PEGA brings imminent changes to Meatco

05 July 2019
Meatco producers are faced with imminent changes, amid speculation that the looming implementation of the Public Enterprises Governance Act (PEGA) could curtail their powers.
Meatco producers, through the Meatco Act, among other things enjoy rights such as deciding on the appointment of board members to serve on the company’s board, a process which has become contentious over the years.
“At this point in time we can only work on assumptions and speculations based on the content of the new PEGA, Act 1 of 2019. Once operational, the PEGA could potentially impact the following:  This could potentially mean amongst others, that Meatco producers will no longer have powers to vote for board members, a benefit which has been enjoyed for many years.  We, however, believe that the process for nominating boards will be fair and transparent and will recommend the best possible team that is able to effectively steer Meatco’s strategic direction for the benefit of all stakeholders.  The precise impact will however be felt and become much apparent once the Act is in force and the requisite regulations are passed,” Meatco Manager Corporate Affairs, Rosa Thobias said.
When asked if the company’s producers had not been consulted during the promulgation of the law and its likely impact on the existing company structure and operations, Thobias said, “The responsible Ministry will be well positioned to speak to the extent of consultations held prior to the promulgation of the new PEGA. We can however highlight recent events such as our annual AGM held in June 2019 where the Hon Minister of PE graciously briefed the farmers on the new Act. The board as well as the Acting CEO recently had a stakeholder engagement forum with the Minister of Public Enterprises and Prime Minister where this also formed part of the discussions.”
Asked about the on-going transformation of the company into a fully-fledged state-owned enterprise and the possible impact on its operational independence, she said, “Meatco has been listed as a public enterprise under Schedule I of the 2006 Act.  At this point in time we want to be positive and evolve with all policy changes and other external environmental factors that sometimes turn out to be better for the company, but for now we remain hopeful that it will still give us the opportunity for operational efficiency.”
Public enterprises (PE) minister, Leon Jooste said although PEGA will supersede the Meatco Act, the Meatco producers will still retain their voting rights when it comes to the company board, whose term is due to come to an end in February next year.
“Section 41 of the PEGA clearly states that the provisions of this Act prevail but the process will allow for the Meatco board selection process to run as provided for in the Meatco Act where the producers will be allowed to nominate four persons (one from the communal farmers, one from the commercial farmers and two with applicable expertise),” the minister said.
“The Meatco Act is very clear when it comes to control and other related functions and I believe that there should be no space for any disagreement if we all honor these provisions and principles.”
Furthermore, Jooste said that compared to prior years, where the Ministry of Agriculture was the parent ministry, which approved the Meatco board appointments, the next board appointments will be supervised by his ministry, in line with PEGA.
“PEGA will be implemented by the time that the new board is appointed and Meatco is likely to be classified as a Commercial Public Enterprise meaning that the Minister of Public Enterprises will be responsible for the process,” he said.
On whether there will be blanket application of the new regulations, with all SOEs expected to comply with PEGA, including parastatals that are already operating efficiently and could be affected by government bureaucracy, the minister said, “Section 40 provides for exemptions in cases where this may be required but in the case of most commercial public enterprises, the application of the law will be consistent.
“The Ministry of Public Enterprises is a professional shareholder providing a normal corporate environment for the commercial SOEs to flourish without interference or undue demands. We will monitor performance and corporate governance constantly and intervene where required.  Our intention is to enhance efficiency without introducing unnecessary bureaucracy,” the PE minister clarified.
The PEGA regulations will among other things, give the public enterprises minister powers such as appointing parastatal board members, monitoring performance agreements, approving special investigations at state-owned entities and allowing for the introduction of Hybrid Governance Model for Public Enterprises will also be introduced, while reporting structures of major SOEs will be changed.


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