RCC goes under knife

A cabinet committee has decided to throw the beleaguered parastatal a lifeline by putting its operations under curatorship of the High Court.

08 September 2017 | Government

The next parliamentary session which opens on Tuesday will be asked to deliberate on a decision by the Cabinet Committee on Overall Policy and Priorities (CCOPP) to file an application with the High Court that beleaguered Roads Construction Company (RCC) be placed under judicial management. The CCOPP took this decision after many hundreds of hours of discussions and head-butting on the RCC's critical financial status, which the minister of public enterprises, Leon Jooste, yesterday described as the most precarious among all SOEs. This is in all likelihood the first time that a parastatal is being placed in this situation and Jooste stressed that the CCOPP decision was – in the end – a collective one. “We are convinced that as we looked at all the options for the RCC, our collective decision is that this is the preferred option for the RCC,” Jooste said. The entire judicial management process is captured under the Insolvency Act and the Companies Act, which stipulates in which conditions judicial management can be applied. Jooste said the RCC has many creditors who will have to wait and see their claims against the company settled while the company is under judicial management.

This means that once parliament endorses the CCOPP decision and the High Court grants the judicial management process, the court will employ a judicial manager who will for the period of the process serve on a permanent basis as a “replacement CEO”.

During that time, neither the shareholder (the government) nor the board will be “disempowered” and will have no influence or powers over the parastatal.

“If the board were to decide to oppose this decision, the shareholder will have no other choice but to dissolve it and replace it with an interim one,” Jooste said.

He said that the current, and former board since 2015, have been part of the entire process and that have been granted ample opportunity to share its views and insights.

The current board chaired by Fritz Jacobs was informed yesterday morning, a day after the CCOPP had reached its decision.

“We think this is in the best interest of all stakeholders that this process is not delayed. We have spent enough time deliberating on this and hope it will happen as soon as possible,” Jooste said.

“We are not concerned by the process considering that the initial proposal was to liquidate the RCC. The wisdom of CCOPP is to ensure that the RCC continues,” said Jacobs yesterday afternoon.

It is expected from attorney-general Sacky Shanghala to have the submission to parliament ready by next week.

Should parliament endorse the decision and the High Court determines to place the parastatal under judicial management, the company will continue to operate.

During the period, however long or short it may take, all current 393 RCC employees will be paid their basic salaries from the treasury, which translates into N$7 million per month from the treasury. This, however, does not include any bonuses or other extra benefits, Jooste said.

All other costs related to the judicial management process will be borne by the RCC.

One of the first things the judicial manager will have to do is to pro-actively seek ways to restructure the debt of the company and to respond to financial and legal demands on the company.



Jooste stressed that the outcome of the process cannot be pre-empted.



The judicial manager can at the end of the process recommend that the company be wound up or that there is a chance to salvage it. In the end the shareholder will have to decide the fate of the company.







Hybrid governance model

Jooste said his ministry was also planning to fix other public enterprises that are under financial constraints, firstly by implementing the proposed hybrid governance model.

“We have a complete strategy on transforming commercial public enterprises. It is a multi-pronged strategy dealing with all issues. We have done a lot of benchmarking with other countries that have been very successful at transforming their SOEs.

“It is very long and complicated process. We will try to leapfrog certain processes and expedite that to generate positive results as soon as possible. The reality is that these things take time. We need a mind-shift, a culture change in these enterprises,” Jooste said.

The move to the hybrid governance model will mean that all 16 000 employees at SOEs will have to be led through change, Jooste said.

“We will not entertain too many excuses. We are convinced that in most cases commercial public enterprises are more than financially viable. Some of them occupy monopolies. Of course, some of them have important strategic roles to play and we should not put too much emphasis on profits in all cases.”

Jooste said the RCC is a case in point of some of the SOEs that can be “cash cows” for the government:

“The RCC should be able to generate profits because what we see in the private sector operating in that industry generates profits for their shareholders. Why has our own entity operating in the same sector, which is enjoying some preference, not been generating the same levels of profits? We will not be happy to hear enterprises reach break-even points and are not financial burdens on the shareholder any more. We will be demanding dividends.”

CATHERINE SASMAN

Similar News

 

Minister defends Oropoko buy

3 days ago - 22 February 2018 | Government

The purchase of Oropoko Lodge by the defence force was discussed in depth in parliament on Tuesday.The defence minister, Penda Ya Ndakolo, addressed the issue...

Kawana, Shanghala swap desks

3 days ago - 22 February 2018 | Government

The justice ministry yesterday welcomed its new minister, Sacky Shanghala, and new attorney-general, Albert Kawana, following the cabinet reshuffle by President Hage Geingob two weeks...

Ngatjizeko retires

3 days ago - 21 February 2018 | Government

Unconfirmed reports indicate that the recently appointed presidential affairs minister Immanuel Ngatjizeko, who has not been in the best of health over the past few...

Trade ministry cancels paper subscriptions

5 days ago - 20 February 2018 | Government

Civil servants employed by the ministry of industrialisation and trade will have to buy their own newspapers from now on.A directive issued by permanent secretary...

Jooste limits paid SOE board meetings

1 week ago - 15 February 2018 | Government

The minister of public enterprises, Leon Jooste, has said parastatal boards will only be paid for four meetings annually starting this year.Jooste said under normal...

Mutorwa lists achievements as he exits

1 week ago - 15 February 2018 | Government

Stakeholders in the agriculture sector and staff from the agriculture ministry yesterday gathered to bid farewell to Minister John Mutorwa, who had steered the sector...

No to 'travelling parliament'

1 week ago - 14 February 2018 | Government

President Hage Geingob has rapped parliamentarians over the knuckles for the pace at which bills are passed, the quality of debate in the House, and...

Deputy ministers redeployed

1 week ago - 14 February 2018 | Government

Days after announcing changes to his new cabinet, President Hage Geingob has redeployed deputy ministers and appointed two new ones. In the cabinet reshuffle...

Serious flaws in cybersecurity bill

1 week ago - 12 February 2018 | Government

Serious concerns have been expressed about a lack of widespread input, potential privacy violations and lack of coherency and expertise related to the 2017 Electronic...

'SOE reforms are nasty'

1 week ago - 12 February 2018 | Government

The minister of public enterprises, Leon Jooste, says it will require a lot of political will to turn around embattled state-owned enterprises. He was...

Latest News

DebMarine prelims to kick off...

1 day - 24 February 2018 | Sports

The DebMarine Namibia Cup kicks off on 3 March countrywide, with clubs in the first and second divisions battling it out to secure a place...

Outjo donkey abattoir off the...

2 days ago - 23 February 2018 | Agriculture

Plans to build a donkey abattoir in Outjo have folded.Fu-Hai Trading Enterprises, reportedly co-owned by Swakopmund estate agent Shane Quinton Hangula and a Chinese business...

One Africa Television Chief Executive...

2 days ago - 23 February 2018 | Business

Namibia’s first ever free-to-air, independent TV broadcaster in Namibia, One Africa Television was founded in 2003, the brainchild of Namibian photographer and businessman, the late...

3 Key Social Media Trends...

2 days ago - 23 February 2018 | Education

Like it or not, you are recruiting in the world of Google. Just as easily as you can go to the Internet to look things...

Union warns private schools

2 days ago - 23 February 2018 | Labour

JEMIMA BEUKES The Teachers Union of Namibia (TUN) intends to clamp down on fly-by-night private schools that allegedly exploit...

Mwoombola fights back

2 days ago - 23 February 2018 | Justice

Former health permanent secretary Andreas Mwoombola has launched a two-fold application in the Labour Court, in which he wants to court to either halt his...

Elephants cause havoc

2 days ago - 23 February 2018 | Environment

Several elephant herds have over the past few weeks caused havoc on farms in the Outjo District, resulting in hundreds of thousands of dollars in...

The Basics of Branding

2 days ago - 23 February 2018 | Business

Simply put, your brand is your promise to your customer. It tells them what they can expect from your products and services, and it...

How to Communicate Effectively in...

2 days ago - 23 February 2018 | Education

Communication is essential for the smooth running of a business, whether it is between colleagues, with a client or with customers.With technology creating a multitude...

Load More