Eskom in move to come clean with its recent past
ESKOM yesterday primed its bondholders for further revelations of tender-related graft when the power utility releases its financial results for the year ended March 31, likely to be released later this month.
In a statement on the JSE’s Stock Exchange News Service (Sens), Eskom said that it was aware of the ongoing reportable irregularities and irregular expenditure which relate to tender processes.
Eskom has been embroiled in allegations that corrupt individuals within and outside the power utility had weakened its governance to facilitate largescale looting by a politically connected elite.
Eskom yesterday said that disclosure on the quantum of the uncovered reportable irregularities and irregular expenditure would be published with the release of the company’s annual financial statements. “The board has resolved to review all governance and has elevated decision making to the board until completion of its review process,” Eskom said.
The expected irregularities are part of a trend in Eskom’s financial results. For its results for the year ended March 31 last year, the power utility received an audit qualification, because auditors could not express an opinion on the completeness of the irregular expenditure reported in the results. These included former chief executive Brian Molefe’s controversial “early retirement” and his multimillion-rand pension payout.
At the time, the auditors also flagged allegation of conflict of interest involving former generation executive Matshela Koko. This related to Koko’s stepdaughter’s interest in Impulse International, a company that did business with Eskom.
Auditors SizweNtsalubaGobodo earlier this year said they had identified reportable irregularities in Eskom’s financial results for the six months ended September 30 last year.
These related to the parliamentary inquiry into alleged maladministration, governance and procurement problems at Eskom. They also raised the controversial payment of approximately R1.6 billion to management consulting firm McKinsey & Company and Trillian Management Consultancy without following due procurement processes.
The auditors also flagged former chief financial officer Anoj Singh’s questionable decision to give Tegeta Exploration and Resources a three-month guarantee, in contravention of the Public Finance Management Act.
Other reports that have put the spotlight on Eskom’s shortcomings on procurement, contract management and governance are the Public Protector State of Capture report and the Dentons report.
Eskom spokesperson Khulu Phasiwe said yesterday that as part of the JSE debt listing requirements, Eskom had to inform bondholders about the looming disclosure of irregularities because its bonds were listed on the JSE.
Phasiwe said Eskom was making progress in addressing the governance-related problems. These include the appointment of a new board and a chief executive.
“Where wrongdoing has been found, Eskom took action against the implicated individuals. Others left on their own,” he said.
Since the release of the last financial results, Eskom has parted ways with a number of implicated senior executives.