Blue IQ board members are currently being paid in accordance with the terms set out in their letters of appointment, dated 30 January 2009, some months before the current term. In November of 2009, I requested the CEO of Blue IQ to review the levels of remuneration of board members through a benchmarking exercise, in order to enable me to determine the appropriate terms of appointment of board members.
The outcome of this exercise showed that the fees received by board members were indeed excessive when compared with fees received by members of board of other DED agencies, although it is also true that Blue IQ has a more complex “conglomerate” structure. The outcome of the benchmarking exercise is set out below:
(i) Amounts paid to board members for each meeting:
Schedule meetings
Position: Chair
Fees paid per meeting: R25 000.00
Schedule meetings
Position: Member
Fees paid per meeting: R20 000.00
Special meetings
Position: All
Fees paid per meeting: R7 500.00
Consultation meetings
Position: All
Fees paid per meeting: R937.50 per hour
(ii)The amount paid to board members for the 2009/10 year:
See annexure A
(iii) Fees paid to board members of other DED agencies
Title: Chairman
GGB: R5 500
GFC: R4 000
GTA: R3 500
GEP: R5 800
GEDA: R2 500
BLUE IQ: R25 000
Title: Deputy Chairman
GGB: R5 000
GFC: R4 000
GTA: R3 300
GEP: R2 500
GEDA: R20 000
BLUE IQ: R25 000
Title: Members
GGB: R4 800
GFC: R4 000
GTA: R3 000
GEP: R2 500
GEDA: R20 000
BLUE IQ: R25 000
Title: Retainer: Chairman
GGB: N/A
GFC: N/A
GTA: N/A
GEP: R12 500
GEDA: N/A
Title: Retainer: member
GGB: N/A
GFC: N/A
GTA: N/A
GEP: R10 000
GEDA: N/A
The benchmarking exercise showed that a board member of a state owned enterprise like Eskom for instance, receives total fees per annum of R477 815 and that on an average basis chairpersons of boards of private sector companies receive a payment of R834 000 per annum and board member of R362 000.
I then wrote to the CEO of Blue IQ indicating that a further review should be undertaken and that “the levels should be appropriate for a public entity which is not a profit generating corporation”.
The CEO wrote back to me in January 2010 advising that in her view the matter of the remuneration of board members should be considered as part of the process of reviewing and rationalising the agencies. I decided that this was sensible advice since this matter of the remuneration of board members fell within the terms of reference of those undertaking the analysis of the agencies.
Indeed our consultants have concluded as follows “the agencies in general have demonstrated a significant lack of good corporate governance which points to systemic failure of the executive teams and boards of directors.” and has recommended a downward revision of the fee structures.
But in arriving at the new determination, we will have to take account of the need to attract the board members with the appropriate skills and experience, since we have decided to retain a rationalised agency structure.
I’m advised that the Blue IQ management recently became aware of National Treasury directives which preclude employees in the public service and in agencies from receiving additional remuneration.
Two members of the Blue IQ board are indeed currently employed in other government entities but have received remuneration as board members of Blue IQ. In terms therefore of the relevant treasury directives, the amount received by the two members are overpayments.
However, it is not clear whether the treasury directives are legally enforceable. Blue IQ has sought a legal opinion which was inconclusive. I am also taking legal advice in my capacity as the MEC. If the directives are legally enforceable, steps will have to be taken to recover overpayments.
However, even if they are not legally enforceable, I consider it inappropriate for directives issued by the National Treasury not to be applied by provincial entities. If fee structures set by the
National Treasury are considered too low to attract the expertise and experience that is required, a process of engagement with the National Treasury will at the very least be required.
For more information contact:
Mandla Radebe
Tel: 011 355 8703/8716
Cell: 083 288 8915
E-mail: mandla.radebe@gauteng.gov.za
Issued by: Department of Economic Development, Gauteng Provincial Government
25 May 2010
