The parlous state of our State-Owned Enterprises {SOEs) was brought into stark focus this week, when it was reported that arms manufacturer Denel was unable to pay full June salaries to its 3500 employees. The chickens had truly come home to roost when public enterprises minister Pravin Gordhan revealed that a ‘Good Samaritan’ had come forward to provide finance for the unpaid portion of the wages.

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Remedial measures

Despite a great deal of  ‘sabre rattling’ by the minister, who promised to visit all manner of consequences on the boards and management of SOEs if they did not begin to mend their ways, the many sceptics amongst us remain unconvinced that action will follow words. As he capitulated to the power of the unions at Eskom by over-ruling the board’s proposed zero increases for their bloated workforce last year, we fully expect that the stranglehold the unions have over the workforce at the majority of SOEs will thwart any meaningful remedial measures by management and boards.

The reality is that the advent of ‘state capture’ at SOEs, from Eskom to SAA and Transnet only served to amplify and bring into the public domain issues that have been  prevalent in SOEs for years. No one can realistically argue that all SOEs were well oiled, well managed enterprises that delivered on their mandates.

The bald and unpalatable solution is the one espoused by straight-talking finance minister, Tito Mboweni, who essentially proposed the closure of those SOEs deemed beyond saving.

Whistle-blowers

Mismanagement and corruption were entrenched underlying features of their operations – it was only when the architects of state capture were overcome by their greed, and effectively ‘over-reached’ in their devious endeavours that the cracks began to show. Ironically, a lot of what has subsequently come to light has been by whistleblowers not guided by moral imperatives, but by vindictiveness from being pushed out of the rent-seeking spaces they occupied for years!

As he said, the country can no longer hold on to ‘vanity SOEs’ such as SAA, which has embarked on innumerable ‘turn around strategies’ that have amounted to nothing except for money in the coffers of the consultants who designed them.

Minister Gordhan needs to be ruthless and realistic in his purge of these entities – in effect, the success of his actions will be achieved on the day that his ministry of public enterprises ceases to be a portfolio in the national government.

After matriculating, Vijay Naidoo studied Economics in the UK. Upon his return, he joined the family construction business as MD for 10 years.

He subsequently joined his sister in their furniture manufacturing business as director for quality assurance and operations. He was responsible for all quality aspects of their products, and led the project to the business achieving an ISO 9000 quality accreditation. As an export focused business, this was important for our international competitiveness.

Mr Naidoo has an abiding interest in quality management and productivity improvement, particularly in manufacturing.

More recently, he has focused a lot of his time on giving back to the community by way of mentorship of small businesses and sitting on the executive of the South Coast Chamber of Commerce. He also sits on the Board of the Ugu South Coast Development Agency.

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