DECISIONS OF THE INTER-MINISTERIAL CABINET COMMITTEE (IMCC) ON THE RESTRUCTURING OF STATE ASSETS

30 SEPTEMBER 1999

Ladies and Gentlemen of the Media,

We have called this media conference to report on a number of decisions taken at this morning's Inter Ministerial Cabinet Committee (IMCC) on the Restructuring of State Assets. I am pleased that my colleague, Minister Ivy Matsepe-Casaburri has joined us he re this morning to make an announcement on a matter that resorts directly under her portfolio.

I want to re-iterate what I told the USA-SA Investment and Finance Forum in New York last week. Our government remains unequivocally committed to accelerate the restructuring state assets so that we may achieve our target by 2004. We believe that this is o ne of the critical areas in which we can unlock the resources to drive our programme of reconstruction, development and growth that is required to improve the quality of life of all our people.

I believe that President Mbeki's call for us to get back to work not only meant that we had to work harder to accelerate the attainment of our development priorities, it also meant that we have to assess and improve our work regimes to be more productive, cost-effective and efficient. It is for this reason that we will continue to review and institute measures for improved corporate governance of State Owned Enterprises(SOEs).

In the light of this we have taken a number of decisions to carry forward our programme of accelerated restructuring and improved corporate governance.

ALEXKOR

Restructuring of the Alexkor Board

You are aware of the continued concerns about the deteriorating circumstances at Alexkor that led to the appointment of a management contractor. Over and above the allegations of irregularities, the Nogxina Report concludes that the board neglected its fid uciary responsibilities and that there was a lack of proper governance and technical competence in the activities of the board. The IMCC therefore endorsed the recommendation that the Alexkor Board be reconstituted. The meeting also endorsed the recommenda tion that four members of the board be relieved forthwith of their responsibilities on the board.. They are:

• Nona Goso
• Elize Delport
• Pius Mokgokong
• Michael Leaf

Furthermore, in line with the Companies Act that allows the shareholder to restructure the board, the following individuals are appointed to the board on an interim basis until a new board is constituted:

• Nchaka Moloi - Special Advisor to Minister of Minerals and Energy (Acting Chairperson of Alexkor Board)
  
• Thibedi Ramontja - Chief Director Minerals Dept of Minerals and Energy (Member)
  
• Jimmy Manyi - Financial Director MEEG Bank (Member)
  
• Bob Klaver - Deputy Director Dept of Minerals and Energy (Member)

Furthermore, the meeting endorsed the recommendation that the following administrative measures be effected:

• That key performance objectives which will include adherence to budgets be installed;
  
• That centralised bookings for all travel arrangements for all Alexkor employees including the Board be effected;
  
• that levels and powers of authorisation be clearly defined.

In view of the indications of financial mismanagement, a forensic audit will be instituted. Specific areas that need investigation are:

• The missing R6million set aside for environmental rehabilitation;
  
• Unauthorised use of Alexkor's resources;
  
• The receipt by the Chairperson of a company car for private use;
  
• The company secretary's appointment and his qualifications;
  
• The contract entered into between Alexkor and Royal Foods.

Management Contract

We have been dealing with the Alexkor issue with a measure of circumspection as we are fully cognisant of the grave consequences that even a temporary closure of the mine will have on the domestic economy of the Namaqualand region and the disastrous impact on the lives of thousands of people whose very livelihood depend solely on the mine and its downstream support industries. We have also been cognisant of the dispute in interpretation on the question of the R120 million loan facility. We have stated previ ously that Nabera had indeed provided proof of funding but that the dispute has arisen in terms of the guarantees required by their financiers. We have taken appropriate legal advice and have also utilised the extension period to review alternate options t o secure the future viability of the mine for the stated strategic reasons.

• In the light of this, the meeting resolved this that should the management contractor, Nabera, fail to comply with the condition precedent of an unqualified loan facility of R120 million by the 7th October 1999, the contract will be considered terminated as it stands.
• In event of this, a fresh competitive bidding process will be embarked upon to secure the services of a management contractor with redefined terms of reference.
• An exploration strategy will be defined and a cost benefit analysis of this strategy will be undertaken as a matter of urgency, to enable an informed decision to be taken on the medium term prospects of the mine.
• A state compliance team will immediately be deployed to the mine to prevent further deterioration of the status of the mine during this period of uncertainty. It may also be necessary to empower this team with certain short-term executive powers. To this end, interaction is taking place with the IDC and the Department of Minerals and Energy Affairs with a view of seconding appropriately skilled staff to Alexkor.

POST OFFICE

With respect to the strategic management partner contract with New Zealand Post International Limited I am pleased to inform you that this represents the conclusion of a comprehensive competitive process which attracted the interest of other leading intern ational post administrations such as Deutsche Post, Canada Post and La Poste (France). The process followed was robust and transparent and represents a milestone in the restructuring of State Owned Assets. I am confident that this valued partnership will r ealise excellent returns for South Africa in terms of international best-practice benchmarking and improved service delivery to all our people.

We thank you.

Contacts for further info :

Ministry of Public Enterprises: Zaid Nordien, 082-453-6224 Ministry for Post, Telecommunications and Broadcasting: 012-427-8000