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Govt will not intervene in corporate sector-Mbeki

28th November 2003

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Government has no intention to intervene in remuneration levels for corporate managers, dividends paid to shareholders, or wage settlements, President Thabo Mbeki said on Wednesday.

Replying to questions in the National Assembly, he said the matter of inappropriate rewards for top management was a concern in the private and the public sector.

The levels of remuneration among high-level private sector managers was currently being debated aggressively internationally.

It was therefore not an exclusive South African challenge, he said.

However, government had "neither the power nor the intention to intervene in this matter".

"One of the key interventions in this regard would be to ensure that corporate governance is sound, as recommended in the successive King Commissions.

"Shareholders and other stakeholders must be vigilant, and should work vigorously for the implementation of sound corporate governance systems," Mbeki said.

The process of globalisation had resulted in greater international mobility of skilled people, including those at senior executive levels.

"Accordingly, what happens elsewhere in the world will invariably influence senior executive salaries in our country.

"The issues of retrenchment and an equitable distribution of income and wealth are central to the daily work in which we are engaged.

"Nevertheless... we have no intention whatsoever to prescribe remuneration levels for corporate managers, dividends that must be paid out to shareholders, or wage settlements that can only be determined through collective bargaining," Mbeki said.

In a statement later on Wednesday, Solidarity trade union spokesperson Dirk Hermann welcomed Mbeki's concern "over big companies that retrench workers to increase their profit".

This was a hopeful sign that Mbeki noticed the seriousness of the problem.

"Thousands of our members at Iscor may soon be retrenched in order for the company to improve its profits and therefore please its shareholders," he said.

Mbeki, replying to a follow-up question in the Assembly by National Action MP Cassie Aucamp, said government had noted the problem of "shareholder fundamentalism", and was engaging big business about the issue.

"The response has not been negative," he said. – Sapa.
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