Eskom, Transnet deny targeting black-owned security firms

Eskom and Transnet, two of South Africa's largest state-owned enterprises, have denied allegations that they are systematically excluding black-owned security firms from doing business with them. The claims come from the Association of Private Security Owners of South Africa (Tapsosa), which says that at least 26 of its member firms have been blacklisted from the Central Supplier Database (CSD). According to Tapsosa's spokesperson, Sindiswa Changuion, this exclusion has left many of these firms unable to operate for over four years, resulting in financial strain and job losses among employees. Changuion emphasized that the impact of the blacklisting has been profound, noting that several firms are now forced to consider retrenching their administrative staff due to non-payment issues stemming from the blockage in the system. Contractors who spoke anonymously confirmed that the exclusion has been used as a justification for terminating existing contracts with other government entities, further exacerbating the situation. Tapsosa expressed concern over what it describes as a "systematic purging" of black-owned security companies, claiming that the alleged violations against these firms have not always been thoroughly investigated before severe sanctions were imposed. Many of the affected security firms are now facing an existential threat after being barred from working with state-owned entities, while some of the alleged infractions have not been adequately examined. Eskom's spokesperson, Daphne Mokwena, responded to the allegations, stating that the restrictions placed on suppliers affect at least 101 contractors. She explained that these measures are part of a broader initiative aimed at improving governance and transparency, as well as tackling fraud and corruption. However, Mokwena clarified that only one of the affected contractors provides security services to Eskom. She further denied the claim that 26 black-owned companies were referred to the National Treasury without proper procedure, asserting that Eskom followed its internal governance and supplier discipline processes, which are applied objectively and consistently based on assessed misconduct and available evidence. Additionally, Mokwena noted that Tapsosa is not involved in the supplier discipline matters related to the 26 restricted suppliers, and only one of the 53 referrals concerns a security-related service provider. Eskom Group Chief Executive Dan Marokane reaffirmed the company's commitment to addressing fraud and supplier misconduct. He mentioned that the utility is processing newly referred supplier discipline cases within a 90-day timeframe, emphasizing efforts to restore public trust through transparent consequences for procurement irregularities. Transnet similarly denied any intent to specifically target black-owned security contractors, stating that only one such firm has been impacted by ongoing investigations. Following the announcement of the restriction of seven companies, Transnet emphasized that forensic investigations conducted by the Special Investigating Unit (SIU) uncovered misconduct, none of which involved security service providers. Separately, concerns have arisen regarding the lack of mandatory lifestyle audits for newly elected municipal councillors. With local government elections approaching in November, thousands of councillors will assume positions without undergoing these audits, despite longstanding discussions about implementing them. Public Service and Administration Minister Mzamo Buthelezi stated that the necessary regulations for mandatory lifestyle audits will not be in place for councillors elected after the upcoming local government elections, citing the current legal framework's limitations. The absence of mandatory lifestyle audits raises questions about the level of scrutiny councillors will face once in office, especially considering the ongoing challenges related to governance, financial management, and accountability within municipalities. Buthelezi explained that the Local Government Municipal Structures Act does not require councillors to undergo lifestyle audits, and the responsibility lies with the Department of Cooperative Governance and Traditional Affairs (DCoG). Efforts are underway to address the gap through existing disclosure requirements and proposed changes to the local government framework. A task team comprising the Public Service and Administration Department, DCoG, and the South African Local Government Association (SALGA) is working on ethics management, discipline management, and lifestyle audits. However, the process of developing the necessary regulations is expected to extend beyond the current electoral cycle, with the anticipated completion of the consultation, approval, and finalization of the Lifestyle Audit Regulations by the end of the 2028/29 financial year. Political analysts have raised concerns about the potential accountability gap created by the delay in implementing mandatory lifestyle audits for councillors. As the local government elections approach, the absence of these audits may lead to increased scrutiny and calls for greater transparency in how councillors manage their roles and responsibilities.