CEO of Eskom for the past 20 months, Brian Molefe, has resigned ‘in the interests of good corporate governance’, as of January 2017.
Eskom CEO Brian Molefe today announced that he'll voluntarily step down from Eskom with effect from 1 January 2017.
— Khulu Phasiwe (@KhuluPhasiwe) November 11, 2016
In a statement sent to the media on Friday afternoon, he said: “I do so voluntarily: indeed, I wish to pay tribute to the unfailing support I have had since I took up office from the chairman, the board and with those with whom it has been my privilege to work. Together we brought Eskom back from the brink.”
On November 2 2016, the Public Protector’s office released former Public Protector Thuli Madonsela’s ‘State of Capture’ report, which included concerns around the sale of the Optimum Coal Mine and Eskom’s advance to Tegeta. Eskom Chair, Dr Baldwin Ngubane had previously stated: “Regarding the continued innuendo that Eskom has been giving special favours to Tegeta Exploration and Resources, the Eskom Board stands firm by the processes undertaken by the company to conclude extensions of its coal supply agreements with its suppliers. We are satisfied that due process had been followed and we can be proud of the savings achieved by the executive team to date.”
Read more about the Optimum/Tegeta story here: State of Capture is nonsense – Eskom and It pains me that I haven’t been heard – Eskom CEO.
Molefe had accused Madonsela of double standards, in not affording him an opportunity to explain himself before implicating him in the report.
On Friday Molefe said: “the report did not make any finding. Instead it made what were termed ‘observations’, based, (the report acknowledged), on an investigation not completed. It deferred a proper investigation to a commission of inquiry to be established at a future date. The outgoing Public Protector has directed the President – in whom the Constitution vests the power to appoint commissions of inquiry – to appoint one, and further directed the chief justice to designate a particular judge to head it.
“It is a matter for regret that the report was prepared in haste to meet a deadline related to the Public Protector’s own departure from office. That her office continues, as all State offices do, and that any uncompleted function is completed by a successor in that office, was not a consideration in the report.
“’Observations’ made in the report relating to, inter alia, my conduct, are in material respects inaccurate, based on part-facts or simply unfounded. What the previous Public Protector has done is not herself to investigate to completion, or to allow her office to complete what she initiated too late to complete herself.
“She has also determined on recording ‘observations’ without, in crucial aspects, putting intended harmful disclosures to me first – as she was by law required to do. She has effectively deferred my Constitutional right to be heard to a future date, and to a future body, which she has ordered others to assemble.
“If such a body is indeed by law to be assembled, and carry out the task, it will not be for some time – as recent experience indicates.
“In the meantime harm is done – to the institution it has been my honour to lead in the most difficult times, to its reputation and to my own. I say nothing of the harm, too, to others close to me.
“I am confident that, when the time comes, I will be able to show that i have done nothing wrong, and that my name will be cleared. I shall dedicate myself to showing that an injustice has been done by the precipitate delivery of ‘observations’, following an incomplete investigation, which the former Public Protector has drawn back from calling ‘findings’. The truth will out.”
“I wish to reiterate that this act is not an admission of wrongdoing on my part. It is rather what I feel to be the correct thing to do in the interests of the company and good corporate governance.
Madonsela told Moneyweb: “All I can say is I recorded what I had by then and left findings to a judicial commission of inquiry. If Mr Molefe and other affected parties allow that process, they’ll have an opportunity to clear their names.”
Prior to his appointment at Eskom, Molefe was CEO of Transnet, worked in the Limpopo premier’s office as well as Airports Company South Africa.
‘Regrettable but understandable’
Eskom Chairperson Baldwin Ngubane said the decision was “regrettable but understandable”.
The State-owned power utility stated that since his appointment, Molefe and his executive management team had turned the company’s operational and financial performance around, with 15 months of no load shedding.
“The improved performance of the power generating units coupled with additional capacity from some of our new build projects has resulted in a stable power system, with excess capacity being exported to neighbouring states.
“The company’s liquidity position has also improved significantly, with liquid assets increasing by 81.6% from R24.1 billion a year ago, to R43.8 billion at 30 September 2016 in the face of CPI growth reported to be 5.1% as at 1 April 2016. The group has access to adequate resources and facilities to continue as a going concern for the foreseeable future.”
Once agreed upon with public enterprises minister Lynne Brown, interim leadership arrangements will be announced.
Brown said she is saddened by the announcement, but respects his decision.
“Mr Molefe has been instrumental in developing Eskom’s turnaround strategy which is beginning to yield positive results and it is disappointing that he will not be present to see it to complete fruition. I want to reassure the country that as shareholder representative, I will work closely with the board to ensure that the company remains stable.
“I am confident that Mr Molefe leaves a strong executive team in place to continue to deliver on Eskom’s mandate and implementation of the turn-around strategy. He leaves the company at a time when Eskom’s mid-term results showed an improvement.
“…Eskom managed to connect 99 869 households to the grid for the period under review and the company must be congratulated for connecting more households in 22 years of democracy to the grid than the previous 70 years of minority rule”.
Corruption Watch said it welcomes the decision and regards it as being in the best interests of Eskom. “Its prominence as a major State-owned enterprise requires that the public has confidence in its operations, functioning and leadership.
“The allegations against Molefe, both in the media and the State of Capture report, must however continue to be the subject of inquiry by the pending judicial commission of inquiry into state capture, and should also be investigated by the relevant law enforcement authorities.
“Corruption Watch also emphasises that any alleged irregular or criminal conduct on the part of Molefe was not possible without the consent of the board of Eskom, specifically the Chairperson of the Board, Dr Ben Ngubane. The organisation urges the members of the board to consider whether their continued leadership of the parastatal is in fact in the best interests of Eskom.”
In a reactionary note on Friday, Peter Attard Montalto, head of emerging Europe, Middle East and Africa economics at Nomura International, said Molefe had no credibility left after the report, “regardless of them being proven or not allegations”.
“Brian is the fallen angel for investors coming out of Transnet as a hero and now implicated in alleged grand corruption and rent extraction by the PP report. In a way its sad, in a way its not. He ultimately was successful because he could navigate the patronage realities of the ANC but it has caught up with him.
“We need to understand however the the rot in Eskom goes much deeper – the whole board needs to be replaced and there are many others there also implicated in the PP report.
“I would expect someone similar to be appointed. I do not see this as a positive. They will appoint someone equally as willing to facilitate rent extraction and ensure nuclear success and as long as the board is in place and other senior management nothing changes. If the CFO is appointed CEO that is not positive and would be a sign of status quo.
“The last ‘good’ CEO (Tshediso) was out after just a few months because he was too clean. They won’t make that mistake again. The question is if we get someone obviously ‘dirty’ or someone (like Brian) who on the surface looked fine but was allegedly turning the mechanism of patronage beneath the surface. The level of scrutiny suggests latter is most likely but let’s watch see.”