Faculty of Commerce, Law and Management (ETDs)

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    Factors contributing to transgressions in the procurement practices of state-owned entities (SOES): Eskom and Transnet
    (University of the Witwatersrand, Johannesburg, 2024) Moloto, Bonolo; Setlhalogile, Matlala
    Public procurement is a vital process for governments and state-owned enterprises (SOEs) to procure essential goods and services. However, state capture and unethical practices have plagued it. The State Capture Commission Report highlighted issues such as poor governance, unethical conduct, and insufficient internal control systems. This has led to financial and operational challenges for SOEs, which heavily rely on state guarantees and bailouts. In South Africa, the government spends around R1 trillion annually on procurement, which represent 12% of the country’s gross domestic product (GDP) (National Research Foundation, n.d.). The Auditor General (AG) report for the 2020/21 financial year reported that most SOEs had high balances of irregular expenditures. Transnet had the highest irregular expenditure, totalling R14.1 billion, followed by Eskom with R11.6 billion (Maeko, 2021). This study aimed to identify the underlying governance factors contributing to transgressions in SOE procurement practices and to provide remedial actions to prevent recurrence. Agency Theory was used to examine the identified issues, and a comprehensive literature review was conducted to investigate the underlying factors. The study found that failure to address these governance issues could lead to qualified audit opinions, issues of going concerns for SOEs as well as impact investments and public confidence. The study also revealed that the slow implementation of consequence management could foster a culture of noncompliance and accountability. The current South African public procurement system ca is characterised by political interference and cadre deployment, which undermines transparency, accountability, and good governance. Political appointments and cadre deployment in critical positions encourage wasteful spending, undermine governance, and promote dictatorship. Politicised boards and management in SOEs has led to an increasing prevalence of corruption. The AG, Standing Committee of Public Accounts (SCOPA), National Treasury (NT), Department of Public Enterprises (DPE), and the respective SOEs’ boards have been unable to conduct their oversight functions effectively due to their unwillingness to do the right thing and failure to establish robust preventative controls. The state's approach to board nomination lacks transparency, operates in an ad hoc manner, and is excessively politicised. iii Remedial actions to address these issues require a dedicated commitment from top leadership, fast implementation of corrective measures, and periodic monitoring and evaluation processes. Limiting political interference in the administration of remedial actions can enhance the effectiveness, fairness, and integrity of the anti-corruption process.
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    The Perceptions of Executive Managers on the Role that Corporate Governance Practices Play on SOE’s Performance: A Case of Eskom
    (University of the Witwatersrand, Johannesburg, 2023) Mboweni, Amos; Qobo, Mzukisi; Soko, Mills
    Background: State-owned enterprises (SOEs) in Africa were established to spur economic development and contribute to infrastructure development, service provision, and ultimately to realise developmental outcomes. However, poor governance and mismanagement have constrained the development potential of SOEs in South Africa. This research explores the concept of corporate governance as it relates to the governance and performance of SOEs. In this respect, the paper assessed the perceptions of the executive managers of the utility as far as governance and performance are concerned. The paper makes use of both primary and secondary resources, including interviews, annual performance reports, policy statements, and academic literature. This study is a modest contribution in an area where knowledge is still evolving and at a time when some of the SOEs in South Africa face an existential crisis. The study focuses on Eskom, a national utility. Research objective: The main objective of this study was to explore whether the SOE Electricity Supply Commission (Eskom Soc Ltd) implements and fully complies with the principles of the King Code on corporate governance practices to ensure sound corporate governance practices and, if so, how this affects the organisational performance of the SOE. As already stated, the research assessed the perceptions of Eskom’s executive managers on the role of objective alignment, resource provision, and management succession in its performance. Research methodology: This is a qualitative case study focussing on Eskom as the utility. The target population is Eskom’s executive managers. In-depth, semi-structured interviews were conducted with a sample of over 12 participants from across the target population.
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    An institutional and stakeholder perspective of governance, ethics and trust in State Operated Enterprises
    (University of the Witwatersrand, Johannesburg, 2023) Manda, More Ickson
    State-Operated Enterprises (SOEs) in South Africa continue to face significant challenges impacting their performance. Governance and other ethical concerns have been identified as factors that have impacted the performance of SOEs. Consequently, trust in SOEs among stakeholders such as the state, business, civil society, and citizens has been eroded. This study explores corporate governance in SOEs using an institutional and stakeholder perspective to examine the relationship between trust, corporate governance, and ethics in institutions. The study is a quantitative study that uses a survey as its primary method of collecting data. Findings were triangulated with evidence from documents and literature. The study was conducted in South Africa, a middle-income developing country and young democracy confronted by many challenges, such as corruption, decreasing public trust and investor and businessconfidence. This has spotlighted theoretical and practical issues such as corporate governance. The study proposed a framework for strengthening trust and corporate governance to restore legitimacy in institutions, an essential factor in building strong, responsible, and capable institutions that deliver value to shareholders and stakeholders. The study also made practical recommendations for strengthening ethics, governance, and trust
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    Impression management analysis of South African State-Owned Enterprises: six capitals disclosure in the chairman, CEO, CFO and Performance Report
    (2022) Shaikh, Sumaiyabanu
    Orientation: State-Owned Enterprises (SOEs) in developing economies, such as South Africa, have a critical economic, social, and environmental influence. However, South African SOEs are currently dealing with increased public scrutiny, putting their organisational legitimacy in jeopardy as they continue to drain public funds. As a result, SOEs may find it difficult to defend their value relevance and may resort to impression management strategies to maintain their legitimacy. Research Purpose: The purpose of this study is to analyse if certain impression management techniques, namely attribution, neutralisation, and thematic manipulation, are employed by Schedule 2 South African SOEs in specific sections of their integrated reports. The study also aims to understand the use of the six capitals in SOEs’ integrated reports and the application of impression management techniques to the six capitals. Significance of study: This study could benefit society at large, as users could factor impression management into their decisions. There is currently limited research regarding impression management in the public sector. This study contributes to the body of literature on impression management within the public sector in an emerging economy. Overview of Research Method: The SOEs analysed are those included in Schedule 2 of the Public Finance Management Act (PFMA). Within the integrated report, the focus is on the Chairman, CEO, CFO Statements, and the Performance Report. A qualitative approach, using content analysis with the data being analysed using quantitative methods, was adopted. Main Findings: The findings of this study highlight that SOEs engage in some form of impression management (either through thematic manipulation, attribution, or neutralisation) when presenting the six capitals. SOEs employ assertive impression management through the technique of thematic manipulation to gain legitimacy and employ defensive impression management through the techniques of attribution and neutralisation to repair legitimacy. Despite the challenges that SOEs have faced over the two years, the narratives disclosed create a notion of optimism to achieve legitimacy, and this is accomplished by managing the impression of the words in the Chairman, CEO, CFO and Performance Reports.
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    Assessing performance management in Transnet
    (2021) Moeletsane, Faith
    Background: In December of 2007 at its 52nd conference in Polokwane, the “ruling political party” of South Africa the African National Congress (ANC) called for the review of State-Owned Enterprises (SOEs) performance (PRC, 2016). The president of the ANC’s brief for this review was to consider the financial performance of the entities together with whether their Constitutional responsibilities were being met (PRC, 2016). The Presidential Review Committee (PRC) of SOEs was then established and mandated to do an examination on all SOEs in the country(PRC, 2016). The PRC understood its mandate as primarily making recommendations that would influence reform in the SOEs by being effective and efficient (PRC, 2016). Most SOEs continue to be inefficient and the weight is felt on the country’s fiscus as governments debt is pushed into unsafe territory (Mutize & Gossel,2017). The poor performance of SOEs not only affects a SOE under scrutiny, however there is deep concern from business, local and internal investors, civil society and government on that the failure of SOEs will have a huge spill over effect on the weakening of the economy of South Africa (News24, 2014). The SA Government’s continuous bailout of some SOEs has resulted in rating agencies continued monitoring of government’s bailouts or the issuing of guarantees because of the threat it poses to both the fiscal and policy priorities (Mutize & Gossel, 2017). Typically, a guarantee would be a commitment the State would make if an SOE defaults on the repayment of a loan it has taken (AGSA, 2018). In the event that an SOE is unable to honour its repayment agreement to a lender, the state then, through the Ministry of Finance provides surety by means of a guarantee to the lender (AGSA, 2018). Though the Provision of a guarantee on an SOE is not necessarily negative, especially when a decision has been taken by government to provide support to an SOE established in a specific industry or sector, due to that key industry or sector in the South African economy struggling to grow as expected (AGSA, 2018). However, in recent times calls on guarantees or bailouts for SOEs have increased the countries budget deficit, government debt and borrowing costs, and has resulted in downgrades from rating agencies (AGSA,2018). It is important that SOEs’ reliance on government guarantees is reduced by making sure that reliable turnaround strategies are implemented, including addressing leadership and governance issues at the SOEs (AGSA, 2018)