Piercing the SOE veil

South Africans have paid billions to rescue failing State-Owned Enterprises (SOEs) crippled by corruption, mismanagement and zero accountability – while executives walk away enriched and taxpayers are left bleeding. SHARMINI NAIDOO says that this needs to stop.

Over the past 15 years, South Africans have paid R521 billion to bail out corrupt and mismanaged SOEs, according to Minister of Finance Enoch Godongwana. In reality, the figure may be closer to R670 billion or more; the Foundation for Rights of Expression and Equality (Free SA) notes that this difficult to calculate precisely due to “inconsistent reporting by companies, varying definitions of bailouts – such as direct recapitalisations, guarantees or debt takeovers – and the complexity of fiscal allocations.”

Based on parliamentary briefings and committee reports, as at the end of 2024, the following bailouts were authorised:

• Eskom has received R496 billion since 2008/09.
• South African Airways (SAA) received 12.4% of the total bailout amount – R49 billion – in just six years.
• South African National Roads Agency Limited (SANRAL) has been allocated R47 billion.
• Transnet requested a R61-billion bailout in 2024 but instead received a guarantee facility.
• Denel received R8.95 billion.
• The South African Post Office (SAPO) received R10.4 billion.

The history of SOEs

SOEs (or public entities) are independent bodies partially or wholly owned by government. They perform specific functions and operate in accordance with a particular Act.

In South Africa, in line with international trends, corporatisation (the transformation of state assets or agencies into state-owned corporations) was introduced in several sectors to promote more effective and efficient service delivery, particularly after the democratic election in 1994. Internationally, using public authorities rather than full privatisation is viewed as a way of taking advantage of private-sector efficiencies while maintaining public accountability. That’s according to a report from Wendy Ovens & Associates, “The Role and Significance of State-Owned Enterprises, Public Entities and Other Public Bodies in the Promotion of Urban Growth and Development in South Africa.”

South Africa currently has around 700 SOEs, operating across sectors such as transport, energy and public utilities. Some are among the largest employers in their industries. They were created and are controlled by government to provide essential services, drive economic development and create jobs. Most are well known, but often for all the wrong reasons. Examples include SANRAL, Eskom, Denel, the South African Broadcasting Corporation (SABC), Transnet, the Road Accident Fund (RAF) and SAPO. 

SOEs are supposed to be structured like businesses to improve efficiency and accountability, yet must also fulfil public service mandates and social objectives. They are required to apply commercial principles such as corporate governance through the Public Finance Management Act (PFMA). They are not designed to be solely profit-driven; the aim is to keep services affordable or develop industries that private investors would not otherwise support. Many modern companies also follow a “triple bottom line” approach (social, environmental and financial) beyond mere profit maximisation.

That said, SOEs have tended to adopt an “open purse” approach, rather than managing costs and cash flow. As a result, principles such as governance, efficiency and accountability often fall by the wayside.

Funding Our SOEs

Funding for South Africa’s SOEs comes from state allocations. As noted above, shortfalls are covered through bailouts, government guarantees and borrowing from financial institutions – all of which ultimately comes at the expense of the taxpayer through taxes, levies and user-pay services.

By contrast, private-sector businesses are funded by shareholders. When borrowing, they rely on the strength of their balance sheets and future profitability.

Remuneration of SOE CEOs, executives and boards

Did you know that the CEOs of some SOEs earn salaries comparable to – or even exceeding – those of CEOs in the private sector, despite consistent underperformance and failure to deliver on their mandates?

Recent examples show these individuals earning between R8.5 million and R15.5 million per year:

• Development Bank of Southern Africa: CEO’s salary rose from R10.5 million to R15.5 million in one year.
• Transnet: CEO earned R8.5 million despite operational failures and a R47 billion bailout.
• Passenger Rail Agency of South Africa (PRASA): CEO earned R7.8 million amid service collapse and audit disclaimers.
• RAF: CEO earned R7.1 million.

Despite being insolvent, the RAF paid R6.74 million in performance bonuses to executives in 2024/25, and the former CEO received R2.8 million in bonuses.

The RAF is funded through the fuel levy (R2.18/litre) and collects over R48 billion annually. Yet it is in dire financial distress, facing insolvency amid allegations of corruption and mismanagement. 

The RAF’s role is to compensate individuals for loss or damage resulting from road accidents, including medical expenses, loss of income and general damages. It has received adverse or disclaimed audit opinions for the past five years and is running a R27.8-billion deficit, which has grown over a decade. Meanwhile, executive remuneration for 2024/25 totalled R32.55 million according to BusinessTech/NewsDay.

In 2025, the RAF had R10.4 billion in unpaid claims and total liabilities of R40.4 billion, including R20 billion in claims outstanding for more than six months. Although Transport Minister Barbara Creecy dissolved the board in July due to “persistent dysfunction”, followed by the new board suspending several senior executives during an independent investigation, there has been no indication that any funds will be recovered or that the previous leadership will be held accountable.

The Standing Committee on Public Accounts (SCOPA) has launched an inquiry into the RAF’s “toxic leadership” and possible criminal misconduct. More than 100 submissions have been received, with allegations including:

• Poor vetting of senior executives with reckless financial histories.
• Claims processing delays averaging four years.
• Financial mismanagement and undisclosed liabilities of R500 billion.
• Excessive spending on personal security: ex-CEO Collins Letsoalo allegedly spent R23 million between 2023 and 2025, including R10 million on hotel stays and bodyguards.

If SOEs want to model themselves on the private sector and enjoy corporate-style benefits, it is time government officials are held to similar standards of accountability – for example, through section 20(9) of the Companies Act (piercing the corporate veil^*).

Closing thoughts

On that note, we can be grateful that 2025 is “done and dusted”. What a year it has been! In December 2024, President Ramaphosa described the year ahead as one that should be viewed with “great hope” by all South Africans. Somehow, that prediction did not quite land – but it was certainly eventful.

According to numerologists^**, 2025 was a “number nine year” (2 + 0 + 2 + 5 = 9): a time of major shifts, transformation, potential instability and the completion of lessons. In contrast, 2026 is expected to bring new beginnings, stability, healing, steady progress and emotional balance, with opportunities for growth and personal empowerment.

Hopefully, we have learned our lessons and can hold the vision for 2026 “without doubt or deviation”, shaping a brighter future by pursuing solutions that benefit all, and focusing on humanitarian values, generosity and community-mindedness.

As Nelson Mandela said, “We can change the world and make it a better place. It’s in your hands to make a difference.”

* A South African legal principle that allows courts to hold directors or shareholders personally liable for a company’s debts or actions by disregarding the company’s separate legal personality. This is primarily governed by Section 20(9) of the Companies Act 71 of 2008, which permits courts to disregard the corporate form when its use constitutes an “unconscionable abuse”.

** An ancient technique that assigns meaning to numbers and their influence on human life and events. Numerology is based on the premise that the universe is a system that can be broken down into basic numerical elements, each with a unique energetic vibration correlating to personality traits, life purpose and future trends.