Struggling SOEs fork out millions on sponsorship

Cape Town – South Africa’s embattled state-owned entities spent millions of rands on sponsorship money and membership fees of business lobby groups, parliamentary questions revealed. 

David Maynier from the Democratic Alliance (DA) asked national departments in a series of parliamentary questions how much was spent on sponsorship of various institutions, including the Afrikaanse Handelsinstituut, the SA Chamber of Commerce, the Black Management Forum and the Black Business Council among others.

Various state-owned companies transferred R74 563 to the Afrikaanse Handelsinstituut, R3 725 624 to the South African Chamber of Commerce and R1 151 393 to the Black Management Forum.

“The total sponsorship, so far is as follows: Afrikaanse Handelsinstituut (R74 563); South African Chamber of Commerce and Industry (R3 725 624), Black Management Forum (R1 151 393), Black Business Council (R 8 050 000), Business Unity South Africa (R 22 800) and the Progressive Business Forum (R 840 000),” Maynier said. 

The biggest sponsorship came from the Department of Trade and Industry (R7 000 000), Transnet (R5 059 002), Eskom (R1 501 763), and Denel (R303 615).

Eskom and Transnet forked out more than R5.7m in membership fees and sponsorships to business lobby groups in the past three years, a response to a parliamentary question has shown. 

Transnet paid a total of R4 658 993 in sponsorships and membership fees, among others to: 

- The SA Chamber of Commerce and Industry: R2 859 000 from 2014 to 2017, of which R550 079 was for membership fees and R129 839 towards gala dinners; 
- The BMF: R1 077 193 in sponsorship money; and 
- The Black Business Council: R700 000 for gala dinners and stakeholder engagement. 

Eskom paid R1 061 763 in membership and sponsorships, according to Public Enterprises Minister Lynne Brown’s response. Payments were made among others to: 

- The SA Chamber of Commerce and Industry: R563 000, including membership fees and a sponsorship of its gala dinner; 
- The BMF: R74 200, including membership fees and a sponsorship of a gala dinner; and 
- The Black Business Council: R350 000 in membership fees and sponsorship of a gala dinner. 

Both Transnet and Eskom have been downgraded by Standard & Poor’s Global Ratings, following South Africa's sovereign credit ratings downgrade to junk status by Standard & Poor's (S&P) and Fitch. Eskom was downgraded last week from 'B+' from 'BB-' with a negative outlook. Transnet was also downgraded to sub-investment grade, in line with South Africa’s sovereign credit rating. 

Maynier said "it boggles the mind” that cash-strapped state-owned enterprises would be allowed to use public funds to sponsor private institutions. “Especially when some of these institutions blatantly pursue a political agenda and bite the hand that feeds them."