Why Eskom is South Africa’s definition of treason

LAST year Eskom published its interim results on November 3, only 33 days after the end of the reporting period in September.

After Paul O’Flaherty became finance director in 2010 the utility had always reported its financial performance within three months of the reporting period.

By the time he left, in July 2013, Eskom’s financial management and reporting was almost on par with the best and biggest JSE-listed companies.

When O’Flaherty joined Eskom, there was still hope the utility could be partly privatised, by listing it on the JSE.

He told me at the time that he wanted Eskom to internalise the tradition of prudent financial reporting that was the mainstay of corporate entities that took their responsibility to stakeholders seriously. Those days are now gone. This time round, says spokesman Khulu Phasiwe, nobody knows when the results to the end of September will be published. Phasiwe says the utility is still busy with the audit, and the auditors want to do a thorough job of that.

The truth, however, is far from that noble ideal.

The utility has been stripped not only of hard capital but also of human capital.

As things stand, the utility will not pass a going-concern test, so nobody will sign off the accounts.

It was only in November that Eskom was forced to admit that it does not have the resources to pay salaries and suppliers beyond December. This month! That is because it had cash and cash equivalents of only R1.2-billion.

It goes without saying that sans another cash injection – most likely from the already empty coffers of national treasury – Eskom is insolvent.

That is the case even if energy regulator Nersa were to approve Eskom’s request for a 19.9% electricity increase immediately. And insolvency is only one of the utility’s major problems.

Governance collapsed long ago. When then public enterprises minister (now finance minister) Malusi Gigaba appointed Zola Tsotsi to chair the company and placed the other Gupta stooges on the board, he effectively signed the licence to escalate looting to hitherto unprecedented levels.

In 2009, when Gigaba became public enterprises minister, Eskom was fully solvent and had adequate working capital.

When he left to become home affairs minister five years later, Eskom was begging for a cash bailout. It received R23-billion in September 2015. Another R60billion came in the form of a debt write-off by government.

Gigaba’s successor, Lynne Brown, came in to finish the job. The results are staring us all in the face: the utility has been stripped not only of hard capital but also of human capital. It owes the capital markets R471billion in expensive debt and has nobody to help generate revenue to service that huge liability.

Eskom now has more actors than you will find in the soapies broadcast by the SABC. The whole board, including its chairman, is acting. The CEO is acting, is unqualified and too junior for the task. Sean Maritz replaced an equally useless acting CEO, who also replaced an allegedly corrupt megalomaniac in Matshela Koko.

The finance director is an acting one, having replaced another acting FD, who also replaced another alleged fraudster in the form of Anoj Singh.

The utility has been totally crippled. And as if that’s not enough, Brown seems to be considering incompetents and fraudsters to fill positions on the vacant board, the CEO post, the FD position and any other that matters.

All of that will happen only next year.

For that, you and I will pay with further credit downgrades, as Eskom is the single largest risk to the whole financial system.

And you still haven’t seen a definition of treason?

Sikonathi Mantshantsha is the Financial Mail’s deputy editor