/ 13 November 2009

Zuma intervened in Eskom

President Jacob Zuma and Public Enterprises Minister Barbara Hogan are increasingly at cross-purposes over what control government should exercise over state-owned entities.

The Mail & Guardian has learned that Zuma intervened directly in the Eskom matter because he felt Hogan was not providing the necessary political leadership.

Government communicators have been reluctant to confirm Zuma’s intervention publicly, but he is said to have spoken separately to Hogan, Jacob Maroga and former board chairperson Bobby Godsell in a bid to find a solution.

His public silence on the matter has fractured his supporters in the tripartite alliance, with the African National Congress Youth League (ANCYL) and the National Union of Metalworkers of South Africa supporting Maroga by insisting he should not resign, while the National Union of Mineworkers (NUM), Congress of South African Trade Unions (Cosatu) and ANC secretary general Gwede Mantashe have supported Godsell and rubbished reports that he is a racist.

In a strong response to her critics Hogan told Parliament on Thursday that she had deliberately kept quiet on the issue because she felt it would heighten tensions.

She confirmed that Zuma had intervened, saying the decision had not been taken lightly and was not intended to undermine the board.

Hogan also hit out at her critics — principally the ANCYL and Black Management Forum (BMF) — saying many outside groups had entered the domain “with their own political and vociferous campaign in support of one party against another”.

She said they had served only to inflame and exaggerate an already complex and difficult boardroom matter. Godsell resigned on Tuesday and the Eskom board announced on Thursday that it had accepted Maroga’s “resignation”. However, Maroga is believed to be insisting that he has not stepped down.

The M&G has learned from sources close to government and Luthuli House that Zuma grew impatient with Hogan’s soft approach. He is said to have held talks with Hogan once the leadership crisis erupted, believing that she was not handling the situation well and had “already taken sides”, a senior government official told the M&G.

Hogan had opted for Godsell to remain in place and for Maroga to be eased out in an orderly manner. But after the Maroga resignation debacle, Zuma decided to step in more decisively.

Said a source close to Luthuli House: “He feels state-owned enterprises are lurching from crisis to crisis and she’s not on top of it.” He said there was a general feeling within government that state-owned enterprises’ boards were undermining the role of government.

“If board chairperson Godsell can resign on the basis that the shareholder has overruled the board, that should tell a story. Hogan has allowed the boards to run rampant; they’re no longer willing to be held accountable.”

But in her speech Hogan emphasised that she did not want to interfere in the running of state-owned enterprises. “The integrity of the board is paramount. Boards are appointed by government and are [obliged] to govern the company with the support of senior management,” she said. “The shareholder oversees the functioning of the board to ensure that the board and company give effect to the strategic intent and objectives of government.”

Issues of transformation also influenced Zuma to intervene in the Eskom debacle.

“He argued his intervention is warranted by the crippling energy crisis and the drama at Transnet around Siyabonga Gama, which made some people doubt the state’s commitment to transformation, as it was seen as the targeting of black executives,” said a government source.

He said Zuma did not ask Godsell to step down, but made it clear that government would not support him if Maroga was forced to resign. He asked the two to “try to work together”.

“The general problem in state-owned enterprises is lack of transformation,” said the source. “But whenever it comes up we end up being locked in debates about personalities and race.”

Zuma was under pressure from black business leaders who opposed Maroga’s resignation, ascribing it to racism and an anti-transformation agenda. The source said Zuma did not want to appear to be “anti-transformation” and felt that Maroga should not be axed while other executives involved in Eskom’s downfall remained in place.

“State-owned enterprises are the only places where government can do something to put black people in leadership positions and he cannot be seen to be unwilling to support that.”

The BMF has called for the entire Eskom board to step down. The forum’s deputy president, Tembakazi Mnyaka, said that by removing Maroga, it was clear it did not have the same transformation vision as the government. Mnyaka also accused the Eskom board of breaching corporate governance laws and the Eskom Convention Act, which barred the chairperson from drafting a strategy document — the chief executive’s responsibility.