LETTER: Law prevents smooth running of SOEs
The Public Finance Management Act reduces the power of the CEO and the board
Can the governance failure at Eskom be explained by two key pieces of legislation, the Companies Act and the Public Finance Management Act? These two laws are important governance instruments for the successful management of the state-owned enterprises (SOEs), since corruption is a symptom of governance failure.
The public finance act gives all operational powers to the board and in effect reduces the CEO position to that of a clerk who requires permission from the board for any project that is worth more than R500,000. The board, on the other hand, is weakened by the act because it requires that the shareholder (minister) be consulted on most aspects of the organisation...
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