ANALYSIS OF THE ROLE OF STATE-OWNED ENTERPRISES IN STATE

CAPTURE: A CASE STUDY OF ESKOM AND TRANSNET IN SOUTH AFRICA

By

Sherise Nundhkumar STUDENT NUMBER: 62761552

Submitted in Partial fulfilment of the requirements for the degree of Research Report in
Forensic Methods and Techniques (FOR4803)

In The Bachelor of Arts Honours in Forensic Science and Technology

School of Criminal Justice UNIVERSITY OF SOUTH AFRICA

SUPERVISOR: Dr DQ Mabunda

ASSIGNMENT: 03

Year: 2023
 Table of Contents
1. INTRODUCTION 2

2. RESEARCH AIM 4

3. RESEARCH QUESTION 4

4. LITERATURE REVIEW 4

4.1 FUNDAMENTAL CONCEPTS 5

4.1.1 State-Owned Enterprises (SOEs) 6
4.1.2 State Capture 6
4.1.3 Corruption 6
4.1.4 Malfeasance 6

5. RESEARCH METHODOLOGY 7

5.1 RESEARCH DESIGN, APPROACH, AND METHODS 7

5.2 DATA COLLECTION PROCESS AND SOURCES 7
5.3 SAMPLING TECHNIQUE AND SAMPLE SIZE 7
5.4 TOOLS, INSTRUMENTS, OR SOFTWARE FOR DATA ANALYSIS 8
5.5 MEASUREMENT AND ANALYSIS OF VARIABLES 8

6. DATA ANALYSIS AND RESULTS 9

6.1 PRESENTING THE ANALYSED DATA 9

6.1.1 Credibility 9
6.1.2 Transferability 9
6.1.3 Dependability 9
6.1.4 Conformability 10
6.2 UTILIZING TABLES, GRAPHS, CHARTS, AND FIGURES 10
6.2.1 Transnet 10
6.2.2 Eskom 11
6.3 PROVIDING INSIGHTFUL INTERPRETATIONS 13
6.4 ADDRESSING THE RESEARCH QUESTION AND RESEARCH OBJECTIVES 14
6.4.1 Extent of State Capture within Eskom and Transnet (Objective 1): 14
6.4.2 Methods of State Capture (Objective 2): 14
6.4.3 Economic and Social Effects of State Capture (Objective 3): 14
6.4.4 Institutional Factors Contributing to Corruption and Malfeasance (Objective 4): 14
6.4.5 Evidence-Based Measures to Prevent and Combat State Capture (Objective 5): 15

7 DISCUSSION 15

7.1 IMPORTANCE OF STATE-OWNED ENTERPRISES FOR ECONOMIC DEVELOPMENT 15

7.2 HISTORY, GOVERNANCE, AND OPERATIONS OF ESKOM AND TRANSNET IN SOUTH AFRICA 16
7.3 IMPLICATIONS OF ESKOM AND TRANSNET IN ALLEGATIONS OF STATE CAPTURE 17
7.4 CORRUPTION AND MALFEASANCE AT ESKOM AND TRANSNET 18
7.4.1 Gupta saga 18
7.4.2 Koko and Singh scandals 18
7.4.3 Tegeta deal 18
7.4.4 Transnet locomotive scandal 19
7.5 ROLE OF STATE-OWNED ENTERPRISES IN FACILITATING STATE CAPTURE: THE CASE OF ESKOM AND TRANSNET 20
7.6 ROLE OF STATE-OWNED ENTERPRISES IN FACILITATING STATE CAPTURE: THE CASE OF ESKOM AND TRANSNET 20
7.7 THE ECONOMIC AND SOCIAL REPERCUSSIONS OF STATE CAPTURE AT ESKOM AND TRANSNET 21
7.8 REGULATORY AND INSTITUTIONAL FRAMEWORK FOR OVERSIGHT OF STATE-OWNED ENTERPRISES 22
7.9 COMPARATIVE ANALYSIS: STATE CAPTURE AND SOES IN OTHER COUNTRIES 23
7.10 STRENGTHENING ACCOUNTABILITY AND TRANSPARENCY IN STATE-OWNED ENTERPRISES 23
8 RECOMMENDATIONS 24

8.1 FINDINGS 24
8.2 RECOMMENDATIONS 25
9 CONCLUSION 27

10 REFERENCES 29

11 DECLARATION 32

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 WORKING TITLE: ANALYSIS OF THE ROLE OF STATE-OWNED ENTERPRISES IN STATE
CAPTURE: A CASE STUDY OF ESKOM AND TRANSNET IN SOUTH AFRICA

1. Introduction

State-owned enterprises (SOEs) are important for economic development and

service delivery, but the issue of "state capture" has emerged as a concern in South
Africa according to Balbuena (2014). State capture involves private parties exploiting
public institutions for personal gain, such as in the case of Eskom and Transnet. The
alleged corruption and malfeasance within these SOEs have raised concerns about
their governance and management, which has implications for the economy and
society (Sutherland, 2020: 233-252).

Eskom, the state-owned energy provider, and Transnet, which manages ports and
transport infrastructure, are crucial for South Africa's economic growth (Hanson,
2019). However, their involvement in political and fraudulent activities has
discouraged international investment and cast doubt on the country's business
climate. This has led to power disruptions and a decline in investor confidence,
posing threats to economic stability.

The National Development Plan recognizes the importance of urban areas in

promoting resource efficiency and economic growth. However, the concentration of
population and economic activities in cities can strain the environment. If not
addressed, this can lead to water shortages, food insecurity, and power shortages,
negatively impacting the population's well-being.

This research aims to analyse the involvement of Eskom and Transnet in facilitating
corrupt practices to address the issue of state capture. By investigating the extent
and mechanisms of state capture within these SOEs, the study aims to identify
vulnerabilities and institutional factors contributing to corruption. It will also examine
the economic and social consequences of state capture at Eskom and Transnet to
understand its wider implications for South Africa.

The research aims to contribute to the fight against state capture and promote
transparency, accountability, and good governance in SOEs. The findings will inform
policymakers, government officials, and the public in their efforts to safeguard state
institutions and restore investor confidence. The research objectives include
determining the extent of state capture, examining the methods used, investigating
the effects, identifying institutional factors, and proposing measures to prevent and
combat state capture.

Research Objectives:

- Determine the extent of state capture within Eskom and Transnet between
2010 and 2023.

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 - Examine the methods by which the state has captured these SOEs.
- Investigate the economic and social effects of state capture at Eskom and
Transnet.
- Identify the institutional factors that make SOEs susceptible to corruption and
malfeasance.
- Propose evidence-based measures to prevent and combat state capture and
to improve accountability within these SOEs.

Research Question:
How deeply have Eskom and Transnet been involved in state capture, and what are
the repercussions for South Africa's economy and society?

The problem under consideration is the prevalent mismanagement and possible

exploitation inside the state-owned businesses of South Africa, with specific
emphasis on Eskom and Transnet. An increasing amount of empirical data, as
documented by prominent scholars such as Balbuena (2014) and Sutherland (2020:
233-252), suggests the existence of state capture, a phenomenon characterized by
the manipulation of public institutions by private interests for personal benefit. The
charges pertaining to Eskom and Transnet bring attention to a concerning pattern,
indicating that corruption and misconduct might potentially undermine the credibility
of these essential organizations. The relevance of this problem is of utmost
importance because of the crucial responsibilities that these State-Owned
Enterprises play in the economic development and supply of services inside the
country. The ramifications of uncontrolled corruption extend beyond the boundaries
of financial implications, possibly resulting in upheavals of power dynamics,
diminished investor trust, and jeopardizing the entire viability of the economy. The
need to conduct studies and tackle this issue is emphasized by its capacity to protect
national interests, enhance accountability, and cultivate responsible governance
within these crucial public companies.

The literature review will explore existing academic articles, reports, and case
studies on state capture and malfeasance in SOEs. The study will focus on Eskom
and Transnet as prominent case studies of state capture in South African SOEs.
However, there may be limitations in accessing sensitive information and uncovering
all aspects of state capture within the given time frame. Nonetheless, the study aims
to contribute to a broader understanding of state capture and promote transparency
and good governance in public institutions.

This research has the potential to contribute to the struggle against state capture and
to promote transparency, accountability, and good governance in SOEs, which
makes it significant. The findings seek to inform policymakers, government officials,
and the public in their efforts to safeguard the integrity of state institutions and
restore investor confidence by identifying effective measures to prevent and address
state capture. Ultimately, the purpose of this research is to equip stakeholders with

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new knowledge and insights that will enable them to safeguard national interests and
promote the responsible management of vital public enterprises.

2. Research Aim

The significance of research methodological objectives cannot be overstated

due to several factors. Firstly, it directs the investigation and establishes
parameters. This facilitates the alignment of research subjects and hypotheses
with the objectives of the study (Denny, 2022, p. 1166). The purpose of the
investigation is further reinforced by highlighting its significance and
addressing any existing gaps in information. Additionally, it offers a
quantifiable outcome for assessing the advancement of the research. Having a
clearly defined objective enables researchers to make informed decisions and
prevent any potential deviation or uncertainty. The objective functions as a
navigational tool to ensure that each research step is intentional and
contributes to the overarching objective of the study

The aim of this research is to investigate and understand the root cause of state
capture in South Africa and the effect it has on the economy.

3. Research Question

The formulation of a methodological research question holds significant

importance for a multitude of reasons (Davis, 2021, pp. 131-140). Firstly, the
study is endowed with a clear emphasis and objective, so maintaining its
concentration and specificity. This matter pertains to the identification of the
necessary data required to address the research problem and the selection of
appropriate analytical methodologies. The selection of a well- chosen research
topic contributes to the significance and worth of the study, hence enhancing
its relevance within the academic discipline. The assessment aids in
determining the feasibility and manageability of the study in light of the
resources already available. A research subject that is unambiguous, aligns
with the objectives of the study, and has the potential to create hypotheses
that can be tested is considered to be clear. The formulation of a research
question serves the purpose of providing lucidity and directing the exploration
of novel facts within the chosen subject matter.

How deeply have Eskom and Transnet been involved in state capture, and what are
the repercussions for South Africa's economy and society?

4. Literature review

A literature review is a critical and systematic evaluation of existing scholarly

works, research articles, books, reports, and other pertinent sources
pertaining to a specific research topic or subject (Literature review, 2022). A

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literature review is intended to provide a comprehensive understanding of the
current state of knowledge on the research topic, to demonstrate the
researcher's familiarity with the existing literature, and to emphasize the
importance of the research question being addressed

The literature review in this study focuses on the role of State-Owned Enterprises in
state capture, with a specific focus on the case studies of Eskom and Transnet in
South Africa. The review aims to identify key concepts, theories, and methodologies
used by other scholars in understanding state capture within SOEs. It also highlights
the gaps in existing literature that this study aims to fill.

To ensure the relevance and accuracy of the literature review, a systematic search
was conducted using current sources from reputable academic websites, books, and
reports. Care was taken to avoid using outdated or limited sources that could distort
the understanding of the topic.

While there is a lack of literature specifically on the case studies of Eskom and
Transnet, the existing research provides valuable insights into the broader
phenomenon of state capture and its implications for public institutions. State capture
is seen as a complex issue where private individuals or organizations exploit SOEs
for personal gain. Scholars have examined the economic effects, such as financial
losses and diminished investor confidence, as well as the social effects on service
delivery and public confidence.

In order to conduct a comprehensive analysis of state capture within Eskom and

Transnet, this research will synthesize information from various sources and
evaluate the strengths, shortcomings, and methodologies of previous researchers.
The findings will help identify research gaps that require further investigation.

This study aims to contribute to the field by providing a comprehensive analysis of

state capture within selected SOEs in South Africa, expanding on existing
knowledge, and identifying new insights. The literature review will guide the
development of arguments and position the research within the larger academic
discourse. It is important to critically evaluate the claims, methodologies, and
objectivity of previous researchers' works in order to construct a strong and well-
informed argument.

4.1 Fundamental Concepts

The establishment of clear definitions and the understanding of key concepts

in research methodology are of paramount importance. Initially, the
clarification of terminology serves to mitigate any potential misconceptions
and enhance the effectiveness of communication between researchers and
stakeholders (Sevara, 2022, pp.21-26). The research is situated within the

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existing body of knowledge, demonstrating its pertinence and its potential to
advance the field. Clearly defined concepts also provide limits and
restrictions, guaranteeing the logical consistency and pertinence of study. The
aforementioned process is crucial in the operationalization of variables in
quantitative studies and the establishment of a framework for data collection
and analysis. Precise delineations facilitate the formulation and examination of
hypotheses, the juxtaposition of research outcomes, and the verification of
empirical evidence. In addition, they ensure the verification of legal and ethical
conformity within the realm of regulatory research. The aforementioned
technique plays a crucial role in the progression of knowledge, ensuring
coherence, and facilitating the accumulation of insights within a particular
discipline.

4.1.1 State-Owned Enterprises (SOEs)

State-Owned Enterprises are companies or organizations that are owned and

controlled by the government or state (Landoni, 2020: 77-85). They operate in
various sectors of the economy and provide essential goods and services to the
public, such as energy, transportation, telecommunications, and healthcare. SOEs
are often established to serve strategic national interests and can play a significant
role in economic development and infrastructure provision.

4.1.2 State Capture

State Capture refers to the improper influence exerted by private individuals, groups,
or entities on government institutions and decision-making processes for personal
gain or to advance their interests (Sutherland, 2020: 233-252). It involves the
manipulation and corruption of state institutions, including SOEs, in a way that
undermines their independence and leads to the exploitation of public resources and
services for the benefit of private interests.

4.1.3 Corruption

Corruption is the abuse of entrusted power for personal gain or to gain an unfair
advantage (Hope, 2020: 294-306). It involves dishonest or illegal conduct, such as
bribery, embezzlement, nepotism, favouritism, and kickbacks. Corruption can occur
in both the public and private sectors and undermine the integrity of institutions,
erode public trust, and distort fair competition.

4.1.4 Malfeasance

Larreguy, Marshall and Snyder (2020: 2291-2327) refers to malfeasance as wrongful

or illegal actions committed by individuals in positions of authority or within
organizations ()It involves the deliberate violation of laws, regulations, or ethical
standards to achieve personal gain or harm others. Malfeasance can take various

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forms, including embezzlement, fraud, abuse of power, and falsification of records,
and it often leads to adverse consequences for both the organization and the
broader society.

5. Research Methodology
5.1 Research Design, Approach, and Methods

A qualitative research design will be utilized for this study on the function of State-
Owned Enterprises in state capture. According to Creswell (2013) qualitative
research permits an in-depth examination of complex social phenomena, which is
indispensable for comprehending the intricate dynamics of state capture within
Eskom and Transnet. This design will allow the researcher to collect extensive
contextual data and obtain insights into the experiences, perceptions, and
motivations of key stakeholders affected by or implicated in state capture within
these SOEs.

Even though Eskom and Transnet aren't the only places where qualitative case
studies have been used to study state capture and corruption in public institutions,
past research has shown that this method is effective at revealing contextual insights
and identifying underlying processes. Nevertheless, the case study method may
present difficulties in terms of access to sensitive information and the potential
reluctance of participants to disclose incriminating information. To overcome these
obstacles, the researcher will establish rapport and trust with participants while
emphasizing confidentiality and adhering to ethical principles.

5.2 Data Collection Process and Sources

The data collection process will consist of semi-structured interviews and document
analysis. There will be semi-structured interviews with key stakeholders, including
current and former employees of Eskom and Transnet, government officials,
governance and anti-corruption experts, and representatives of civil society
organizations. Document analysis will entail examining reports, legal documents,
media articles, and internal company records to collect pertinent information on
allegations of state capture and measures implemented to combat corruption within
these SOEs.

5.3 Sampling Technique and Sample Size

The method of sampling and sample size will be to select participants who have
relevant knowledge and experience regarding state capture and corruption within
Eskom and Transnet.

The sample size will be determined based on data saturation to ensure that a
sufficient number of disparate perspectives are collected to address the research
objectives exhaustively. This study's sampling method will be purposeful sampling,

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also known as purposive sampling (Austin & Sutton, 2022). In this instance, as the
researcher I will seek out individuals with direct knowledge of state capture and
malfeasance at Eskom and Transnet.

Using the concept of data saturation, the sample size will be determined. The
researcher will conduct interviews and collect data until data saturation is achieved,
ensuring that all pertinent perspectives and experiences regarding state capture and
corruption at Eskom and Transnet are captured. The actual sample size may vary
based on the difficulty of the research topic and the quantity and quality of the
collected data. In order to accomplish data saturation, the researcher must be
adaptable in modifying the sample size as they progress through the data collection
process.

By using purposeful sampling and figuring out the sample size based on how much
data is available, the research will be able to get detailed and varied feedback from
participants with relevant expertise. This will help researchers learn more about the
role of SOEs in state capture in the context of Eskom and Transnet.

5.4 Tools, Instruments, or Software for Data Analysis

The collected data will be analysed by means of thematic analysis. Thematic

analysis is a flexible and systematic technique for identifying, analysing, and
reporting themes or patterns within qualitative data. During the data analysis
process, software applications such as NVivo and ATLAS.ti may be utilized to
facilitate the organization and categorization of data (Austin & Sutton, 2022).

5.5 Measurement and Analysis of Variables

Given the qualitative nature of the research, variables will be measured by qualitative
coding, categorization, and interpretation of interview data and document analysis.
To convey the findings in a comprehensive and meaningful manner, themes and
patterns will be identified, and qualitative descriptions will be provided.

The research methodology employed in this study seeks to provide a comprehensive

examination of Eskom and Transnet's role in state capture. The qualitative case
study method will provide a comprehensive comprehension of the dynamics of state
capture within these SOEs (Delmar, 2019: 199-215), while thematic analysis will
enable the identification of key patterns and themes. Through this methodology, the
research aims to contribute to the existing body of knowledge on state capture within
SOEs and to enlighten efforts to prevent and combat corruption and malfeasance in
these vital public institutions.

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 6. Data Analysis and Results
6.1 Presenting the Analysed Data

The data analysis was conducted to investigate the role of State-Owned Enterprises
in state capture, with a particular emphasis on the case studies of Eskom and
Transnet in South Africa. To address the research objectives and research question,
the findings are presented in a clear and organized manner.

Based on a literature review, the data analysis for this research will entail a
comprehensive review and synthesis of relevant literature regarding the role of
State-Owned Enterprises in state capture, with a particular concentration on Eskom
and Transnet. Using tables, graphs, charts, and figures to illustrate key insights and
patterns, the findings will be presented in a concise and well-organized manner.

6.1.1 Credibility

To ensure the credibility of this literature review, multiple data sources, including
academic journals, books, government reports, and reputable online sources, will be
consulted. As the researcher I will evaluate the credibility and dependability of each
source to ensure that the presented findings are founded on accurate and reliable
data. In order to verify the research's validity and present a thorough picture of state
capture within SOEs, Glensne, Liamputtong, and Creswell proposed the technique of
triangulation.

6.1.2 Transferability

As this research is based on a literature review, transferability refers to the extent to

which the findings and insights derived from the extant literature can be applied to
the specific context of Eskom and Transnet in South Africa. As the researcher I will
closely assess the similarity and applicability of the relevant literature to the research
topic and the investigated SOEs. By recognizing the unique circumstances of Eskom
and Transnet, the study will shed light on how the existing literature can be applied
to these specific cases and contribute to a greater understanding of state capture
within SOEs.

6.1.3 Dependability

In this literature review, dependability refers to the consistency and veracity of the
interpretations and conclusions derived from the collected literature. As the
researcher I will use a methodical approach to identify pertinent literature, critically
evaluate its quality, and keep meticulous records of the sources consulted. The use
of member verification, which entails sharing the findings with experts in the field, will
further improve the reliability of the research by ensuring that the interpretations are
consistent with the data presented in the literature.

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 6.1.4 Conformability

In this literature review, conformability refers to the extent to which the acquired data
supports the interpretations and conclusions. As the researcher I will clearly connect
the findings and interpretations to the pertinent literature and demonstrate how the
conclusions logically follow from the data. External audits, such as peer evaluations
and supervisor feedback, will be pursued to ensure objectivity and adherence to the
information presented in the literature.

6.2 Utilizing Tables, Graphs, Charts, and Figures

Various visual aids, including tables, graphs, charts, and figures, were used to
illustrate the main findings. These visual representations facilitate the concise and
intelligible presentation of complex information. For instance, a table may be used to
compare the extent of state capture in Eskom and Transnet over the specified time
period, while a line graph may be used to illustrate the relationship between
corruption levels and economic decline. Additionally, pie charts could be used to
illustrate the various state capture techniques employed by these SOEs.

6.2.1 Transnet

In 2017, Transnet, a state-owned

enterprise, reported R65.5 billion in
revenue and a profit of R2.8 billion.
Despite being implicated in allegations
of state misconduct, Transnet appears
to be in a better financial position than
Eskom. The Gupta family is at the
centre of the controversy surrounding
allegations of state capture involving
contract inconsistencies and payments to companies not performing substantive
work. In these allegations, Transnet's enormous procurement expenditure has been
a significant source of concern. Transnet's reported annual profit serves as proof that
it was able to maintain profitability in spite of these challenges (These graphs show
how Deep the troubles go – businesstech, 2017).

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 6.2.2 Eskom

Another state-owned enterprise,

Eskom, reported R177 billion in
revenue and R888 million in profit.
Eskom, like Transnet, has been
embroiled in the state capture
scandal, with allegations that the
company was used to benefit Gupta-
affiliated companies through lucrative
contracts. Even though Eskom was able to record a profit, there are concerns about
its rising debt levels and difficulties procuring new funding. The company's debt,
which presently exceeds R350 billion, imposes a significant burden on state finances
and is anticipated to increase in the future. Despite the company's evident
profitability, Eskom's substantial debt suggests future difficulties (These graphs show
how Deep the troubles go – businesstech, 2017).

The graph depicts the revenue and

profit performance of Eskom over the
past fifteen years. While revenue has
increased significantly, it is noted that
this growth is not due to increased
sales but rather to fee increases.
(These graphs show how Deep the
troubles go – businesstech, 2017).

Despite the optimistic 10% revenue growth on

paper, the average price per kilowatt-hour
increased by 11% during the same time period,
indicating underlying problems. As Eskom
raises prices to cover expenses, expansion,
and loan repayments, consumers and
municipalities struggle to make payments,
resulting in an increase in debt.

While Eskom has shown strong revenue growth over the past 15 years, a profit
graph for the same period shows precisely how volatile things have been.

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 The description emphasizes the alarming
trend of artificially boosting Eskom's
revenue growth through fee increases
rather than increased sales. On paper, a
10% increase in revenue might seem
optimistic, but overshadowed by a 12%
increase in the average price per
kilowatt-hour during the same time
period. This indicates that the utility is
significantly reliant on tariff increases to
generate revenue, which may be indicative of underlying financial management
issues (These graphs show how Deep the troubles go – businesstech, 2017).

The considerable increase in tariffs, from 15 cents per kWh in 2002 to approximately
76 cents per kWh in 2016, suggests that Eskom must substantially raise prices to
support its operating expenses, finance expansion projects, and repay its debts. This
approach, however, places a burden on consumers and municipalities, making it
difficult for them to pay for electricity. Consequently, the description accentuates the
increasing difficulty consumers and municipalities have in paying their electricity
expenses, resulting in accumulating debt.

As a result, the issue of outstanding municipal debt becomes apparent, as Eskom is

forced to disconnect areas due to delinquent electricity bills. The provided graph
illustrates the increase in outstanding municipal debt (municipalities owing Eskom)
and debt from Soweto, where over 180,000 consumers have amassed R4.7 billion in
delinquent electricity bills. The increase in money owed to Eskom, which rose from
approximately R1.2 billion in 2012 to R11.3 billion in 2016, further supports this
trend.

The graph below outlines the rise in

outstanding municipal debt (m debt)
and debt from Soweto (S debt).
Money owed to Eskom climbed from
around R1.2 billion in 2012, to R11.3
billion in 2016 (These graphs show
how Deep the troubles go –
businesstech, 2017).

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 Between 2005 and 2016, the graph depicts
Eskom's short-term and long-term debt
liabilities, including debt securities and
borrowings. Each year, noncurrent (long-
term) debt continues to accrue, whereas
revenue increases barely cover operating
expenses and generate a small profit. This
accumulation of long-term debt is a major
concern for the utility company (These graphs
show how Deep the troubles go –
businesstech, 2017).

Alone, each of these graphs tells a separate

story at Eskom – but put together, they give you the big picture:

Revenue increases, as a result

of tariff hikes, do enough to
cover operating costs and yield
a small profit. But while these
costs help the books balance
on a continuing basis, each
year the non-current (long-
term) debt keeps accumulating
(These graphs show how Deep
the troubles go – businesstech,
2017).

6.3 Providing Insightful

Interpretations

The results of the data analysis

provide insightful interpretations for understanding the implications of state capture
on South Africa's economic development and social welfare. During the investigation
period, the findings cast light on the extent of state capture within Eskom and
Transnet, disclosing the extent of corruption and malfeasance. Analyses of the
causes of state capture, such as political interests and the absence of accountability
mechanisms, may be included in insightful interpretations.

In addition, the data analysis provides an in-depth examination of the methods used
to secure these SOEs, demonstrating how corruption was enabled and the effect it
had on the companies' efficacy and performance. A perceptive interpretation may
emphasize the effects of state capture on service delivery, investor confidence, and
the economy as a whole. Insightful interpretations may examine how political

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interference, lax supervision, and the absence of competition contributed to the
vulnerability of these SOEs.

6.4 Addressing the research question and research objectives

A systematic data analysis was done to look at how much state capture happened in
Eskom and Transnet between 2010 and 2023, how it happened, the economic and
social effects, the institutional factors that led to corruption and wrongdoing, and the
evidence-based ways to prevent and fight state capture.

6.4.1 Extent of State Capture within Eskom and Transnet (Objective 1):

Reviewing and analysing data from various sources, such as government reports,
investigative journalism, and academic studies, in order to determine the extent of
state capture within Eskom and Transnet. During the specified time period, the
analysis revealed that both SOEs were significantly impacted by state capture.
Principal findings indicated that state capture involved the inappropriate influence of
private interests in decision-making processes, resulting in the appointment of
politically connected individuals to key positions within SOEs and facilitating
unscrupulous practices.

6.4.2 Methods of State Capture (Objective 2):

Various methods of state capture were identified and documented through data
analysis. These methods included the manipulation of procurement processes, the
awarding of contracts to entities with political connections, and the diversion of
resources for personal gain. The analysis also identified instances of favouritism and
nepotism that undermined the operational efficacy of SOEs and hindered their ability
to fulfil their public service mandates.

6.4.3 Economic and Social Effects of State Capture (Objective 3):

The analysis of the data revealed significant economic and social effects of state
capture at Eskom and Transnet. Economically, state capture led to financial
negligence, inflated contracts, and wasteful expenditure, resulting in severe financial
duress for South Africa's state-owned enterprises and the economy as a whole.
Socially, the effects included pervasive power disruptions, compromised service
delivery, and diminished public confidence in government institutions.

6.4.4 Institutional Factors Contributing to Corruption and Malfeasance (Objective

4):

The analysis of data on institutional factors revealed that a number of systemic

issues contributed to the susceptibility of SOEs such as Eskom and Transnet to
corruption and malfeasance. These factors included a lack of accountability and

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transparency, the politicization of key appointments, a culture of impunity, insufficient
supervision mechanisms, and a lack of competition within the sectors in which they
operated.

6.4.5 Evidence-Based Measures to Prevent and Combat State Capture (Objective

5):

On the basis of the data analysis and findings from multiple sources, evidence-based
measures to prevent and combat state capture at Eskom and Transnet were
proposed. These measures included strengthening transparency and disclosure
requirements, enhancing oversight and accountability mechanisms, strengthening
legal frameworks and penalties for corruption, promoting an ethical leadership and
governance culture, and encouraging civic engagement and public participation in
monitoring and holding SOEs accountable.

7 Discussion

7.1 Importance of state-owned enterprises for economic development

The combined analysis of the role of State-Owned Enterprises in economic progress,

their significance for national development, and their contribution to the provision of
infrastructure highlights the critical importance of these entities in propelling overall
economic development.

Comparison to Existing Literature: The integrated findings are consistent with

existing literature, which emphasizes the multifaceted significance of SOEs for
economic development. Consistently, research has demonstrated that well-managed
and strategically administered SOEs can substantially contribute to economic
growth, fill infrastructure voids, and play a crucial role in accomplishing national
development objectives.

Implications and Significance: The exhaustive investigation of the significance of

SOEs provides policymakers and stakeholders with a holistic comprehension of the
effect of these organizations on economic development. It emphasizes the
importance of cultivating and strengthening SOEs as important progress drivers.

Unexpected Results or Limitations: Variations in the performance of individual SOEs

and the complexity of their contributions to economic development may pose
limitations for the analysis. However, the research provides a comprehensive
perspective on the significance of SOEs.

Explanations of Results: The findings indicate that SOEs play a crucial role in
promoting economic development by spurring innovation, supporting strategic

15
industries, and ensuring equitable access to critical infrastructure and public
services.

Future research could examine case studies of successful SOEs that have
effectively contributed to economic growth, national development, and infrastructure
provision. In addition, it would be beneficial for future policy formulation and strategic
planning to investigate potential obstacles and opportunities in optimizing the impact
of SOEs on different aspects of economic development.

7.2 History, governance, and operations of Eskom and Transnet in south

Africa

The analysis of the historical background, governance structure, and operations of

Eskom and Transnet provides a comprehensive comprehension of the evolution,
organizational structure, and operation of these two essential South African State-
Owned Enterprises (SOEs).

The Electricity Supply Commission was founded in 1923 and renamed Eskom in
1987. It generates, transmits, and distributes power to South African families,
companies, and industries. Eskom generates 95% of South Africa's electricity using
coal-fired and renewable energy plants. Financial issues, corruption scandals, and
aging equipment have caused regular power outages and supply interruptions at
Eskom.

Transnet replaced South African Transport Services in 1990. The corporation

manages South Africa's ports, trains, and pipelines. Transnet runs a massive rail
network that transports products and commodities throughout the nation and to
Durban, Richards Bay, and Cape Town ports. According to Nicolson (2022) transnet
maintains many crude oil and petroleum product pipelines.

South African government-appointed directors run Eskom and Transnet. The boards
monitor the firms' activities and ensure they are handled according to best practices
and South African interests. Both corporations have struggled due to political
influence and corruption, which has hurt operations and finances.

Eskom and Transnet are vital to South Africa's economy. Disruptions to Eskom's
electricity production might hurt the economy since industries and companies
depend on it. South Africa's exports and imports depend on Transnet's infrastructure.

South Africa's two biggest and most significant state-owned corporations are Eskom
and Transnet. Despite recent difficulties, they are vital to the nation's economic
growth and corporate operations. Nicolson (2022) states that South Africa and the
international community will monitor these enterprises' governance and operations.

16
Comparison to Extant Literature: The findings are consistent with extant literature on
the historical development of Eskom and Transnet, their governance frameworks,
and their responsibilities in the economic and infrastructure development of South
Africa. The research confirms the significance of examining these aspects in order to
understand the operation of SOEs.

Implications and Significance: The in-depth analysis of the history, governance, and
operations of Eskom and Transnet illuminates the institutional foundation and
decision-making processes that have shaped these organizations over time. To
ensure effective oversight and accountability, it is crucial to comprehend their
governance structure and operations.

Unexpected Results or Limitations: The availability of historical data and the

complexity of the operations of SOEs may limit the scope of the analysis. There may
be unanticipated findings regarding particular historical events or governance
practices that require further investigation.

The historical context provides insight into the origins of Eskom and Transnet,
including their establishment to meet national infrastructure requirements. The
governance structure reveals the relationships between various stakeholders, such
as government ownership and board membership. The operations analysis sheds
light on the functions and services offered by both SOEs.

Future research could evaluate the effect of past decisions and governance
structures on Eskom and Transnet's performance and efficacy. In addition, a
comparative analysis with other SOEs in South Africa or around the world could yield
valuable insights into best practices for enhancing their governance and operations.
Understanding how historical legacies have influenced contemporary challenges and
opportunities for SOEs can also be a fruitful research topic.

7.3 Implications of Eskom and Transnet in allegations of state capture

The analysis of Eskom and Transnet in relation to allegations of state capture sheds
light on the potential repercussions of corrupt practices and unlawful influence on
these vital SOEs. State capture refers to the improper influence of private interests
on government institutions, such as SOEs, for personal gain or to further specific
agendas.

Comparison to Existing Literature: The findings confirm existing literature on state

capture, especially in the context of Eskom and Transnet. The research confirms the
concerns expressed by earlier studies regarding the potential dangers associated
with state capture in critical public enterprises.

Implications and Significance: Comprehending the repercussions of state capture on

Eskom and Transnet is essential to comprehending the broader socioeconomic

17
effects such practices can have on the nation. It assists in emphasizing the
significance of protecting SOEs from undue influence and corruption to guarantee
their efficient operation for the public's benefit.

Unexpected Results or Limitations: The availability of information on specific

instances of state capture and the complexities of identifying and proving such
allegations may pose limitations for the analysis. Regarding the extent and scope of
the involvement of both SOEs in state capture activities, unexpected outcomes are
possible.

Explanations of Results: The overview of state capture provides context and

background for comprehending how powerful individuals or entities attempt to
manipulate and control SOEs for their own personal gain. Examining the allegations
against Eskom and Transnet reveals instances or patterns of allegedly corrupt
practices within these organizations.

Future research could investigate the mechanisms and strategies used to exert
undue influence on Eskom and Transnet, as well as the roles of the various actors
involved in state capture. In addition, investigating the long-term effects of state
capture on the performance and reputation of these SOEs could provide valuable
information for addressing and averting such activities in the future.

7.4 Corruption and malfeasance at Eskom and Transnet

7.4.1 Gupta saga

One of the largest instances of corruption in South Africa involved the Gupta family's
alleged control over the appointment of ministers and executives at Eskom and
Transnet. The Gupta family had close ties with former President Jacob Zuma, and it
was alleged that they used their connections to secure lucrative contracts with the
state-owned entities (Mahlakoana, 2022).

7.4.2 Koko and Singh scandals

Two senior Eskom executives, Matshela Koko and Anoj Singh, were implicated in
various instances of corruption and malfeasance, including allegations of awarding
contracts to friends and associates, irregular payments to Gupta-linked companies,
and manipulating tender processes. Both were eventually suspended and faced
disciplinary hearings (Smit, 2022).

7.4.3 Tegeta deal

In 2015, Eskom awarded a coal supply contract to a company called Tegeta

Exploration and Resources, which was owned by the Gupta family. The contract was
allegedly awarded without following proper procedure and at a greatly inflated price.

18
The deal eventually led to criminal charges against former Eskom executives and the
Gupta family (Kahla, 2022).

7.4.4 Transnet locomotive scandal

In 2018, it was alleged that Transnet had inflated the prices of locomotives by as
much as R3.5 billion ($220 million) in a deal with Chinese manufacturer China South
Rail. The deal was allegedly engineered by a senior Transnet executive, who had
ties to the Guptas.

The impact of corruption on these entities has been significant, leading to financial
losses, decreased operational efficiency, and a loss of public trust (Ferreira, 2022).
This section examines the specific instances of corruption and malfeasance
unearthed at Eskom and Transnet. It examines four notable controversies, including
the Gupta affair, the Koko and Singh scandals, the Tegeta deal, and the Transnet
locomotive scandal.

Comparison to Existing Literature: The results are consistent with the existing
literature on corruption and malfeasance within state-owned enterprises. Previous
research has emphasized the susceptibility of SOEs to corrupt practices and the
need for stringent preventative measures.

Implications and Significance: The analysis of these controversies exposes the

severity of Eskom's and Transnet's corruption problems. These revelations have
significant ramifications for the reputation of these SOEs, investor confidence, and
the entities' overall capacity to carry out their missions.

Unexpected Results or Limitations: The availability of thorough data, the difficulty of

looking into financial irregularities, and the existence of potential legal barriers may
all hinder the investigation into these specific cases.

Examining the Gupta affair, the Koko and Singh scandals, the Tegeta deal, and the
Transnet locomotive scandal offers insight into the mode of operation of corruption at
these SOEs. It illustrates how influential individuals or organizations abuse their
positions for personal benefit, thereby undermining the integrity and efficacy of
Eskom and Transnet.

Future research could delve deeper into the fundamental causes and facilitating
factors that made it possible for these scandals to occur. It could also investigate the
role of institutional flaws, the absence of supervision, and possible collusion in the
commission of corrupt acts. In addition, comparative studies of corruption in other
state-owned enterprises around the world could provide valuable lessons and
strategies for effectively combating corruption.

19
 7.5 Role of State-Owned Enterprises in Facilitating State Capture: The Case
of Eskom and Transnet

This section examines the role of state-owned enterprises (SOEs) in facilitating state
capture, focusing in particular on Eskom and Transnet. It examines the mechanisms
of state capture, the influence of political interests on SOEs, and the factors within
Eskom and Transnet that make them susceptible to state capture.

Comparison to Existing Literature: The results are consistent with the existing
literature on state capture and the role of SOEs in facilitating corrupt practices.
Previous research has demonstrated how potent political actors and private interests
can use state-owned enterprises (SOEs) to advance their agendas, resulting in
mismanagement, corruption, and inefficiency.

Implications and Significance: The analysis illuminates the crucial role that SOEs
such as Eskom and Transnet play in the phenomenon of state capture. It
emphasizes the importance of strong governance, transparency, and accountability
mechanisms within these entities to prevent disproportionate political influence and
corrupt practices.

Unexpected Results or Limitations: The difficulty of accessing private information

and the unwillingness of those involved to cooperate may make it more difficult to
investigate the mechanisms of state capture and political influence in SOEs.

Explanations of Results: The examination of the mechanisms of state capture

exposes how influential actors, both inside and outside the government, exploit the
decision-making processes and operations of Eskom and Transnet for personal
benefit or the advancement of specific interests. In addition, the analysis identifies
systemic flaws and vulnerabilities within these SOEs that enable state capture.

Future research could examine case studies from other nations in order to make
comparisons and identify common patterns in the involvement of SOEs in state
capture. In addition, investigating the efficacy of anti-corruption measures and the
role of civil society in combating state capture within SOEs would be worthwhile
areas of research.

7.6 Role of State-Owned Enterprises in Facilitating State Capture: The Case

of Eskom and Transnet

This section explores the precise function of state-owned enterprises (SOEs) such
as Eskom and Transnet in facilitating state capture. It examines the mechanisms of
state capture, the influence of political interests on these SOEs, and the factors
within Eskom and Transnet that make them susceptible to capture by external
actors.

20
Comparison to Existing Literature: This section's findings on state capture and the
involvement of SOEs are consistent with existing literature. Prior research has
identified a wide range of state capture mechanisms, and discussions of the
influence of political interests on SOEs in the context of corruption and governance
issues have been extensive.

Implications and Significance: Understanding the role of SOEs in facilitating state

capture is essential for combating corruption and enhancing governance in these
organizations. The analysis provides insights into Eskom and Transnet's
vulnerabilities, which can enlighten the development of strategies to bolster their
resistance to unwarranted influence and misconduct.

Unanticipated Outcomes or Limitations: Examining the role of state-owned

enterprises (SOEs) in state capture can be difficult, as it may entail navigating
confidential information and overcoming possible resistance from individuals
involved in corrupt practices.

The section reveals how political interests and influential actors manipulate decision-
making processes at Eskom and Transnet to advance their agendas and personal
advantages. It also emphasizes factors such as ineffective governance structures, a
lack of transparency, and insufficient supervision that foster state capture.

Future research could examine case studies from other countries to obtain a more
comprehensive understanding of how various SOEs are implicated in state capture.
In addition, investigating effective anti-corruption measures and governance reforms
in SOEs can provide valuable insights for enhancing the accountability and
transparency of Eskom and Transnet.

7.7 The Economic and Social Repercussions of State Capture at Eskom and
Transnet

This section examines the extensive economic and social repercussions of state
capture for Eskom and Transnet. It investigates the effects of state capture on
national finances and the budget, on service delivery and public welfare, and on the
investment and business climate.

Comparison to Existing Literature: The findings in this section supplement the

literature on the negative effects of state capture on the economy and society that
already exists. Previous research has demonstrated that corruption and
mismanagement within SOEs can result in financial losses, diminished public
services, and a deterioration of public confidence in institutions.

Implications and Significance: Understanding the economic and social

consequences of state capture at Eskom and Transnet is essential for policymakers,
stakeholders, and the general public to comprehend the scope of the problem. The

21
analysis emphasizes the importance of confronting state capture in order to preserve
public welfare and economic stability.

Unanticipated Outcomes or Limitations: When analysing the economic and social

repercussions of state capture, it may be difficult to obtain comprehensive data on
financial losses and to determine the full extent of the impact on public welfare.

This section explains how state capture can result in financial negligence, inefficient
resource allocation, and diminished service quality at Eskom and Transnet. It also
highlights how the compromised integrity of these SOEs can discourage foreign
investment and impede economic expansion.

Future research could concentrate on more precisely quantifying the economic

losses caused by state capture at Eskom and Transnet. In addition, examining case
studies of successful recovery and reform efforts in other countries following state
capture can provide South Africa with valuable lessons.

7.8 Regulatory and Institutional Framework for Oversight of State-Owned

Enterprises

This section analyses the institutional and regulatory framework that governs state-
owned enterprises (SOEs) such as Eskom and Transnet. It evaluates the efficacy of
current oversight mechanisms by analysing the extant laws and regulations
governing SOEs, the roles and responsibilities of oversight bodies, and the roles and
responsibilities of oversight bodies.

Comparison to Extant Literature: The findings in this section are consistent with the
extant literature regarding the significance of robust regulatory and supervision
mechanisms for SOEs. Previous research has highlighted the importance of robust
governance structures and transparent supervision for preventing corruption and
ensuring accountability.

Implications and Significance: It is essential to comprehend the regulatory and

institutional framework for supervising Eskom and Transnet in order to identify
potential gaps and vulnerabilities. The analysis can be used to inform
recommendations for enhancing governance and supervision practices within these
SOEs.

Unanticipated Outcomes or Limitations: Access to confidential information and the

reluctance of stakeholders to disclose shortcomings may limit the evaluation of the
effectiveness of current oversight mechanisms.

Explanations of Results: This section illuminates how vulnerabilities and deficiencies

in the current regulatory framework could be exploited for state capture and

22
corruption within Eskom and Transnet. In addition, it emphasizes the significance of
transparent reporting and accountability mechanisms.

Comparing South Africa's supervision mechanisms for SOEs to international best

practices could be the focus of future research. In addition, investigating the role of
civil society and public participation in the oversight of Eskom and Transnet can shed
light on how to improve transparency and accountability.

7.9 Comparative Analysis: State Capture and SOEs in Other Countries

This section provides a comparative analysis of state capture within state-owned

enterprises (SOEs) in various nations. It investigates international case studies of
state capture in SOEs, identifies the lessons learned from these experiences, and
investigates the applicability of foreign approaches to addressing state capture in
South Africa's context.

Comparison to Extant Literature: By providing insights from international cases, this

section contributes to the extant literature on state capture and governance in SOEs.
Previous research has emphasized the significance of learning from global
experiences in order to create effective anti-corruption strategies.

Implications and Significance: Understanding state capture in SOEs in other nations

can provide valuable insight into common patterns, risk factors, and effective anti-
corruption measures. The analysis provides policymakers and stakeholders with a
more comprehensive understanding of best practices and possible hazards.

Unanticipated Results or Limitations: When conducting a comparative analysis, it

may be difficult to obtain comprehensive data from various countries and to account
for cultural and contextual differences in state capture dynamics.

Explanations of Results: This section demonstrates that state capture of SOEs is not
unique to South Africa and has been a global issue. It identifies prospective
strategies and solutions that could be adapted to the South African context by
analysing international experiences.

Future research could concentrate on undertaking in-depth case studies of specific

nations that have successfully fought state capture in SOEs. In addition, examining
the role of international organizations and cooperation in the fight against global
corruption in SOEs could provide additional insight.

7.10 Strengthening Accountability and Transparency in State-Owned

Enterprises

This section highlights the significance of enhancing accountability and transparency

in state-owned enterprises such as Eskom and Transnet. It provides

23
recommendations for enhanced financial reporting and auditing, the implementation
of whistle-blower protection mechanisms, and strategies for protecting SOEs from
external influence and interference.

Comparison to Existing Literature: The findings in this section are consistent with
existing literature regarding the importance of accountability and transparency in
preventing corruption and promoting good governance in SOEs. Previous research
has highlighted the importance of transparency in fostering public confidence and
discouraging corrupt behaviour.

Implications and Significance: Strengthening Eskom and Transnet's accountability

and transparency can increase public confidence in these institutions and assist in
restoring their credibility. The proposed measures are intended to combat corruption
and enhance the overall performance and efficacy of these essential public
institutions.

Unanticipated Outcomes or Limitations: The implementation of accountability and

transparency measures may be met with opposition from vested interests and
encounter difficulties arising from the cultural and institutional context of the
organizations.

This section explains how transparent financial reporting and auditing can
discourage corrupt practices and ensure sound financial management. Protection
mechanisms for whistle-blowers can encourage individuals to report corruption
without fear of retaliation. It is possible to protect SOEs from external interference by
implementing robust governance structures and engaging stakeholders.

Future research could concentrate on evaluating the efficacy of implemented

accountability and transparency measures in SOEs and determining their influence
on reducing corruption and enhancing performance. Additionally, it could be
advantageous to investigate innovative technologies and practices that promote
transparency in public institutions

8 Recommendations

8.1 Findings
8.1.1 State capture has significantly impacted Eskom and Transnet, leading to
allegations of corruption and malfeasance.
8.1.2 Specific instances of state capture, such as the Gupta saga, Koko and Singh
scandals, Tegeta deal, and Transnet locomotive scandal, have been
identified.
8.1.3 Mechanisms of state capture within Eskom and Transnet include undue
political influence and cronyism.

24
8.1.4 The influence of political interests on SOEs has led to mismanagement of
funds and resources.
8.1.5 Enabling factors within Eskom and Transnet, such as a lack of transparency
and weak oversight, have facilitated state capture.

8.2 Recommendations
8.2.1 Implement robust anti-corruption measures within Eskom and Transnet in
order to detect and prevent corruption. This may involve enhanced internal
controls, routine external audits, and the formation of an independent anti-
corruption unit. Improve whistle-blower protection mechanisms to encourage
employees and stakeholders to report suspicious activity without fear of
retaliation. This will aid in uncovering instances of corruption and misconduct
and promote openness.
8.2.2 Investigate these specific instances of state capture thoroughly in order to
hold those responsible accountable. This may necessitate cooperation with
law enforcement and judicial processes to ensure that justice is served.
Enhance the governance and supervision structures of Eskom and Transnet
to thwart future instances of state capture. Reduce opportunities for corruption
and malfeasance by implementing clear guidelines for procurement
procedures, executive appointments, and financial reporting.
8.2.3 Implement measures to depoliticize the operations of SOEs by ensuring that
executive appointments and significant decisions are made on the basis of
merit and expertise, as opposed to political connections. This will help these
organizations maintain their independence and integrity.
8.2.4 Establish distinct lines of accountability and reporting between SOEs and
relevant government bodies in order to guarantee the transparency of
financial transactions and decisions. Regular performance evaluations and
public disclosures can aid in the identification and correction of any
mismanagement.
8.2.5 Enhance the function of the board of directors in supervising the operations of
state-owned enterprises, guaranteeing their independence and competence.
Regular reporting and transparency can aid in identifying and promptly
addressing any potential problems. Include constituents, such as civil society
organizations and independent experts, in the supervision and evaluation of
Eskom and Transnet's performance. This external oversight can provide
valuable insights and aid in identifying improvement opportunities.

Based on the research findings, these actionable recommendations can be

implemented to combat state capture and improve the integrity and efficacy of
Eskom and Transnet. South Africa can take significant strides toward ensuring that
its state-owned enterprises contribute positively to economic development and
national progress by implementing these measures:

25
 - Implementation of Anti-Corruption Measures

Given the discovery that state capture has resulted in accusations of corruption and
misconduct, it is crucial for Eskom and Transnet to adopt rigorous anti-corruption
protocols (Min, 2019: 217–239; Lehtinen, Locatelli, Sainati, Artto & Evans, 2022:
347–361). One potential course of action may be the establishment of an
independent anti-corruption agency, with the implementation of strengthened internal
control mechanisms and the periodic conduct of external audits. These methods will
facilitate the prevention and identification of corruption, therefore ensuring the
effective and ethical use of resources.

- Whistle-blower Protection Mechanisms

Enhancing the safeguards for whistleblowers is crucial to addressing cases of state

capture and fostering openness. By implementing measures to protect workers and
stakeholders who disclose suspicious activities, the business may enhance its ability
to detect instances of corruption and misconduct. This measure would facilitate
individuals in disclosing crucial information without fear of reprisal (Sharma, Kanojia
& Sachdeva, 2018: 45-68; Gibbs, 2020: 591-600).

- Thorough Investigations and Accountability

Particular instances of state capture, such as the Gupta affair, Koko and Singh
controversies, Tegeta deal, and Transnet locomotive scandal, must be subject to
comprehensive investigations and accountability. Zientek (2020) suggests this would
entail cooperating with law enforcement agencies and ensuring that those
accountable are held accountable for their actions. State capture can be discouraged
by transparent investigations and subsequent legal proceedings.

- Strengthen Governance and Oversight Structures

In order to mitigate the risk of future state capture, it is imperative for Eskom and
Transnet to enhance their governance and oversight frameworks. The
implementation of well-defined norms pertaining to procurement procedures,
executive appointments, and financial reporting has the potential to mitigate
instances of corruption and misconduct. This would ensure that judgments are made
on the basis of experience and merit rather than relying on political ties (Tusalem,
2023). Furthermore, adopting comprehensive background checks and due diligence
processes during executive appointments can help safeguard against potential
individuals with ulterior motives (Dvoskin, 2023: p. 102463).

- Depoliticize SOE Operations

In order to mitigate the influence of political interests on state-owned enterprises, it is

essential to undertake measures aimed at depoliticizing their operations. The

26
establishment of clear lines of responsibility and reporting between state-owned
enterprises and the relevant government authorities may achieve this objective. Dai
and Wang (2023) argue that enhancing the autonomy and ethical conduct of these
institutions may be achieved via the implementation of merit-based executive
nominations and public assessments. In addition, the implementation of strategies
aimed at safeguarding state-owned enterprises from political intervention may
contribute to the restoration of public trust and confidence in their functioning
(Boschiero & Silingardi, 2023).

- Participation of Stakeholders and External Supervision

In order to effectively mitigate enabling factors like inadequate oversight and a

dearth of transparency, it is essential to include many stakeholders, including civil
society groups and independent experts, in the process of monitoring and evaluating
the performance of Eskom and Transnet. External supervision plays a crucial role in
offering useful insights, aiding in the identification of areas that need development,
and ensuring public responsibility for organizations (Egan, David & Williams, 2023:
520-533).

By putting these ideas into action, the empirical results could be turned into useful
steps to fight state capture, improve accountability, and support the honesty and
efficiency of Eskom and Transnet. Nurturing reliable and responsible state-owned
firms would serve as a catalyst for the economic growth and overall advancement of
South Africa (Jefferies, Davis & Mason, 2023: 1-8).

9 Conclusion

This exhaustive study has provided valuable insights into the role of state-owned
enterprises (SOEs) in state capture, with a particular emphasis on Eskom and
Transnet in South Africa. The research question that served as the investigation's
focus was, "How deeply have Eskom and Transnet been involved in state capture,
and what are the repercussions for South Africa's economy and society?", which
aimed to address the following research objectives:

- Determine the extent to which Eskom and Transnet have been captured by
the state.
- Analyse the means by which the state has seized control of these SOEs.
- Examine the economic and social repercussions of state capture at Eskom
and Transnet.
- Determine the institutional factors that make SOEs susceptible to corruption
and wrongdoing.
- Propose measures supported by evidence to prevent and counteract state
capture and to enhance accountability within these SOEs.

27
The key findings of this research can be summarized as follows:

- State capture has significantly impacted Eskom and Transnet, leading to

allegations of corruption and malfeasance.
- Specific instances of state capture, such as the Gupta saga, Koko and Singh
scandals, Tegeta deal, and Transnet locomotive scandal, have been
identified.
- Mechanisms of state capture within Eskom and Transnet include undue
political influence and cronyism.
- The influence of political interests on SOEs has led to mismanagement of
funds and resources.
- Enabling factors within Eskom and Transnet, such as a lack of transparency
and weak oversight, have facilitated state capture.

The study contributes significantly to the field by providing a thorough analysis of

state capture in essential public enterprises. It emphasizes the significance of
enhancing SOE accountability and transparency in order to protect national interests
and promote economic growth.

The implications of these findings for practice are of the uttermost importance. State-
owned enterprises (SOEs) must prevent and combat state capture through the
implementation of concrete measures by policymakers and other stakeholders.
Enhancing governance, instituting effective financial reporting and auditing, and
preventing external influence are essential measures in this regard.

In conclusion, this research provides a foundation for further action and study to
preserve the integrity and transparency of public enterprises and prevent the
negative impacts of state capture on the nation's development. South Africa can
strengthen its institutions and ensure the proper functioning of SOEs for the benefit
of its economy and society if it comprehends the complexities of state capture.

28
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11 Declaration

I, Sherise Nundhkumar declares that this portfolio of evidence/assignment is my own

original work and I did not copy any person’s work. I also understand Unisa
Plagiarism policy, which prohibit the submission of plagiarized work as one’ own
work. Where I have used information from other sources, a list of reference and in-
text reference was provided in order to acknowledge the original authors of the
information.

Signature:

Date: 29 October 2023

Place: Residence

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