By Antony Sguazzin and Mike Cohen
Nov. 12 (Bloomberg) -- Political interference and claims of racism at South Africa’s biggest state-owned companies have left them leaderless, threatening to delay $64 billion in investment and slow the economy’s recovery from recession.
State power utility Eskom Holdings Ltd. has lost its chairman and ports and rail company Transnet Ltd. has no permanent chief executive officer amid disputes fueled by allegations of racism.
Eskom plans to spend 385 billion rand ($52 billion) over the next five years to avert a recurrence of power shortages that idled the country’s mines for five days last year. Transnet is spending 81 billion rand. Together the plans form the bulk of a government program to pull the economy out of its first recession in 17 years.
“If Eskom doesn’t sort out their problems, the market will punish them by charging them more on their debt,” said Malcolm Charles, a portfolio manager at Investec Asset Management in Cape Town. “They are running out of lives.”
Bobby Godsell, the 57-year-old white chairman of Eskom, which has 71.5 billion rand of outstanding debt, according to Bloomberg data, resigned after he tried to enforce a verbal offer by the black Chief Executive Officer, Jacob Maroga, 49, to step down. The youth league of the African National Congress and the Black Management Forum, which represents black executives, said he was a racist.
‘Baas-Boy’
Godsell had a “baas-boy mentality” toward Maroga, the forum said on Nov. 6, using the Afrikaans term for master. The treatment of Maroga showed “the covert anti-transformation and racist agenda inherent” in a country that ended apartheid only 14 years ago.
The search for a new chairman and CEO may take six months, acting Chairman Mpho Makwana said at a press conference today.
The disputes at the state enterprises highlight a battle between groups that united to back Jacob Zuma for leadership of the ANC and are now fighting for positions and influence over the country’s new president. While labor unions are targeting jobs growth and service delivery, groups like the Black Management Forum say their main objective is to transform the economy through the promotion of black executives.
“Powerful individuals are playing politics with the senior positions,” said Nic Borain, a Cape Town-based political analyst whose clients include HSBC Plc. “The tension between running an effective state and running a mad feeding frenzy for an aspirant class of people is becoming untenable for the ANC.”
Backing
Labor unions and the ANC’s Secretary-General, Gwede Mantashe, have defended Godsell. Minister of Public Enterprises Barbara Hogan told lawmakers in Cape Town today that Godsell has “integrity and the best interests of the country at heart,” adding that she couldn’t legally interfere and didn’t want to inflame tensions by commenting.
There is a group within the ANC and its allies that is “increasingly revealing themselves to be less concerned about the performance of the parastatals and more concerned about making a fast buck,” Borain said. Others “are deeply worried about the situation” and have argued for the companies to concentrate on efficiency and stop the infighting.
At Transnet Sipho Maseko, a BP Plc executive earmarked to replace Maria Ramos as CEO, said he no longer wanted the post after a public spat about the position broke out.
His decision came after a rival for the post, Siyabonga Gama, was suspended from his position as head of the rail division of Transnet and said he was the victim of racism. Justice Minister Jeff Radebe and Communications Minister Siphiwe Nyanda objected to the suspension, while the ANC Youth League and the Black Management Forum backed his claims of discrimination.
Leaderless
South African Airways, the state-carrier, and the South African Broadcasting Corp., which runs government television and radio stations, are also without leaders. SAA CEO Khaya Ngqula left in March after a labor union demanded an investigation of procurement procedures, while ANC officials and the opposition have been fighting about the composition of the SABC’s board.
The meddling and infighting is undermining management. Eskom’s five-year expenditure program could escalate to more than 500 billion rand, said Marc Goldstein, an energy analyst at Frost & Sullivan in Cape Town. The government has said it will guarantee up to 175.9 billion rand of Eskom’s debt and agreed to lend it a further 60 billion rand.
Eskom sold 500 million rand of bonds due in 2018 yesterday at a yield of 9.52 percent, a spread of 67 basis points to government notes of a similar maturity.
“Investors are going to say: Listen here, we want a bigger spread,” said Deon Van Zyl, head of fixed interest at Metropolitan Asset Managers in Cape Town said.
Speedy Resolution
Investment by state-owned companies will represent 5.3 percent of gross domestic product in the fiscal year through March 2010, according to the Treasury’s figures. That makes them pivotal to the recovery in an economy the government expects to shrink 1.9 percent this year.
“At a time of a significant investment and debt issuance program, the government needs a speedy resolution” to the infighting at the companies, said Peter Attard Montalto, an economist at Nomura International Plc in London.
To contact the reporters on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net
Last Updated: November 12, 2009 09:35 ESTSource : http://www.bloomberg.com/apps/news?pid=20601109&sid=aAaPlGQ53fyc&pos=15#
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