(Bloomberg) -- South Africa’s state-security authorities should vet prospective members of state-owned companies’ boards more strictly to ensure the best candidates are appointed, Home Affairs Minister Malusi Gigaba told lawmakers.
New President Cyril Ramaphosa in January announced sweeping changes to the board of cash-strapped state power utility Eskom Holdings SOC Ltd., which has been mired in allegations of corruption relating to supply and services contracts. Weapons company Denel SOC Ltd. and rail operator Transnet SOC Ltd. have also suffered.
Emails leaked to local media, as well as reports by the country’s main church organization and a team of eight academics place former President Jacob Zuma and his friends, the Gupta family, at the center of an orchestrated effort to raid state assets. They all deny wrongdoing. South Africa’s economy has been hamstrung by years of mismanagement and corruption institutionalized during Zuma’s almost nine-year tenure, and two companies have cut its credit rating.
“There is a very high cost to corruption and allegations of state capture and there is a very high benefit to action being taken against those issues,” Gigaba told lawmakers in the portfolio committee on public accounts. They’re probing so-called state capture, or the local term to describe allegations that Zuma has allowed the Gupta family to secure state contracts and influence cabinet appointments. Gigaba was minister of public enterprises when the board members involved in the allegedly corrupt contracts were named.
“Unfortunately, the lesson can only be learned after enormous cost to the economy, but nonetheless the lesson has been learned,” he said in Cape Town.
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