Public Enterprises on briefing to Parliamentary Portfolio Committee

The Department of Public Enterprises is looking to review the Memoranda of Incorporation (MOIs) in its portfolio.

The review seeks to improve the memoranda where there are weaknesses, with the ultimate aim of improving accountability and performance. It will also consider the delegation of more authority to the companies on matters that do need executive input.

The Department’s leadership team is acutely aware of the governance weaknesses that led to state capture, and as a result we deliberately empower the executives to operate independently when it comes to day-to-day management and strategy implementation. The Department is already empowered in law to carry out its duties as the shareholder representative on behalf of government.

The MOIs are the equivalent of a constitutional document for the department and the SOCs and are helpful in establishing a cooperating environment and an accountability framework for the boards and the management teams. One of the tools available to the department is the appointment of a “quasi” Administrator to turn-around the company, in the event a board has been dissolved.

Events that could lead to dissolution include:

• Where the SOC is in financial distress or there are allegations of maladministration and mismanagement;
• When the SOC has material governance challenges;
• When the SOC fails to perform its functions effectively or efficiently; and
• Where the SOC has acted unfairly or in a discriminatory or inequitable way towards a person to whom it owes a duty under the Legislative or Policy Framework of the SOC; or has failed to comply with any law or any policy envisaged in the Legislative or Policy Framework relevant to the SOC.

The review of the MOI should also look at the existing governance structures in the SOC, especially where there is ambiguity as who to report to, or the system is not working effectively.