Eskom boss blames board for B2B fi­asco

CityPress - - Business - SIZWE SAMA YENDA busi­ness@city­

Eskom’s act­ing CEO, Mat­shela Koko, says he is not re­spon­si­ble for R310.8 mil­lion in ir­reg­u­lar ex­pen­di­ture that was in­curred by the power util­ity on an un­ap­proved project.

Koko told City Press this week that it was Paul O’Fla­herty, Eskom’s former chief fi­nan­cial of­fi­cer, and not him, who was re­spon­si­ble for the over­all man­age­ment of the R8.5 bil­lion Back to Ba­sics (B2B) Pro­gramme.

O’Fla­herty, who also sat on the board, re­signed in 2013 and is cur­rently CEO of Al Na­boodah Group En­ter­prises in the United Arab Emi­rates.

City Press was un­able to reach O’Fla­herty for com­ment re­gard­ing the ir­reg­u­lar ex­pen­di­ture.

The B2B Pro­gramme be­gan in 2010 with four aims: to im­prove Eskom’s ser­vice tools, its projects, its op­er­a­tions and its main­te­nance and engi­neer­ing.

At the time B2B was first im­ple­mented, Koko was di­vi­sional ex­ec­u­tive of group tech­nol­ogy. The R310.8 mil­lion in ques­tion was spent on engi­neer­ing, which fell un­der his au­thor­ity.

Koko was ap­pointed act­ing CEO in Novem­ber, af­ter Brian Molefe re­signed.

City Press re­ported last week that Pub­lic En­ter­prises Min­is­ter Lynne Brown was de­mand­ing an­swers from Eskom chair­per­son Ben Ngubane and Koko about what steps were taken to avoid ir­reg­u­lar ex­pen­di­ture, in ac­cor­dance with stip­u­la­tions in the Pub­lic Fi­nance Man­age­ment Act (PFMA).

The board’s in­vest­ment sub­com­mit­tee has since con­doned the ir­reg­u­lar ex­pen­di­ture.

Brown also wants to know why a to­tal of R2.55 bil­lion was spent on the pro­gramme, de­spite the de­ci­sion taken by her pre­de­ces­sor, Malusi Gi­gaba, not to ap­prove it in May 2014.

The board halted the pro­gramme in Septem­ber 2015 be­cause Gi­gaba was un­happy that Eskom had ap­plied for PFMA ap­proval for the engi­neer­ing com­po­nent of the B2B Pro­gramme only, and not for the full pro­gramme.

“The is­sue here is that the pre­vi­ous board said we had to make a PFMA ap­pli­ca­tion to the min­is­ter [Gi­gaba] when we wanted to spent R1.5 bil­lion on engi­neer­ing,” said Koko.

“When we went to the board, R310.8 mil­lion had al­ready been spent. I sub­mit­ted a doc­u­ment to the board about the ex­pen­di­ture in 2012, and the board’s mes­sage that got to the project man­ager was that the board had ap­proved that ex­pen­di­ture, so the money was spent.”

As stated above, Gi­gaba de­clined the PFMA ap­pli­ca­tion in May 2014.

“How­ever, he noted the im­por­tance of engi­neer­ing tools in im­prov­ing Eskom’s per­for­mance, but de­cried the split­ting of the B2B Pro­gramme, re­sult­ing in only one com­po­nent ap­ply­ing for PFMA,” said Koko.

“He [Gi­gaba] then re­quested Eskom to reap­ply and an­swer a num­ber of ques­tions he had raised.” Koko said the board re­lied on a pre­vi­ous de­ci­sion, made when Eskom’s board chair­per­son was Zola Tsotsi and its CEO was Brian Dames, that the ex­pen­di­ture was above board and that dis­ci­plinary mea­sures against the re­spon­si­ble of­fi­cials were taken. How­ever, it turns out that the pre­vi­ous board had mis­led Ngubane and his team re­gard­ing its min­utes. Koko said that be­cause of a num­ber of lead­er­ship changes at board and ex­ec­u­tive level, and the fact that a num­ber of B2B key role play­ers had left Eskom’s em­ploy­ment, there had been a de­lay in re­spond­ing to Gi­gaba’s con­cerns. Added to this, said Koko, was the fact that Eskom had been un­der­go­ing sig­nif­i­cant fi­nan­cial con­straints, which re­sulted in the util­ity re­view­ing its ex­pen­di­ture. Hence, Ngubane and his board de­cided on Septem­ber 3 2015 that the en­tire B2B pro­gramme be stopped. “In Novem­ber 2016, Eskom in­formed Brown of the in­vest­ment and fi­nance com­mit­tee’s de­ci­sion to con­done the R311 mil­lion in ir­reg­u­lar ex­pen­di­ture and of Eskom’s de­ci­sion to with­draw the PFMA ap­pli­ca­tion since the pro­gramme had been can­celled,” Koko said. “This means that the cur­rent board con­doned the trans­ac­tion based on the de­ci­sion of the pre­vi­ous board, which con­cluded that the nec­es­sary gov­er­nance ac­tions – in­clud­ing dis­ci­plinary and/or cor­rec­tive ac­tions – were im­ple­mented.”

Mat­shela Koko

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