ON THE MONEY
STUART THEOBALD: Bond holders can wield a mop in clean-up
State-owned companies are vulnerable to the views of bond investors, even when public condemnation of mismanagement and corruption goes unheeded
Are bond investors the last line of defence against the looting of state-owned companies (SOCs)? Controversial finance director Anoj Singh was booted from Eskom only after a major bond investor, the Development Bank of Southern Africa (DBSA), insisted. It had within its power the ability to recall R15bn after Eskom received a qualified audit opinion. Several other investors, such as Futuregrowth, have publicly condemned the behaviour of some SOCs and ministers. In September, the Old Mutual subsidiary sounded the alarm after Umgeni Water’s board and CEO were suddenly fired by Water and Sanitation Minister Nomvula Mokonyane without following proper procedure. It meant that the water utility’s R7bn capital spending plans were left in the hands of an acting CEO and the minister. After Futuregrowth sounded the alarm, the Cabinet rushed to appoint an interim board. SOCs are vulnerable to the views of bond investors, even when public condemnation of mismanagement and corruption goes unheed...
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