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South Africa’s Transnet – Beware State Ownership And Political Management

Transnet is the government owned parastatal transport company in South Africa – railways ports, that sort of thing. Current allegations are that the management appointed to the company essentially looted it. Which is an interesting warning about government ownership itself and the associated political appointment of management. For it does rather matter who the politicians are and who they appoint on that political basis:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]TRANSNET WAS THE FIRST TARGET OF STATE CAPTURE – POPO MOLEFE
The parastatal’s board chair says some executives were professional thieves and went to work only to loot the company.[/perfectpullquote]

The essential claim being that the criminals gained political power and appointed those with the same lack of morals – or same aims – to run the company. With the inevitable result:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] “We are increasingly beginning to understand the scale of theft and the abuse of public resources. The claws of that corruption have ran deep, those roots are so deep that we don’t know how soon we would get them out.” Molefe says that summons have been served on some of the former top executives implicated in maladministration and corruption at the rail agency. The state-owned company’s been working on a clean-up operation at the parastatal which has allegedly been looted by Gupta allies in prominent positions. [/perfectpullquote]

As to the manner of the looting, from Wikipedia:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] On 17 March 2014, Transnet’s CEO, Brian Molefe, announced contracts of R50 billion with four international manufacturing companies to build 1,064 Locomotives. (465 Diesel and 599 Electric Locomotives). GE will supply 233 Diesel locomotives, CNR 232 Diesel locomotives, Bombardier Transportation will supply 240 Electric locomotives and CSR 359 Electric Locomotives. Of the total of 1064 locomotives, 70 will be imported complete and the rest will be built locally by Transnet Engineering in Pretoria and Durban. Transnet have subsequently terminated it’s contracts with Brian Molefe and his successor Siyabonga Gama. A forensic report states Molefe misled the Transnet board into approving costs. Molefe and three others increased the locomotive deal by at least R16 billion to R54 billion. Both are currently under criminal investigation. The organisation fired Gama last month saying it needs a CEO that’s trustworthy. [/perfectpullquote]

That’s really one of the problems with state owned companies. Who gets appointed by the state to run them depends upon who is in political office. Politics not being known as a great way to find honest and competent people.

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5 years ago

An additional feature of these arrangements is that every time a new gang seizes the government reins the cycle repeats itself with a new collection of grifters, thieves and hucksters looting the treasury.

5 years ago

The railways in SA have always been state owned. That Wikepedia article lists the CEOs since 1910 (Union) and you can trace how English gave way to Afrikaaners in 1950 after the National Party (NP) won the 1948 elections and apartheid started its ascendancy. And then the change in 1996 after the end of apartheid. The railways were mass employers of whites pre-1995, on what were very generous terms: good pay, solid pensions, discounted travel, preferential home loans, housing at nominal rents, jobs for life, apprenticeships for your children, generous medical aid and that is just what was visible! And… Read more »

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