Editorial: The tiller wobbles
The independence of boards and executives, he implied, must be subordinated to the directives of the developmental state.
This approach seems inspired by the governing party's increasingly frequent trips to China. "There must be introspection on the part of the ANC, especially about our understanding of the political management as it relates to the state-owned enterprises [SOEs]. Are we really in charge of them or are the boards too powerful?" reported one 2010 party group after its visit to China, adding: "The [ANC] delegation observed that the management and staff at the Chinese SOEs have perfect clarity about the central government's wishes for their particular SOEs."
A charitable interpretation might have been that there should be unity of purpose on the grand strategic objectives of state-owned companies. That interpretation would have been wrong. We didn't know then that Gigaba's office, in the person of his powerful legal adviser Siyabonga Mahlangu, would literally be telling South African Airways (SAA) which newspapers to buy.
It is trite to say government must set broad goals for parastatals, but the Gibaba approach always looked like a serious risk to the already fraught governance environment at Transnet, Eskom and SAA. Politicians can mandate profits, or infrastructure delivery, or social impact, but, as Judge Thokozila Masipa put it in a ruling on the severance pay demanded by former Eskom boss Jacob Maroga: "A shareholder does not have the right to interfere in the decision-making of the board in respect to the company's internal affairs."
The public enterprises ministry is doing that on a routine basis, as numerous senior government and parastatal officials with direct experience of the process have told the Mail & Guardian. The interference almost always involves procurement. At the chicken-feed end of the scale there is the illustrative case of Mahlangu "persuading" parastatal executives to buy the New Age newspaper or sponsor its events. At the other are bids for major new contracts, including SAA's R10-billion purchase of more fuel-efficient aircraft. Nearly a trillion rand in infrastructure spending is currently planned by government, much of it through companies administered by Gigaba's department. The opportunities for patronage dwarf the 1999 arms deal.
We do not believe the Guptas when they tell us that Mahlangu and acting SAA boss Vuyisile Kona took the well-trodden path to Saxonwold to discuss their corporate travel needs.
For starters, the family owns a stake in Comair. And, even if their version is true, the presence of the minister's adviser at such a commercial negotiation would be gravely improper. What seems much more likely is that the Gupta brothers, together with the sons of Jacob Zuma and Ace Magashule, had called Kona in to discuss more serious business: the turnaround strategy for SAA, its planned purchase of a new Airbus fleet, and the flow of really big money.
The insertion of party donors, cronies and relatives into the heart of parastatal decision-making cannot be explained away with "developmental state" rhetoric. On the contrary, it is represents a basic threat to the infrastructure plan that is South Africa's best hope for more rapid economic growth. We know that there are many in the upper ranks of the ANC who are deeply disturbed by what they are seeing. There isn't much time left for them to make it stop.