Eskom has noted the observations, conclusions and recommendations published in the Public Protector's two reports released Wednesday (Report on the Preliminary Investigation Relating to Electricity Load Shedding Implementation and the Report on an Investigation into an Allegation of Improper Conduct by the Former Chairperson of the Board of Directors of Eskom Holdings Limited, Mr V Moosa, Relating to the Awarding of a Contract).
On the report relating to the awarding of the boiler contract for the Medupi Power Station, we welcome the Public Protector's finding that there was no undue influence by our former Chairman Mr Valli Moosa in the awarding of the contract to the Hitachi Consortium. In his report, the Public Protector further noted that "from the independent audit of the procurement process relating to Medupi Boiler Contract, no indication could be found that the ANC in fact exerted political pressure on Eskom to award the contract to the Hitachi Consortium.
The fact that the boiler contract was initially awarded to another tenderer and that the subsequent decision to award it to the Hitachi Consortium was based on merit and after obtaining independent legal advice, supports the contention that the contract was not awarded to Hitachi Consortium because of its relationship with the ANC."
The Public Protector has further recommended that Eskom's Company Secretary takes urgent steps to ensure that all the members of the Eskom board are provided with the copy of Eskom's Conflict of Interest Policy and the Guidelines for the Directors, and brief them on its application and on the law applicable to conflict of interest referred to in his report. This is a standard practice of the Eskom board and in keeping with good corporate governance. Eskom therefore accepts this recommendation.
The Public Protector's finding of no undue influence is in line with findings of an independent review conducted by Deloitte. The board of Eskom, and at the recommendation of the former Chairman Mr Valli Moosa, resolved to put in place additional interventions to ensure the integrity of the process leading up to the awarding of the boiler contract to the Hitachi Consortium. This recommendation of the former Chairman to put in place additional interventions is in line with Eskom Conflict of Interest Policy.
The board explicitly requested Deloitte to include in the review a conflict of interest assessment of all board members, executives and other persons involved in the tender process. The independent review found the awarding of the contract to the Hitachi Consortium was fair, transparent, equitable, cost effective and competitive and not biased towards any pre-determined outcome. The issue of Chancellor House was specifically highlighted in the independent review report tabled and discussed by the board.
The board was satisfied that its former Chairman Mr Valli Moosa had conducted himself with integrity and had not unduly influenced the awarding of the contract. This has been confirmed by both the independent review and the Public Protector.