Transport minister Barbara Creecy has her hands full dealing with the management disruptions that have befallen key entities in her portfolio. It seems much of her time is spent putting out fires that frequently flare up within these entities.
Besides these outbreaks of dysfunction, the minister has a demanding portfolio, central to which is improving the performance of the country’s railway network and ports, essential for ratcheting up sorely needed economic growth. A key element of this turnaround is securing private sector participation in the network. Overseeing the heavily indebted state-owned freight and port enterprise, Transnet, is a challenge in its own right.
Added to this is the drive to improve passenger rail services and perform several other responsibilities.
The recent allegations of questionable managerial practices at the Road Accident Fund (RAF), the Road Traffic Management Corporation (RTMC), Airports Company SA (Acsa), and the Air Traffic and Navigation Services (ATNS) are unwelcome and suggest a general malaise in the transport sector.
In the latest crisis, Creecy this week dissolved the RAF’s board of directors because of its persistent governance and operational challenges, which undermined its ability to function and fulfil its fiduciary duties.
The technically insolvent fund is responsible for paying claims of road accident victims and receives about R50bn in funding a year through a levy on fuel sales. It has become notorious for the delay in making claim payments.
The minister has initiated the appointment of a panel of independent experts to review the RAF’s business processes and to propose recommendations. The Special Investigating Unit (SIU) has also been asked to broaden its existing investigation to include current issues.
Among the litany of the RAF board’s failures cited by the transport department were its protracted and costly litigation against the auditor-general’s office regarding the application of accounting standards, draining its financial resources.
The suspension of CEO Collins Letsoalo was not handled optimally and landed up in the courts, and the RAF frequently faced default judgments because of its failure to defend litigation, which has added to its contingent liabilities and weakened its financial sustainability. It has taken some ill-advised decisions regarding its litigation strategy.
The board has also been riven by conflicts and failed, the department said, to fill at least two critical executive positions, namely for the chief claims officer and head of legal.
In another recent event, RTMC CEO Makhosini Msibi was placed on precautionary suspension by the agency’s board after it received whistle-blower allegations of financial misconduct, irregular expenditure and governance failures at the entity. A forensic investigation has been instituted.
Acsa has placed its group executive for enterprise security and compliance, Mzwandile Petros, on precautionary suspension pending the outcome of an independent investigation into allegations of operational irregularities.
The company that owns and operates the country’s nine principal airports has been in a prolonged legal dispute over hold baggage screening services with Aviation Co-ordination Services (ACS) after Acsa decided to insource this function. ACS, which was formed by a coalition of airlines, obtained a court order allowing it to replace backup equipment at certain airports. Creecy has had to intervene ordering mediation between the parties.
ATNS CEO Nozipho Mdawe was placed on suspension earlier this year after a preliminary report highlighted significant issues at the entity, including critical staffing shortages, unreliable navigation systems and suspension of flight procedures due to a lack of maintenance. The suspension of flight procedures led to flight delays and disruptions, raising concern about aviation safety and prompting the intervention of the minister. An independent law firm has been briefed to investigate Mdawe’s conduct.
Fortunately, in most of these cases, acting CEOs or executives have been drawn from within the entities themselves to ensure continuity and stability.
All this gives the impression of a crisis within the transport sector, but the department insists that due processes are simply being followed to fix a broken system. As departmental spokesperson Collen Msibi told Business Day: “Fiddling while Rome burns is not an option.”
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