and purpose of the business, it must determine the strategic direction. Management can develop various strategies which are approved by the board and then management implements them. (Khoza, RJ and Adam, M. The Power of Governance, 2007)

7. TELKOM

7. TELKOM

Telkom – Board of Directors Jeff Molobela Chairman Jeffrey Hedberg Acting Group CEO Deon

Telkom – Board of Directors Jeff Molobela Chairman Jeffrey Hedberg Acting Group CEO Deon Fredericks Acting Chief Financial Officer Brahm du Plessis Independent Sibusiso Luthuli Independent Julia Ntombikayise Hope Government Representative Younaid Waja Non-Executive Director PIC Peter Joubert Independent Dr Victor Lawrence Government Representative Reitumetse Jackie Huntley Government Representative

Chairman interference • Telkom SA Ltd - Listed on JSE & NYSE 2003 •

Chairman interference • Telkom SA Ltd - Listed on JSE & NYSE 2003 • Acquired Multilinks in Nigeria May 07 – financial disaster • Govt 39. 8% largest shareholder – can appoint 5/12 directors • PIC 15% (www. telkom. co. za) • Tension between profit and installing unprofitable landlines in remote areas

Chairman interference • CEO Reuben September complains of interference by chairman Jeff Molobela (BD

Chairman interference • CEO Reuben September complains of interference by chairman Jeff Molobela (BD 22/06/10). • CEO and CFO Peter Nelson resign (BD 14/07/10) • Jeffery Hedberg appointed as acting CEO from Cell C (FM 16/07/10)

8. TRANSNET

8. TRANSNET

Transnet Directors (Dept of Public Enterprises) Prof G. K. Everingham Acting Chairman CF Wells

Transnet Directors (Dept of Public Enterprises) Prof G. K. Everingham Acting Chairman CF Wells Acting Group Chief Executive M. J. Hankinson NED Dr ND Haste OBE NED MP Moyo NED NR Ntshingila NED A Singh Acting Chief Financial Officer PG Joubert NED KC Ramon NED N. B. P. Gcaba NED NNA Matyumza NED

Succession • Transnet Ltd a public company in 2000 • Maria Ramos resigns as

Succession • Transnet Ltd a public company in 2000 • Maria Ramos resigns as CEO to go to ABSA Feb 09 • Siyabonga Gama, CEO Transnet Freight Rail is a candidate supported by Cabinet ministers (Minister of Justice - Radebe & Minister of Communications - Nyanda) • Disciplinary process against Gama and dismissal for exceeding limit of R 10 m (BD 15/06/10) • Quiet diplomacy of minister criticised. Prefers to let boards run SOEs. (M&G 18/06/10)

Shortage of skilled corporate governance professionals • Company secretaries: King III – “competent, suitably

Shortage of skilled corporate governance professionals • Company secretaries: King III – “competent, suitably qualified” • Companies Act – “knowledgeable and experienced in the law” • CIS qualification recognised in 70 countries • 101 years old in Southern Africa