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Conflict between board and Gordhan delays appointment of Transnet CEO

2020-01-20 02:00

Six months since interviews were conducted, Transnet still does not have a permanent chief executive officer (CEO).

This is because of a disagreement between the board and Public Enterprises Minister Pravin Gordhan over the suitable candidate.

The appointment of a permanent CEO is crucial to provide leadership and revive the state-owned rail, port and pipeline company, which was identified as a key player in state capture during the administration of former president Jacob Zuma.

An official appointment has yet to be made, despite the board having submitted its short list to Gordhan in October.

Questions have been asked about whether the minister would be overstepping the line should he reject the board’s preferred candidate.

The prerogative to identify a suitable candidate rests with the board.

According to several sources with inside information, the board named Patrick Dlamini, who is currently the CEO of the Development Bank of Southern Africa, as its preferred candidate.

In the event that Dlamini was deemed unsuitable, former Transnet executive Simo Lushaba was selected as the runner-up.

The name of former public enterprises director-general Portia Molefe has also been thrown into the mix, although she was not part of the initial interview process in August.

At least six independent sources pointed to Gordhan as the driver behind Molefe’s proposed appointment on the basis that he preferred a candidate who was a woman with financial experience.

Others said that it was Transnet board chair Popo Molefe (no relation to the Molefes mentioned above) who suggested Portia, because the board was uncomfortable with Gordhan’s choice of Lushaba.

Although the process leading up to the final decision appears to have taken a political turn, sufficient reasons would have to be given for Dlamini to be dropped as the frontrunner – including whether the selection process followed by the board was faulty or whether there was a problem with Dlamini as an individual. Whatever the reasons proferred, they have to stand up to scrutiny in court in the event of a legal challenge.

One of the possible trade-offs mentioned could see Portia being appointed as CEO and Dlamini taking up the post of chief operating officer.

However, Lushaba could challenge such an outcome given that the expectation was that he would be the automatic choice after Dlamini.

Applications for the CEO position closed in May last year.

Thereafter, Transnet’s board conducted the interviews with the help of independent and external experts, including Professor Nick Binedell, the founder and former dean of the Gordon Institute of Business Science, and Nosipho Damasane, the former CEO of the Richards Bay Coal Terminal.

Responding to claims that he might be interfering with the work of Transnet’s board, Gordhan told City Press in a written response on Saturday that these claims were “just an attempt to disrupt the process of appointing a CEO with the required skills, who will continue the process of rooting out corruption and state capture at Transnet”.

Maybe these ministers must start running the SOEs themselves
An SOE board member

He said Transnet’s board had followed due process in its recruitment search, adding that it was “a two-pronged process in order to widen the search process, to explore the possibility of attracting other appropriate candidates and thereby widen the pool of candidates available to choose from”.

He said the board had already recommended its preferred candidate for his consideration, and he was “still taking the process through government’s processes, and will make an announcement when the process is finalised”.

He added: “The minister may approve, disapprove and/or express an opinion on the short list. If the minister approves the short list, he can submit the recommendation to Cabinet prior to the board appointing a candidate as CEO.”

Gordan did not explain what the two-pronged process consisted of and how it differed from regular interviews conducted in the public and private sector.

City Press understands that, outside of the process followed by Transnet, an option to appoint the CEO via a process led by a group of Cabinet ministers had also been discussed – similar to the arrangement that took place during the appointment of André de Ruyter as Eskom CEO.

Transnet spokesperson Nompumelelo Kunene said the company “will not comment on the appointment as the process is to be finalised with the shareholder minister”.

A board member at one of the state-owned enterprises (SOEs) said Gordhan’s role in the final appointment of the CEO should be limited to a “consultation” and, thereafter, to facilitating the Cabinet process, adding that Gordhan could not decide for the board who to appoint.

“Maybe these ministers must start running the SOEs themselves,” said the person.

A service provider doing big business for many years with Transnet said delays in appointing the CEO were preventing a new Transnet railway line project in Swaziland from starting, as Treasury had to provide a guarantee before the initiative could take off.

The service provider said Transnet needed a guarantee from Treasury, estimated at R30 billion, which “Treasury has refused to entertain until a permanent CEO is appointed”.


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March 29 2020