Brown’s chance to bring order to playground
Public Enterprises Minister Lynne Brown has a rare opportunity to salvage what is left of her integrity by appointing a strong and suitable board to fix what’s broken at Eskom.
The board she will announce on Thursday will have the uphill task of stabilising the management team by appointing a new CEO to replace Brian Molefe. It should also decide the fate of generation executive and recently acting CEO Matshela Koko, who took a leave of absence while Eskom probed allegations of impropriety.
Brown has been public enterprises minister since 2014; under her leadership, Eskom has been crippled by alleged corruption and other corporate governance malpractices.
She inherited a rotten governance structure from Malusi Gigaba, now finance minister. If anything, the governance and corruption problems have deepened under Brown’s leadership.
FLIP-FLOPPING MINISTER
Brown has also been complicit in many of the scandals plaguing Eskom, more recently her flipflopping and spineless handling of the Molefe imbroglio. Molefe first left in December, took up a position in Parliament, then returned to Eskom after the minister vetoed his R30m separation agreement with the board. That was one of many incidents in which Brown failed to lead, a matter not helped by the weakness of the board.
But what kind of director does the company need? What priorities should the board adopt? Previously, a position on the board of Eskom and other state-owned companies was for business and other leaders who had distinguished themselves in their areas of influence.
Since 2010, when Gigaba took over as public enterprises minister, the boards have become a playground of unemployed and unemployable political deployees with questionable motives and even less suitable qualifications.
All Gigaba’s appointments at Eskom and Transnet have turned out to be alleged Gupta associates who ended up channelling business to the family. Eskom’s board started by irregularly signing a contract to sponsor The New Age newspaper in 2014, spearheaded by then acting CEO Collin Matjila.
That proved to be only the start of the governance rot, accompanied by more serious allegations of fraud and corruption, which worsened under recent chairman Ben Ngubane.
“The unemployed director is what we don’t want at the stateowned entities,” says lawyer Matodzi Ratshimbilani, who served on the board that successfully turned around arms manufacturer Denel. “There’s a phenomenon of people who accept these positions because they don’t have anything else to do. They are really looking to just make a quick buck out of that position. Often, they have nothing to lose.”
DISRUPTIVE DIRECTORS
According to Ratshimbilani, this kind of director is “very disruptive and wants as many meetings as possible. And they always want to talk to politicians on behalf of the board.”
Eskom has for the past 10 years found itself on the wrong end of corporate scandals, dating back to 2007’s acrimonious departure of former CEO Jacob Maroga after he lost a fight with the board.
He failed to agree on a strategy to combat load shedding. Bobby Godsell was chairman of the board at the time. He also left soon afterwards. Due almost exclusively to political meddling, stability has eluded SA’s biggest and most strategic state-owned company since then. The recent crisis, which has left Eskom without a CEO since January and without a chairman since Ngubane’s resignation in midJune, can be traced directly to political meddling and corruption at the utility’s top echelons.
In tears, Molefe left in December after he was implicated in alleged wrongdoing in the public protector’s investigation into state capture by the Gupta family.
He was found to have made numerous telephone calls and personal visits to members of the controversial family and their home during the time a company owned by the Guptas was negotiating to buy a company that supplied Eskom with coal. Eskom also paid hundreds of millions of rand to the Gupta family, which may have assisted its Oakbay Resources to — controversially — take over Optimum Coal from Glencore.
Early in 2017, Molefe’s replacement, Koko, was exposed as having allegedly favoured a company linked to his stepdaughter. A division of Eskom, with Koko in charge, awarded contracts to Impulse International, in which his stepdaughter owns a stake. After external pressure, the board initiated an investigation into his conduct by Cliffe Dekker Hofmeyr. It has been finalised and handed over to Eskom.
UNQUALIFIED TO LEAD
The current board has been crippled by resignations and boasts only five directors, under the leadership of Zethembe Khoza as acting chairman.
A full board should have 14 members, as this one did in December 2014.
Not only are the board members unqualified to lead a utility of Eskom’s strategic and critical importance, but they are also sullied by alleged association and relationships with the Gupta family, which has been accused of spearheading the corruption that accompanies the capture of the state.
SHE INHERITED A ROTTEN GOVERNANCE STRUCTURE FROM MALUSI GIGABA THE UNEMPLOYED DIRECTOR IS WHAT WE DON’T WANT AT THE STATE-OWNED ENTITIES