New research to help fix the fail in SOE governance laws

South Africans are no stranger to loadshedding and increasing train passenger woes that can be linked to the capture of strategic State-owned Enterprises (SOEs) like Eskom and the Passenger Rail Agency of South Africa (Prasa). These institutions over the years turned into places where it was a free for all to steal money and board appointments became proxies for the creation of opportunities for looting. Given the prevailing ills of state capture there is a need for greater transparency and quality in these board appointments.

Important research initiated by the Dullah Omar Institute (DOI) at the University of the Western Cape seeks to change this. The DOI with the support of the Open Society Foundation is conducting research and advocacy on the framework for the appointment and dismissal of Board members to SOEs. This research is crucial as existing laws governing these board appointments are fragmented and do not demand the necessary transparency. It gives ministers unlimited discretion which, as testimony given to the Zondo Commission shows, is often abused. For years, government promised to better regulate these appointments but after more than a decade, the legislation on SOE governance remains deeply problematic.

According to DOI director Prof Jaap de Visser the overall purpose is an improved functioning of SOEs that will ultimately lead to improved service delivery benefiting all South Africans. “In particular, we want to see an improved accountability structure for the executive leadership, legislative oversight over and public engagement with those SOEs.” The research focuses on two key flaws in the appointment and dismissal of SOE board members, namely, the procedural issues and the substantive criteria used for appointing board members. Said De Visser: “Our aim is to suggest options for law reform, criteria for board membership and criteria for appointment processes that recognise the role of the public in these appointments.”

Currently the law for appointing SOE boards is fragmented as each SOE is governed by at least two, but often even three different laws, as is the case with Eskom, for example. This legal confusion over SOE governance creates conditions that enable State Capture. Pres Cyril Ramaphosa in his State of the Nation address emphasised the need to restore the integrity and capacity of SOEs. This ongoing research aims to contribute to that end.

To track the research visit the website at: https://dullahomarinstitute.org.za/women-and-democracy/board-members-of-state-owned-enterprises-towards-transparent-appointments

Latest publication: https://dullahomarinstitute.org.za/women-and-democracy/board-members-of-state-owned-enterprises-towards-transparent-appointments/reports