The African National Congress (ANC) on Thursday described as “erroneous and unfortunate” the “generalisation that corporate governance challenges beset” the country’s state-owned enterprises (SOE).
The party‚ through spokesperson Zizi Kodwa‚ said it “has noted the decision by Futuregrowth Asset Management to suspend loans to a number of SOEs…(as) a result of concerns the asset manager has in relation to governance and decision-making at these institutions”.
“The ANC is concerned by the posture adopted by Futuregrowth. It is our hope that Futuregrowth will engage with the relevant ministries and parastatals to discuss the concerns they have; and together find a solution in the interest of the economy and country‚” Kodwa added.
He said the ANC’s “commitment to ensuring they are models of good corporate governance‚ independence and sound technical capacity is not in doubt”‚ but added: “Where necessary‚ the ANC-led government must not hesitate to comprehensively respond and act on any concerns regarding their governance frameworks and institutional integrity.”
Kodwa said interventions “made to strengthen these institutions included the establishment of an inter-ministerial committee chaired by Deputy President Cyril Ramaphosa‚ to oversee their stability and reform‚ with specific focus on their governance frameworks”.
“Accordingly‚ we believe that Futuregrowth‚ or other any investor‚ should await the outcome of these interventions before taking any preemptive stance‚” he said.
Democratic Alliance leader Mmusi Maimane‚ however‚ described Futuregrowth’s decision to withhold additional funding to a number of SOEs as “a vote of no confidence in President Jacob Zuma”.
He said Futuregrowth’s announcement that it would only proceed with financing SOEs when “proper oversight and governance” have been restored at the companies was “a clear swipe at Zuma and his project of state capture”.
Maimane quoted Futuregrowth saying “recent reports that strongly hint of conflict between branches of South Africa’s government‚ the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence”.
He noted that Futuregrowth’s action comes “just weeks after the absurd Cabinet decision to place the president in charge of overseeing all SOEs”‚ and argued that “restoring confidence requires that Zuma desists from his attempt to centralise control over SOEs in himself‚ and affirms the independence of the Treasury”.
“South Africa’s SOEs are in a dire state costing the country billions as government continues to prop them up despite their immense losses. At the root of their mismanagement is large-scale corruption that feeds an ANC patronage network headed up by Zuma.”
Asset manager halts loans to state firms
Fixed-income asset manager Futuregrowth has halted lending to six state-owned firms, including power utility Eskom and logistics firm Transnet, it said on Wednesday citing political uncertainty.
Futuregrowth, which manages client assets of around 170 billion rand ($12 billion), said it was concerned by “a power struggle” in government, triggering a drop in the rand currency.
An elite police unit is investigating Finance Minister Pravin Gordhan over a suspected surveillance unit set up when he ran the tax service while the Treasury has accused Eskom of blocking an inquiry into coal contracts between the utility and a firm owned by the Gupta family, which has denied holding undue political sway over President Jacob Zuma.
Eskom’s bonds fell on the news of the lending halt by Futuregrowth. The other firms affected by the lending freeze are the Development Bank of Southern Africa, the Land Bank of South Africa, the Industrial Development Corporation and South African National Roads Agency and rail.
The asset manager’s Chief Investment Officer Andrew Canter said the Cape Town-based firm would stop talks with three state-owned firms seeking more than 1.8 billion rand in loans.
“There were three or four loans in negotiation with three different entities and we have informed them that we’re pulling those back now, we won’t be making those loans,” Canter said.
“We just said we can’t defend ourselves to our clients three years from now why we made additional loans now. So we felt that the right thing to do was to suspend it,” he said.
Communications officials at the public enterprises ministry which oversees the state firms were not available to comment.
Canter said Futuregrowth was also concerned after the cabinet said it would form a new committee to oversee state-owned enterprises that would in turn be supervised by Zuma.
The presidency last week defended the new plan after analysts said it would limit the finance minister’s control over state firms.
“We’re principally worried about the state-owned enterprises that may fall under this new council because we’re not sure what that council is trying to accomplish,” Canter said.
Zuma’s team and the Treasury under Gordhan have disagreed about government spending, including loss-making state companies like South African Airways, analysts say.
“There’s uncertainty among investors and concerns generally about how state companies are spending their money,” said chief trader at Bidvest Bank Ion de Vleeschauwer. - Reuters
Futuregrowth: ANC says loan suspension was premature
The African National Congress (ANC) on Thursday described as “erroneous and unfortunate” the “generalisation that corporate governance challenges beset” the country’s state-owned enterprises (SOE).
The party‚ through spokesperson Zizi Kodwa‚ said it “has noted the decision by Futuregrowth Asset Management to suspend loans to a number of SOEs…(as) a result of concerns the asset manager has in relation to governance and decision-making at these institutions”.
“The ANC is concerned by the posture adopted by Futuregrowth. It is our hope that Futuregrowth will engage with the relevant ministries and parastatals to discuss the concerns they have; and together find a solution in the interest of the economy and country‚” Kodwa added.
He said the ANC’s “commitment to ensuring they are models of good corporate governance‚ independence and sound technical capacity is not in doubt”‚ but added: “Where necessary‚ the ANC-led government must not hesitate to comprehensively respond and act on any concerns regarding their governance frameworks and institutional integrity.”
Kodwa said interventions “made to strengthen these institutions included the establishment of an inter-ministerial committee chaired by Deputy President Cyril Ramaphosa‚ to oversee their stability and reform‚ with specific focus on their governance frameworks”.
“Accordingly‚ we believe that Futuregrowth‚ or other any investor‚ should await the outcome of these interventions before taking any preemptive stance‚” he said.
Democratic Alliance leader Mmusi Maimane‚ however‚ described Futuregrowth’s decision to withhold additional funding to a number of SOEs as “a vote of no confidence in President Jacob Zuma”.
He said Futuregrowth’s announcement that it would only proceed with financing SOEs when “proper oversight and governance” have been restored at the companies was “a clear swipe at Zuma and his project of state capture”.
Maimane quoted Futuregrowth saying “recent reports that strongly hint of conflict between branches of South Africa’s government‚ the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence”.
He noted that Futuregrowth’s action comes “just weeks after the absurd Cabinet decision to place the president in charge of overseeing all SOEs”‚ and argued that “restoring confidence requires that Zuma desists from his attempt to centralise control over SOEs in himself‚ and affirms the independence of the Treasury”.
“South Africa’s SOEs are in a dire state costing the country billions as government continues to prop them up despite their immense losses. At the root of their mismanagement is large-scale corruption that feeds an ANC patronage network headed up by Zuma.”
Asset manager halts loans to state firms
Fixed-income asset manager Futuregrowth has halted lending to six state-owned firms, including power utility Eskom and logistics firm Transnet, it said on Wednesday citing political uncertainty.
Futuregrowth, which manages client assets of around 170 billion rand ($12 billion), said it was concerned by “a power struggle” in government, triggering a drop in the rand currency.
An elite police unit is investigating Finance Minister Pravin Gordhan over a suspected surveillance unit set up when he ran the tax service while the Treasury has accused Eskom of blocking an inquiry into coal contracts between the utility and a firm owned by the Gupta family, which has denied holding undue political sway over President Jacob Zuma.
Eskom’s bonds fell on the news of the lending halt by Futuregrowth. The other firms affected by the lending freeze are the Development Bank of Southern Africa, the Land Bank of South Africa, the Industrial Development Corporation and South African National Roads Agency and rail.
The asset manager’s Chief Investment Officer Andrew Canter said the Cape Town-based firm would stop talks with three state-owned firms seeking more than 1.8 billion rand in loans.
“There were three or four loans in negotiation with three different entities and we have informed them that we’re pulling those back now, we won’t be making those loans,” Canter said.
“We just said we can’t defend ourselves to our clients three years from now why we made additional loans now. So we felt that the right thing to do was to suspend it,” he said.
Communications officials at the public enterprises ministry which oversees the state firms were not available to comment.
Canter said Futuregrowth was also concerned after the cabinet said it would form a new committee to oversee state-owned enterprises that would in turn be supervised by Zuma.
The presidency last week defended the new plan after analysts said it would limit the finance minister’s control over state firms.
“We’re principally worried about the state-owned enterprises that may fall under this new council because we’re not sure what that council is trying to accomplish,” Canter said.
Zuma’s team and the Treasury under Gordhan have disagreed about government spending, including loss-making state companies like South African Airways, analysts say.
“There’s uncertainty among investors and concerns generally about how state companies are spending their money,” said chief trader at Bidvest Bank Ion de Vleeschauwer. - Reuters
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