Good corporate governance in state owned enterprises: a legal analysis

Abstract

This study examines the governance challenges in State Owned Enterprises (SOEs) in relation to South African legislation, governance regulations and best practice codes introduced to ensure that accountability, transparency, and good corporate governance principles are observed by the entities and their role players in the governance structures. The said legislation and regulations coupled with policies, best practices, Memoranda of Incorporation (MOIs), shareholder compacts, and National Treasury Circulars constitute the SOE governance framework within which SOEs operate. Furthermore, the study seeks to ascertain if the seemingly comprehensive regulatory framework, is adequate to combat corruption, financial mismanagement, and abuses of power happening regularly in the governance of SOEs. The study will establish why seemingly, the law and policy framework, although comprehensive, is not effective in preventing corruption and abuse of public assets in SOEs. Reported governance failures and criminal acts at various SOEs over the last decade allegedly escalated into state capture, a higher level of abuse of public resources and power identified by the Public Protector in her report in 2016. This escalation happened despite the comprehensive legal and regulatory frameworks in the sector. The Commission of Inquiry into Allegations of State Capture (Zondo Commission), through evidence led suggest that national government departments and municipalities are not spared from the effects and consequences of SOE failures as evidenced by load shedding by Eskom, water-shedding, and other crippling service delivery failures.