ONE of South Africa’s biggest institutional investors in the bond market FutureGrowth expressed its concern at poor governance at Transnet, the struggling state-owned rail and ports company.
Cited in a report by BusinessLive, FutureGrowth listed credit investment analyst Lindani Vezi said there were “evolving governance weaknesses” at Transnet related to unfilled non-executive board positions.
“Of the 12 independent non-executive directors, six have subsequently resigned or retired without being replaced,” said Vezi in a statement issued by FutureGrowth on Tuesday. “Alarmingly, four of these vacancies have been open for more than a year.”
In May 2018 public enterprises minister Pravin Gordhan appointed an entirely new board at Transnet in an attempt to clean up governance after years of state capture, said BusinessLive. The new board’s 12 independent non-executive directors and two executive directors were tasked with tackling years of corruption allegations while also improving Transnet’s management of its rail, port and other assets, it said.
Since then there has been a slew of director departures including the sacking of former CEO Siyabonga Gama was fired. In addition, Edward Kieswetter resigned to become appointed head of the SA Revenue Service (Sars); Joyce Ramasela Ganda resigned; Oupa Motaung passed away; Gratitude Ramphaka resigned; and Louis von Zeuner retired.
At present Transnet’s board has only eight members: the six remaining nonexecutive directors appointed in 2018 and the two executive directors, CEO Portia Derby and CFO Nonkululeko Dlamini. Both were appointed in 2020. Transnet’s six nonexecutive directors are Popo Molefe, Ursula Fikelepi, Dimakatso Matshoga, Mpho Letlape, Aluwani Percy Ramabulana and Sydney Mufamadi, said BusinessLive.
“Our view is that a company of the size and complexity of Transnet needs a larger board, with a broader array and depth of skills than it currently has. We believe that the shareholder — as represented by the minister — should be speedily filling the vacancies with appropriately qualified, skilled, ethical and suitable people,” Vezi wrote.
“That these key positions remain unfilled at this moment in Transnet’s history, and with the significant operational challenges it faces, disturbs us as investors in Transnet, together with its implications on the broader South African economy.”
