There has to be a wall between party politics and government

WILLIAM GUMEDE

Associate Professor, School of Governance, University of the Witwatersrand and a Sunday Times columnist

Appointing current or former politicians, party activists and the politically connected onto the boards and as executives of state-owned entities (SOEs), is one of the reasons why many South African SOEs have chronically failed to deliver on their mandates and have been beset by incompetence and corruption.

Appointing current and past politicians to SOEs has led to the politicisation of the management of these state companies, turning these companies to prioritise political, selfenrichment, and corrupt objectives, rather than on delivering quality services and becoming profitable. They undermine good corporate governance, accountability, and oversight in SOEs.

They sap the morale of ordinary employees, introduce toxic organisational cultures into SOEs and drive away talent. Many politicians and party activists are appointed to boards or management of SOEs by governing parties often solely based on patronage - to reward them for party loyalty, and support of the party leader or faction. In the overwhelming cases, South African politicians and party activists appointed to boards have limited specialised skills, beyond having been in politics or their connectedness to current governing party leaders. However, their skills gained from party politics are often not only unsuitable to the state or SOEs, but they are also toxic to these institutions.

Many party activists appointed to boards often have too much time on their hands and try to get involved in the management of organisations –and the allocation of tenders and the appointments of senior management, which undermines corporate governance. This undermines the corporate governance firewall between the board and management to ensure the optimal function of organisations. Similarly, politicians and party activists on boards often see themselves as more senior than management – and in some cases demand to receive the same benefits and remuneration or more than management for their services.

Politicians appointed to SOEs often politicised the boardrooms, making critical decisions based on party, faction and self-interest reasons. They turn SOE boardrooms into spaces where factional politics are played out. They bring toxic organisational cultures to SOEs –often gate-keeping appointments for board and executives, channelling contracts to politically connected companies and pushing projects which are unsustainable or do not fit within the mandate of the business but are politically motivated.

Politicians on boards destabilise boards, management, and companies, and have more power than ordinary board members because of their political seniority in their party.

They have more power than other board members or executives –undermining corporate governance – as board members must have equal power, rather than one or a few board members having more power than others. It is very hard for SOE executives to question politicians on their boards – even if the politicians are wrong.

Political appointees within SOE boards and executives can often not be challenged, as they bring the weight of the governing party to bear in boardrooms where they serve as executives or board members.

Going against them often means not only being fired but also being blacklisted from working for any other SOE – so it is career-ending.

This means the views, decisions and actions of politically connected SOE board members and executives often go unchallenged, even if they are destructive to the business, undermine the performance of the organisation, or are corrupt.

This means that political appointees to management and boards cannot be held accountable by the rest of the board or management. They can only be held accountable by the governing party leadership – who in many African countries, often value loyalty to the governing party and leader over everything else, which means that politicians board, and management are unlikely to be held accountable.

Political appointees to SOE boards and management also bring their political baggage – their acolytes, their political enemies and their corruption cases with them. This means that SOEs which are managed by political appointees often see a replay of the political fights, the corruption and the incompetence that follows these political appointees.

Politicians from liberation and independence movements who adhere to such beliefs about SOEs, once they get appointed to SOEs, do not really care whether SOEs are efficient or profitable if they provide jobs public services, or patronage. This means that the liberation and party politicians turned SOE executives and board members invariably undervalue the role of a board member as providing accountability for SOEs to be managed responsibly, honestly, and efficiently – and they oppose other managers or board members, who emphasise that SOEs should be run efficiently, honestly and profitably.

There has to be a wall between party politics and the state or SOEs. Appointing active politicians to SOEs breaches the wall between politics and state – and makes SOEs accountable to the party, rather than delivering on their public mandates and to their consumers.

There are many countries where former politicians are appointed to public sector entity boards, whether France or South Korea. They are normally appointed on the basis that they are fully retired from party politics, and have specialised skills acquired in non-political careers, such as being accountants, doctors, or lawyers. However, in South Africa and most African countries, many governing party leaders are career politicians. Many have never managed anything else, other than party politics. The majority do not have specialist or technical or business skills – a basic requisite to manage complex SOEs.

A key reform to improve the effectiveness of South African SOEs is to ban politicians from appointments to boards and management. This is the only way to prevent the politicisation of SOEs – which is at the heart of their corporate governance failures, delivery misfiring, and high levels of corruption. Appointments to boards and managements of South African SOEs should be removed from politicians, should be professionalised and should be more transparent. Appointments to boards and management of SOEs should be based on merit, competence and appropriate practical experience.

If not, these critical companies will continue to fail to deliver on their mandates, remain hotbeds of corruption, and be a drain on public finances. 

*William Gumede is Associate Professor, School of Governance, University of the Witwatersrand and author of Restless Nation: Making Sense of Troubled Times (Tafelberg)