Is ‘raping the fiscus’ a crime?
The major problem with state-owned organisations in post-apartheid South Africa is their continued abuse by politicians. With few exceptions the top jobs at so-called ‘parastatals’ are reserved for well-connected ruling-party faithful. Year after year rem
Money for the well-connected
According to Fin24, wage bills at the country’s top three public institutions have skyrocketed recently. They say the three-year bill for salaries and bonuses of executive directors and senior management at Eskom, Transnet and the Industrial Development Corporation (IDC) runs to approximately R550m. The sum paid to 50 directors and a handful of senior staff at these organisations averages R3.7m per annum per employee over the period!
Executive remuneration is in the spotlight again following the resignation and subsequent legal action by ex-Eskom chief executive Jacob Maroga. Oblivious to the fact he resigned from his position, Maroga wants taxpayers to cough up the R85m he would have earned had he completed his contract. His claim includes R14.5m for loss of salary, R45m for incentives and R7m for other benefits! The Congress of South African Trade Unions (Cosatu) is horrified by the details revealed in the claim. Benefits claimed included R1m for a ‘dedicated driver and protector for his family’, R500 000 for security at his home and R1m for ‘personal assistance’. Maroga’s basic package is reported at R4.9m – but seems to exclude many perks mentioned in his R85m lawsuit. But he is not the only executive living it up at the taxpayers’ expense. IDC chief executive Geoff Qhena walked away with R10.29m in the year ending 31 March 2009. Transnet chief executive, Maria Ramos (now at Absa), received R5.3m in 2009 (after a massive R11.2m windfall in the previous year).
The Democratic Alliance says failed chief executives have benefited scooped up R262.1m in taxpayer-funded handouts despite their dismal track records. South African Airways (SAA) tops the ‘guilty’ list with massive payments to former chief executives including R8m to Khaya Ngqula, R3.6m to Andre Viljoen and a staggering R232m golden handshake to Coleman Andrews in 2001. In 2009 the struggling South African Broadcasting Corporation (SABC) paid R11m to former group CEO, Dali Mpofu. The broadcaster wants to levy a 1% payroll tax to fund future expenditure! And it doesn’t end there. Victor Moche, ex-CE at Denel received R3m in 2005 and Land Bank CEO Alan Mukoki picked up R4.5m after quitting the bank in 2007. This crazy payout culture has spread to the public service too. Former Public Protector Lawrence Mushwana received R7m while departing head of the National Prosecuting Authority Vusi Pikoli pocketed R7.5m! Why are chief executives at state-owned institutions bleeding the taxpayer dry? We can find some of the answers rooted in management structures in the ‘real’ public service…
The root of the problem
The heart of the problem in modern day South Africa is laid bare in an article published in The Times, 29 January 2010. In Corrupt Officials not Punished, Brendan Boyle outlines problems with disciplining corrupt civil servants. Willie Hofmeyr, head of the Special Investigating Unit (SIU), recently told Parliament’s Standing Committee on Public Affairs (SCOPA) that government lacked the capacity to stop or discipline crooked civil servants. Those guilty of infringements were using “time-consuming legal and bureaucratic steps” to delay punishment.
In a country beset by poverty as many as 400 000 individuals were receiving Social Services Agency benefits which they weren’t entitled to. Speaking to reporters after the SCOPA briefing, Hofmeyr observed that disciplinary steps against 6 000 senior government officials who failed to declare private business interests had not yet been implemented either. “One of the weak areas in the government is its disciplinary process,” said Hofmeyr, adding that the SIU “often recommend disciplinary outcomes and processes, but they seldom run to conclusion.”
After singling out disciplinary protocol as a major stumbling block Hofmeyr proudly announced progress at the SIU. The unit’s staff complement was up from 67 in 2001 to more than 500 and was expected to grow to as many as 2 000 in the next couple of years. Rather than provide hope, his announcement reinforces a serious problem at publicly funded organisations. Despite admitting that his unit cannot function properly Hofmeyr wants to increase its head count by some 300%. Instead of paying for 500 salaried staff to carry out investigations without censuring wrongdoers, the taxpayer has to fund 2000!
Too many employees
Head count is an issue at many public and state-owned institutions. Eskom’s employee numbers and staff costs have leapt higher in recent years. Employee benefit expenses (salaries to you and me) for the group’s 37 857 permanent employees and 5 600 contractors topped R15.166bn in FY 2009 – up from R11.353bn a year before. That works out at approximately R30 000/month per employee! If you wind the clock back a few years (to 2002) you’ll find that Eskom spent R6.249bn on 29 359 employees. An average wage across Eskom at that stage would have been just short of R17 800, suggesting the new hires since 2002 have been in senior and management positions!
M-Net current affairs programme Cart Blanche recently exposed accusations of tokenism against the power provider. Disgruntled employees head-hunted from India and other countries in Africa say they have been employed to meet Employment Equity quotas and nothing else. “This organisation is dysfunctional at best,” claimed one. The statement could apply to any number of public sector initiatives.
Editor’s thoughts: Those appointed to management positions at state-owned utilities manage taxpayers’ assets. Government owes it to the public of South Africa to ensure these appointees are appropriately skilled for the job – and held to account in the event they fail. Considering the record at Eskom, Transnet and the IDC, should we be entrusting national assets to state-executives? Add your comments below, or send them to [email protected]
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