South African State-Owned Companies are Properly Managed!

It is now official, coming directly from the Deputy State President.  South African State-owned companies are properly managed and so will not need to be privatised.  The glib statement was made by Cyril Ramaphosa during a question and answer television discussion which included a large share of the top brass of the ANC.  The fact that there were no gasps of astonishment from the ANC leadership, no cries of ‘Liar!’ entitles one to believe that those leaders all subscribe to the view of Ramaphosa, supposedly an experienced, competent businessman, that the State-owned companies are in fine fettle.

An item on the news today mentioned that Citibank has withdrawn a R250 million facility previously granted to South African Airways, on the ground that the risk of collapse of that State-owned company and default on the loan was too high.  The suggestion was made that the facility would be reinstated if a Government guarantee were to be made available.  A recent letter of the Legal Advisor of SAA stated unequivocally that the company was de facto insolvent and trading illegally in an insolvent condition.  SAA recently made a spirited attempt to subvert the directions of the Treasury to honour an agreement to lease five Airbus aircraft from Airbus, a deal struck when SAA found that it could not pay for the purchase of ten aircraft, preferring to lease them through a local company.  The proposed lease would have cost SAA significantly more, and it would have provided those involved with a very lucrative source of corrupt funds, and yet the Chair of SAA, rumoured to be a close friend of Jacob Zuma (possibly even to have had a child by him) remains in office, enforcing a lunatic and illegal policy of demanding a 30% share in the companies that do business with the airline.  That policy alone acts to push up the operating costs of SAA dramatically.

Another news item referred to the fact that PetroSA, another ‘well-managed State-owned corporation, was in a similar position after having cost the country (I.e. the taxpayers, not the ANC) about R1,5 billion in the past two years, with more to come.

Recent experience with the South African Post Office, with a registered letter posted from Midrand to Pretoria, a distance of less than 50 kilometres, taking more than five weeks for delivery, while the delivery service to a post-box in the Bryanston Post Office was unaccountably suspended for more than three months, after a year in which postal strikes interrupted service for about eight weeks, all with no notification to the customers.

Spoornet, which provides (?) essential rail services to mines, refineries, forestries and agriculture, undertook to provide a specified number of rail trucks per week to a mine, exporting a valuable bulk, semi-processed mineral to Durban Harbour.  When the first train was called up in accordance with the agreement with Spoornet, it simply failed to arrive, with no explanation.  Many telephone calls were made to track down the reason for the failure, with no result.  Eventually, a Director of the company discussed the matter with his partner and close confidant, a Black advocate, who informed him that the matter could be speedily resolved by payment of a fee to the advocate of R300 000 (approximately four days demurrage on the freighter waiting to be loaded in Durban Harbour.  Payment was made and the train arrived within three hours.  Subsequently, the advocate advised that the delay in service was the result of the mine company not employing a Black company to arrange the delivery of the trains.  Seeing the obvious illegal blackmail, the mine employed such a company, and the trains ran smoothly for a few deliveries, and then stopped again, unaccountably and without notification.  After a day spent walking the corridors of Spoornet Head Office in an attempt to find a responsible Manager to resolve the impasse (one of the people interviewed who referred the two Directors of the mining company to someone else, and they were referred again to him after seven hours of fruitless effort, was asked by one of the Directors what work he did.  The reply?  “I hold down a position.”) the two Directors barged into a meeting of the General Manager of Spoornet with several Heads of Departments and demanded to know the reason for the refusal of service.  The reason was given the following day.  The Black company arranging the service had failed to pay an amount to Spoornet.  After proving that the company had met every obligation to Spoornet and to the Black company, the General Manager was adamant.  The mine had to pay an amount of R260 000 to settle the debt of the Black company to Spoornet.  Payment was made under protest, and the service resumed.  A visit to the Black company to resolve the problem and recover the money revealed that the three Directors of that company had each purchased a new 7 Series BMW.  Numerous companies, employing tens of thousands of workers, have withdrawn from South Africa as a result of the high cost, unreliable service and outright dishonesty they have experienced in their dealings with Spoornet.

Of course, the prime example of a well-managed State-owned corporation is Eskom, which has single-handedly brought about a significant share of the decline in the GPD of the country by its inability to provide a reliable supply of electricity to industry.  The very high cost of that electricity has had effects that are more long-term in character, driving away companies that might have invested in new industrial capacity.  In case there is a statement from the ANC that we don’t really need investors from the USA or Europe (no longer favoured sources of investment, in view of the country’s developing rapprochement with Russia and China), many of those investors are South Africans, who would have liked nothing better than to invest in a way that will benefit their homeland, if only there was a Government they could trust, managed by politicians who they could believe to speak the truth!

If Cyril Ramaphosa can claim that these examples of State-owned corporations are well managed, one must have strong doubts about his ability to manage the country, and one must further take extreme care to check the accuracy and veracity of any statement he must make in the future.  On the evidence of this statement alone, Ramaphosa has disqualified himself from any future position of trust in the Government of South Africa, as much as his boss did when his indiscretions were revealed in their nakedness!