GOVERNMENT is heading towards massive infrastructure expansion designed to promote economic activity and create jobs which will put the efficiency of state-owned enterprises under the spotlight.

The presidential state-owned enterprises (SOE) review committee, tasked with exploring sustainable SOE business models that strike a balance between commercial, developmental and shareholder objectives, is expected to release its report soon.

This will include recommendations on shareholder oversight and governance, recruitment, selection and appointment of boards, and executive management of SOEs.

"SOE compliance with codes of good governance is a fundamental aspect," says Sandra Burmeister, CEO of the Landelahni Recruitment Group.

One option under discussion is the grouping of SOEs under a central authority.

"Should this make it possible to put in place more effective and accountable leadership and allow for a sound governance structure, it may be deserving of support," says Burmeister.

However, there has been a blurring of lines between the shareholders' responsibilities and those of the board, and this has prejudiced operational effectiveness.

"It is the shareholders' role to appoint the board, comprising experienced, qualified and capable board members who are equipped to ensure the organisation is managed according to sound governance principles," says Burmeister.

"It should be the board that nominates the chairman and appoints - or dismisses - the CEO and other executive directors.

"If the board itself is not performing, government as the shareholder can remove directors, preferably at a properly-constituted annual general meeting."

Burmeister says that the state should not play the dual role of the shareholder and the board, since this leads to the kind of conflict of interest evidenced at SOEs such as the SABC, Telkom, Eskom and Transnet, which reached a flashpoint when the state interfered in the process of appointing the CEO.

"In this scenario, the board becomes accountable for the performance of the organisation under a CEO it may have had no hand in appointing and whom it is unable to replace in the case of non-performance," says Burmeister .