Rob Rose Editor: Financial Mail

A few months ago, speaking about why Brian Molefe had quit as CEO of Eskom in November, his successor, acting CEO Matshela Koko, said Molefe was clear about his reasons for doing so. “He wanted to set a precedent of good governance. [He said] I have a cloud [over me], I’m going to give the process a chance and step aside,” he told TV channel CNBC.

So much for that.

On Friday, the beleaguered electricity utility announced that Molefe would be returning to Eskom as CEO, less than six months after he left “to give the process a chance”.

This new development is alarming considering that not a single molecule of that “cloud” over Molefe has dissipated. In this context, Molefe’s return is devastating in its chutzpah, illustrating the attitude of President Jacob Zuma’s shadow state to chapter nine institutions, including the public protector.

Justifying Molefe’s return, Eskom chairman Ben Ngubane told Business Report that Molefe had to return because the power utility couldn’t agree on a “mutually acceptable” pension payout to Molefe, after public enterprises minister Lynne Brown had vetoed a plan to pay him R30m.

“The board therefore rescinded Molefe’s early retirement application,” said Ngubane. He added he was “absolutely delighted” that Molefe is returning.

But the most obvious problem with Ngubane’s response is that Molefe didn’t “retire” as far as the public was told — rather he resigned “in the interests of good corporate governance”. 

More to the point, Molefe only resigned after Thuli Madonsela’s state of capture report detailed how he was a “very good friend” of the Gupta family, at the very time that Eskom was lavishing a series of apparent sweetheart deals on the well-connected family. Notoriously, this included a R586m “prepayment” from Eskom for coal it hadn’t yet provided.

Molefe’s name cropped up 71 times in Madonsela’s report — seemingly a death-knell for the career of a highly skilled technocrat who was one of the most promising members of Trevor Manuel’s team at national treasury during the early 2000s.

On Friday, Brown gave a press conference in which she seemed utterly tone deaf to the wider implications of Molefe’s return, painting this as fundamentally a financially sensible compromise.

She said the board’s view that he return “presents a significantly better value proposition to the South African fiscus” than paying him R30m as part of a pension payout.

Asked if this was a case of the country being “held to ransom”, Brown said the state capture report only made a recommendation for “further investigation” and found no-one guilty of anything.

“When Mr Molefe is declared guilty or not, then we can take a decision about whether his return is ethical or not,” she said. “There’s a public narrative that says Eskom is in an exceptionally bad state ... (but) as it stands today, Eskom both nationally and internationally has been able to cover its costs.”

However, this position contrasted with the views of many in the country — including her own political party, the ruling ANC. The ANC described Molefe’s reinstatement as an “unfortunate and reckless” decision by the Eskom board, given that nothing has changed since he quit.

In a stunning rebuke, the ruling party said the decision was “tone deaf to the SA public’s absolute exasperation and anger at what seems to be government’s lacklustre and lackadaisical approach to dealing decisively with corruption — perceived or real”.

During a television interview, ANC spokesman Zizi Kodwa said this was damaging to “brand ANC”.

The ANC’s message was unambiguous — and would not have been sanctioned by the faction loyal to Zuma.

Zuma himself wanted to appoint Molefe to replace Pravin Gordhan as finance minister last month, but he was overruled by others in the ANC’s top six — Gwede Mantashe, Cyril Ramaphosa and Zweli Mkhize.

Others close to the ANC, including the SA Communist Party, also described Molefe’s return as “extremely unacceptable”.

Now, it seems, Molefe’s return could act as a catalyst for the opposing forces of the state-capture debate to break cover, leading to open warfare.

SA’s business community was also outraged by Molefe’s return.

Jabu Mabuza, chairman of Business Leadership SA, said this decision “makes a mockery of Molefe’s own words about leaving Eskom in the interests of the country and good governance. His reappointment is wilfully disrespectful of the citizens of this country”. It also undermines all efforts to convince ratings agencies that the country is putting in place good governance at state-owned companies, Mabuza said. 

But the business sector will also see this as further damning evidence of a delinquent board at Eskom, led by Ngubane (who was also, coincidentally, the chair of the SABC during Hlaudi Motsoeneng’s tenure).

Even before this, anger was mounting. On April 28, the CEO Initiative (led by Mabuza) met Zuma and demanded that Eskom’s board be dissolved.

“We call on you, Mr President, to replace the entire current Eskom board and appoint a credible and strong chair to lead the board, and to appoint a new CEO,” Mabuza told Zuma.

It is a demand that has now assumed unprecedented urgency. This new scandal will also reinforce the impression of a limping leadership team at Eskom — a coalition of the compromised.

Besides Molefe, Koko himself is being investigated relating to R1bn of contracts that Eskom awarded to a company of which his 26-year-old stepdaughter, Koketso Choma, was a director.

More damningly, Koko couldn’t keep his story straight. First he said: “I didn’t know anything about Impulse except that they were Eskom service providers. I have no relationship with them, or CEO [Pragasen Pather].”

However, records then emerged of 52 phone calls between Pather and Koko in seven months when Impulse was scoring deals from Eskom. Confronted again, Koko now said: “I talk to all suppliers of Eskom all the time. It’s not unusual.”

Last week, former finance minister Trevor Manuel took aim at Ngubane at the World Economic Forum, over this issue. “When a chair allows an acting CEO to be inquired in the public domain as Koko has been, and he’s not suspended, then you have to worry about the trendlines,” said Manuel. Ngubane was furious, predictably.

On Friday, Brown announced that Koko would be “taking leave” while the investigation continues.

Now that the ANC has also taken aim at the Eskom board, it seems Ngubane may be on borrowed time.

More worrying, it could also act as a spur for ratings agency Moody’s, which placed SA on review for a credit downgrade on April 3 due to Zuma’s cabinet reshuffle. Last month, Fitch and Standard & Poor’s downgraded SA’s foreign currency ratings to junk status.

Moody’s, however, has SA on two notches above junk status, so a single notch downgrade would still leave the country at investment grade.

SA’s CEOs said Molefe’s return “sends a worrying message to investors and ratings agencies about the country’s commitment to good governance and tackling inefficiencies at state-owned entities.”

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