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SA: Lynne Brown: Address by Minister of Public Enterprises, at the launch of the Transnet Matlafatšo Centre, Wits University, Johannesburg (06/11/2017)

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SA: Lynne Brown: Address by Minister of Public Enterprises, at the launch of the Transnet Matlafatšo Centre, Wits University, Johannesburg (06/11/2017)

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Public Enterprises Minister Lynne Brown

7th November 2017

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About a week ago, Transnet released a set of financial results for the six month period ending in September showing a 13.8% increase in revenue earnings. Profit increased from R1 billion in the previous period to R3.4 billion.

These are good results achieved in a very difficult economic environment. They are the outcome of improved operational performance by Transnet – on the back of practical cost-cutting measures such as drastically reducing requirements for over-time work – coupled to increases in mineral production and consumer demand.

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Best of all, the results were not achieved at the expense of developing skills and infrastructure that our nation profoundly needs, by shedding jobs that the nation can ill-afford to shed, or by decelerating Transnet’s expansion into Africa.

Announcing the results, Transnet’s Group Chief Executive Siyabonga Gama said there was enough headroom for the company to continue executing its investment strategy, that it had maintained a strong financial position and cash-generating capacity.

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The results are therefore quite compellingly indicative of a state-owned company fulfilling the expectations of the developing state.

To say that media ignored this “good news story” would be an exaggeration. At a time when the prospects of growth are not what we would like it to be, the media fed into a narrative that State-Owned Companies are a drain on the fiscus and ignored the positive results announced.

It was there, if you looked closely enough. Business Report reported it under the headline: “Transnet boss distances company from SAP debacle.” Somewhere else, I read a report condemning Transnet’s cost-cutting measures for allegedly leading to increased waiting times to load and offload freight.

Ladies and gentlemen…

Unprecedented resources have been poured into a campaign, fueled by political and business contestation that feeds into the public narrative that State-Owned Companies are shot through with corruption.

Programme director…

It is my responsibility, acting in my capacity as Shareholder Representative within the constraints of the PFMA, the Companies Act and other legislative authority, to ensure maladministration and corruption are rooted out.

I interact with the Companies through their Boards of Directors. As Shareholder Representative I do not get involved in the operations of the SOC. This is the Board and Management purview. The corporate veil between us is guided primarily by the Shareholder’s Compact and the Significance and Materiality Framework which sets qualitative and quantitative thresholds for transactions that must come to me for approval. Even at that level, I am reliant on the approved information provided to me by the Board.

It is common cause that the State of Capture Report and the preceding investigations by the Hawks and Parliament are dominating the news.

But the wheels of justice are turning slower in this digital age.

Since January I have repeatedly called for the establishment of an investigation of some sort to clear the air. I have instructed the Boards of Eskom and Transnet to initiate investigative processes, some of which have led to disciplinary processes and others of which are still underway. I have asked the Special Investigative Unit to conduct a deep dive probe into Eskom and Transnet’s procurement and contract management. There is also the Parliamentary inquiry and various other litigation processes underway, and the laying of criminal charges by various organisations.

These investigations should lead to prosecutions, if appropriate, exonerate the innocent and restore the integrity of our state-owned companies. Not for their sake, alone; also for the sake of the sovereign and the economy.

But none of these processes are fast enough to keep up with the speed at which the media can publish new allegations, or add to existing ones, courtesy of a vast trove of emails they have been fed.

It is a feeding frenzy, and people are being tried and found guilty of various crimes, incuding that of association.

Don't misunderstand me. The police and prosecutors must do their work, allegations must be investigated, the guilty must be tried – and the companies must recoup money that has been misspent. Without fear or favour.  There must be consequences for any wrong doing if proven.

.. .And let’s not throw out the baby with the bathwater. Let’s not grind our State-Owned Companies into the dirt with our political and business football boots. Let us rather preserve the functioning and asset base of these State-Owned Companies in order to drive government’s developmental objectives of building the economy and eradicate the triple challenges.

Ladies and gentlemen…

I have sketched this background so that you understand the terrain you are entering, the opportunities that exist, and that our expectations of you are that you will be at the forefront of the battle for inclusion in the economy.

Years and years of exclusion makes it hard for black and women owned businesses to access the State-Owned Companies’ procurement processes. This has largely been dominated by a few white companies.

I am excited by the Transnet Matlafatšo Centre, and that the prototype has been located at Wits University. Increasing the competitiveness and capacities of Black-owned and managed SMMEs to take their place in the Transnet supply chain – and those of other large companies – is exactly what is needed to spread the wealth these companies generate and to change peoples’ lives.

I am excited where Transnet presently finds itself. It has not been immune to allegations of corruption. It will shortly report on its investigation into the purchase of locomotives from China, and certain deals and individuals are subject to investigations by the Hawks and Parliament. But Transnet is not defined by corruption as some would have you think. Its good work and contribution to the economy should therefore not be diminished by these allegations.

This year, it launched the first locomotive designed and produced in Africa for African conditions. It recently commissioned the multi-fuel pipeline between Durban and Johannesburg. It is negotiating port, rail and pipeline partnerships with companies in eight other African countries.

Not to mention that it has produced an exceptional set of half-year results.

I thank everyone involved in the birth of the Matlafatšo Centre for contributing to the development of our country. I wish you all success as the initiative is launched. Continued success in the development of the model and execution of your plans to expand to other centres.

I thank you.

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