/ 8 July 2022

Amid heckling, Pravin Gordhan warns of state capture 2.0

Public Enterprises Minister Pravin Gordhan.
Public Enterprises Minister Pravin Gordhan. (David Harrison/M&G)

South Africa’s beleaguered state-owned entities (SOEs) are still vulnerable to capture. 

This is according to Public Enterprises Minister Pravin Gordhan, who warned that there are people who still wish to extract resources from the state by destabilising its institutions.

“There are people amongst us, and perhaps outside as well, who perhaps don’t want these SOEs to find themselves on the right track, because they would like to explore the possibility of state capture version two,” Gordhan said on Thursday night.

“So we have gotten rid of one set of thugs and rogues. They are not in orange uniforms yet, as they should be. But is it the case that we have created a vacuum, through political and other means, for the presence of people who actually want to continue with extracting resources from the state for their own purposes?”

Gordhan was giving a keynote address dealing with reform and governance at state-owned entities, at a public lecture hosted by Wits University’s School of Governance.

The minister and the lecture’s organisers were heckled by audience members before and after the address. 

Gordhan called the hecklers an “organised clique”. 

“You are the paid servants of the people I am talking about, people who want corruption to continue. All of you, you speak the same language. Now just remember, you are not going to intimidate us,” he boomed into a microphone. 

Gordhan delivered the address as the country continues to grapple with the recent spate of load-shedding implemented by Eskom, the state power utility at the heart of South Africa’s economic woes. 

One audience member called for Gordhan, and Eskom chief executive André de Ruyter to resign, as British Prime Minister Boris Johnson did earlier in the day. Another repeated a call to take Eskom out of Gordhan’s department and place it under the department of energy, a position that was reportedly expressed during a meeting of the ANC’s national executive committee (NEC) this week.

Responding to reports about the NEC meeting, Gordhan’s department released a statement alleging that the media “is being fed false stories of the recent ANC NEC meeting and its discussions about Eskom and the current energy situation”. 

The statement suggested the sources behind those reports were seeking to use Eskom and the country’s energy crisis “for their own nefarious political objectives”.

Eskom, and its gutting during the state capture era, was a key subject of the Zondo commission’s report — the final instalment of which was handed over last month after a number of delays. The commission’s chair, chief justice Raymond Zondo, also dedicated a section of his report to governance at state-owned entities, undermined over the years through corruption.

Addressing the current state of affairs at Eskom on Thursday, Gordhan underlined the role the wage dispute played in the recent blackouts. A settlement was reached between Eskom and labour earlier this week, presumably setting the utility on the course towards recovery.

The minister reiterated that Eskom’s decline was also the result of years of inadequate maintenance, poor quality coal and a dearth of skills.

Speaking about changing the course of state-owned entities post-capture, Gordhan said transforming them requires understanding the context in which their dismantling has been allowed to unfold. He noted that turning these entities around will prove difficult as long as there are people who wish to recreate the instability that nurtured state capture.

The current economic crisis, the minister suggested, makes their turnaround all the more complicated. “This rise in inflation and the consequent rise in prices is also going to have political connotations,” Gordhan said.

“It is going to give rise to all kinds of populism …. And we can see how opportunistic forces within the polity of a country can utilise these sorts of moments for the wrong reasons and create a climate of destabilisation, which benefits nobody at the end of the day.”

The minister pointed to “a number of countervailing forces that would say that state-owned enterprises must remain in ‘the old form’ … but that they should also remain in a situation which makes them vulnerable to further forms of extraction and what I referred to earlier on as state capture version two”.