Tag: money

Eskom: we’re not broke

Eskom has lashed out at media reports that it was “broke”, saying it was confident it could keep going.

“Eskom refutes the notion that it is facing a cash crisis, and that it has only enough cash to last for the next three months,” it said in a statement.

“The company is confident that it will maintain sufficient liquidity to support its operations,” it added.

The state-owned enterprise said that it had noted weekend media reports about apparent financial problems.

However, it said that, because it was making an official announcement on its finances this coming Wednesday, “Eskom is not in a position to respond comprehensively to the specific issues raised at this stage”.

The power utility said that “external auditors have confirmed Eskom as a going concern, and as a result the company sees these reports as being inaccurate and misleading…

“It is important to reiterate that Eskom is not facing any liquidity challenges.”

The parastatal also said it wanted to highlight certain points, including that “whilst Eskom’s financial position has always been supported by significant reliance on debt and borrowings, its improved overall financial and operational performance over the last two years has led to an improved balance sheet”.

Eskom said it had “sufficient government guarantees” in order to be able to carry out its funding plan. It also had “maintained access to capital markets and raised committed funding”.

‘Eskom may not be able to pay salaries’

The Sunday Times newspaper published an article on Sunday in which it claimed that, according to financial statements it had seen, Eskom only had enough money to last approximately three months.

According to the weekly publication, Eskom has R20bn left, but has proposed to pay millions in bonuses, including to former CEO Brian Molefe and suspended acting chief executive Matshela Koko.

This week, Fin24 reported that, late last Monday, Eskom postponed its financial results presentations which had been due to take place last Tuesday.

Earlier this month, external auditors SizweNtsalubaGobodo reported the state utility to the Independent Regulatory Board of Auditors for apparent irregularities.

Koko has been on special leave since May, pending an investigation into an apparent conflict of interests, while a legal battle continues into the reinstatement and subsequent removal of Molefe.

On Sunday, the DA called on Public Enterprises Minister Lynne Brown to reject the proposed multi-million rand bonuses for the executives, past and present.

“The fact is that Eskom may not be able to pay salaries to its 49 000 employees come November,” said DA MP Natasha Mazzone in a statement.

Recent controversy

Here is a list of some recent controversies Eskom has been embroiled in.

  • Boiler tender worth R4-billion set aside

At the end of June‚ the Johannesburg High Court set aside a R4-billion tender given to Chinese firm Dongfang to replace a boiler at Mpumalanga power station Duvha.
Losing bidders‚ Murray and Roberts and General Electric‚ which had put in much cheaper bids than the Chinese firm‚ approached the Johannesburg High Court to have the tender set aside. Price was supposed to be a factor in the choice‚ Eskom had said.

  • Eskom paid Trillian R266-million without invoices

The Trillian report‚ released recently by advocate Geoff Budlender‚ SC‚ found millions were paid by Eskom to Trillian without proof any work was done for the power utility.
One invoice was for the broken boiler station that Dongfang had won a bid to fix. The boiler remains broken.
Budlender linked the Trillian company to the Guptas because their associate Salim Essa owns 60% of Trillian.

  • US firm acts

US auditing firm McKinsey has taken steps against its SA director‚ Vikas Sagar‚ after he wrote letters saying McKinsey was doing work for the company‚ something the company denies took place. The action taken against Sagar is part of a probe that is looking into Eskom contracts given to a Gupta-linked company.

  • Tegeta‚ Eskom and the Guptas

The Guptas received a R600 million pre-payment for coal from Eskom and used this money to buy the Optimum Coal mine.
Eskom said this was a pre-payment‚ but former Public Protector Thuli Madonsela said in her State of Capture report that this prepayment was irregular.

  • CEO Brian Molefe resigned‚ retired‚ rehired‚ rescinded

Molefe announced he was stepping down as Eskom CEO in November 2016 in the wake of the Tegeta incident and Madonsela report.
In May‚ he returned to Eskom as CEO‚ saying he had just retired.
After Public Enterprises Minister Lynne Brown was forced to explain his reappointment‚ she filed an affidavit saying he had never retired but had taken “unpaid leave”.
The scandal led to the Eskom board firing him at the end of May

  • Revelations in the Denton report‚ published in the Financial Mail

Eskom wasted about R200m over two years by failing to negotiate proper discounts with diesel suppliers. The company paid billions to companies without having received proper invoices‚ in many instances paying for services without evidence of having received the supplies for which it was paying.
Eskom contributed to its own financial problems‚ and contravened the Public Finance Management Act by failing to put proper controls in place.
It consistently overpaid for diesel‚ coal‚ logistics and other contracts.
Eskom employees diverted business opportunities to themselves at the expense of the utility.

Source: News24; timesLive
Image credit: National Geographic

Office Depot has announced the results of an educator productivity survey whose findings uncovered the minimum cost of US teacher time spent researching and buying supplies for their classrooms is more than half a billion dollars.

“We are proud to partner with public and private schools around the country to reduce educators’ out-of-pocket expenses and time spent sourcing classroom supplies through our classroom enablement programs and print services instructional materials solutions.”

The non-profit Center for College & Career Readiness and Office Depot’s Committed to Learning initiative recently surveyed more than 2 800 educators regarding purchasing and researching needed supplies for use in the classroom.

An average teacher’s salary is more than $55,000 per year (roughly $26 per hour) and there are more than 3.5 million full- time teachers in the US, therefore based upon the results of the survey, the costs of researching and purchasing classroom supplies could reach over $500 million.

A few key findings from the survey:

  • Nearly 70% of respondents indicated that a central purchasing hub would save time and money when buying classroom supplies;
  • 42% of the educators surveyed reported purchasing classroom supplies every month;
  • More than 30% indicated they spend more than 10 hours every year researching and buying supplies for the classroom; and
  • 50% of the educators surveyed preferred to purchase classroom supplies online.

Office Depot partners with school districts from Connecticut to California to bring strategic planning expertise and a team of education experts to help plan, produce and deliver classroom materials, allowing educators to save time in the classroom. Through www.officedepot.com, educators have access to an easy-to-use central purchasing hub that helps with streamlining buying decisions.

“These survey findings show the increased demand for educator support when it comes to researching and purchasing classroom supplies,” said Becki Schwietz, senior director of growth strategies for Office Depot.“We are proud to partner with public and private schools around the country to reduce educators’ out-of-pocket expenses and time spent sourcing classroom supplies through our classroom enablement programs and print services instructional materials solutions.”

Office Depot collaborates with school districts and other educational institutions through the company’s Committed to Learning initiative, which offers educators access to a national team of curriculum and instruction experts across disciplines. Through the Committed to Learning initiative, the company partners with school districts to meet their strategic goals by providing instructional solutions and access to experts that enrich the learning experience in the areas of personalized learning, project-based learning and innovative learning spaces, culture and wellness, instructional resources, and supplies.

With South Africa’s economy under intense pressure and the fallout of socio-political uncertainty impacting significantly on investment, the business climate is volatile to say the least. However, while most companies are holding back on spending and are looking to save, the reality is that it is a mistake to overlook the critical importance of workforce management solutions to optimise processes and optimise businesses in tougher times in particular.

This is the view of Guenter Nerlich, MD of AWM360 Data Systems, the leading provider of Human Capital Management (HCM) focused workforce management solutions.

Nerlich agrees with the broader market sentiment that the economy reflects stagnant to no growth (0%) and this is has put a block on investment. He also agrees that many international businesses are reluctant to invest further ‘on home soil’ and are looking to rather extend their operations and businesses abroad.

The air of apprehension that has engulfed most sectors is beginning to smother industry, strengthened by political infighting, discourse and disharmony between key stakeholders including Finance Minister Pravin Gordhan and President Jacob Zuma.

There is also growing concern over the country’s ability to avoid an official financial downgrade by global rating agencies.

So as complex as the situation may be and as serious, the reality facing businesses is that they cannot afford to hold back on investment in technology. “

“You must spend money first to save money,” says Nerlich. “A major part of the problem is that many companies are on a knife-edge – they feel trapped by the economic difficulty and become immobile, which is very dangerous. The fact is that during times of difficulty and volatility, businesses must be proactive and not sit back… sitting on the proverbial fence is not an option,” Nerlich says.

Investment is the backbone of an economy and when there is restriction, there is contraction – it squeezes the life out of investors, according to AWM360 Data Systems and this is very worrying.

“Effectively South African companies are sitting on capital that would otherwise be spent on investment. What we are advocating is that businesses free up their capital and commit to investment in solutions that boost workflow and reinforce HR and systems and directly contribute to the bottom line earnings, that is an investment in the future,” Nerlich continues.

He believes while South Africa’s labour force continues to feel the pinch of economic hardship and resources become more scarce, the need for solutions that optimise work systems, help businesses handle data, analytics, cloud migration, the Internet of Things and digital transformation, will only increase.

Time is money

The Basic Conditions of Employment Act (BCEA) sets the fundamental conditions of service for all employment situations, ranging from the domestic to, with variations, the industrial.

When it comes to hours worked per week in business, particularly overtime, the BCEA is precise – the maximum normal working time allowed is 45 hours per week, any overtime is voluntary and may only be worked in agreement between employer and employee.

Nicol Myburgh, head of HR Business Unit at CRS Technologies, an HR and HCM specialist services provider, offers a broad perspective on the matter and the company’s view, which, as he explains, is only a guideline.

Myburgh says there are terms and conditions that have to be taken into consideration – including the fact that the above regulation excludes lunch breaks. “Lunch breaks are, by law, not defined as working time and will therefore be unpaid,” and does not mean the employee must work 45 hours per week normal time.

“The normal working hours are determined by mutual agreement between employee and employer, in this aspect the act only provides the maximum limit of 45 hours, and does not mean the employee MUST work 45 hours per week normal time. The statutory limitation of 45 hours per week means that the employee may not work more than 45 hours per week normal time,” says Myburgh.

As CRS Technologies explains all overtime is voluntary and may only be worked by agreement between employer and employee.

Labour legislation is also clear on overtime, defined as time worked in excess of the normal working hours. “The maximum permissible overtime is three hours per day or 10 hours per week. The employee must be paid at one and a half times his/her normal wage rate except for Sunday work and work on public holidays, which must be paid at twice the normal wage rate. The employees aren’t necessarily paid for overtime, instead by mutual agreement, they can be granted time off in lieu of payment calculated by the same formula mentioned above,” Myburgh continues.

By mutual agreement

However, this segment of the law is only applicable to employees earning below the earnings threshold, as determined by the Minister, and is currently R205 433,30.

As CRS Technologies executives explain, overtime payment or time off in lieu thereof for employees earning above this threshold is not compulsory, but rather a mutual agreement between employer and employee.

Employees earning above the threshold for overtime who are not compensated by employers have the right to refuse to participate in overtime work.

While it is true that each industry has its own variations and is governed by specific dynamics, legislation regulating overtime is applicable irrespective.

“No employee may work more than 45 hours per week normal time and the no employee may work more than 10 hours per week overtime. However, while the BCEA sets the fundamental minimum rules, there are legislated variations based on sectoral or industry operational requirements. A sectoral determination, a Bargaining Council Main agreement or a union agreement, etc. may bring about variations on the conditions mentioned above since these documents are viewed as extensions of the act. These are known as delegated legislation,” says Myburgh.

CRS Technologies refers to the security industry as an example.

The company explains that Sectoral Determination 6: Private Security Sector, regulates among other conditions the maximum normal working hours to 48 hours per week for a security officer.

“and the Metal and Engineering Industries Bargaining Council regulates the conditions for employees operating in the industry, among other conditions the ordinary hours of work shall not exceed 40 in any one week for employees on day shift and/or night shift or employees working on the two and/or three-shift system,” Myburgh explains.

A further example is the retail industry, where overtime provisions allow for extended shopping hours.

The six red flags of a money scam

Consumers should treat any offer of an above market return on their investment with suspicion, regardless of whether it is promised in cash, interest, income or capital gains, warns Justus van Pletzen, CEO of the Financial Intermediaries Association of Southern Africa (FIA).

FIA would like to warn consumers against “wasting their money on so-called ‘get rich quick’ schemes”.

“Wealth is generated through hard work and smart investing and there is no way that you will turn a few hundred rand into a fortune over a few months – those who try soon find themselves out of pocket,” says Van Pletzen.

He says the SA Reserve Bank (Sarb) is investigating more illegal deposit taking scams than ever before.

The common feature of a “get rich quick” scheme is a promise of an unrealistic return while the common emotions driving a consumer’s decision to participate in such schemes include desperation, greed and the fear of missing out.

The perfect Ponzi scheme must do two more things: It must be able to demonstrate that the unrealistic return is being achieved and it must have a clever explanation as to how the scheme generates so much more return than mainstream asset managers or banks.

“One of the saddest things about local scams is that they often lure in the old and vulnerable who are desperate to supplement declining retirement incomes due to the current low interest rate environment,” says Van Pletzen.

He provides six red flags that may signal a Ponzi or pyramid scam:

Abnormally high returns
Steer clear of investment schemes that offer abnormally high returns – and treat the phrase “guaranteed return” with a measure of suspicion too.
Consumers usually understand the concept of higher risk for higher returns as this is a fundamental principle of investing. But consumers do not understand that the returns being offered by Ponzi or Pyramid scheme crooks are way off the charts.
For example, South African investors can expect around 7.0% a year in cash (low risk) or 15% a year in the stock market (high risk) over five years. You should be highly suspicious of any product or opportunity that promises a return that is higher than the country’s top asset managers can generate.
Remember that no return is ever “guaranteed” in the world of investments and that even the most modest of investments carry some risk. The guaranteed products offered by large and respected financial institutions are based on solid actuarial models and involve a complex trade-off between risk and reward.

Vague business models
Steer clear of investment schemes that are based on vague business or investment models.
Before you invest you should make sure that you understand how the returns are generated.
You should never fall for claims from the Ponzi crooks that the investment or business model is “confidential” or “too complex” for you to understand. The bottom line is that if you do not understand the product you should not invest.

More participants
Avoid investment schemes that rely on you bringing in more participants in order to generate a return.
This is a classic trait of both Pyramid and Ponzi schemes, with the former requiring you to bring in additional participants to qualify for any return.
Legitimate investment tools do not require you to bring in more participants. It is also common knowledge that new participants to a scheme will eventually dry up, resulting in a total collapse or implosion of the scheme.

Undue pressure
Steer clear of investment schemes that place you under undue pressure to invest.
If you are being pressured to make the initial investment – or are frequently encouraged to increase the size of your investment – then beware.

Complex foreign exchange
Take care when considering offshore investments that rely on complex foreign exchange transactions and shifting money across borders.
All of the warning signs given above are compounded when the opportunity requires your cash to be taken offshore into banks that are outside of the South African regulator’s reach.

Too good to be true
If it is too good to be true, it usually is.
Any investment with a high rate of return that is says to be “guaranteed” should be treated with suspicion – if it looks too good to be true, it usually is.

“People who plan carefully for their financial futures are less likely to fall victim to a Ponzi or Pyramid scheme, because they have more realistic return expectations and a better understanding of how the savings and investments industry works,” says Van Pletzen.

“The desperation that lures many older persons into ‘get rich quick’ schemes can be avoided by saving sensibly throughout you working years and reaching retirement with enough to support yourself through retirement.”
In his view the best protection when making an investment is to transact with a reputable financial institution with assistance from a licensed financial adviser, financial planner or insurance broker.

“In this way you can transact in confidence because both the financial services provider and adviser must be registered with or licensed by the Financial Services Board (FSB) and subject to the many rules and regulations put in place specifically to protect consumers,” he says.

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