Eskom CEO Molefe found wantingState capture report: Eskom board should be dissolved Eskom is one of five state-owned enterprises implicated in allegations of impropriety mentioned in South Africa''s state capture report. The board of Eskom should be dissolved after former public protector Thuli Madonsela''s report into state capture was released, according to respected economist Iraj Abedian.Eskom is one of five state-owned enterprises (SOEs) implicated in allegations of impropriety mentioned in Madonsela''s report titled ''State of Capture''.
The report into allegations of improper influence by the wealthy Gupta family over President Jacob Zuma and his family was released on Wednesday following a court ruling.
Eskom''s board has been singled out as appearing to be in “severe” violation of the Public Finance Management Act.
“It appears that the Board at Eskom was improperly appointed and not in line with the spirit of the King III report on good Corporate Governance.”
Madonsela stated that Ajay Gupta admitted during an interview that Eskom CEO Brain Molefe is his “very good friend” and often visits his home in Saxonwold.
“Even though certain conflicts may have arisen after the board was appointed, there should have been a mechanism in place to deal with the conflicts as they arose and managed actual or perceived bias,” Madonsela wrote.
“A board appointed to an SOE is expected to act in the best interests of the Republic of South Africa at all times and it appears that the board may have failed to do so,” she said. This referred to the board''s fruitless and wasteful expenditure relating to the Gupta-owned Tegeta Resources & Energy for a coal tender. Madonsela noted that it appears the conduct of the Eskom board was solely to the benefit of Tegeta in awarding contracts to them.
“It appears as though no action was taken on the part of the minister of public enterprise as government stakeholder to prevent these apparent conflicts.”
The 355-page report states that public enterprises minister Lynne Brown was one of the people issued with notices by the public protector.
While board appointments would be discussed and approved by cabinet, former minister of public enterprises Barbara Hogan, who was axed in October 2010, told Madonsela that Zuma took special interest in the appointment of board members at Eskom.
Abedian told Fin24 the report highlights Eskom''s failure at many levels.
“This is a fairly straightforward case of corporate governance failure, director failure and shareholder failure.”
He said the chairperson of Eskom''s board should resign immediately and be subjected to the failure of fiduciary responsibilities. “So should each and every director on that board be sued for failure regarding fiduciary responsibilities.”
More importantly, Abedian placed the blame on the shoulders of ministers Brown and her predecessor Malusi Gigaba, who is currently the minister of home affairs.
“Brown failed to exercise her role as the shareholder representative, which is in violation of her oath of office as a minister. Her predecessor likewise.”
He said two interventions need to take place immediately:
“The current board should be dissolved and each member subjected to the provisions of the Company Act. They carry personal liability in this regard.
“A new board should be appropriately constituted and should be put in place.”
Meanwhile, Abedian said parliament should also take action in line with the provisions of the Executive Members Ethics Act with regard to minister Brown, and possibly before her, minister Gigaba.
“It is now time for parliament and its relevant committees to jump into action to fulfil their responsibilities,” he urged.
Eskom and the public enterprises ministry did not respond to Fin24 ''s questions.