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OUTA’s Court Battle Could Finally End Impunity in South Africa’s State-Owned Entities
South Africa’s state-owned entities are facing a legal spotlight they’ve long avoided, but this time, it’s piercing deep. A civil society shockwave may soon redraw the lines of responsibility for executives and boards.
The trouble with registration
Here’s the catch that’s been protecting powerful people: only boards of entities registered as companies (think Eskom, SAA, Transnet) can be taken to court under delinquent-director rules. Many SOEs, though, operate outside that corporate registration. That has created a legal safe haven, and financial mismanagement in those organisations has often gone unpunished individually.
Enter OUTA, the Organisation Undoing Tax Abuse. On 20 August 2025, it launched a challenge in the Pretoria High Court demanding that sections 83(4) and 84 of the Public Finance Management Act be declared unconstitutional. If successful, the change would mean that civil society could sue non-registered SOE board members just as it does those in registered companies.
The wartime of accountability
Under the PFMA, misconduct by SOE authorities can lead to vague sanctions, dismissal, suspension, or other internal discipline. But under the Companies Act, section 162 demands that a court must declare a director delinquent if found guilty of misconduct. OUTA argues that such a gap between regimes is unjust and violates constitutional rights like equality and access to courts.
What’s more, if Parliament doesn’t act to close this loophole within two years, OUTA asks that the delinquency provisions of the Companies Act be applied to all accounting authorities as an interim measure.
Recycled officials, recycled chaos
Public frustration is high. Many see a revolving door in government: officials implicated in financial misdeeds simply move to other positions with impunity. Under the existing legal design, miscreants in non-company SOEs slip through the cracks.
OUTA points to precedent: in 2020, it succeeded in having Dudu Myeni, former chair of SAA, declared a delinquent director for life. That ruling was possible only because SAA was a registered company under the Companies Act. Had she instead been an accounting authority of a non-registered SOE, OUTA says that remedy would not have been available, and she might still be serving somewhere.
More recently, OUTA has filed delinquent-director proceedings against Helen Botes over the Usindiso building tragedy and procurement controversies. That was possible only because JPC is registered. But in cases involving NSFAS or Services SETA (neither registered), OUTA says it has no legal foot to stand on under PFMA.
A fresh accountability frontier
If the court rules in OUTA’s favour, South Africa could see a transformation in how public entities are governed. Accountability would stretch beyond the company-style SOEs to those last sheltered zones where boards have acted with impunity.
For CEOs, board chairs, accounting authorities of every public bodyeven those that don’t wear the “company” label, this is no small matter. You might soon be held to the same personal standard as directors in the private sector.
What the public expects, and demands
South Africans have grown weary of corruption, mismanagement, and endless bailout bills. On social media, voices are rising. Many communities feel the pinch directly: electricity failures, failing transport infrastructure, unpaid student funds, and more. The public may see this lawsuit as a turning point: not only to punish past wrongdoing but also to erect durable barriers against future abuse.
But there’s also a risk. If changes are cosmetic or avoided by loopholes, cynicism will surge. Real change demands that courts, legislators, and watchdogs act in concert, not only in rhetoric but also with teeth.
Let’s hope this case ushers in a new era where the public purse is guarded fiercely. Because when power is unaccountable, everyone pays the price.
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Source: Business Tech
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