Gordhan slams ‘arrogant’ Denel
Finance Minister Pravin Gordhan has slammed the "arrogance" of boards of some state-owned companies, in particular arms maker Denel.
|||Parliament - Finance Minister Pravin Gordhan has slammed the “arrogance and belligerence” of boards of some state-owned companies, saying arms maker Denel, in particular, should heed his message.
Gordhan was responding to the debate on the Treasury budget vote in Parliament on Wednesday, in which a number of MPs questioned the government’s commitment to follow through on promised reforms, suggesting Gordhan did not have the full backing of the cabinet in his efforts to stave off a looming ratings downgrade.
ACDP MP Steve Swart cited Denel, which has forged ahead with a joint venture with a company linked to the Gupta family despite lacking the necessary approval from Gordhan, as an example of the finance minister being undermined.
“On the question of Denel, one of the tendencies we are spotting in recent times is that when the boards are beginning to do things they’re not supposed to do, they begin to display a level of arrogance and belligerence that doesn’t befit the right kind of corporate governance, and the board at Denel needs to take that message,” Gordhan said in response.
The Denel board was to have appeared before Parliament’s public enterprises oversight committee on Tuesday to explain events at the company, where two executives remain on suspension pending disciplinary proceedings and the CEO has been removed, allegedly over their resistance to the joint venture.
The company was required in terms of the Public Finance Management Act to get approval from Gordhan and Public Enterprises Minister Lynne Brown before proceeding, which both have said it did not.
However, in a media briefing on her budget last week, Brown said it was possible the deal was technically legal since the Treasury was supposed to have responded to the request for approval within a reasonable period, failing which the entity could assume it had been given.
The question hinged on the interpretation of a “reasonable period”, Brown said, but added she had asked for the joint venture company, Denel Asia, not to trade in the meantime.
The row took an ugly turn last month, after Gordhan had issued a statement making it clear that as far as he was concerned approval had not been given because the Treasury had asked Denel to provide more information before it could finalise the request.
Denel then hit back, implicitly accusing the minister of acting in bad faith and against the principle of co-operative governance.
Gordhan also said in response to concerns over ailing national airline SAA that while the goal remained to find a minority equity partner, the first priority was to get it “on its feet” and ensure it was well managed and governed.
Deputy Finance Minister Mcebisi Jonas said earlier this would include the appointment of a full board, which would then have to fill the vacancies left in key executive positions.
SAA has requested a bailout of R5bn and has been unable to table its annual report because of auditor concerns over its status as a going concern, amid reports it is insolvent.
Gordhan said, however, work on SOE reform was making progress in an interministerial committee chaired by Deputy President Cyril Ramaphosa.
In the written version of his speech, which he didn’t complete, Gordhan said the Treasury was helping to develop a framework for private sector participation and for explicitly costing the developmental mandates of SOCs.
“Good progress” had been made and proposals were under discussion in the committee.
“As part of this reform process, work is in progress on a holistic resolution of the governance and financial issues affecting our state-owned airlines. A Terms of Reference for advice on the realignment of these enterprises and an appropriate group corporate structure has been developed,” he said.
Political Bureau