Acting Transnet boss Phillips emerges as frontrunner after board lists preferred CEO candidates

The acting CEO of Transnet, Michelle Phillips, has emerged as a frontrunner among the candidates that have been selected by the state-owned transport group’s board to take up the top job permanently.

The board of Transnet — chaired by Andile Sangqu — recently provided a list of preferred candidates to Public Enterprises Minister Pravin Gordhan to fill the CEO position, which became vacant after Portia Derby resigned in September 2023. 

Other names have been suggested to fill critical executive positions, including the CEO of Transnet Freight Rail (the company’s biggest division in terms of revenue generation) following the resignation of Siza Mzimela. The chief financial officer position is also vacant. 

Business Times first reported on Phillips being the preferred choice by the board to replace Derby. Business Maverick confirmed with a source, who is close to Transnet and its governance processes, that Phillips was the board’s choice.  

Phillips is seen as bringing a stable pair of hands and continuity to Transnet. She took over as acting CEO when Derby resigned and has been in the top job for four months. She joined Transnet in 2001 and rose through the ranks in the ports and pipeline divisions of the state-owned enterprise (SOE), bringing corporate governance, strategy and logistics experience.

More candidates considered

Other candidates who were considered by the board include Russell Baatjies, the acting CEO of Transnet Freight Rail (TFR), Richards Bay Coal Terminal executive chair Nosipho Damasane, former Transnet CFO Mohammed Mahomedy and former Transnet group chief operations officer Mlamuli Buthelezi. If not chosen for the group CEO job, these individuals could still be considered for the vacant TFR CEO and chief financial officer positions.

The source said Damasane, who is largely viewed as “the best candidate” for the Transnet CEO job, did not make it to the final preferred candidates list of the board. 

“She is excellent and technically qualified and good for the job. Damasane was seen as being best left at Richards Bay Coal Terminal [a coal-handling facility owned by 13 coal miners], and helping the company get through the problems caused by the dysfunction of Transnet’s freight rail operations,” the source said.

Read more in Daily Maverick: SA coal exports at 30-year low but mining sector appreciates Transnet’s new top brass

The source said Phillips was the Transnet board’s choice. The choice was presented to Gordhan and he still has to accept it. Beyond Phillips, who brings technical expertise and institutional memory, Gordhan is seen as not having another viable alternative.

Peter Attard Montalto, the managing director at Krutham, said considering the importance of Transnet’s logistical operations in South Africa’s economy, the process of boosting the company’s withered leadership profile (especially the CEO position) should not be taken lightly. 

“We need to be cautious of where we put the bar after the disastrous reign of Portia Derby and her sidekicks. The bar is not if a person is just better, but it is if they can manage the deep institutional and structural change required of the roadmap [to reform Transnet’s operations] and the bailout conditionality. 

“Someone who can [also] shift the mindset [that is needed] — as must happen in all SOEs — from being the totality of their sector to being an enabler of their sector,” Attard Montalto said.

Read more in Daily Maverick about Transnet’s roadmap: How the Presidency aims to fix South Africa’s collapsing logistics sector

Read more in Daily Maverick about the Transnet bailout: Government throws a R47-billion support package to get Transnet back on track

The spokesperson for the Department of Public Enterprises, Ellis Mnyandu, confirmed to Daily Maverick the Transnet board had concluded its CEO search process.

“The next step involves government processes that are yet to be concluded. Following the conclusion of the government processes and a decision by Cabinet, an announcement will be made,” said Mnyandu, who did not offer a timeline on when government approval processes would be concluded.

“The minister has consistently articulated his intent to ensure that there is a competent, experienced and committed leadership team at SOEs.”  

Politics get in the way

The process to confirm a CEO appointment for Transnet has apparently been delayed by the ANC’s deployment committee, which is responsible for hand-picking individuals and lobbying for them to be appointed to crucial positions at state organs. 

According to Business Times, some members of the committee plan to block the board’s recommendations for the Transnet CEO job, including the selection of Phillips and Baatjies, with members expressing transformation concerns. The members argued that the list of preferred candidates lacked black Africans.

Business Times also reported that some ANC deployment committee members were lobbying for former Transnet chief operations officer Mlamuli Buthelezi to be appointed as the CEO of Transnet. Buthelezi was one of  four Transnet executives who were suspended in 2019 over misconduct allegations. He was later paid to leave the company. 

The source who spoke to Daily Maverick said there was a push by the ANC deployment committee to appoint individuals at Transnet who were implicated in State Capture corruption. DM