If there is one thing the past 14 years have taught us, it is that big state-owned enterprises (SOEs) such as Transnet and Eskom, with their massive expenditure requirements, can be fertile grounds for the corrupt, who seek instant wealth without putting in the work. These two institutions are primarily targeted for self-enrichment.
As much as we need Transnet to turn around its operational performance and become more agile to procure goods and services faster, we must approach this with eyes wide open. Not all bad actors have left the room. Moves by Transnet to relax its procurement regime in an effort to make the company more responsive to urgent needs assume all bad apples have left the company.
In principle, we support the rationale behind the amendments to the company’s supply chain management policy. SOEs, like private entities, need to be agile in responding to the immediate needs of the company. It makes sense for Transnet to differentiate between the procurement of goods and services for the normal day-to-day administration of Transnet and the procurement of goods and services with direct impact on revenue generation.
One of the progressive features of the amended supply chain policy is the provision that Transnet can enter into long-term agreements with original equipment manufacturers (OEMs) and customers that can step in faster than if they went through traditional procurement routes. This is standard business in the corporate jungle. However, SOEs are not normal businesses, and Transnet’s leaders must take extra care to ensure that the relaxation of its supply chain policies is accompanied by more accountability and tighter internal control.
Some of the amendments are open to abuse and collusion between Transnet’s employees and the private sector. One of the key amendments announced last week will allow Transnet to enter into joint “intervention arrangements” with customers to “pull together and combine resources and capabilities to address any Transnet procurement challenges” that may directly affect customers in a particular region.
This will see a “customer buyback/step-in clause” in commercial agreements between Transnet and the customer, or group of customers, in the form of a joint intervention arrangement that “should be considered for situations where the customer may be in a better position to supply the goods or services to Transnet quicker than Transnet internal procurement processes”.
This sounds well and noble. However, this can also be abused by bad actors in Transnet and collaborators in the private sector. For these amendments to serve the noble intentions they are meant to achieve, Transnet needs to reset its procurement process to ensure they are transparent, agile and responsive to its needs in a cost-competitive manner. Those who sought to capture the state and repurpose the public purse have not given up.
Unlike the ilk that has congregated at the MK party, who wish for us to pretend state capture did not happen and present themselves as SA’s new heroes, we must be awake to the dangers of making the ground fertile of the greedy. The are always among us, lurking, waiting for the next opportunity to feast.
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