Eskom and Dentons: decoding its ombudsman spin
The power utility tries desperately to put a positive spin on the ombudsman’s findings
Eskom has had an awful week, so you can see why it would seize on any small glimmer of sunshine and hype it out of all proportion.
Late on Tuesday, press ombudsman Johan Retief issued a ruling in which it dismissed 21 of Eskom’s specific complaints, and found against the Financial Mail on three issues relating to our Cover Story on the explosive Dentons report.
In March, the Financial Mail published a Cover Story about the report that “Eskom does not want you to see”, which contained explosive new information about how the state-owned power utility’s shoddy coal purchasing practices and governance breaches meant taxpayers ended up paying far more than they should. Worse, it revealed how Eskom had sought to bury the Dentons probe.
But following the ombudsman ruling on Tuesday, Eskom’s acting CEO Matshela Koko — who is embroiled in a nepotism scandal involving R1bn of contracts that Eskom awarded to a company in which his stepdaughter has a stake — crowed that “the press ombudsman ruled in favour of Eskom against the Financial Mail”.
Eskom then issued a press release saying the Financial Mail “brazenly veered off the SA code of ethics and conduct, resulting in Eskom being cast in a negative light”.
Unfortunately, this is misleading at best. A reading of Retief’s ruling shows clearly the vast majority of Eskom’s complaints were thrown out and Koko also conveniently failed to mention the damning conclusions that Retief did reach regarding Eskom’s poor transparency.
Financial Mail merely did its job and acted as a watchdog and a messenger
Among the more serious claims Eskom made in its 24-page complaint was that the Financial Mail had obtained the report “illegally and dishonestly”, that the journalists were wrong to suggest its transparency was poor, and that the magazine had not “obtained Eskom’s views prior to publication”.
Retief threw out all of those complaints, saying the magazine had a “duty” to report on this case.
“Given the fact that taxpayers’ money was involved, that by far the greatest majority of citizens were using (and paying for) electricity, and the content of the redacted information, I can come to no other conclusion than that the Financial Mail merely did its job and acted as a watchdog and a messenger,” he said.
The public interest case was so immense, it overrode all other concerns. Retief said it was “not a false impression to suggest that Eskom had reneged on a promise to release the report. The Financial Mail has done nothing wrong in reporting this particular issue”.
Retief also rejected Eskom’s complaint that it was wrong to say Dentons was “prevented” from completing its probe into Eskom.
“As an outsider, this does sound strange — why would Eskom not use the opportunity to get all the cards on the table? ... If a reasonable reader then would interpret the ‘message’ that Eskom wanted to cover up certain information, it should blame itself, and not the messenger,” he said.
However, Retief did say the Financial Mail had overstepped in a few paragraphs, and reprimanded it in three cases.
First, he said while the Financial Mail story had “raised new questions about Eskom’s rationale for load-shedding”, the magazine hadn’t properly explained what this rationale was, saying this was a breach of the press code. Second, he said where the Financial Mail wrote that chairman Ben Ngubane had argued that the names of people be redacted from the Dentons report — and implied this was corroborated by board minutes — those board minutes themselves do not confirm that, or that Dentons “had to be convinced to produce a letter confirming that no wrongdoing had been found against anyone”. In both these cases, the Financial Mail obtained the information from six sources.
Finally, Retief said the Financial Mail should have taken care to refer to Dentons’ “allegations”, rather than Dentons’ “findings” when the magazine reported “senior executives handpicked suppliers they wished to negotiate with”.
Though the Financial Mail’s arguments prevailed in the vast majority of Eskom’s complaints, the magazine is still considering appealing the three issues for which it was reprimanded.
Speaking on radio about the ombudsman’s findings, Eskom’s acting head of legal, Suzanne Daniels muddied the water by creating the impression that the Financial Mail had been found guilty of not giving Eskom a right of reply, and of obtaining the report “dishonestly” — when these complaints were rejected by Retief.
Daniels claimed in the press release that Eskom had “become the main victim for appalling journalism”.
Though she doesn’t say as much, she is presumably referring to a slew of articles from AmaBhungane, Business Day and the Sunday Times, all in the past week, that point to a raft of suspect or possibly corrupt tender practices at the power utility.
For example, AmaBhungane reported this week that Koko handed Tegeta Exploration, owned by the influential Gupta family, a R7bn coal contract on August 8 without a tender — despite warnings from national treasury that this would be irregular. While the contract was meant to run until 2023, within two months of signing that deal, Eskom mothballed the Komati power station — implying they’ll then need to buy the Guptas out of the contract, or pay for taking the coal elsewhere. Last week, it emerged that a report by treasury cast a further cloud over Eskom’s procedures, saying a forensic auditor should “investigate why Eskom gave and continues to give preferential treatment to Tegeta ... by not enforcing key conditions of the Coal Supply Agreement”.
Eskom reacted badly, again, telling AmaBhungane that the treasury report “is yet to be finalised and is speculative to say the least”.
Then, compounding Eskom’s problems, on Wednesday Business Day reported that General Electric — the fourth-largest public company in the world according to Forbes, now worth an estimated US$255bn — has filed papers in court effectively accusing Eskom of rigging a R3bn tender to build a new boiler at the Duvha power station.
Eskom, following the advice of a company part-owned by the Guptas’ business partner called Trillian, decided to award the tender to a Chinese firm called Dongfang, even though their bid was R1bn more expensive than that of GE.
“Eskom’s conduct in awarding the bid to a tenderer that did not qualify as one of the two shortlisted bidders at the desktop stage of evaluation is highly suspicious,” GE sub-Saharan Africa head George Njenga told Business Day.
Eskom did not respond. It said it was preparing its affidavit, though it claimed it had acted “prudently and legally”.
After such a slew of bad news, perhaps you can understand why Eskom is eager to make mountains out of the few slivers of good news it does get. But, as Retief’s ruling makes clear, this doesn’t deal with the fundamental problems of its poor transparency around suspect contracts.