Disgraced former Eskom chief executive Brian Molefe on Friday recast Eskom’s woes as a case of President Cyril Ramaphosa selling the power utility and the country down the river for the sake of his business interests.
Eskom’s real problem was that Glencore sought to extort R8-billion from the power utility after it bought the Optimum Coal Mine and thereby tied itself into a disadvantageous coal supply contract without due diligence, because its real risk calculation was on the political influence of Ramaphosa.
“Mr Ramaphosa was their bet,” Molefe said in a lengthy prepared statement as he took the witness stand at the Zondo commission of inquiry.
“Instead of conducting due diligence and understanding how the coal-supply agreement worked, they did something extraordinary. They sold 9.46% of the shares in the newly acquired company to Mr Cyril Ramaphosa, a political heavyweight and made him chairman of the newly acquired company.
“That was a strategic decision to use the former secretary general of the African National Congress and former secretary general of the National Union of Mineworkers, a member of the national executive committee of the ANC at the time.”
Molefe said Glencore knew that the company could prove profitable only if there were successful renegotiation of the coal price in the contract with Eskom, and if the utility waived penalties that were approaching R2-billion.
Together with the almost fourfold increase in the coal-sale price the company demanded, this would have added up to securing about R8-billion from Eskom.
“The profitability of Optimum was, therefore, dependent on the peddling of political influence and the extent to which Glencore would be able to exert pressure on Eskom directors and management,” Molefe continued.
“They had made their bed and needed to lie on it. It was unfair and arrogant of them to demand that Eskom should effectively pay for the manner in which they had tied themselves into the proverbial knot.”
Molefe implied that Ramaphosa played along, with devastating consequences for Eskom that included a seemingly intractable return to load-shedding.
He said although Ramaphosa ostensibly sold his shares when he returned to politics, the deal had not gone through when he became the deputy president of South Africa.
Piling on the accusations against the president, Molefe said Ramaphosa’s tenure as head of the Eskom war room was disastrous and undermined its executives’ and managers’ efforts to end the power cuts.
The war room had become a de facto alternative Eskom board and Ramaphosa, the de facto chairman, he charged.
In an aside, he impugned its reliance on the advice of infrastructure experts such as Professor Anton Eberhard, from the University of Cape Town Graduate School of Business, whom he said had never spoken “a sane word” on energy expertise.
Molefe said when he arrived at Eskom on secondment from Transnet he was not prepared to countenance the situation and to ask residents of Soweto to pay their power arrears while the utility was held to ransom by corporate interests.
“I could not face Eskom employees and the unions and tell them that their bonuses would not be paid or that their salary increases would be zero …. and that we have no funds to fix the apartheid wage gap that still exists between black and white employees of Eskom while rich international corporations were unduly exploiting Eskom,” he added.
“The payments to Glencore would have sunk Eskom.”
Therefore, he said, the Zondo commission and others who alleged state capture were wrong to focus on the acquisition of Optimum by the Gupta brothers’ Tegeta Exploration in a deal eased by advance coal payments by the parastatal.
Molefe suggested that the relationship with Glencore represented the true face of state capture that should instead concern investigators.
And he continued his attack on Ramaphosa by saying his rise to the ANC presidency in 2017 after a campaign that had the benefit of an R1-billion in donor funding betrayed the values of the governing party.
After Molefe concluded his statement, Zondo said there were parts of it that made him wish the commission had been given a copy beforehand to warn those mentioned of the allegations against them.
He added that although there may be different legal views on the need to do so, the commission would have erred on the side of caution.
Molefe, in reply, readily conceded that he was implicating the president.
Zondo called for a tea break and when the sitting resumed made a ruling that in future witnesses who wished to make statements from the stand implicating others should give a warning of seven days that they planned to do so.