When to intervene?
When should a Minister intervene at a State-owned company or independent regulator? It’s a difficult question to answer, and will remain so for as long as Ministers have shareholder responsibilities at companies, or line authority over regulators.
South Africa’s recent past is littered with examples of Ministers getting it spectacularly wrong. Often because they intervened, or failed to do so, without regard to legality or governance principles, and were motivated instead by political expediency or worse.
The reports arising from the Zondo commission of inquiry include thousands of pages of evidence of both serious missteps and malicious intent, particularly in relation to Ministerial interactions with boards and executives.
The unfolding Madlanga inquiry into criminality and political interference and corruption within the police and the criminal justice system indicates that such interactions remain problematic.
While it is too early to make firm judgments, the strangely timed directive by now-suspended Police Minister Senzo Mchunu ordering the disbandment of the Political Killings Task Team appears to be another case of Ministerial overreach; one that was more than likely illegal.
That said, there are also several cases where earlier Ministerial interventions were probably justified and even required, with governance failings (and more) at the Road Accident Fund emerging as something of a case study.
How and when to intervene is also a question facing South Africa’s highly-rated Electricity and Energy Minister Dr Kgosientsho Ramokgopa, who has two live cases: one at the South African Nuclear Energy Corporation, or Necsa; and the other at the National Energy Regulator of South Africa, or Nersa.
In the case of Necsa, he has been left with little choice but to intervene after five board resignations left the board inquorate. He is doing so by accelerating, by a few months, the appointment of an entirely new board rather than filling the vacant seats.
The response appears to be within the letter of governance rules but there are some lingering questions about whether it is in keeping with the spirit.
The old board members raised serious questions about whether they were given accurate financial information, or whether this had been manipulated so that a pay-progression policy for senior executives could be implemented without delay.
There is no sign that this will be probed further, with the Minister insisting that the new board will have people with the skills needed to drive strategy rather than fixate on salary policies. It shouldn’t be either/or, surely?
At Nersa, meanwhile, all “consequence management” for what was a serious miscalculation of Eskom’s regulatory asset base that precipitated a R54-billion settlement to be paid for by consumers has been deflected away from the regulators and towards a manager.
Given the size of the differential, and a failure to follow up when the problem was purportedly highlighted by a regulator raises questions. Especially given that it forms part of a pattern of miscalculations by Nersa that have all too often played out in the courts.
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