Eskom: Board statement on governance and internal executive management processes

Yesterday, a meeting of Parliament’s Standing Committee on Public Accounts (SCOPA) took place at which Eskom was, in accordance with the agenda, prepared to, but not asked to present information on its annual report and procurement deviations and expansions. SCOPA decided at the meeting not to consider the Eskom annual accounts, but rather to defer the proceedings, in order to consider certain claims made by the suspended Chief Procurement Officer of Eskom, Mr Solly Tshitangano, and to hear evidence from Mr Tshitangano in person. Eskom remains ready and available to account to parliament as required by law.

Procurement at Eskom has long been an area of particular concern to the Board of Eskom, as it has been, and continues to be, an area associated with state capture. Savings expected from procurement have failed to materialise, and as hearings at SCOPA have repeatedly evidenced, compliance with National Treasury requirements have not met the expectations of the Board with regard to good governance. The Board has therefore encouraged and instructed the executive management of Eskom, including the Group Chief Executive, André de Ruyter, to pay particular attention to the procurement function to effect the required change, and deliver the expected savings. Progress in this regard has been slower than the Board would have liked to see, at least in part due to leadership lacunae in the procurement function.

The Board of Eskom therefore wishes to affirm its support and confidence in the executive management of the company in instilling a high performance culture, including the application of appropriate consequence management in accordance with Eskom’s internal disciplinary processes. The Board has complete faith in the company’s internal processes and governance procedures to deliver a fair process and outcome on the matter of the suspended Chief Procurement Officer.

The executive management team remains fully accountable to the Board, and the Board is confident that the management team is currently performing its critically important duties to restore Eskom to operational stability and a sustainable financial position.

Unfortunately, over the past few weeks a number of allegations have been put in the public domain and in the media, which, on the face of it, seek to influence internal operational and good governance processes by exerting pressure through structures outside of Eskom.

These allegations and the accompanying unwarranted attacks on Eskom’s management team have the potential effect of distracting management from the critical role of restoring Eskom to operational effectiveness and financial stability.

This is unfortunate as Eskom is a critical and strategic asset of South Africa, on which the fortunes of the whole country and economy depend. Eskom’s Board is confident that management is executing its mandate to restructure the business, reduce the risk of loadshedding, and drive greater efficiency through cost savings, including from scrutinising existing and new procurement contracts. The Board will continue to support and guide management in these efforts.