SOE accountability in South Africa is a bugbear for public and private entities alike. Now, the Organisation Undoing Tax Abuse (OUTA) is proposing a new law that will heighten SOE accountability.
Specifically, most state-owned enterprises (SOEs) are not registered as public companies. Therefore, there is little legal recourse against SOE board members and executives who mismanage public money.
GREATER SOE ACCOUNTABILITY
“This legal gap means that SOE accountability is effectively protected from delinquency actions,” says OUTA advocate Stefanie Fick. As such, OUTA filed a case in the Pretoria High Court last month, arguing that sections 83(4) and 84 of the Public Finance Management Act (PFMA) are unconstitutional.
According to the Companies Act, a court must declare a company director delinquent if he/she has failed in their duties. Meanwhile, the PFMA offers far more lenient disciplinary options. As such, OUTA is asking the court to declare these PFMA sections unconstitutional and allow Parliament two years to fix the law.
INCOMPETENT GOVERNMENT OFFICIALS
Under the current system, incompetent government officials are recycled through various departments. However, by closing the PFMA loophole, advocacy groups like OUTA believe they will have another tool to enforce SOE accountability.
Back in 2020, it was OUTA that had South African Airways chairperson Dudu Myeni declared a delinquent director for life. And OUTA recently filed a similar case against former Johannesburg Property Company CEO Helen Botes for her role in the Usindiso building fire tragedy.
SOE ACCOUNTABILITY IN SA
However, it’s another story for those implicated in the Sector Education and Training Authority (SETA) and the National Student Financial Aid Scheme (NSFAS) scandals. As neither SOE is a registered company, OUTA and the public has no recourse.
“This is about fairness and accountability. If the government fails to hold corrupt officials to account, civil society must have the tools to do so. Public money must be protected, and those who abuse it should face real consequences,” concluded Fick.
