It’s remarkable chutzpah of Eskom CEO Brian Molefe to describe Futuregrowth’s concerns about governance at state-owned companies as "frivolous". To do so with any conviction, Molefe would also have to argue that the concerns of ratings agency Moody’s were equally "frivolous" after the ratings agency last week followed the lead of Futuregrowth’s Andrew Canter in putting six state-owned institutions on review for a downgrade.
"Sometimes to engage with people that do not have an intention of being constructive is a waste of time," he told journalists.
It was classic Molefe. The former treasury official and Transnet CEO is, after all, a flamboyant dealmaker extraordinaire, never short of a word or two or a fair amount of bluster, especially when he’s under pressure.
But the news this week that Futuregrowth has indeed begun lending again to one of those state-owned companies, the Land Bank, illustrates that Canter does indeed intend to be "constructive".
All Futuregrowth wanted, which is something all investors should be demanding, were assurances that the state-owned companies were doing the right things to mitigate risk. It wanted explanation of how their board committees and governance worked. Once satisfied, Futuregrowth opened the taps again.
Perhaps Molefe’s bluster is simply pre-empting the fact that Futuregrowth is less likely to resume lending to Eskom any time soon. By claiming Eskom doesn’t care either way, Molefe seeks to not lose face.
But the sticking point with Eskom’s governance remains Mark Pamensky — who sits on Eskom’s investment committee, and is also a director of Oakbay Resources, owned by the Guptas.
Considering the highly unusual R560m "prepayment" to the Guptas by Eskom this year, it’s a rip-roaring conflict of interest.
To claim this is somehow insignificant shows a tin ear for the discomfort of SA’s investor community to the unsettling currents in the country right now.
If anything, the concerns over how state-owned companies are run have only been amplified, since Futuregrowth’s initial decision, by an astounding turn of events at the Strategic Fuel Fund (SFF).
A few months ago it emerged that the SFF had sold off nearly all its stockpile of 10m barrels of oil — at prices far below market value, in a murky deal with poor transparency.
The SFF is a division of the Central Energy Fund, and its purpose is to hold these barrels of oil to ensure "security of energy supply in case of a crisis".
It was a deal done in December, and approved by energy minister Tina Joemat-Pettersson, who spoke of this as simply a "rotation" of stocks, claiming the sale had netted R5bn. At it turned out, this wasn’t exactly the whole story.
Already, there were signs a few months ago that the deal stank to high heaven. For a start, finding out exactly who benefited from this odd deal proved to be an uphill battle, while government seemed determined not to breathe a coherent word about how the deal was struck. Finally, when government was coaxed into commenting, the official doublespeak was breathtaking.
Now it has become resoundingly clear why this was so. In a report this week, the auditor-general said the sale was illegal as it contravened the Public Finance Management Act in two key respects. This included the fact that the deal didn’t have the permission of finance minister Pravin Gordhan.
Worse, perhaps, is the glaring R1bn discrepancy between the R5bn that Joemat-Pettersson claimed they got for the oil, and the R3.9bn which the auditor-general says they were paid.
That’s more than R1bn that remains as-yet unexplained. Little wonder that the auditor-general concluded that "reasonable care" had not been taken by the officials involved to safeguard a public asset.
Joemat-Pettersson’s department blundered, despite her adamant denials. And it leaves the SFF exposed to a potential shortfall of $173m — about R2.5bn.
Spin it whichever way you want, that’s taxpayer money lost through ill-considered decisions not transparent to anyone.
If Molefe thinks investors ought not to worry about these sorts of "frivolous" leakages, he’s far off the mark.