A collection of Futuregrowth thought leadership pieces, media articles and interviews.

Futuregrowth SOE report gives grisly details of ‘governance degradation’

28 Feb 2018



Old Mutual subsidiary Futuregrowth, which brought the problems at Eskom, Transnet and other large state-owned enterprises (SOEs) to light in August 2016 by refusing to buy their bonds, released a detailed criticism of their poor governance on Wednesday.


"The simple fact is that every wasted or stolen rand is a rand which cannot build a road, buy a locomotive, electrify a house, or educate a child," Futuregrowth chief investment officer Andrew Canter said in the introduction to the report titled SOE Governance Unmasked: A Learning Journey.

"It is untenable for investors to allow the nation’s savings to be absconded, and it is incumbent on all responsible investors to play their appropriate role in allocating capital to sustainable enterprises."

Futuregrowth said the report summarises the problems it had found at SA’s six-largest SOEs so far. Its aim is to move from what started as a "creeping sense of governance degradation" to defining what good governance at these organisations should entail.

The fund manager said it was issuing the report before its governance reviews for Eskom and Transnet are concluded. The examples provided of improvements to procurement governance are from its South African National Roads Agency (Sanral) due-diligence conclusions.

Obvious problems listed in the report are conflicted directors such as Mark Pamensky who served on Eskom’s board and investment and finance committee while doubling as a board member of a key supplier of coal to Eskom, the Gupta family’s Oakbay resources.

The report concludes by saying: "Looking back over the past 18 months, we have realised that our concerns around SOE governance, as expressed in August 2016, were but a scratch on the surface.

"We had no way of knowing the extent of the allegations revealed by the information that emerged subsequent to our announcement. This started with the release of the State of Capture report by the public protector and continued in 2017 with the Guptaleaks revelations, the publication of the document Betrayal of the Promise: How SA is being Stolen by a team of academic researchers, and the ongoing parliamentary and other inquiries.

"New revelations and allegations are released almost daily in the press and on social media platforms."