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Global entrepreneur, political activist and a favourite of the BizNews community, Rob Hersov outlines the ANC’s practice of deploying its members into key positions and how cadre deployment has led to the deterioration of state-owned enterprises (SOEs) and the erosion of constitutional elements. He highlights instances like ESKOM and SAA where ANC-appointed officials diverted funds for personal and party gain. Hersov deems abolishing cadre deployment vital for restoring state institutions, particularly Transnet, the collapsing rail network, which symbolises the ANC’s mismanagement and corruption. He asserts that only with this change can South Africa save its economy and prevent further decay.
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By Rob Hersov*
In a working democracy with checks and balances, budgets and approval processes, oversight and transparency, and consequences for breaking the law, it is relatively hard to steal.
This is why, simply put, with ANC cadre deployment in place, the ANC has broken all the SOEs, weakened so many elements of our Constitution, diverted the rule of law (cadre deployment into circa 30% of the judges ensures decisions go the way of the ANC, and the useless Bheki Cele as Minister of Police), it is blatantly obvious that the ANC breaks so it can steal.
ESKOM and SAA are examples we know too well, with cadres like Dudu Myeni at SAA (or Brian Molefe at ESKOM), who followed ANC orders to divert funds into the ANC’s coffers (and the Gupta’s and their own) and many other cadres identified by the Zondo Commission still in place, with Spineless Cyril doing nothing to effect any change.
Abolishing cadre deployment is a fundamental prerequisite if we ever want to end load-shedding and try to save what is left of the state institutions, broken by the ANC, so they can steal. But the ANC has made it very clear it will not abolish this corrupt practice on its own, as it is the very lifeblood of corruption and thievery on which the ANC depends.
While ESKOM is being destroyed by the ANC and its mafia and is being rapidly replaced by private sector ingenuity, the real asteroid that is about to strike our economy, which no one seems to be calling out, is the ANC destruction of Transnet, our once mighty rail network.
On passenger rail alone, in June 2013 we had 49.2 million rail passengers, while in June 2023, a mere ten years later, we had, at best, a mere 3.2 million. Hence the emerging power of the taxi mafia is no doubt deep in Bheki Cele and the ANC’s pocket.
Freight rail, the logistic heartbeat of our beleaguered economy, which represented 66% of Transnet revenue, moving 226 million tons in 2018, has fallen to 149 million tons in March 2023, but today is closer to 130 million tons – an epic collapse.
And, if Transnet was in breach of its cash interest ratios at 226 million tons, which was highly likely, then one can only imagine the financial position at 130 million tons. Transnet is falling off an ANC-created cliff.
A mere look at the N3 highway from Durban to Pietermaritzburg (and beyond) shows two lanes filled with trucks carrying freight that once was carried by rail. Extrapolate that across the country, and you can easily see the ANC-maneuvered collapse of the rail network.
And unsurprisingly, we hear the ANC appointee and grossly underqualified Transnet CEO Portia Derby (she has not had one proper business role) claim that any recovery in the rail network might hurt the trucking network!
How patently obvious is that comment – The destruction of our rail network will hamper the ANC-appointed and BEE-backed truckers. We no longer wonder what her real job description was………to break so the ANC can steal! And it is no surprise that Portia used to be married to Brian Molefe – the gangster cadre himself was her tutor.
Transnet is doomed:
Any company that cannot maintain or upgrade its infrastructure is doomed. And the Transnet physical track network is appalling.
Up to 2012, Transnet was spending circa R3.4 billion per year on track maintenance, but from 2013 it fell to R1.6 billion and has never recovered to the prior levels.
If we assume the R3.4 billion per year was “enough” to maintain the infrastructure, then from 2013-2023, Transnet underspent on maintenance by around R28billion! And, for anyone who understands the basics of business, especially when it comes to vital infrastructure – maintenance cutbacks are not savings, they are suicide.
The result is that today Transnet has serious problems. The Transnet balance sheet is in disastrous shape, cash income has collapsed, Transnet borrowings are in breach of lending covenants, the national fiscus has no money to step in and, most embarrassing of all, business lightweight Portia Derby and her team are in complete denial, pretending they can actually fix this situation. Simply put – no one, not even experienced rail executives or turnaround experts, can fix Transnet.
Portia and her underwhelming management team completely lack comprehension of the problem’s depth and breadth. If they care at all.
A fundamental recapitalization is required. And the ANC is once again completely unqualified to fix this, as it has been in their interest to break Transnet, so they can steal, and obviously, as Portia Derby made it so clear recently, support the trucking industry instead.
Any investor in a company that is reliant on Transnet and South African rail like Thungela, Anglo American, Glencore, ARM, Tharisa or really any company with significant holdings in South African coal, chrome, iron ore or exporters of these commodities, or companies like Amsa or even Mondi SA, should dump their positions as fast as they can.
But most worrying for all South Africans is how many touchpoints Transnet has into the broader South African economy. Many companies and elements of our economy are reliant on Transnet.
There are so many factors that lead to the imminent collapse of Transnet – and it will collapse – but a very obvious one was under the clown-criminal Zuma’s regime and the (no checks, no balances) illegal procurement of 1,064 Chinese locomotives (it is estimated that the Guptas stole R4.6billion on that deal).
Transnet massively overpaid the Chinese for bad-quality locomotives, creating a major “failure in the field” from which the company never really recovered.
During the 2013-2023 period, instead of training and investing in competent managers, the ANC appointed cadres who, as we know from the Zondo Commission report, lacked any competence whatsoever.
A perfect example of a high-level cadre appointment, a woman with no real business qualifications or rail experience whatsoever, is the Head of Transnet Rail Freight, Sizakele Mzimela, a disastrous cadre and weak link of epic proportions. She is completely out of her depth at Transnet, and the results show.
Almost as disastrous as the corrupt practice of ordering Chinese locomotives, was the pernicious cancellation of the crucial and world-class MultiRail software as it simply made the infrastructure management role (the rail Control Tower) and network integration “too transparent and too robust” – having it in operation would make it impossible for the ANC cadres to steal.
In its place, all 23,000 kms of Transnet rail network would have to be run on Microsoft 365 via an Outlook spreadsheet. This has created chaos and is actually extremely dangerous as it is massively complicated to operate and almost impossible to manage – the perfect environment for the ANC to steal!
Case Study of ANC corruption:
Coal was at around $300/ton in 2022 (is now at around $100/ton) and the cash cost to mine it was circa $70/ton which allowed for a profit of $200/ton. With each train carrying 16,600 tons, and 200 trains in operation, the profit per train would have been R68mil cash each.
When the market is efficient, you can easily get another train in operation and hence generate that extra profit per train. Everyone wins.
But when the market is chaotic, dysfunctional, and constrained, as it has increasingly been since 2013, then corrupt ANC cadres can command almost any price to “allocate” trains.
And the reason we don’t hear the mining chieftains’ shout out against this corruption, is that they are too scared to be cut off from their rail capacity – and are therefore cowered into submission by Transnet’s ANC cadres. Corporate cowards and colluders are now the norm in the mining industry…………much like the rest of South African industry.
If your mining company relies on Transnet, you therefore feel like you cannot be the only one pointing out the rampant corruption of the ANC cadres, and your CEO won’t speak out.
Where is Anglo American’s voice? African Rainbow Minerals? Assmang? Assore? Arcelor Mittall? It is simply the silence of the lambs…………and lambs to the slaughter.
Foreign mining capital will continue to avoid South Africa. Transnet will collapse, and the South African economy will head into the abyss.
Thank you, evil ANC. You break, so you can steal.
But there won’t be much left to steal soon.
And then your job is done, Portia and Sizakele.
- Madam, please leave… – Cachalia on “host of reasons” to sack Transnet CE
- Transnet’s arch critic heralds its Durban Port’s Filipino partner as “best in world”
- Budget 2023: Two images illustrate the disaster called Transnet
*Rob Hersov is a global entrepreneur who has become an activist for political change in his native South Africa
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