Former CEO tells of Eskom battles for tenders

Former Eskom group CEO Tshediso Matona described on Tuesday how the governance and ethical environment at the parastatal had already begun to deteriorate when he took over as CEO in late 2014.

There was also deep infighting within the board led by then chairman Zola Tsotsi over procurement issues, to the extent that it had become almost dysfunctional.

Matona, who was Eskom CEO from October 2014 to March 2015, presented evidence to the inquiry by Parliament’s public enterprises committee into allegations of state capture of state owned enterprises. Tsotsi is also to be called as a witness.

Approached to comment on suggestions that by getting rid of Matona and opening the way for the employment of his successor Brian Molefe as Eskom CEO he had laid the groundwork for the capture of Eskom by the Guptas, Tsotsi said he did not want to comment ahead of his presentation to the committee.

"I will say what I have to say then," he said.

Matona said that at the time of his tenure the morale and the ethical fabric of the company needed urgent attention. Several employees were on suspension and the numbers were increasing.

Matona was suspended in March 2015 for reasons that he could not understand but which he surmised were because his continuation as CEO did not fit in with the plans of the board. He said his suspension came as a "complete shock" to him.

The decision was taken by a new board that had just taken office and still needed time to familiarise itself with the affairs of the company.

Matona, who was previously director general of the departments of trade and industry and of public enterprises and is now secretary of national planning in the Department of Planning Monitoring and Evaluation, challenged his suspension both at the Labour Court and the Commission for Conciliation, Mediation and Arbitration but eventually abandoned the case when it became apparent that the board was determined not to take him back.

"I chose to leave that sordid and sorry episode behind me and to continue with my life," Matona said noting that his suspension had dealt a mortal blow to trust between himself and the Eskom board. He added that his suspension was a "misgovernance" event which triggered a downgrade of Eskom by credit ratings agency Standard & Poors.

The suspension was instituted by a newly appointed board packed with Gupta-linked members. Matona was later replaced by Molefe who was accused in former public protector Thuli Madonsela’s report on state capture of having facilitated the award of Eskom coal contracts to Gupta-linked companies.

Dubious procurement decisions made by former interim Eskom CEO Collin Matjila were also highlighted during the inquiry. Matjila headed up Eskom from April to October 2014 and within a month of taking office proposed a sponsorship of the monthly business breakfasts of Gupta-owned New Age newspaper at a cost of R1.2m per event.

Leaked Gupta-emails have suggested that Matjila’s appointment was vetted by the Guptas.

Former Eskom group executive for enterprise development Erica Johnson, who left the utility in October 2014, told MPs that Matjila went ahead with implementing the R43m, three-year contract with the New Age despite the fact that the financial director refused to co-sign it and despite the fact that it was not signed by two signatories as required.

The expenditure was irregular because Matjila signed it beyond his delegation of authority.

Matjila also took the unprecedented step of removing the standard exit clause from the contract, Johnson said. "He certainly wanted that contract," she added.

Matjila was also instrumental in terminating the procurement of an alternative IT service provider for the applications and maintenance of Eskom’s IT system. A new contract could have resulted in audited savings of R1bn to the utility. Instead the contract with the existing supplier — the Gupta-associated T-Systems which had not been shortlisted as one of the three preferred contractors during the procurement process — was extended.

The new Eskom board appointed by Public Enterprises Minister Lynne Brown in December 2014 — reportedly packed with Gupta associates — decided in January 2015 to retain T-Systems.

Johnson said Matjila had requested her to look into the suspension of the chief information officer (CIO) Saleh Laheer but she could find no reasons to do this.

"He was a good CIO," she insisted. After she left the company Laheer was suspended and left Eskom.

Johnson said her despair at the time of her employment in Eskom was its preoccupation with procurement rather than on the core business of power supply and key operations. The unpredictable outcomes of the procurement processes were also a concern.

She said the suspension of the hard-working head of primary energy in June/July caused shockwaves among general managers who became afraid to raise their voices.

"The silence in the company was a concern," she said, adding that it had intensified since then.