Minister of Public Enterprises Alec Erwin’s shake-up of the state sector — designed to locate it at the centre of a more vigorous economy — is moving into top gear.
Developments this week made it clear that managers and officials who cannot match the pace are get-ting short shrift as he overhauls the Department of Public Enterprises and turns the screws on tardy parastatals.
Erwin was expected on Friday morning to provide new details of how state enterprises will beef up electricity generation and overhaul the transport system. His budget vote speech in Parliament, officials said, would contain important announcements on Eskom, Transnet and troubled defence conglomerate Denel.
The speech comes during an unsettled time at the Department of Public Enterprises as Director General Eugene Mokeyane fights for a job that Erwin wants to give to Deputy Director General Portia Molefe, and at Denel, where chief executive Victor Moche has been told that he must make way for Grintek CEO Shaun Liebenberg.
Since his appointment after last year’s elections Erwin has announced R165-billion in new investment by the state concerns and has lent his support to the difficult mop-up operation at Transnet. The entire Transnet board was sacked, and South African Airways CEO André Viljoen was replaced by former IDC chief Khaya Ngqula.
Transnet CEO Maria Ramos was given firm political backing for the sensitive task of rooting out corrupt and incompetent managers while rolling out her turnaround strategy.
Friday’s speech is the opening bell for round two, with much more detailed investment plans for Eskom and Transnet, and a new stress on the government’s oversight of its assets. Eskom — far and away the most successful of the major parastatals — is expected to detail massive new investments in power generation, as well as the restructuring of transmission and distribution.
But Erwin’s determination to recast his department as a crack agency for state-led development has exposed skills gaps that have left him frustrated with some existing bureaucrats — notably Mokeyane.
The most charitable interpretation offered of Erwin’s disenchantment is that Mokeyane, under former minister Jeff Radebe, was preoccupied with the sale of state assets and was ill-suited for the department’s new role of building companies to deliver investments in economic capacity.
Other insiders say his limited skills and leadership abilities do not equip him for the job of transforming public enterprises from a backwater into an elite, front-line department.
Erwin would like to see Molefe take over management of the department, and she has been acting in that capacity this week. Her permanent appointment is “a formality”, say insiders.
Mokeyane has refused to step down quietly, however, so the formalities may take time. He is on leave and attempts to reach him for comment were unsuccessful.
Meanwhile, it appears the impeccable struggle credentials of Moche — an Umkhonto weSizwe veteran — no longer outweigh the Cabinet’s concern over the crisis at the arms company.
Erwin told a Denel board meeting in Pretoria on Tuesday that Moche would be replaced by Shaun Liebenberg, who currently runs Grintek, a listed electronics firm with major defence interests.
This is the first step in a more aggressive rescue plan for Denel, which has been on the brink of financial collapse for some time.
Several sources told the Mail & Guardian that Denel would be insolvent by July — years before the expected benefits of a more favourable defence procurement regime and participation in the Airbus A400M manufacturing programme begin to filter through to the bottom line. Unable to raise new loans or to fund either working capital or basic expenses from its limited cashflow, it would be forced to stop trading, they said.
“Moche has had two years and he hasn’t turned it around,” commented one figure familiar with the decision.
Several inside sources insisted his removal was unrelated to allegations of corruption at Denel or to anger among predominantly white unions at what they say is a purge of white managers.
To salvage the aerospace wing of the company, which is seen in the government as a potential catalyst for industrial development, equity partners who can help patch the financial holes and secure access to crucial international markets have been sought over the past two years.
An initial deal with BAe Systems fell through in 2003, and last year saw failed negotiations with European giant EADS. More recently discussions have been held with the Swedish firm Saab, industry sources say.
Erwin is expected to state on Friday that an international partner is needed to help secure markets for projects such as the technologically advanced — and hitherto unsold —Rooivalk helicopter.
It is understood that nothing concrete has yet been agreed with Saab, but Liebenberg’s appointment is seen by some as a clue to the direction of talks. The Swedish firm holds a major stake in Avitronics, Grintek’s electronic warfare arm.
Liebenberg is described by defence industry analysts as a conservative, but effective, figure. His appointment is considered by officials close to Erwin to be a sign that the minister has a mandate to deliver, which trumps political sensitivities.
“He has the backing of the president, and is on a mission,” one said.
Chairperson of the portfolio committee on public enterprises Yunus Carrim told the M&G that “given the strategic shift in the role of state enterprises, there is a need for new skills and capacities”.
Carrim stressed that the committee took no view on specific cases in the public domain at present. However, he said it would be watching closely to see whether the government acted more decisively in terms of the Public Finance Management Act against board members and managers who caused losses.