Speaking at the launch of a new study of corruption and erosion of governance at Eskom since 2009, Gordhan said: “If we put it bluntly, this is part of a story which is reflective of the fact that some R150-R250 billion has disappeared from South Africa’s overall fiscal system and finds itself in various places.
"That’s the amount of money we are talking about.”
The report on Eskom comes as the focus of public attention on public sector corruption is sharpened by preparations for Parliament’s Public Enterprises Committee inquiry into state capture at Eskom, Transnet and Denel, which was scheduled to start this week but has now been postponed to October.
The authors of the report, Anton Eberhard and Catrina Godinho of the University of Cape Town’s Graduate School of Business, said they hoped the study would prove an important source of reference for the inquiry.
Gordhan emphasised the importance of the public being informed of what was happening in the country.
Gordhan said a narrative had been developed to distract the attention of citizens from corruption and it was now time to start unmasking the corruption.
Citizens needed to be informed, as they were the ones to hold institutions to account.
“Public accountability works when you have a vigilant and informed public, when there’s a wide understanding of who is right and who is wrong, what is right and what is wrong. Change is required,” Gordhan added.
Governance failure and creeping corruption in Eskom is the key focus of the study by Eberhard and Godinho, which forms part of a wider research project by the universities of Stellenbosch, Wits, UCT and Johannesburg.It brings together information that has emerged on what has taken place at Eskom since the start of Jacob Zuma’s presidency in 2009, and how governance was systematically destabilised, allowing corruption to set in.
The study notes of Eskom that, with annual revenues nearly three times those of Transnet and six times those of South African Airways, the power utility was by far South Africa’s largest state-owned company. Outlining the timelines of corruption and state capture, Eberhard said shortly after Zuma came to power he expressed an “unusual degree of interest” in board appointments, particularly at Eskom and Transnet.
“We had a minister at that time, Barbara Hogan, who resisted the deployment of cadres, and that soon cost her her job,” he noted.
Malusi Gigaba, now Finance Minister, replaced Hogan as Minister of Public Enterprises in November 2011, and just seven months later entirely overhauled the board, replacing all but two non- executive directors.
That was the start of what Eberhard called the “repurposing of governance” at Eskom which was the precursor to the large-scale corruption which followed, and continued under the current Minister of State Enterprises, Lynne Brown.
Under Brown “the hollowing out” of Eskom’s board and executive governance appeared to have been more severe, with six out of eight appointees having “unambiguous” connections with the Gupta family, Eberhard added.
The booklet also details how a number of tenders were decided at board or ministerial level, against executive procurement committee decisions; how coal contracts with the Gupta-owned Brakfontein mine were signed and extended despite the coal not meeting quality or environmental standards; and how Eskom’s assistance was critical in Gupta-owned Tegeta gaining ownership of Optimum Coal Holdings from Glencore.
It also looks at how Eskom “squeezed out” coal majors such as Anglo Coal and Exxaro, against economic and, in the case of Exxaro, transformation imperatives.