/ 3 September 2020

Eskom and treasury fight needs urgent attention

Nampak Ltd. Chief Executive Officer Andre De Ruyter Interview
Former Eskom chief executive, André de Ruyter. (Waldo Swiegers/Bloomberg via Getty Images)


After a relatively quiet winter, the majority of which was spent with minimal economic activity under lockdown, ailing state power utility Eskom has again heaved into view because of load-shedding.

Crippling challenges with generation units at 10 of its power stations this week saw Eskom announce stage four load shedding on Wednesday. Almost at the same time, the treasury was telling Parliament that the ailing power company had missed several conditions attached to its R69-billion bailout announced by the government in 2019.

These included the sale of its internal loan company — the Eskom Finance Company — as well as managing its cost structure, which has been partly achieved through offering voluntary severance packages. 

The Eskom board’s appearance before Parliament’s standing committee on appropriations on Wednesday came as MPs serving on the standing committee on public accounts were also itching for a chance to grill board members on the state of the entity. 

Eskom has also recently experienced worrying developments that indicate a slide further into the dark side from which it is fighting to escape. These include tensions with the treasury over the alleged breach of procurement rules, plus internal ruffles at the top. 

This is all as new chief executive André De Ruyter seeks to pry the company back from the grips of decades of corruption and looting that have decimated it to the point of threatening South Africa’s entire economy.

Last week, the Mail & Guardian reported that not only had De Ruyter found himself at odds with the treasury in his bid to cancel a R14-billion fuel-oil-supply tender, but that there was also a breakdown at board level over breaches of corporate governance.

The trust deficit has skyrocketed once again, with one insider saying  Eskom is currently instituting a forensic investigation to uncover sources of leaked internal documents. These investigations of staff for alleged leaking hark back to the days when Eskom was deep in the throes of state capture. 

Eskom spokesperson Sikonathi Mantshantsha is adamant that no such investigation exists.

A board-sanctioned investigation by Wim Trengove SC into allegations that De Ruyter himself intentionally misled the board on the fuel-oil tender, exonerated the top executive. The terms of reference for the investigation, which were not discussed in a formal board meeting, included a bizarre request that Trengove advise Eskom on what action to take against De Ruyter’s accuser, non-executive director Sifiso Dabengwa, should the allegations prove untrue. 

Wim Trengove report for Eskom by Mail and Guardian

Although Trengove declined to offer advice on this, the request indicated that some insiders viewed Dabengwa’s request for an independent investigation as malicious. Dabengwa has since resigned from the Eskom board, citing his fellow board members’ acceptance of Trengove’s report, Trengove’s report has been kept under wraps by Eskom but can be read on the M&G website.   

Another source of tension at Megawatt Park, and one of the items of discussion at a board meeting this week, are allegations against Eskom’s chief operations officer, Jan Oberholzer. He is a former Eskom executive who was hired on contract in 2018 as part of efforts to bring the power utility back from the brink. 

Oberholzer was recently cleared of a majority of allegations of impropriety, including corruption in a contract he signed in 2007 with United States-based engineering firm Black & Veatch. The deal escalated to more than R14-billion from an initial R114-million. Eskom was also advised by an independent report to “counsel” Oberholzer after he had met with Stefanutti Stocks to discuss work for Eskom, even though he held shares in the company. 

Last week the M&G reported that De Ruyter’s critics raised allegations of breaches of process when he hired several senior members of staff, including the appointment of new treasurer Richard Vaughan. Former Edcon chief financial officer Vaughan was appointed over Eskom’s acting treasurer, Mandla Maleka, who cried foul at being overlooked.  

Insiders, commentators and politicians have all used these developments as a stick with which to beat De Ruyter, as well as Public Enterprises Minister Pravin Gordhan

For De Ruyter and his supporters, these accusations — including questions by the treasury over the process to contract De Ruyter’s former colleague at Sasol and consultant Werner Mouton — represent nothing more than the fight-back by those who are involved in the looting of Eskom. This argument is strengthened by the inclusion of Gordhan in these theories at a time when it is clear that the last thing you can accuse the minister of is taking any interest in the state-owned enterprises (SOEs) he’s in charge of. 

The fact that former Eskom chief executive Matshela Koko, one of eight individuals Eskom — with the help of the Special Investigating Unit — is claiming R3.8-billion from, is in possession of internal documents showing tensions between Eskom and the treasury is illuminating. 

But the current leadership at Eskom will do well to remember that breaches in corporate governance and procurement regulations, under the guise of fighting corruption and addressing capacity issues, was a regular occurrence at SOEs during the state-capture years.