Ben Ngubane, the chairman of South Africa’s state power utility Eskom Holdings, has resigned amid management turmoil and probes into its financial dealings, weeks after its chief executive officer was removed.
“Ngubane formally tendered his resignation, which I accepted,” Minister of Public Enterprises Lynne Brown said in the statement sent in a text message by spokesman Colin Cruywagen. The chairman cited personal reasons for stepping down, Khulani Qoma, Eskom’s board spokesman, said on Tuesday.
Eskom, which is spending tens of billions of dollars on new power plants, is at the center of allegations that President Jacob Zuma allowed the Gupta family to take advantage of their friendship with him to benefit from state business. The graft ombudsman found last year that the government helped the Guptas and Zuma’s son buy a mine from Glencore that supplies coal to the utility.
The National Treasury is investigating Eskom’s advance of funds to the Guptas’ company to buy the operation.
Ngubane steps down after chief executive officer Brian Molefe was forced to leave the company due to alleged close ties with the Gupta family. Ngubane defended Molefe’s brief reappointment by the board last month, a decision that prompted public outrage and the ruling African National Congress to demand he be fired. Molefe is challenging his dismissal.
Brown said she appointed Zethembe Khoza as interim chairman “until I am able to take new board appointments to the Cabinet for approval.”
While Ngubane had defended Molefe and praised the company’s management for ending power shortages that had stifled the economy, Pravin Gordhan, who Zuma fired as finance minister in March, accused its directors of abusing state property and resources for their own gain and suggested a forensic audit into decision-making at the utility.
The rand was little changed at 12.8219 per dollar by 8:54am in Johannesburg.
Eskom has R207 billion ($16 billion) of outstanding debt, data compiled by Bloomberg show.
Ngubane told lawmakers last month that Molefe’s reappointment by the board as CEO was in the company’s best interests and the board would welcome an inquiry into its conduct. Eskom’s previous acting CEO Matshela Koko was suspended last month over allegations he awarded Eskom contracts to a company linked to his stepdaughter.
It’s likely due to “the intractable mess of having two CEOs unavailable and no one running the company,” Peter Attard Montalto, an economist at Nomura International in London, said of the resignation. “We can only call it a positive if we know the caliber of the person taking over as well as future of the CEO role.”
There have been at least seven investigations into alleged maladministration and corruption at Eskom, including the public protector’s report, Brown said last month. Although there have been no prosecutions or convictions, “Eskom’s reputation has been torn to shreds,” she said.
© 2017 Bloomberg
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