03/10/2017 10:30 SAST | Updated 03/10/2017 11:06 SAST

Trevor Manuel Doesn't Mince His Words On Eskom And SAA

“The rot is so deep..."

Former finance minister Trevor Manuel.
Former finance minister Trevor Manuel.

Former finance minister Trevor Manuel says the country cannot fix its state-owned enterprises (SOEs) by "pouring more money" into them.

"The rot is so deep... there might be some issues that are immediate, but I do not know many private sector companies where a board of nonexecutive directors form a tender committee, but it has become a rigour of our SOEs," he said.

"There are some management issues... there are some big decisions that are about management that you can't resolve by pouring money into it."

"[SAA] employs too many people, their pay scales are out of industry normsTrevor Manuel

Manuel was speaking about risk mitigation at Deloitte's Risk Conference in Sandton on Tuesday.

Speaking about Eskom and SAA, Manuel said the airline's cost structure was wrong.

"[SAA] employs too many people, their pay scales are out of industry norms... unless you can drive an agenda about what the cost structure of SAA is, you cannot sell it to anyone who wants to buy an airline," Manuel said.

"When you look at a more complex entity like Eskom, you may want to revisit issues... of corporate governance failures."

Siphiwe Sibeko / Reuters

In his presentation on risk management, Manuel said one of his "deep concerns" for South Africa was that there was no communication. He used KMPG as an example.

Read: Trevor Manuel's Message To Malusi Gigaba: 'Prove Your Detractors Wrong'

"The issue of communication, and this is not a funeral for KMPG, but if their communication happened differently... it is a lesson. Regardless of how smart the analysts, the economists -- quality of strategy is always about implementation and implementation is always about people," Manuel said.

"The one issue that I think nobody is crediting KPMG with is the fact that they have [removed those responsible]"

"The one issue that I think nobody is crediting KPMG with is the fact that they have [removed those responsible]. In any partnership, if you lose the top nine people, like KMPG has done, it's a big decision. It's a big decision that ought to lay the precedent for a new beginning," Manuel said.

"My own sense is we have to support a process that must be about a new beginning at that firm. You can't unwind the clock in people's lives; we need to turn to the profession and say, we need a healing process, this is a crisis for us."

He said South Africans did not talk enough about the economic risk facing the country.

Siphiwe Sibeko / Reuters

"We find ourselves at the mercy of the most unpredictable set of economic factors this country faces. We approach with a degree of trepidation, partly because there is so much negative news and so little reassurance," he said.

"I'm deeply concerned about the metrics. If I look at the upward trendline of the [budget] deficit, I look at the gaping and yawning chasm on the revenue side, then I think we are facing a very difficult situation."