Ministry pursues SOE directors for delinquency

The department of public enterprises is taking action to have 92 former directors of state-owned enterprises (SOEs) declared delinquent because of their alleged role in state capture. 

The Zondo Commission of Inquiry into state capture recommended that delinquency proceedings be instituted against board members who had breached their fiduciary duties.

Former SAA chair Dudu  Myeni has already been declared delinquent and the department is pursuing 95 cases against 92 former directors including Eskom (13 cases), Transnet (25), SAA (25), Alexkor (22) and Denel (10). 

The department’s deputy director-general for state-owned companies governance assurance and performance, Adv Melanchton Makobe, gave an update on Thursday on the progress made in implementing the recommendations of the Zondo commission.

Apart from the delinquency proceedings, other actions being taken include the referral of civil and criminal proceedings to the relevant authorities for investigation with a view to prosecution and the introduction of reforms at SOEs to ensure good governance. A number of proclamations have been issued for the Special Investigating Unit to conduct investigations. 

According to Makobe, contracts worth R14.7bn were subject to state capture in Eskom, while at Transnet the total value of tainted contracts identified by the commission was R41bn.

Public enterprises minister Pravin Gordhan introduced the department's presentation, noting that law-enforcement agencies were not making good progress in acting against corruption. He stressed that the difficult path of recovering from state capture and the devastating damage that it had caused would take time and involved rebuilding organisations to embody a culture of performance, accountability and efficiency.  

“The project of recovery is tortuous and full of potholes, and it's hard work,” the minister said.

He said the department had instructed SOEs to put into place a plan of action to deal with the commission’s recommendations and the department had also taken action to implement them. 

Makobe said that in addition to the delinquency proceedings, the department was ensuring that individuals who failed to exercise their fiduciary responsibilities were disciplined by their professional bodies and were flagged and/or prevented from accessing employment opportunities across the three spheres of government. A database of implicated officials had been established and the board appointment processes provided for in the draft National State Enterprises Bill was being refined.

Criminal and civil cases had also been opened. 

He said the Companies and Intellectual Property Commission (CIPC) was investigating delinquency cases against four former directors of Eskom. In addition, 56 evidence submissions had been prepared and referred to the CIPC on November 13 to assist the CIPC to initiate complaints against 60 former directors of Transnet, Denel and Alexkor.

“The department of public enterprises is on track to refer the remaining 35 evidence submissions to the CIPC by December 31,” Makobe told MPs.

The CIPC will have to approach a court for a delinquency declaration. 

Makobe said that the department was consulting with professional bodies such as the SA Institute of Chartered Accountants (Saica), the Legal Practice Council and the Independent Regulatory Board for Auditors (Irba) to form a workstream to support its delinquency proceedings. It is consulting with them to bring evidence from their disciplinary proceedings into delinquency proceedings. 

The department had also referred six cases relating to former board members, accounting and law firms implicated in state capture, to their respective professional bodies – four cases related to SAA, one to Denel and one to Transnet. 

A complaint laid with the Saica resulted in one SAA director being fined R6.1m and being barred from practicing as a chartered accountant.

A complaint laid with Irba resulted in a director of an audit firm being fined R5.1m and barred from practicing as an auditor, for an incorrect audit opinion in respect of Eskom's 2016 audit.