Legacy governance issues within the communications ministry’s entities will be ironed out with new measures. (Image source: 123RF)
The Department of Communications and Digital Technologies (DCDT) has introduced several reforms to arrest the governance crises within its entities.
This was revealed during a briefing to the Parliamentary Portfolio Committee on Communications and Digital Technologies on the department’s state-owned enterprises (SOEs) governance reform programme.
The DCDT has oversight of 11 SOEs: Broadband Infraco (BBI), Film and Publications Board, Independent Communications Authority of SA, NEMISA, Postbank, SABC, South African Post Office, Sentech, State IT Agency (SITA), Universal Service and Access Agency of SA (USAASA) and .ZA Domain Name Authority (ZADNA).
Some of these have received billions of rands in bailouts from the state, have been placed under business rescue, are in the process of consolidation and are often the subject of poor governance controls.
Omega Shelembe, deputy director-general: SOE oversight and ICT enterprise at the DCDT, told the Parliamentary portfolio committee on Friday that early observations indicate the department’s entities face financial sustainability and ongoing concerns, governance instability, whistleblower allegations and investigations, and audit regressions and repeat findings.
Further, the department’s informal diagnostic assessment identified inconsistent board appointment processes, lack of standardised shortlisting methodology for board member considerations, and absence of a formal framework for structured escalation for governance crises.
The DDG acknowledged the entities’ past governance challenges, saying these include dysfunctional boards (board squabbles or inquorate boards), for example.
Therefore, the department’s reform programme actions include standardised board appointments, independent shortlisting panels and vetting, standardised shareholder compacts and governance agreements, governance performance reporting matrix, and structured investigation processes, noted Shelembe.
He said the board appointments process has been standardised to include implementation of uniform terms of reference process of shortlisting panels.
“We will typically appoint a nominations panel that will assist the minister to sift through the nominated individuals for boards. Over the years, this has been done without following a uniform term of reference for identifying a suitable candidate.
“We have now established a uniform set of terms of reference for shortlisting the panels. These panels, we have ensured they are independent panel members. The selection process is competency-based, trying as much as possible to align such a selection to the mandate of the organisation or the public entity.
“We have also introduced a structured interview scoring matrix, which ensures people are taken through a stringent screening process for participation in our boards. All board members nominated for participation in our boards must undergo an interview or a screening process. We do qualification verifications as well.
“We have also introduced a system of conflict-of-interest declaration, to ensure people who have conflicting interests with the organisation declare their interests up-front as they are being considered as board members, but also continuously declare their interests.”
The reforms, he added, aim to ensure a merit-based, transparent and defensible appointment system for board members. “There is an improvement in the alignment of skills to institutional complexity and institutional mandates.”
Omega Shelembe, deputy director general: SOE oversight and ICT enterprise, at the DCDT.
He noted shareholder compacts are required by law to be entered between the minister and the entities. “The reforms that we have taken to standardise the instrument…are the inclusion of performance targets; we have introduced what we call gatekeepers, which essentially says an entity cannot consider the payment of performance bonuses if the organisation itself has not reached a threshold of performance.
“We have also included audit improvement indicators in the shareholder compacts, which ensures audit findings are attended to by boards and dealt with in time to improve audit outcomes.
“Financial sustainability and ongoing concerns have been marring our organisations, and we now want to include those into the shareholder compacts, with the boards agreeing to look and pay particular attention into issues of financial sustainability and entity turnaround.”
He added that reporting cycles have been defined. “By regulation, entities are required to report at least once a quarter. Additional to that, the minister has requested that the department receive monthly reports that showcase how the entity is performing towards quarterly targets. These have helped to bring issues to us as an early warning system of what may be going wrong in the entities.”
Shelembe explained that governance agreements are not required by law. However, the department felt it needed to develop something akin to the shareholder compacts and create a framework that includes the clarification of the mandate of the entity, inclusive of governance compliance indicators, reporting timelines, as well as oversight engagement schedules.
“The minister has started to engage entities regularly, on top of just once-off meetings at the annual general meetings,” said Shelembe.
He further stated that the department is of the view that the governance reform programme will result in stable and professional boards, improved audit outcomes, stronger alignment between governance and performance, reduced governance crises, improved public perception, as well as enhanced Parliamentary confidence in oversight mechanisms.
Turning to entity-specific reforms, the DDG revealed the department is looking to appoint a service provider to assist it in developing a revised business model and implementable recommendations for SITA reforms.
The status of the appointment is currently underway, with the tender process closing on 30 January. “It has been evaluated and adjudicated, and we tend to finalise the appointment process of the service provider.
“This service provider will assist in reviewing the totality of the mandate of SITA and create what we call a state services company. This means not focusing only on procurement but also on other key elements, such as digital transformation, issues relating to cyber security, as well as improving service delivery to client departments.”
He added that reforms are in the pipeline for USAASA and the Universal Service Access Fund, which will result in the establishment of the Digital Development Challenge Fund.
