Association says remuneration of executives out of step with performance

The high remuneration of executives at State-Owned Enterprises (SOEs) remains a concern and should be the focus of a Parliamentary inquiry in 2022. The Automobile Association (AA) says in specifically three entities it has reviewed, remuneration of executives does not correlate with set targets, nor is it in line with private sector remuneration.

The AA has reviewed the Road Traffic Infringement Agency (RTIA), the Road Traffic Management Corporation (RTMC) and the Gautrain Management Agency (GMA), a provincial public entity in Gauteng.

In the case of the RTIA, for example, its Registrar and Chief Executive Officer (CEO), Mr Japh Chuwe, was paid a remuneration package of just under R10.9m in 2020 but was fired earlier this year for what the Agency said was “serious maladministration”.

In the 2020/2021 Annual Report of the RTMC, the Auditor-General noted that the management of the Corporation did not ensure the financial statements “… were in line with the reporting framework, and [that they] were accurate and complete”. Yet, in the same year, the CEO of the RTMC, Adv Makhosini Msibi’s total remuneration was R9.8m, in spite of the adverse findings of the Auditor-General. In addition, the RTMC has failed to fulfil its core mandate of reducing road deaths in South Africa, despite receiving billions of Rands from government to address the issue.

In the case of the GMA, its CEO Mr William Dachs, in a recent television interview, declined to explain the remuneration policy of the Agency. In 2020, the seven-member GMA Executive Management team received R8.4m in bonuses, and in 2021 the executive team received R4.2m in bonuses, despite the system never achieving projected ridership levels, and with the current low levels of commuters declining even further.

“In fact, Gautrain has never achieved its target annual ridership levels since operations commenced. In 2017, the system recorded its highest ridership levels at just over 15.6 million riders, a far cry from its projected annual ridership of 47.5 million commuters. The low number of people using the Gautrain has negative financial implications for all Gauteng citizens who fund the private concessionaire of the system for any shortfall in ridership levels. In the past two years, this funding – through a mechanism known as the Patronage Guarantee – has amounted to around R4bn,” says the AA.

The AA says while the GMA may want to assure the public that it is reaching other targets – such as the punctuality of the system, and clean audit outcomes – this is really a smokescreen to cover for the failings relating to its core function of attracting sufficient commuters to ride on the Gautrain.

“Mr Dachs is the CEO of provincial public entity and, as such, must be held accountable for expenditure. While he may believe he does not need to defend the bonuses of executives, that is precisely what the public is entitled to. Not only are taxpayers funding the system through allocations from government, they are effectively refunding the Gautrain through the Patronage Guarantee; all of this for a system which is clearly not reaching its targets but for which its executives are paid handsomely,” the AA notes.

The AA says CEOs and Boards of Directors at each of the agencies it has reviewed have an obligation to account for the manner in which they are managing their organisations, and the money entrusted to them by the public.

“In the case of the GMA, for instance, we’re in a situation where government is effectively bailing out an SOE as a result of declining usage yet the person at the helm of the system believes there is no need to account for inflated bonuses. It’s outrageous and disgraceful, and Mr Dachs and the other CEOs must be called to explain themselves at a Parliamentary inquiry.”

The AA says it will be engaging with Parliament in the new year to lobby for the inquiry into these and other SOEs. It says the public has a right to demand these entities are held to account for the money they are allocated, and for the remuneration executives receive.

“We call on all citizens to support us as we champion their rights. By joining the AA, the public not only benefits from the services the Association offers, but they will also be supporting and benefitting from the increasing advocacy role the AA is playing in promoting and protecting their rights,” concludes the AA.