Business organisation the South African Chamber of Commerce and Industry (Sacci) says changes to power utility Eskom's board of directors should take place within normal rotation principles in line with established corporate governance policy.
However, it remains concerned as to what credible and established process Cabinet follows in the selection, recruitment, retention and performance management of the leadership in State-owned enterprises (SOEs).
"As Sacci, we have consistently called for an establishment of an independent commission that will look at the selection and recruitment of SOE boards. Such an independent commission should be staffed by highly skilled and experienced individuals with the right values.
"In line with established corporate governance principles, it should be the role of the board, and not that of the shareholder, to appoint the CEO of an SOE. The current system where Cabinet appoints boards and CEOs is broken, inconsistent and unreliable, which is part of the chaotic mess we see," the organisation says.
The review of the entire SOE ecosystem is urgent and long overdue, Sacci states.
Cabinet may not be the right authority to select boards and senior executives, as corporate senior executive level or nonexecutive director level experience may not be a specific requirement to be in Cabinet, as Cabinet deals with a range of State activities. Qualifications in business, finance, operations and strategy, among others, need not be a necessary requirement for Cabinet appointments.
"It, therefore, would be unfair to expect high execution capability in this area, without the commensurate experience," the business body says.
It may be this lack of corporate level experience that leads to the blurring of the lines between governance, operations, decision-making and the role of the shareholder.
Lack of performance may be a result of this mismatch between the appointed candidates and the complexity of the task. The inability to design and implement a meritocracy across the board is the main cause weakening the capability of the State, Sacci says.