Eskom CFO Anoj Singh axed, sort of
Eskom’s chief financial officer Anoj Singh was placed on special leave pending an investigation on Thursday, after one of its lenders raised governance concerns in the wake of the company’s recent qualified audit report.
A senior government official familiar with the matter confirmed to the Mail & Guardian that the Development Bank of South Africa, which has lent Eskom R15-billion, had flagged concerns after Eskom had racked up almost R3-billion in spending that flouted the Public Finance Management Act.
The decision was taken after discussions with the Finance Minister Malusi Gigaba and Public Enterprises minister Lynne Brown, the source said.
Efforts to reach Eskom and Singh for comment were unsuccessful, but in brief statement Eskom’s acting acting chairman Zethembe Khoza confirmed that Singh would be placed on leave, while Calib Cassim would be appointed interim Chief Financial Officer. Cassim is a registered chartered accountant that has been at Eskom for 15 years.
Khoza gave assurances that the company remained stable and would continue delivering on its turnaround strategy.
Aside from the extensive list of breaches of the PFMA revealed in its recent annual report, allegations of corruption linking Singh and other former Eskom leaders to the Gupta family have continued to dog the organisation.
At its annual results briefing last week, where Eskom revealed an 83% collapse in profits, Singh faced a grilling over his role in company decisions that benefited the Guptas or its associated companies.
These included questions over money flowing to Gupta linked advisory firm Trillian, which scored almost R500-million in payments from the power parastatal.
Singh refused to answer questions, saying however that he would release a “tell all document” explaining his role in these events.
Corruptions claims at Eskom have raised the ire of other development financial institution such as the World Bank. It told the Mail & Guardian last week that it has requested more information from Eskom, after which it will “discuss next steps”.
Eskom has around R350-billiion in government guarantees, which it relies on heavily to raise funding. In total the government has issued almost R500-billion in guarantees to other various state companies.
After Standard Chartered Bank refused to extend a loan to South African Airways (SAA), potentially triggering the airline’s state guarantees; the national treasury was forced to provide the company with a cash injection to repay the loan.
Concern is growing over the threat of contagion to other state agencies if a similar scenario were to play out at a company the size of Eskom.
At the same time, investors have been increasingly reluctant to take up state owned entity bonds as South Africa’s credit ratings have been downgraded in the face of poor economic performance and policy uncertainty.
By June, bond issuance by SOEs sat at R8.2-billion – down from R20.3-billion in June in 2016, and R25.7-billion in June 2015.
Under these constrained circumstances Eskom must nevertheless raise over R340-billion in the coming five years.
Eskom’s reliance on debt to remain a going concern was highlighted by Singh at the recent results. If something took place that “limited [Eskom’s] to debt capital markets” Eskom would have to turn to the Treasury for support, he said.
While other Eskom executives such as former chief executive Brian Molefe and Matshela Koko have both faced censure over allegations of corruption, Singh has until now been relatively unscathed.
But Singh worked alongside Molefe when some of the most audacious deals allegedly linked to the Gupta family, were done at Eskom as well as state logistics giant Transnet. With the release of the #GuptaLeaks email dossier Singh was revealed to have flown to Dubai on several occasions, and put up in luxurious hotels, paid for by the Gupta’s Sahara Computers.
Under Singh’s tenure as finance boss at Transnet, it negotiated a R1.8-billion contract with Neotel in 2014. But an expose done by the amaBhungane Centre for Investigative Journalism, revealed that the deal involved Neotel allegedly paying a Gupta-linked “letterbox” company Homix, millions in commissions to ensure it got the contract.
As CFO, Singh was also an important player in the procurement process for Transet’s purchase of over a 1 000 new locomotives. But with the release of the #GuptaLeaks amaBhugane reported that the deal appeared to have been engineered to generate the Gupta’s and their associates some R5.3-billion in kickbacks.
The Democratic Alliance’s Natasha Mazzone welcomed Singh’s suspension.
The party believed however that Singh had a “a criminal case to answer for and we have committed to laying charges for possible breaches of the Public Finance Management Act” she said.
Singh’s possible role in a range of corruption scandals and dodgy deals at Eskom, must be fully investigated Mazzone said.