JOHANNESBURG - Weak controls and blatant disregard for systems appear to be at the centre of the collapse of governance at Eskom.
The utility has been leaping from one controversy to another, as allegations of corruption, bribery and financial misconduct swirl. Instability at board and senior management level has exacerbated the utility’s woes. Key executives, Matshela Koko and Anoj Singh are among officials on suspension facing serious charges.
The corruption and governance problems at Eskom have been in the spotlight since the release of the Public Protector’s report on state capture last year.
The report pointed to alleged irregularities and favourable treatment of companies with links to the Gupta family.
Head of legal and compliance Suzanne Daniels has been on suspension since last month for, among others, spending R50 000 on a team building exercise. She has reportedly described the charges as frivolous and lacking merit. Significantly, Daniels was suspended shortly after she had compiled a damning report on the controversial McKinsey and Trillian contract. Eskom had paid the two companies a combined R1.6 billion. The utility wants the money back.
Daniels has taken the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA). Recent reports and testimonies at the ongoing parliamentary committee investigating Eskom paint a picture of an organisation plagued by internal weaknesses which have provided a fertile ground for the alleged financial misconduct, corruption, improper conduct and apparent governance failures. The logical question is: Who benefits from the weak controls?
“The systems are there but they are undermined and by-passed,” said an Eskom employee who declined to be named. The employee said there was a weak internal audit function, while the legal and compliance department was under resourced. “Financial structures are being controlled from the top,” the employee said.
It appears that the instability at the top echelons of Eskom has also paralysed the organisation. The paralysis has allowed, if not fuelled, the lack of accountability. The Eskom board last month controversially removed interim chief executive, Johnny Dladla and replaced him with Sean Maritz. In its justification of the move, the board said it was rotating current executives “to ensure exposure”, a concept that has been unheard of and is therefore without any business merit.
As the skeletons tumble out of the Eskom closet, it is difficult to neglect the role of the Eskom board. The current board has been accusing of shielding some of the utility’s executives. For instance, in the face of mounting evidence of wrongdoing in the McKinsey/Trillian matter, the company was slow to react. The board only suspended Singh when it could no longer bear pressure from the Development Bank of Southern Africa (DBSA).
The DBSA threatened to recall loans to Eskom if no action was taken against Singh. Koko, on the other hand, is currently involved in a disciplinary process for, among others, failing to declare a conflict of interest because his step-daughter, Koketso Choma was a director of Impulse International, a company that won Eskom contracts running into millions of rands.