Tag: crisis

Darkness descends on Eskom

South Africa’s state-owned enterprises have been hit by one scandal after another signalling serious political and corporate governance failures. The largest of these, the power utility Eskom, has seen its CEO Brian Molefe resign, then return, and then be fired – all in the space of seven months. This was followed by the unexpected resignation of Eskom Chairperson Ben Ngubane. The Conversation Africa’s Sibonelo Radebe asked Owen Skae to make sense of it all.

What do you make of what’s happening at Eskom?
It’s an unholy mess. The entire basis of the departure, reappointment and subsequent firing of the Eskom CEO raises so many red flags it’s hard to know where to start. And, to cap it all, the chairman has resigned with immediate effect. That means Eskom is without a CEO and now has a stand-in chairperson.

One thing is clear. The board, the chairperson Ben Ngubane, the minister of public enterprises Lynne Brown, and Molefe failed in their duties to serve Eskom. They failed South Africa’s taxpayers who are the indirect shareholders of Eskom. And they failed the country.

To understand their duties, one has to consider the basic principles of governing state owned enterprises. Eskom is a public company and its sole shareholder is the government. The shareholder representative is the ministry of public enterprises. A shareholder compact guides the relationship between the board, the executives and the minister.

The shareholder compact is an annual agreement between Eskom’s leadership and the minister. It documents the power utility’s mandate, as well as key performance measures. It also sets out what’s expected from a good governance perspective. It’s meant to avoid the kind of mess that has visited Eskom over the past few months.

What went wrong?
A number of things.

The main one is that corporate governance rules designed to manage conflicts of interest were totally disregarded.

The country’s Companies Act spells out what a director may or may not do if they have a personal financial interest in a matter. These rules apply as much to state owned enterprises as they do to publicly listed ones. The Eskom situation suggests that directors, and Molefe in particular, disregarded this principle.

This is highlighted in the former public protector Thuli Madonsela’s “State of Capture” report which suggested that Molefe had had an improper relationship with the Guptas, a family of businessmen with close ties to President Jacob Zuma. Among other things, the report questioned the way in which the Eskom leaders collaborated with the Guptas to buy, some say hijack, a mine supplying power utility with coal.

The Eskom board and the minister also failed to apply their minds properly around Molefe’s controversial departure and return. This includes a deal to give him a pension payout of R30 million just 18 months in the job and 13 years before he is due to reach retirement age.

A good understanding of the act, as well as the codes of good corporate governance that have been developed in the country, make it clear that the board should have:

  • Called a special meeting to consider Molefe’s departure;
  • Applied its mind to the circumstances of his departure; and
  • Ensured that the necessary legal, risk and reputation issues were addressed.

Another big area of failure was the role of the board’s chairperson. Even though he has resigned, he should still be held accountable for not providing the necessary oversight at such a momentous time.

As the only shareholder, the government is also complicit. As the shareholder representative the minister of public enterprises had the responsibility of asking the board questions as part of a consultative process that’s set out in the shareholder compact.

Either the minister wasn’t properly informed or didn’t ask the questions she was entitled to ask, or a mixture of both. This raises red flags about her level of commitment to the shareholder compact.

What does it tell us about the broader political environment?
There’s just too much interference – for nefarious reasons – from outsiders in the running of state owned enterprises. Excessive power and authority is vested in too few people. I often use the analogy of being a sports coach. Imagine a situation where the coach is called to account for his actions every day, where he has no say in who is picked and is told to change the game plan. The situation becomes unmanageable.

Interference undermines the way things should be, erodes confidence and allows conflicts of interest to flourish. This is particularly true when the interference is from people who aren’t acting in the best interests of the team.

But being untouchable is also a recipe for disaster. So we have to find a middle ground. The rules of the game must be established and the parties must carry them out with integrity, competence, responsibility, accountability, fairness and transparency.

These rules of the game are clearly set out in the South African context. Nobody can claim they don’t know what they are. In the case of Eskom they’ve simply been flouted.

What do the events at Eskom tell us about state owned enterprises in South Africa?
Sadly, state owned enterprises are seen as instruments to serve an elite few rather than fulfilling their broader mandate.

On top of this they aren’t financially viable which means they’ll continue to be a drain on the fiscus. The government must consider partnerships with the private sector. This can be done by selling minority stakes as suggested by former finance minister Pravin Gordhan.

The success of the partly privatised telecommunications entity Telkom supports this view. The company has just posted handsome profits, suggesting it’s a model that could be used to turn around other state owned enterprises, including Eskom.

By Owen Skae for www.mg.co.za

Censored: The SABC in turmoil

The wheels, rims and axles are flying off the SABC wagon as staff threaten a news blackout.

Senior SABC managers, including journalists, are seeking an urgent meeting with the public broadcaster’s board to discuss recent editorial decisions by chief operating officer Hlaudi Motsoeneng.

Failure by the board to meet staff would result in a news blackout, staff warned.

The proposed blackout follows yesterday’s resignation of the SABC’s acting CEO Jimi Matthews over what he called a “corrosive atmosphere”.

This morning more pressure will be exerted on Motsoeneng as the DA says it will picket outside SABC headquarters in Auckland Park demanding Motsoeneng vacate his office. The DA says Motsoeneng has proved he is not a fit and proper person to manage the SABC.

SABC journalists have told The Times that Hlaudi rules like a dictator and that anyone who opposes him is axed. The proposed blackout would see staff come to work but doing nothing to get the news out.

Another senior news producer said they would fight to regain control and prove to the public that they were not all “captured”.

“There are forces at play here and they are using Hlaudi to capture the SABC. We are going back to the old days and we will fight to the end to regain our editorial independence,” said a radio news producer, who asked to remain anonymous for fear of victimisation. SA National Editors’ Forum executive director Mathatha Tsedu said on possible blackouts: “Sanef has no view on the steps SABC staff would take. It’s a democratic country and they can do whatever they like.the staff are the ones in pain and in the middle of it and they know how to deal with it.”

Yesterday Matthews shocked the public when he said: “For months I have compromised values that I hold dear under the mistaken belief that I could be more effective inside the SABC than outside.What is happening at the SABC is wrong and I can no longer be a part of it.”

The “corrosive atmosphere” is created by, among other things, Motsoeneng’s order that no images of violent protests be shown on TV news broadcasts.

The blackouts are being contemplated after a letter was written by SABC executive producers Busisiwe Ntuli and Krivani Pillay and senior investigative journalist Jacques Steenkamp requesting a meeting with the board.

The letter is believed to be behind Matthews’ resignation. It follows the suspension of economics editor Thandeka Gqubule, Radio Sonder Grense executive editor Foeta Krige and journalist Suna Venter.

They were suspended for disagreeing with Motsoeneng’s orders to not report on anti-censorship protests at the SABC’s offices.

Matthews, head of the SABC’s group radio and TV editors and general managers, wrote to Motsoeneng on Sunday stating its newsrooms had become sources of “derision, despair and criticism”.

“The developments have heightened this sense of fear, lack of clarity about our journalists’ responsibility and low staff morale.”

The executive producers’ letter criticised the removal of the SABC’s newspaper slots and The Editors on SAfm’s AM Live, which they say amounts to censorship.

In their letter they say: “As journalists having to operationalise the policies of this public institution, we feel aggrieved that journalistic integrity continues to be compromised. We wish to register our deep concern for our colleagues who have been suspended for expressing their right to freedom of expression by simply debating and assessing the newsworthiness of events as expected.”

They say the latest pronouncements “fundamentally erode the right of the public to know the whole story about developments in their communities.

“These pronouncements effectively render our newsrooms incapable of providing compelling audiovisual content that educates and informs the public and disseminates balanced and accurate information.”

Humphrey Maxegwana, parliamentary communications portfolio committee chairman, said the latest developments were alarming.

“When parliament’s recess ends we will meet to discuss summoning the SABC to explain exactly what is going on.”

William Bird, Media Monitoring Africa director, said a blackout was an extreme but effective tactic.

“These are desperate times at the SABC. Journalists are being suspended for legitimate dissent.”

Sekoetlane Phamodi, national co-ordinator of the SOS Support Public Broadcasting Coalition, welcomed the proposed blackouts.

“It’s time the SABC’s rank and file stand up and show the broadcaster’s board and parliament, which is derelict in its duties to ensure stability within the SABC, that the situation of decay cannot be tolerated.

“The SABC belongs to South Africans. We have a right to know what is going on.”

Hannes du Buisson, Broadcasting Electronic Media And Allied Workers Union president, said: “We support any action as long as it is properly managed and complies with labour legislation.”

By Graeme Hosken and Dominic Mahlangu for www.rdm.co.za

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