BETWEEN THE CHAINS: New Eskom boss heading into a storm
The incoming CEO of Eskom will be its sixth boss in three years. He will inherit a political minefield fraught with an appalling governance culture and corruption that interferes with operations.
The new CEO, who will be appointed before the end of June, will have the task of dealing with national treasury’s report into Eskom’s procurement irregularities during the past two years, which is due to be released in the next few weeks.
The current board is also gearing itself up for a fight to clear its name and restore its credibility in the wake of the public protector’s state capture report. The report pointed an accusing finger at then CEO Brian Molefe, chairman Ben Ngubane, former nonexecutive director Mark Pamensky and two other directors, either for inappropriate dealings with the Gupta family, or conflict of interests while representing Eskom.
Why did Eskom not allow Dentons to do a thorough and complete forensic investigation?
These allegedly improper dealings caused Eskom to improperly pay more than R1.2bn to Tegeta Resources in the months it was trying to raise cash to acquire the Optimum Colliery from Glencore. Tegeta is owned by the Gupta family, which has ties to President Jacob Zuma and his family. Molefe resigned in tears in December after the adverse findings.
Another Eskom hot potato is the Dentons report, compiled by a US law firm of that name. It was commissioned by public enterprises minister Lynne Brown early in 2015 to investigate the state of the company. It has been kept under wraps since.
That investigation resulted in Eskom’s then newly appointed CEO, Tshediso Matona, quitting after four months on the job. Finance director Tsholofelo Molefe and group capital executive Dan Marokane also parted ways with the utility while they were still on suspension. They had all been in their positions for less than a year, and the three were paid a collective golden handshake of R22m upon departure. They had been suspended together with Matshela Koko, who was chief procurement officer at the time. He later returned to his job, and has been appointed acting CEO.
Eskom emphasised that the individuals were never found guilty of any wrongdoing, and were not the subject of the investigation.
Asked about it at Eskom’s media briefing this week, Brown said the report was with the Eskom board.
“It is the board’s report. I have read it, it needs further investigation,” said Brown, adding that the report “is inadequate for use by the company”. In her view the report is incomplete because Dentons only had three months to investigate, which was not enough. Why, one wonders, did Eskom not allow Dentons to do a complete forensic investigation?
‘Let’s not go there’
Brown said it was for Eskom to release the report to the public. Curiously, she also said: “There are people’s names [mentioned negatively] in the report. Maybe we shouldn’t go there.”
The Dentons investigation centred on the state of Eskom at the time. The period was marked by daily loadshedding, and the utility was in danger of financial and operational collapse. The brief was for the US multinational law firm to check if there were any operational and financially irregularities causing the suboptimal performance that rendered the utility unable to fully discharge its mandate of generating electricity.
Brown’s statement contradicts Ngubane, who told the Financial Mail last year the report was complete and it was up to the minister to decide whether to release it. He said the utility was using the report’s recommendations to fix what was wrong with Eskom. This week he did not contradict Brown, who was sitting next to him when she answered the question.