Arms manufacturer Denel is the best performing state owned enterprise in terms of good corporate governance even though it is making losses‚ research has shown.
The findings were based on publicly available information covering 96 indicators of good corporate governance according to a research report produced by the Centre for Corporate Governance at the University of Stellenosch and released on Thursday, 11 October 2012.
The research covered other state-owned-enterprises including Transnet‚ Telkom‚ the South African Post Office and the Development Bank of Southern Africa.
Researcher Lynn Mc Gregor said the factors considered included:
- The composition of the boards and their committees;
- The functioning of the boards and their ability to give strategic direction;
- Accountability‚ particularly financial and audits;
- The relationship of enterprises with stakeholders‚ particularly government;
- Social and environmental factors;
- The quality of reporting.
McGregor said generally state-owned enterprises under-performed relative to the private sector with regard to corporate governance though they were generally better with regard to social aspects.
Advisor to the project Nozizwe Mdlala-Routledge raised concerns about the post-facto oversight by parliament of state-owned enterprises and about the process of appointing board members.
McGregor said government needed to be much more professional in the appointment of directors to the boards of state-owned enterprises.
She cautioned however that there were about 600 state-owned enterprises and entities so it was difficult to generalise.
Transparency and disclosure of information were critical‚ she said.
