Valli's paradox

“I’m going to say this again: I did not have sexual relations with that woman, Miss Lewinsky.”—Bill Clinton, January 1998

“As independent non-executive chairman of Eskom I have at all times acted in an ethical manner. I have made good corporate governance a keynote of my tenure as chairman.”—Valli Moosa, February 2008

Bedrooms (or the Oval Office, as the case may be) and boardrooms: they tend to share a characteristic—closed curtains. And when you ask the big guy whether he’s been fooling around, literally or figuratively, the answer all too often is “trust me”.

But once in a blue moon a reluctant witness comes forward with a stained blue dress.
Does Hillary trust her man? No way.

Should we, the public, trust blindly those to whom we entrust our fate? I suggest not, unless we need repeatedly to be thumped on the head with a hammer to know it is hard.

Unless you are the president of the United States, your bedroom secrets concern no one but your partner. But the boardrooms of large modern companies, listed or state-owned, should be different. These companies impact tremendously on their stakeholders, often including the public (Eskom being a not-so-shining example of this simple truth).

Which gives us, as stakeholders, a legitimate interest to know how these companies are run.

Our interest, of course, has to be weighed against the companies’ interest to maintain confidentiality about commercial terms and other matters affecting their competitiveness.

It is to balance these competing interests that corporate governance rules have been developed. External auditing, regular reporting, cautionaries and declarations of directors’ dealings afford us a window, hopefully sufficient to justify our trust, on how a company is run. They are confidence-building measures.

Then along comes Valli Moosa, Eskom’s chair. With him at the helm, Eskom’s board oversees probably the largest procurement in South African history, for a new coal-fired power station.

When the winning bidder for the most expensive part, six boilers at R20-billion, gets sticky about what it regards as the agreed scope of work, Eskom’s board endorses a decision to revert to the sole other (and originally losing) bidder. For good measure, it also endorses a “fleet strategy”, doubling the order without a further tender.

It might be that these were perfectly rational decisions, taken in the best interests of us, the stakeholders.

And it might be coincidence that Chancellor House, the ANC’s fundraising company, had a significant stake in the losing-turned-doubly-winning bidder—and that Moosa serves on the ANC’s fundraising committee.

That might be. But it cannot inspire us, the stakeholders, with confidence.

Testing the transparency of the corporate governance window, the Mail & Guardian inquired whether Moosa had declared his conflict of interest and recused himself, and whether we could have copies of the Deloitte reports that Eskom maintained had certified the integrity of the tender process.

Eskom, when it finally responded, emphasised the procedural aspects it claims guaranteed the tender process, but without providing the answers or the evidence we had requested. “Trust us.”

Moosa’s own response, the core of it quoted above, stressed his personal commitment to ethics and good corporate governance, but again without saying whether he had declared his conflict or recused himself. “Trust me.”

Moosa, like Eskom, just doesn’t get it. Good corporate governance, to which Moosa appeals, cannot fulfil its confidence-building imperative if it is not seen to be done. But Moosa refuses to open the curtain. His response is a contradiction in terms, a paradox.

And what about ...

Valli Moosa must be a nimble egg-dancer, given his position as Eskom board chair, his outside interests and his professed commitment to good corporate governance.

Here are two more potential conflicts of interest:

l Moosa is executive chair of and a major shareholder in Lereko Investments. Last August the minerals and energy department selected the AES Khanya Consortium to build and operate two new peaking power stations to make it South Africa’s first major independent power producer.

Mbane Power—previously called Lereko Energy—is among AES Khanya’s BEE partners. While Moosa’s involvement with Mbane is unclear, three of his co-directors in Lereko Investments also serve on Mbane’s board. Eskom, the department said, would be the sole buyer of AES Khanya’s power and negotiate a long-term contract with it.

  • On January 23, a day before Eskom pulled the plug on South Africa’s mining industry, Anglo Platinum appointed Moosa a non-executive director. Releasing its annual results about three weeks later, Angloplats reportedly said it had lost 30 000 ounces in production because of load shedding and that the figure could rise significantly.
  • Angloplats said: “We continue to engage Eskom and the relevant government departments directly … to address the constraints.”

    Whose side will Moosa choose in both sets of negotiations, or will he recuse himself—and if so, will he let us know?

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