Eskom Inquiry: Venete Klein, Viroshini Naidoo, Brian Molefe

Meeting report

Mr M Gungubele (ANC) stated that it is important as the Committee to express its view on the news of an attempt to bribe the evidence leader, Adv Ntuthuzelo Vanara, and this has emanated widely in the public domain.  It is being investigated, but it is a very serious accusation and if found to be true, the Committee will take a dim view of this. If it is true, it will be one of the low points of government.

Mr S Swart (ACDP) endorsed Mr Gungubele’s statement. This is another attempt to intimidate the evidence leader, as are the threats to disbar him. He supports an investigation into the veracity of the allegations.

Ms N Mazzone (DA) asked the Chairperson to write to the Speaker on behalf of the Committee asking that this investigation takes priority. She noted that the Ethics Committee deals with the investigations regarding MPs and members of the executive. Adv Vanara is neither, therefore if there is any truth to these matters, she encourages that Parliament takes immediate action. Once again, she congratulated Adv Vanara by keeping it to himself and going about it the legal way. She encouraged all other persons including members of the Committee and the witnesses to follow the same trajectory because this inquiry is very important to the people of South Africa.

Mr F Shivambu (EFF) stated that the Committee should consider elevating the issue to the Office of the Public Protector, in addition to the Ethics Committee investigating the actions of Bongo. There is no reason to doubt Adv Vanara, and the Committee can only wait for the process to unfold and insulate Parliament.

The Chairperson noted the Members’ proposals and comments, as the matter unfolds.

Witness: Ms Venete Klein
She asked the incumbent to take either an oath or an affirmation.

Ms Klein took the Oath.

Adv Ntuthuzelo Vanara led the evidence collection.

Adv Vanara: Can you for the record state your full names

Klein: Venete Klein

Adv Vanara: The Committee has invited you to these proceedings because at some point in recent history you were a member of the Eskom board. Can you explain how and when you became a non-executive director; whether you still are part of the board; if not, when you left; as well as the committees you served in, and in what capacity did you serve in those committees?

Klein: I was appointed to the board of Eskom on the 11 December 2014 by Minister Lynne Brown. During this time I served on a few different committees which I have included in my statement. It wasn’t always possible to give the correct dates on my statement because the committee changed quite a bit. However, from the onset I was the chairperson of the Social and Sustainability committee, then the IFC committee, and People and Governance (P&G) committee. After a while, Mr Khoza who was the chairman of the People and Governance committee became the interim CEO and that is when I became the chairperson of the People and Governance committee for a few months. Later on around July I was then moved off People and Governance, however around September I went back to chairing People and Governance committee. In December 2015, I became a member of the Audit and Risk committee. Around about April of 2016, when there was all the noise about Eskom and who was connected to whom I considered leaving Eskom. I was also serving on the board of the SARB and the Twin Peaks Bill was before government and based on the possible conflict of interest, I approached the Minister and told her that I could not do this anymore. This was around the time when load shedding had been overcome and I felt that it made sense to only leave then. I resigned and I was going to step down at the AGM of 2016, but three days before the AGM, the Minister called me in with Dr Ben Ngubane and told us that she had received three more resignations, and asked me to remain at least until October. Since then on a monthly basis until May 2017, I contacted DPE asking when the other board members would start. On 12 May I wrote to the Minister and stated that I could not continue, and duly apologized.  

Adv Vanara: It is customary for the board upon its appointment to have an inaugural meeting with the shareholder representative. When did this meeting happen, if it did, and what were the issues that were brought forward by the shareholder representative?

Klein: One day after our appointment which happened on the 11 December, we were called to the meeting at the Minister’s office, there were a number of new board members, but they were not all present. My main take out of that meeting which is what the Minister told us was Eskom was in dire need to come to grips with the issues at the time because we were already in load shedding stage 3. The second thing she said was the problem with the cash flow and the going concern challenges; and third was that the company was actually run out of the war room, with the Deputy Minister and some of the high ranking officials part of the war room. Fourth, she said she could not rely on the information that was coming out of the war room; there was a lot of inconsistency around the flow of information to and from the war room and the Ministry as well as the company. There was huge pressure on the new board to come in as quickly as possible to try and understand the business.

Adv Vanara: You have prepared a statement of 145 paragraphs, can you confirm that the statement dated 19 October, and you have given permission to the Committee to utilise this statement as part of your submission to it. We will not deal with everything in this statement but it is conceded in its entirety in this proceedings. When you received correspondence from the DPE requesting directors and non-executive directors to make declarations, when was that and what was your response?

Klein: On 29 January soon after we started, remember we were appointed on the 11 December, I received a letter from the department with the list of the declared companies that I was associated with – could I please confirm that it is correct. I went through everything to make sure that I have covered everything and complied with the deadline I was provided with. I assume this was the case with everybody else, but I do not know for sure but this is what happened to me.

Adv Vanara: The New Age (TNA) deal – what do you know about it and what was your involvement?

Klein: Having gone back and read all the minutes from the previous board meetings, I remember my first engagement with the TNA was on the robin resolution that was sent to the board on the 2 March requesting us to rectify certain proposals which was that the board was not going to take any actions against any individual, because this was subject to an investigation that was going to be done. My problem was that I struggled with the fact that the recommendation was that we could not take action against anybody because Mr Matjila had already left the organisation and we could not terminate the contract because there was no exit clause. One of the staff members who was the group executive of corporate affairs was mentioned to have played some role in it. I refused to sign the round-robin resolution and I insisted that we take action against people who are still in the organisation, and that was the reason I did not sign it but it looks like I was the only person that did not sign, but that was left at that. The meeting of the 19 March, the chairperson realising that I was not going to be swayed wanted to have an offline discussion with me about it but that did not come to fruition.

Ms Klein read out paragraph 14 for the record, as requested by Adv Vanara

Vanara: There is evidence before the Committee about developments that took place prior to you joining the board in December of 2014, that evidence comes from the former Financial Director, Ms Molefe, who testified before the Committee that when this contract was signed there had been an internal investigation that was done by SNG which had found this contract to be an irregular expenditure, are you aware of that?

Klein: The complete report was never brought to us, I know from my side that I was uncomfortable with that but all that noise that was happening at the time required us to take action, and I did not go into the contract itself. In addition, the contract did not have an exit clause but there was a requirement that all commercial contracts between Eskom and other companies must have an exit clause.

Vanara: This transaction is historical in nature and predates the tenure of your board, does anybody who introduces this round-robin resolution explain to you as new board members that you are meant to take a resolution that there should not be any consequences around this matter. Are you informed that in December, prior to your appointment the resolution of the old board, leading to the appointment of your board, there were concerns raised by the external auditors around the same transaction and they insisted that they would not append their signature to the annual report without the matter being dealt with and raised as a matter of emphasis.

Klein: I don’t believe that the matter was dealt with the manner in which you have mentioned it, but what I do remember was the round-robin resolution on the matter. My main concerns were that there were no actions that were going to be taken against people who were liable; there was no escape clause on the contract. It was discussed in the meeting of the 19th but other board members also raised their concerns; whether they signed off on the resolution, I am not sure, but I refused.

Vanara: Over and above the reservations you had based on the information you had at the time, if this information that I have disclosed to you now was brought to your attention, what would its effect be on your decision on this particular issue.

Klein: I would have hoped to have more people persuaded to not support it, and that level of detail was not provided and discussed with the board.

Vanara: I know now what your attitude was to the round-robin decision or resolution. What I have shared with you now, would it have strengthened your resolve to oppose this resolution or persuaded you otherwise?

Klein: It would have definitely strengthened my resolve, and persuaded me to be more vocal in convincing others to not sign off on the resolution.

Vanara: On governance issues, we will not deal with all of them, but thank you for a detailed statement. You deal here with what happened when you joined the board from the corporate governance perspective and the Denton inquiry. Can you briefly take the Committee through the concerns that you had on corporate governance. What are the things you felt had to be improved and what is the relevance of the Denton inquiry around governance?

Klein: I served on quite a few boards but nothing could have prepared me for what I found at Eskom at the time, the enormity of the operations, and the level of complexity of the issues we had to deal with as the board and that we did not have proper support right from the beginning. One of my biggest issues was we would get a lot of information the day before the meeting. I believe that there is no way we would get that quantum of detailed information at the last minute and be able to apply our minds to it the following day and take decisions. Secondly, we had the right structures in place, the sub-committee was there, and all the stuff that a typical board would have but the way things were presented to the board was not effective. The other thing that was under-estimated was the levels of authority, at executive level, on contracts and tenders – decisions up to R750 million could be made. Upwards from that (R1.5 billion – materiality level), decisions are taken by the board tender committee. It’s only when it’s over the investment level that it ever comes to the board, the board does not see many tender contracts at all. The size of the numbers was very overwhelming – being a banker and having seen how you hold people accountable, I struggled with that. I addressed it a couple of times but due to the volume of the work that Eskom does, the numbers could not be smaller. The board had to rely on the checks and balances which were provided within the governance structures. We had to rely heavily on the institutional knowledge within Eskom, but importantly I was driven by how do you do the best with what you have and ask the right questions.

Vanara: In paragraph 19, you do allude to the rotations, but in paragraph 20 you refer to the instability that the rotation was causing, can you elaborate on that?

Klein: During the first few months Eskom was unstable and turbulent having the suspensions of the executives, the chair exiting and many people moving around. One of the board members took on the role of acting chairperson. That created a problem because that board committee needed a chairperson and that was around the time of Dentons and there was a lot of work to be done in the P&G board committee.

Vanara: You testified on the bulkiness of information which was a disadvantage to prepare for meetings. You make a profound statement on the second last sentence of paragraph 21 - can you read it for the record.

Ms Klein read out paragraph 21 for the record, as requested by Adv Vanara

Vanara: What is the role of the People and Governance board committee that you chaired?

Klein: The role is to ensure that the succession in the company is taken care of, to ensure that the governance frameworks are applied to or applied with; to ensure that we take care of the policy documents around governance; as well as the remuneration and the appointment of senior executives’ policies and people. In addition, the people issues in the organisation as it relates to discipline and complete labour force; monitoring and measuring number of frauds and the number of people with suspension on pay on a monthly basis.

Vanara: So your committee would have played a role in the recruitment of Mr Molefe and Mr Singh as the FD, is that correct?

Klein: Yes, that is correct.

Vanara: In March 2015, you have the first task as the board on a matter introduced by Mr Tsotsi about an inquiry to be conducted. Can you explain to the Committee how this got to the board and what was brought to the board and how it dealt with it, and the role of the Minister.

Klein: Later in the evening of March 8, I was requested to attend a meeting the following the day (9 March), attached to the request was a list of nine resolutions that were sought to be approved on that meeting. I was perplexed that the meeting was called within a 12 hour period. Secondly, I had previous engagements and so I could not make it, but the meeting continued because some members were available. Apparently at the meeting the members felt that the matters that required a resolution such as the inquiry, that it must be within three months and look at people who might be implicated; it seemed prescribed how the board would proceed. I read the minutes of the board meeting to familiarize myself with the discussions that took place. Apparently, because of the gravity of the matters the chairperson wanted the resolution to be taken on, the view was that we can’t unilaterally make these decisions, the whole board was required. At that meeting, the chairperson also raised the point that he got a call from the Presidency. Members felt that if there was anything to be discussed as requested from the outside, it had to be presented through the Minister. So it was for that reason that the meeting was rescheduled for the 11 March where the Minister was invited to attend.  

Vanara: On the meeting of the 11th, what transpired at that meeting?

Klein: We started off as a normal board meeting, because the Minister was going to be arriving later. I have listed the kind of issues that the former CEO raised – he gave us all the issues that were on top of his mind. When the Minister joined us, the board put it to the Minister what we were concerned about. We were given a list of directives from the chairman on how to handle various things. I remember the Minister giving us the four things that she wanted us to do, however she did not say whether the board should or shouldn’t do the things that we were given by the chairman of the board. She just told us to focus on the four issues which were the load shedding, the going concern of the company, not trusting the information she was getting from Eskom and the fact that the operation was being run from the war room. The board had to grapple with that and come to terms on how to run the company; she said she expected some level of traction around the issues that she raised.

Vanara: You went back to your in-committee meeting after the Minister had left, you missed the meeting of the 9th and you had to rely on the minutes. My understanding is that Mr Tsotsi re-introduces the subject matter that he had introduced on the 9th, in your presence. What is it that he introduced to the board and what were his motivations for the resolutions he was proposing?

Klein: He said an inquiry has got to be done; and it will not take more than three months; and anyone who was going to slow down the inquiry must be asked to step aside; we have to look at contracts. I must say that my resolve or the fight in me on the Sunday night was that we are not going to be prescribed to. Every discussion at the time was based on challenges that were happening, and with the Minister expecting us to grapple with the issues. At the time information was stemming out of Eskom to the war room, and there was a lot of noise that was going on in the public domain. At that stage I conceded to get in line with the sand and try to correct some of the issues.

Vanara: Matshela Koko, Marokane, Tshediso Matona and Ms Tsholofelo Molefe get to be put on suspension. Why?   

Klein: I am a board member for two months and we were asked to get on with the work. The board at that particular meeting expressed concerns as outlined in my statement prior to the Minister’s arrival. One of the biggest things that the then CEO expressed was the exit of senior executives and retirements that were taking place.  The board did not unilaterally decide that those people were to be suspended; if anything the board asked if it could not do some form of a fact finding so that one can determine the people that would hold us back. The then chairman of the board was adamant that the four people would slow us down, he gave us various examples when we asked why, and said that the then CFO was involved in some tender, maybe an integrity issue. The second person that he had something to say about was Matshela Koko where there was a discussion about misconduct with a staff member – he actually motivated why these people were to be suspended. Various members of the board were concerned, but the chairperson was concerned that if we wanted to do this expeditiously, that was the only way to do it.

Vanara: Did you ever consider the impact of that decision on the markets and how Eskom would be viewed?

Klein: We looked at it but nothing could have prepared the new board for those suspensions, and all the noise that was going on in the media. This was about the time Eskom also had a downgrade, and it was said to be based on poor governance and the matters rose. Being between a rock and a hard place and told to get your way around an organisation that was very difficult to manage.  At every meeting there were no answers, the glass was half empty, and more money for diesel was needed, but no answers were coming out. I think that is what eventually convinced me that we needed something different, that is when for me the decision to support without actually going through with the fact finding first, so that we could get the ball rolling.

Vanara: Do I get your testimony to be confirming that your decision contributed to the downgrade of Eskom’s ratings.

Klein: It was all over the place that the suspensions were the reason why we had the downgrade.

Vanara: I seem to be getting a picture that you were put under pressure to consider these suspensions, which is why you eventually acceded to the recommendations. Is that a fair observation?

Klein: Yes, that is correct.

Vanara: Now that the four are gone, and of course there are financial implications, there is an investigation to be conducted. Who must conduct the investigation?

Klein: One of the resolutions that Mr Tsotsi convinced us to agree to in the original or initial documents was that he will run the investigation by himself, with Audit and Risk by Ms Chwayita Mabude. In later documents, it was Audit and Risk with the support of People and Governance.

Vanara: What do you know about Mr Nick Lennell regarding the investigation?

Klein: Mr Tsotsi alluded to the fact that a lot of work had already been done and he brought in Lennell as the consultant in audit and risk and setting up the terms of reference and working with the service provider. The board was very unhappy with this and it felt like it was pre-planned, and work that was brought into the board without any consideration and consultation for those services to be rendered. On a personal level, what really worried me at that stage was that when a decision was to be made on whom was going to act as a CEO, Mr Tsotsi put in the name of a gentleman named Malesela Sekhasimbe to occupy the position in the interim. What was a bitter pill to swallow was the fact that Mr Sekhasimbe was on suspension, for some or other matter, and the chairman chose not to tell us that he was on suspension. When I went to the minutes to prove that point that the chairman had given us the name of someone who had been on suspension, the minutes told a different story attributing that to a decision that was taken by the board. So he had to stop that because he was on suspension. I also managed to track down the letter that we eventually issued against Mr Tsotsi why the board lost confidence in him. Even though Mr Tsotsi said he had to correct the board about bringing in Mr Sekhasimbe; the letter issued against him clearly states the opposite and what actually happened. So for me that was when I lost the confidence in Mr Tsotsi.

Vanara: You painting a picture of the distortion of the minutes, so how do Eskom board minutes during your tenure get to be approved and confirmed by decision makers so that instances of this nature do not occur?

Klein: That is a very good question, but when I arrived and became the chairperson of the Social Sustainability and Ethics committee. On my very first meeting they wanted me to sign off minutes for the whole of 2014 and I refused. I do not think that minute taking was ever top of mind and in any event if you sign off a minute, a year later you cannot possibly remember what was in it. I do believe that the minute I’m referring to which I am led to believe was signed off by Dr Ngubane after Mr Tsotsi had left was probably signed off in error because that was not what had happened in the meeting.

Vanara: You talk about the letter that would confirm your sessions, what is this letter, from whom is it and who is it addressed to?

Klein: It was a letter from Thomson Wilks who are the lawyers appointed by the board to assist with the charging of Mr Tsotsi. One of the charges was the matter regarding Mr Sekhasimbe whom Mr Tsotsi insisted be the Acting CEO whilst he was on suspension. The second matter was the day after the 19 March, Mr Tsotsi released a media statement about the inquiry with detail that never came pass the board and the board felt like its role was being disregarded. The third matter was the appointment of Mr Nick Lennell, who was imposed on the board.

Vanara: What happened to the charges?

Klein: We had various meetings with Mr Tsotsi and his legal advisors, after a couple of those meetings he eventually agreed to leave Eskom.

Vanara: He leaves not long after the suspensions of these four executives. He exerted pressure on, he seems to have played a critical role in persuading, if not going to the extent of exerting pressure, to agree to the suspensions. He is now gone and there are investigations. If there are suspicions that he had brought forward the allegations which were the basis of the suspension, one assumes that the investigations get to deal with these allegations, the cause of the suspension of the executives. Does it get to be investigated and if so by whom and what was the outcome?

Klein: The motivations were merely motivations to get the board to concede and do the inquiry and none of the executives were actually charged, and it got a clean bill of health on the one member who was brought back. The story about the CFO who met the tender contractor was never brought up in the investigation that was used only to persuade us to concede to the suspensions. The allegations about the irregular conduct with the staff member, which was an ongoing thing that happened in the organisation a while back, it was not current – these were the reasons that were provided by Mr Tsotsi as motivations. In fact, no details were provided behind these motivations. 

Vanara: So those four officials were suspended for no legitimate reason?

Klein: At the time the legitimacy was impressed upon us to get it done, and get it done quickly. What gave me comfort was the fact that these guys were not being charged. They were told that they were not being charged but suspended to get the inquiry going in three months – this was the driving force.

Vanara: Now we know this is your testimony, having all of what Mr Tsotsi and the company had told you. So sitting here now is there any specific basis in law that you could say is why you suspended these officials?

Klein: No, I can’t, other than to say, as the board member with three year tenure…told by the people before you that this was the way and the only way to do it; at some point I believed that something needed to be done. With the benefit of hindsight, the board did try to resist and try to do the fact finding mission before the suspension; but we were persuaded not to go that route.

Vanara: And your decision caused Eskom a downgrade, and that decision will also cost Eskom fruitless and wasteful expenditure with the top brass of Exco sitting idle at home whilst Eskom was in need of their services. You are sitting there saying that in law there was no reason for them to be suspended. These people were competent and qualified and being paid whilst sitting at home – basically they were sitting at home whilst being paid for no reason. Is that what happened?

Klein: With the information that was at my disposal at the time that was the decision we took. If it was a bad decision, it was based on the information that I had on hand at the time.

Vanara: You are a woman. Ms Molefe is a black, young and highly qualified individual and was the financial director in one of the biggest state owned companies. When you go to bed at night knowing very well how badly/unfairly you treated her as a woman, how do you feel?

Klein: I suppose I feel bad, that I could have fought harder for her to be around which I was persuaded not to. As a proponent for women’s rights, we could have fought harder to keep her.

Vanara: Have you since the incident to date extended an apology to her for the role you have played towards her suspension.

Klein: No, I have not because my role was never to prejudice Ms Molefe; it was to be a director and make decisions based on the information I had on hand.

Vanara: Given the opportunity, would you take that opportunity and apologize?

Klein: Yes, Ms Tsholofelo Molefe, if the decision that we take has prejudiced you in any shape or form, you have my apology for that.  

Vanara: On the appointment of Mr Molefe, I am aware that he was first seconded from Transnet but I am more interested on how he became employed as the Group CEO. Can you take the Committee through the process?
 
Klein: On 17 April 2015 he was seconded for a three month period at Eskom. Within days of Mr Molefe arriving, as a board member I started getting comfort when he spent the entire weekend of the Friday he started with the team that was there and he came forth to brief the board on how he understood the challenges of the company, and how he thought he could go about mitigating those challenges. It was the first time for me at Eskom in a board meeting to have somebody who was optimistic and what was going to be done to correct it, so I found a lot of encouragement in that. His secondment was meant to be up to June, then sometime in June there was a letter that was sent by Ms Daniel to the Minister’s office from Dr Ben Ngubane stating that the P&G which had met in between was looking at appointing Mr Molefe on a permanent basis. During that time as P&G we wanted to ensure that we were doing this by the book – that is, sending a list of three names to the Minister with a preferred candidate. In this case because we had a preferred candidate, we wanted to make sure that it was legally feasible to do so and we received legal opinion that confirmed that. A few hours after Ms Daniels sent the letter, Dr Ben sent a mail saying that Mr Molefe was to spend six months on his secondment. Then another letter was sent to the Minister, withdrawing the appointment until a further three months had been served by Mr Molefe on his secondment, which ended at the end of September.

Vanara: The secondment ended and the process gets to be initiated for his appointment. So who initiated this appointment, how was it initiated and does the process take into account the applicable prescripts that regulate the appointment of senior executives.

Klein: The legal opinion that we received was to cover exactly what you just raised and confirm whether it was possible to write to the Minister with one preferred name instead of the three names as per the regulations. The opinion said it was possible. We needed to write to the Minister in that regard, when the Minister approved the secondment she asked us to get rolling with the appointment process. The Minister also asked for the legal opinion we received. On 13 September, the head of governance at DPE wrote to us about the legal opinion, asking us whether we took into account the guidelines for the appointment of senior executives. What we had done up to then, we had been given all the recruitment documentation and MOI and we did not have the guidelines which the head of governance sent to us. On 14 September we sent that off to the attorneys, Bowman Gilfillan responded that we could do it but we had to make a deviation for the Minister’s approval, and that was the decision. In addition, on the 9 September there was a P&G where the concerns around the number of acting roles at Exco were highlighted and the view of P&G at the time was, rather than worry about the number of acting roles at Exco, we needed to confirm the CEO and CFO roles. At the board meeting of the 10 September, P&G put the resolution to the board and the board approved it and a letter could go to the Minister asking the appointment of Mr Molefe.

Vanara: On paragraph 63, there is a letter dated 24 June 2015 addressed to the Minister by Dr Ngubane. Can you read for the record from the third sentence: "The Minister requested".

Ms Klein read out paragraph 63 for the record, as requested by Adv Vanara

Vanara: Now we know that you had proposed a deviation, what was the reason for not following the normal process for recruiting the senior executive (Group CEO), particularly when the shareholder representative seems to be reminding the board of the process?

Klein: It is safe to say that having come into an organisation that was so unstable and after a few months seeing the progress made, and by August we had already seen the progress with load shedding. So this board was really convinced that, based on what had been when we arrived and the clock was ticking backwards for our three year tenure, and fact that South Africa was suffering R434 million per day due to load shedding; the fact that we had an individual who seemed to grapple with the issues and turned it around so quickly. For my motivation, he was certainly somebody who was fit for the job.  

Vanara: That motivation needs to acknowledge its shortcomings. One, there could possibly been other candidates in the market that could have done a better job. Are you prepared to acknowledge that?

Klein: Yes, that was possible, but I must add that with everything that was happening at the time and the fact that we came in and had the downgrade, I do not think we had margin for error and I believe this was the best decision that we took at the time.

Vanara: Now looking back at that decision, for instance the Public Protector State of Capture Report and the effect that Report had on your best candidate with him stepping down at Eskom; that Eskom to date and the shareholder are in court battling around issues of his employment at Eskom. Do you still insist with the benefit of hindsight that was the best decision that you made at the time?

Klein: What happened with state capture has changed many people’s lives; I pray that we would have an opportunity to do a proper inquiry quickly so that those who are found guilty can face the law. When it came to the candidate at the time was based on what we had in front us at the time not what we have today, we did not have that benefit at that stage. I wish we can get this inquiry as soon as possible so that people can be held accountable.

Vanara: On the pension, the R30 million paid to Mr Molefe or to Eskom pension fund. Can you take the Committee through the meetings where the People and Governance board committee had discussions around this proposal and what were the details of this proposal?

Klein: On 2 October we get a letter from the Minister confirming the appointment from the 1 October. The difficulty was that nowhere in that letter was the term of employment highlighted – on the 1st of October it was indicated that Mr Molefe and Mr Singh were appointed. On 8 October I received an email from Ms Daniels (between her and Ms Ruthnam – responsible for governance at DPE) stipulating that it is a five year contract. The difficulty I am facing at this stage is that according to Eskom and what Eskom has always done, it has always been permanent jobs. In this email between Ms Daniels and Ms Ruthnam, Ms Ruthnam said she will check where the Minister needed to write to the board to clarify the five year term. I think it’s important to reflect at this stage that I serve on other boards as well where there are five year terms for senior executives, and there are others that are permanent so I don’t know if we got it sorted at this stage but we are told that the Minister will write back to us to clarify the term of the employment. On 16 October Dr Ben Ngubane wrote a letter to the Minister where he proposes various income bands based on surveys that were done by NERSA, Deloitte and others because we wanted to make sure that the salary bands were correct. Mr Molefe’s matter goes horribly wrong when the board had written and expected that this would be a permanent employment and the pension fund is not in contention at all because that is how Eskom always did it. So we are waiting for a letter from the Minister and I get no feedback on any letter that comes from the Minister to confirm that it is a five year period.

On 9 November Dr Ngubane handed Mr Molefe a fixed term contract which Brian signs with the entire pension fund, medical aid and other benefits stipulated, but there was no specific term stipulated in the contract. In this week I received an email sent from the department to Ms Daniels dated 4 November, mind you Mr Molefe has already received his contract on the 9th and he signed it. The letter that we had been waiting for confirmed tenure of five years, and this letter was sent to Ms Daniels on 4 November. On the morning of the 9 November, Ms Daniels writes to the executive of remuneration asking him to do the contract for five years. The difficulty is that the letter or contract that was given to Mr Molefe did not state the term. I believe that we need to ask Ms Daniels why she sat on that letter for five days and why she asked Dr Ngubane to give Mr Molefe a contract that had no term in it, because had the right letter been given, the issue of the pension would not be up for discussion.

Vanara: On the pension, it does appear in a meeting in February 2016 in your committee that you chaired, so notwithstanding what Ms Daniels did and how she would have dealt with the letter from the Minister that stipulated the tenure of employment. What happened in the People and Governance committee meeting that took place in February around the pension discussions?

Klein: I only pointed that out to say to you that had we followed sequentially the requests and instruction from the department there would be no need to discuss pension at all. Now we sat with the scenario where Mr Molefe signed a fixed contract with no term, then we get a letter that said he needs to sign a different contract for five years. He then said that he had come from one SOE to another, he was very keen to be at Eskom for much longer, he was hoping that he would retire here. Myself and the chairman together with the head of remuneration sat together to have a discussion on what that meant. So we needed to ascertain what we were taking away from him from signing a fixed term contract to signing a five year contract. One of the things Anton said is that we were taking away his ability to retire from Eskom, and he took us through previous CEOs that have been with Eskom for much longer that after the tenure they would be given a five year bonus in recognition for services rendered. There is a rule that says if you have been in the organisation for ten years and you are 50 years old, the organisation will pay for certain things and penalties and this happens. So we said okay, looking at that after five years, he would be 55, and that same rule could apply except he would not be there for 10 years. We discussed and took it to P&G and Mr Pienaar gave us a presentation and said that this has happened in the organisation before. With that in mind he brought the resolution to P&G and P&G accepted that after five years Mr Molefe would be 55, and the only thing that would mean that he would not have been in the organisation for 10 years, so we agreed to buy the additional five years for him.

Now this is not very clear in the minutes, I went to re-listen to the actual transcript of the explanation that Mr Pienaar gave. It is clear that this was going to happen after five years and at the maximum that he’d be 55 years at the time with an additional five years being bought for him not 50 with the 13 years that was paid afterwards.

Vanara: We now know that meeting where Mr Minnaar brought the letter was incorrect?

Klein: That was a different meeting. You are talking about the end of it, you are referring to the back end when the early retirement kicked in.

Vanara: The People and Governance committee then properly constituted took this decision and wrote to the Minister detailing this proposal – what was the purpose of writing to the Minister?

Klein: The meeting that this happened where the resolution is taken is the 9 February 2016. The letter you are referring to is as a result of us knowing and finding out on the 11 November 2015 we are in a conundrum. It was at that stage Mr Molefe expresses his discontent, the board then realised we had a dilemma that it had to resolve. We wrote to the Minister informing her of the proposal around his pension benefits. From the 25 November until the 9 February 2016, we heard nothing. So as far as I am concerned I am sitting in a meeting with the Secretary, and I relied on that it was okay for us to pass a resolution even though we had not heard from the Minister.

Vanara: Before sitting in February 2016 to pass the resolution, you had four months earlier written to the shareholder representative making a proposal. That must surely have taken into account that the pension had become a material condition of employment for Mr Molefe. Is that correct?   

Klein: Yes, that is correct, sir.

Vanara: Because the Minister as shareholder representative has got a say on the employment of Mr Molefe, she would naturally have a say on those terms and conditions, thus your writing to her seeking her approval. Is that correct?

Klein: No, my understanding it was never an approval; Ms Daniels told us that we were advising the Minister of how we were going to resolve the matter. The board did not always get all the information that came from the department.

Vanara: Forget about Ms Daniels. I am asking you as a non-executive director of the company with a fiduciary duty, you had written a letter through your chairperson to the shareholder with what you call a proposal to the Minister. You have on record admitting that the pension of Mr Molefe was a material condition of employment about which surely the Minister had a say.

Klein: You are making it difficult for me to say that I must forget about Ms Daniels. As a director I rely on people who are on the inside who know the system better than me. If Ms Daniels tells me there is no problem with it, she sat in the meeting where the resolution was being passed and I don’t think I breached my fiduciary duty. I asked the questions and I was provided with the answers.

Vanara: I am trying to understand why you with your duty, having taken a decision to write a proposal to the Minister on what you are saying was a material condition of employment which the Minister had to have a say on, why did you accept an advice that was just for information.

Klein: In the minutes it says we have received no feedback from the department; it goes on to call for Mr Minnaar to come and present the resolution and the thinking around it. My understanding at the time was that it was okay, having applied my fiduciary duty.

Vanara: The pension payout made to Eskom pension fund is clearly not consistent with the resolution taken at the meeting in the February, is that correct?

Klein: Yes.

Vanara: Now on what possible resolution could this pension have been made to the Eskom pension fund? How do we then still get monies taken from Eskom to be paid to the pension fund for those funds to be paid over to Mr Molefe for his pension?

Klein: When the resolution was taken it was taken on the basis of after a five year term this is what would be considered. When Mr Molefe applied for early retirement, that letter requesting early retirement never came to P&G, it went to the board chairman and apparently it did not go to the Minister as well, but in my notes/statement I said it went to the Minister. On 21 November we had a meeting to discuss state capture and what Eskom’s actions were going to be and consider, because it was a special P&G, there were only two members of P&G present and the rest was other board members which meant the P&G was not quorate – the first line of the minutes stated this. So when Anton Minnaar came in and read an extract of the letter that was going to Dr Ben regarding Brian’s request, we noted it in principle and we made it clear from the minutes that was not a resolution and it was going to come back to a full P&G committee consideration and after the P&G has sat on it, it would then go to a full board. Apparently, in his contract there was a six month exit clause, the board said you are in breach and there were a lot of things that the board said but never happened. After Anton left P&G where there was no approval, he took it to Dr Ben’s office and he signed it – this is what I heard. When I heard about that I went to check, and Ms Daniels told me that we do not need a full board’s signature on this, the resolution of February stands, that is why even when asked by the Minister this year in April, I was convinced that we did everything according to the rules of Eskom and delegation of authority. To confirm this, at the meeting of 24 April, Ms Daniels and Mr Patel came and went line by line on how the board had followed the exact correct process with the approval of the application.

Vanara: To close this aspect, Eskom paid X amount of money to the pension fund; and there was no resolution within Eskom board or its sub-committee for this money to be paid to Mr Molefe under the circumstance in which it was paid. You are on record as saying that the money paid by Eskom to the Fund was not consistent with the resolution of the February meeting, is that correct?

Klein: Correct.

Vanara: Is there a subsequent resolution after the meeting held in February?

Klein: There isn’t another resolution.

Vanara: If there is no resolution authorising this payment from Eskom to the Fund, isn’t this theft of monies from Eskom taken through to the pension fund and paid over to Mr Molefe camouflaged as a pension?

Klein: It is an interesting question and that is certainly not how I saw it until you just mentioned it, from my side we had done everything 100 percent correct and according to the book. But where we had gone wrong was at the back end and when I queried it, I was told that Dr Ben had the requisite mandate and did not need the board to approve it. So when you ask me about theft, that will be an opinion which I am certainly not qualified to render.  

Vanara: Lastly, the meeting with you, Dr Ngubane, Mr Khoza, Dr Pat Naidoo and Ms Mabude must have taken place between 12 and 2 o’clock in the afternoon where you presented a report on the process to recruit a new Group CEO. Do you recall that meeting?

Klein: If you are talking about the meeting where we specifically discussed recruiting a Group CEO externally, yes I do.

Vanara: I have a recording of that meeting; if there are issues in dispute we will play the recording. At that meeting after you had disposed of the recruitment external process, you discussed suspending Mr Koko, do you still remember that or you’d rather listen to the recording?

Klein: I remember the meeting, but I do not recall the issue of suspension and recruitment being discussed concurrently.

Adv Vanara requested the Chairperson to have the recording played.

The Chairperson granted the request.

Vanara: Does that ring a bell?

Klein: Yes, it does.

Vanara: This meeting must have taken place around March 2017, do you any specific date in mind?

Klein: Not really.

Vanara: Let’s focus on the discussion around the suspension of Mr Koko. It is very apparent that you were very vocal at this meeting in light of the information that was at the disposal of the members of the special board meeting. You wanted action done and that action could not wait for tomorrow, is that a fair observation?

Klein: Yes, the recording makes that very clear.

Vanara: At this meeting, yourself, Dr Ngubane, Ms Mabude, including Mr Khoza, to a certain extent even Dr Pat Naidoo, there was anonymity on the seriousness of the allegations that the individual concerned had been spoken to even before he was recommended as the acting Group CEO and his behaviour continued to be erratic and it becomes clear at this meeting that a decision has been taken by this board that he be suspended. Is that your understanding?

Klein: I was certainly pushing for that because of how he was treating and handling the people, it was not the first time when he became the acting CEO. I was actually the one who said to him that I will be watching him closely, of how he will deal with people.

Vanara: If those reports that served before the special board are anything to go by, the officials at Eskom including senior executives must have been faced with somebody who was close to a Hitler?

Klein: I am not sure if I would call it a Hitler, but Mr Koko introduced a card system on how people would be punished which I had a problem with and addressed.

Vanara: The cards aside, I am talking about the allegations before the committee. Group executive for group capital, Abram Masango, is to be sent to Harvard University and henceforth shouldn’t be given work and there are executives that are on paid leave that the board does not know anything about and in terms of the MOI the board should have known about this – this is the discussion I have listened to in the recording. It becomes very apparent that at that time the five of you have decided to suspend Mr Koko, but that Mr Khoza had introduced an element of a procedural aspect. In other words you had to afford the man an opportunity before you take the decision, but it was very clear that a decision was already taken. The man had already been given an opportunity but he squandered the opportunity. The committee was going to meet at 6pm to pull the trigger. Is that not your observation too?

Klein: No, that is not my observation, I was pushing very hard – it is no secret that I have not been a fan of Mr Koko because of the way he treated people. At that meeting it sounded like everybody was not in unison with me that it was going to be an automatic suspension, so we were going to settle it that night and afford him the opportunity to defend himself.

Vanara: Ms Mabude had made it clear in that meeting that these are serious allegations and they had given this man an opportunity and he messed. Dr Ngubane is clear that something must be done and not tomorrow, that very same day. You are going to a meeting at 6pm, what happens at that meeting?

Klein: We discussed the issues. It almost felt that the board members had gone cold from the time we left from the earlier meeting, it felt like I was now a lone voice in the wilderness and not everybody was part of that meeting – it was not a full board that evening, but I am open to correction.

Vanara: By full board I meant the five of you, and you were all to be at the 6pm meeting and you are insisting that Ms Mabude should be there because she has a tendency of talking inside the board and when a decision is to be taken, she disappears. So is she in attendance at the meeting?

Klein: I do not recall very clearly whether she had come back or not.

Vanara: The only issue I listened to was Mr Khoza saying we need to afford him an opportunity before taking the decision. My understanding of Mr Khoza was he was not opposed to the suspension, neither was Dr Ngubane. Ms Mabude was fully supportive. The only person who was opposed was Dr Pat Naidoo. He suggested that instead of a suspension the board needed to sugar coat the situation and tell him and the nation that the only reason he was being removed as GCEO was because the position he is acting in will be soon advertised and that because he could potentially apply – that is the reason you are removing him as GCEO. Did you hear anything different?

Klein: I think that is what Dr Pat said, that could be what he said.

Vanara: Now it is clear that the five of you are persuaded that the man has to be suspended, the only slight difference is that one of you was pro-removal. Now this is why I am saying the gun has been loaded, it cannot wait for the next day. You were busy with other responsibilities and you had to rush back to Megawatt Park for that meeting, so are we clear now about the attitude at the earlier meeting.

Klein: I am certainly clear about my attitude in the earlier meeting, which was the same in the second meeting later in the day.

Vanara: I find it problematic that you are only concerned at what you were saying and not paying attention to what everyone else was saying when you were trying to persuade them.

Klein: When we went back the process issue that Mr Khoza introduced, the man had to be given the opportunity to defend himself as per the policy of the company and that is exactly what happened there. I was not even supposed to be part of the group that was going to be there, but as chairperson of P&G I wanted to make sure that we were not going to be light touch on him. We went and we spoke to Mr Koko and told him about the seriousness of the matter and I even took him back to the original discussion, at that meeting this was put to him and given the allegations – at that meeting he was going to come back in writing to the chairman, but I never got feedback from that.

Vanara: Listen, I am still on the 12pm meeting, and that meeting is critical to what is going to happen at the 6pm meeting. Yourself, Dr Ngubane, Mr Khoza and Ms Mabude you have made up your minds that the man had to be suspended and its clear from the recording. The only person who is not pro-suspension is Dr Pat Naidoo – saying do not suspend but remove from the position and tell the narrative that he is being removed because the position will be advertised and he may re-apply. Do you have a different view from this?

Klein: I do not have a different view but where I am coming is to say that according to me he must be suspended, there are people in that recording who are talking about process. I understand that he must have be given an opportunity as to why he must not be suspended, at that meeting he says he is going to come back to Dr Ngubane in writing and that is something you should ask Dr Ngubane. I still maintain that he should be suspended.

Vanara: at the 6pm meeting, why is Mr Koko not suspended?

Klein: Like I said before, I was pushing for it and I believe I persuaded most of my colleagues but there was a process issue in terms of the Eskom policy which stated that if you are going to suspend a person, we must put it to you why you must not be suspended. In this case he was coming back to Dr Ngubane in writing which is why he was not suspended.

Vanara: I challenge that 12 o’clock session, because you knew at the 12 o’clock meeting that you were going to afford him an opportunity to respond at 6pm and at 6pm you expect him to respond to the allegations and take a decision to suspend him, something not inconsistent with what you, Dr Ngubane and company had done when you suspended Matshela Koko, Marokane and Mr Matona. Do you remember that? You had called them into a meeting and afforded them an opportunity to state why they would not be suspended, do you remember that?

Klein: Yes, I do.

Vanara: And what you envisaged from Mr Koko in March 2016 was exactly a similar process. What is it that Mr Koko told you when you afforded him an opportunity not to suspend him?

Klein: At that meeting Mr Koko was quiet and pensive, other than saying he would respond in writing.

Vanara: But you were not dependent on Mr Koko, you had afforded him the opportunity. What stopped you from pulling the trigger as you did with the previous executives?

Klein: The chairman and Mr Khoza seemed comfortable that he was going to respond in writing, and I was not going to push that.

Vanara: You mentioned that from the 12pm meeting to a 6pm meeting, there seemed to be a change in attitude amongst your colleagues, is that correct?

Klein: Yes, that was the case.

Vanara: There must have been an act that intervened then. You have not met with Mr Koko but already the attitude was changing which you observed; so there must have been something happening to change this attitude. Do you agree?

Klein: I didn’t mean that there was a change in between, at the meeting itself we were not as determined as we were at the 12pm meeting.

Vanara: But that change of attitude, what would have informed it because just four hours earlier you are singing from the same hymn book and what is it that happened that made some of your colleagues seem to be reading from a different book?

Klein: I do not know, but I would like to assume that you will ask these individuals directly when you get an opportunity.

Vanara: There is testimony before the Committee and it comes in the form of Mr Qoma, do you remember him?

Klein: Yes, I do, I actually listened to the testimony and I heard what he had to say.

Vanara: Mr Qoma testified before the Committee that in his interactions with Mr Khoza in his house in KZN when he presented an opinion on how to redeem the image of Eskom. Mr Khoza accepted the opinion but indicated to him that this opinion was not going to be implemented because the Minister of Public Enterprises is captured, that he himself, Mr Khoza, is captured. To make the point to Mr Qoma, Mr Khoza cites exactly this meeting that I am referring to that took place at 6pm as a typical example why he says himself and the Minister is captured. Mr Khoza stated that when he realised that the board was going to pull the trigger he called one of the G brothers, and that one of the G brothers then phoned the Minister to stop the suspension. As you sit there having observed this change in behaviour from the 12pm meeting to the 6pm meeting, does this testimony of Mr Qoma make sense. Is it a plausible explanation why you did not pull the trigger at the 6pm meeting.

Klein: It is a hard one, if I had been there when the phone call happened then I could account for it. So I don’t know what happened and I can’t explain what it is that happened. I hope that you will ask Mr Khoza the question. Something happened but I do not know what it is, but I was determined to have him suspended.

Vanara: It appears that you knew the erratic behaviour of this individual, why did you recommend that he be appointed as the Acting GCEO.

Klein: The person we recommended to take the position had changed their mind about coming on board and this was around the time Eskom was facing a lot of challenges and issues coming up week after week.

Vanara: It was on the recommendation of the board which you were part of. Knowing what you knew at the time, why did he make the list of the recommended candidates to the Minister, and did you disclose what you knew at the time about the individual to the Minister?

Klein: He made the list because there were very few executives that were left in Eskom at the time who could run the show. Most of the experienced executives either left or were not interested. We did not disclose to the Minister. But the way that I dealt with it when he accepted the position, I said to him that the way you treat people is very weak although you may be strong technically. I will be watching you. We were having board members who were leaving Eskom and some occupying acting positions, so we were running out of options and we did not have a pool to choose from.

Vanara: But competent individuals sit right at your door because you chased away Mr Matona, Ms Molefe, and Mr Morokane for no reason. So who do you blame for that?

Klein: The one thing I omitted to mention earlier is that we didn’t chase people away for no reason; they were suspended because of input we received from the previous chairman. This was before the Denton Report and the information that subsequently surfaced. These people came back and said that they did not want to come back to Eskom. People stepped forward and said they did not want to be here anymore.

Vanara: What was the trigger for that; because these people did not voluntarily say that they did not want to be at Eskom anymore. You are saying now that Mr Matona wanted to come back, and why did he not?

Klein: In my opinion, I did not believe that Mr Matona had his hands on the business. Every meeting we had all he presented was challenges and never offered any solutions.

Vanara: You created a problem for yourselves by chasing away competent people.

Klein: I concede that the decision that we made was made in the presence of information that we had available at the time. Many were good decisions and very few bad ones amongst them.

Vanara: You did not tell the Minister this critical information, don’t you think the board misled the Minister?

Klein: I am not sure I can agree that the board misled the Minister; we went with the proposal of the name that we had available and we thought that the person could do the job at that point since we were running out of options. I don’t know if we misled the Minister. After the Minister agreed he could act, we took him through what we expected of him.

Vanara: The Minister is the ultimate decision maker on whether or not Mr Koko was to act GCEO, is that correct?

Klein: Yes, it is correct.

Vanara: You spoke eloquently about corporate governance and you are complaining about information that was bombarded at you and how you were misled by being provided with inaccurate information, the little time you were given and how the executive misled you about making proper decisions. Now apply the same principle to the Minister who had to decide on approving the appointment of GCEO. Do you not think that it was critical for the Minister to be provided all the material information one knew about the candidate?

Klein: That is fair comment.

Vanara: Why did you not do it, and place the Minister in a position to make a decision but you did not play open cards with her.

Klein: I do not think I agree with you about playing  open cards with the Minister. We went forward with the recommendation of the person we thought would do the job. And when the Minister approved the appointment, we sat down with the candidate and went through what was expected of him – we saw that as a mitigating strategy.

Vanara: This is exactly my problem, you know of information that could potentially disqualify this individual from being appointed, you are not the decision makers and you are placing somebody else who is the decision maker in a position where she does not have a full picture of who she must appoint, because you are not telling the Minister that the individual being recommended has got these defects. This is the point I want to understand and why do you find it difficult to tell the Minister that part. And quickly after the Minister has made the decision, you embark on a mitigating strategy – why did you not disclose to the Minister the character of the individual?

Klein: I understand your point, but I do not think we misled the Minister. I believe that we had adequately dealt with what we believe was the problem.

Vanara: Sitting there and having considered the responsibility that the shareholder through the appointment of you, the hope and desperation of millions of South Africans whom you represented on that board and consider the issues we have just raised now, are you proud of the work that you did?

Klein: We could have certainly done better.

Vanara: Thank you, Chairperson.

Questions by Members
Dr Z Luyenge (ANC) asked what she thought the Minister identified in Ms Klein to qualify as one of the board members during her interaction with the Minister. Ms Klein raised the challenges that were facing Eskom at the time and presumptuously you responded in a manner that convinced her that you would add value to Eskom. Can you comment whether other board members had a similar kind of process that sought to identify the qualities that were needed for Eskom.  

Ms Klein: Looking at the CV, the Minister must have realised that I would add value to the team given that I had quite substantial experience in governance. The challenges she raised were load shedding, financial instability, inaccuracy of information, the fact that there were trust issues lingering, amongst others. With regards to the peers on the board, members who maybe did not have the experience to be on a board, those members were encouraged to join the Institute of Directors to learn about directorship and enhance their understanding of corporate governance.

Dr Luyenge: Secondly, in the board membership during your tenure, do you think they had enough expertise to execute their duties in accordance with the policies of Eskom and the PFMA? You never raised any concerns about peer board members who seemed incompetent.

Ms Klein responded that in terms of the board charter, room is made for urgent meetings to happen especially if it is a critical event. She had a problem with being sent a document with nine resolutions to consider for the following day. According to her understanding that is not how corporate governance is handled. Commenting on other board members, there was a lot of financial data to get through and we did not have enough technical expertise on the board, where there was a lack of adequate cover. It was raised and the Minister offered the support.  

Dr Luyenge: Thirdly, what role did you play as the board when the executives were inflating figures and monies paid to the Gupta aligned companies? Other witnesses have mentioned that Gupta aligned companies were given priority and prepayments were made, whilst other contracts were stopped. As a governance leader did you come across any of that and would you say you were never suspicious?

Ms Klein responded that in serving in the board committees she did, she never saw any of the contracts and the payments. The McKinsey contract came to the board committee because it was a big contract, and the board dealt with it but she cannot comment on any other contracts because she never saw them. However, what later came out was the Trillian matter which the entire board was not even aware of. Furthermore, she saw the R1.6 billion Optimum Coal contract because the board needed to sign off for the coal on the 8 December. She went back to the Secretary and stated that she could not sign that without the appropriate approval processes followed and applied. This turned out to be a guarantee to ABSA for something else. She alluded to what she mentioned earlier that what she and others often had in front of them was not the actual information.

Dr Luyenge: What was your involvement in Mr Tsotsi’s motivations for executives to be suspended and what can you say about this institution with such glaring misdemeanours, and you were part of that?

Ms Klein responded that the chairman recommended someone to lead the company whilst other executives were suspended, but he was bringing in someone who was on suspension and he did not disclose that information to the board. The fact that it went horribly wrong at the end was due to maladministration. We have checked and checked as the board and got various opinions from legal people and ensured that we did everything according to the prescripts of the law. One needs to bear in mind that as board members we do not get involved in operational aspects of the company.

Ms N Mazzone (DA) asked Ms Klein what is her feeling about the tendency in the SOEs of the revolving door policy, gross mismanagement and corporate governance? Do you think we add any value by rotating people?
 
Ms Klein responded eagerly that is exactly the problem, we rotate people when we could go out and get additionally skilled people. With a career in the banking sector I would not have joined Eskom, but I wanted to make a difference. You find that people leave their career prospects to make a difference but people end up getting pulled into something that damages their careers.

Ms Mazzone asked what her monthly remuneration as a board member was.

Ms Klein replied that they average about R30 000 to R40 000, but it would be about R50 000 if we were few due to the increased work load.

Ms Mazzone asked whether she was ever requested by anyone on her board or personally to meet with anyone from the Gupta family, Zuma family, and Salim Essa.

Ms Klein emphatically responded that she was never requested to meet with anybody. However they did exchange business cards at an event and that’s where it ended.

Ms Mazzone asked her to briefly explain what happened when the Dentons report was produced to the committee, and how she felt when Dr Ngubane requested that the report goes back because it was too damning and it needed to go back and be polished. When it came back, 92% of the report was redacted. Can you explain to the Committee how you felt about that.

Ms Klein responded that the first report that they got had a lot of people’s names and companies that were in it, but the question that was asked was whether the information was corroborated or not – if that information was not corroborated, then the company could be sued. However what was corroborated remained in the report. So based on what was done, for the three months they removed all the information that was not corroborated.

As for the redacted report version, Ms Klein happened to be in a meeting where they agreed to have a media briefing the next day about what was contained in the report. They had discussed in the meeting that the public needed to see the report. We also agreed that Ms Daniels would get an opinion on releasing the corroborated report and it was such a surprise for me when in the following meeting Ms Daniels did a presentation of the redacted report. After the presentation she then shared with us that the legal opinion indicated that the company can share the redacted version. The media went wild when we gave out a redacted report.

Ms Mazzone said a lot has been said about lawyers and the legal opinions that the board consistently received. You spoke about the advice from attorneys, surely as the board you realise that you getting incorrect information, not once and not even twice it was ongoing. So why would you suspend Mr Matona on the basis that you are getting legal advice that was flawed and it sounded as though you are blaming attorneys for giving the board incorrect information.

Ms Klein responded that when it came to Mr Matona’s suspension, the decision was not based on legal opinion; it came from the chairperson, Mr Tsotsi. Particular law firms over and over, maybe it is time we broaden the pot. Within Eskom there has always been a revolving door, and we were bleeding skills internally. The board was hugely dependent on legal opinions, and at this point I can advise board members to go out and receive a legal opinion of their own.  

Ms Mazzone said in terms of the way the board operated on Mr Brian Molefe’s pension, you could agree that the whole country is deeply disturbed by the resignations, secondments and so forth and it is no secret that you were impressed with Mr Molefe’s performance. There is clear attempt by Dr Ngubane and Mr Molefe to mislead the board, and you have admitted to that. Why do you think the board was not given correct information. Why did the board allow this to happen in the first place?

Ms Klein responded that this whole pension needs to be looked at, we were put into a position that the board was not supposed to be in and the way we got the sequencing of information led the board to a wrong direction.

Ms Mazzone asked her, do you think the board was misled, and chaos was deliberately created so that members of the board could not see what was happening?

Ms Klein said, yes, we were always given information that was not actually correct. What was presented before the board was not accurate most of the times or it was incomplete.

Ms Mazzone said Ms Klein was quite vocal about her admiration of Mr Molefe, and you also spoke about the Public Protector’s Report that came out and you cited that was the reason Mr Molefe resigned. What was your feeling when you found out that 58 telephone calls took place between Mr Molefe and Ajay Gupta? Did it affect your opinion of Mr Molefe and some of the decisions that were taken before?

Ms Klein replied that the board gave Mr Molefe an opportunity to present what had happened as far as the Public Protector’s Report is concerned. He gave us his side of the story and he shall do so again today.
 
Mr T Rawula (EFF): If you look at the pattern there is a lot of inconsistency with the board in how they treated the CEOs, it is very inconsistent. You said you supported the removal of Mr Matona because he did not have a turn-around strategy, when did you pick that up and what did you do about that? We heard that there was a meeting that was scheduled for the 8 March and the board did not agree with the recommendations of Mr Tsotsi to suspend. The meeting was then re-scheduled where the Minister was present in the meeting - who then suspended Ms Molefe and Mr Matona - was it an initiative of the board or the instruction of the Minister? Mr Qoma had argued that in his view, the Minister had poor judgement and appeared as if she did not know what she was doing and therefore contributed to the mess at Eskom.

Ms Klein: When it came to Mr Koko, please ask the people who were involved what changed for them in suspending Mr Koko – I maintained my stance on him. As for Mr Matona, I did not have any opinion on him. Every meeting we had with Mr Matona, there was no suggestion about what was going to be done to turn things around. I was mindful of one thing, and that was trying to resolve the challenges as quickly as possible - he didn’t have his hands around the business. We were convinced that in order to get the processes going and expeditiously those people had to be suspended. In Mr Matona’s case, perhaps if the man was given an opportunity, he would have proven himself.

It was on the instruction of the board that the people were suspended, it did not stem from any individual who gave us instruction but if that was the case I have not heard it. I interacted with the Minister a number of times and I never once heard of anything from the Minister that was a lie or misleading, so I can’t respond about her poor judgement.

Mr Rawula: As for the pension fund, so much was done even as far as amending the pension fund rules to accommodate Mr Molefe’s pension benefits. Did the board feel that it was indebted to Mr Molefe to the point where all these compromises had to be made? So far R7.2 million has been paid to Mr Molefe, do you not think that money should be paid back?  

Ms Klein: I do not think that the board bent backwards for Mr Molefe, in fact people applauded him for the work that he had done.  He was the first CEO in the history of Eskom to have gone as far as five years. We were faced with the conundrum as the board - notwithstanding the fact that he had been given a wrong contract to begin with - he signed a contract which was equivalent to a permanent position.

Ms Rawula: Eskom had a contract with McKinsey, which was sub-contracting Trillian. McKinsey was paid R1 billion and they have committed to pay it back, but Eskom further gave Trillian money. Can you comment on this, and the unlawful payment made to Trillian as well as McKinsey. In addition, why would Eskom under your board be so careless with public funds?

Ms Klein: I cannot provide more information with regards to Trillian contracts because I never dealt with those contracts. However, the only contract that I am aware of was the amount of R103 million which was for governance. Anything outside the investment level and budget came to the full board and that (Trillian contract) never came to the full board.

Mr S Swart (ACDP): The PFMA places certain responsibilities on the board. It is concerning to see that the board does not seem to accept responsibility for a lot of the decisions taken. Firstly, do you accept responsibility or is this a governance issue that there is a breach of the PFMA? The board must accept responsibility and it seems that there are substantial breaches of the PFMA during your tenure.

Ms Klein: Yes. My first concern at Eskom was on the separation of duties and delegation of authority and how it could have been possible for one person to have the decision power over R750 million contracts. The boards are then in the dark because that information does not come before the board – delegation of authority was certainly questionable.

Mr Swart: With regards to the decision on the suspension of four executives taken on the 11 March which leads to the downgrade, surely with your experience it must have been foreseeable that it would have serious implications for Eskom. In hindsight, surely that was not a wise decision.

Ms Klein: I conceded that this morning – it wasn’t a wise decision, but if you are sitting at the helm of the company that is costing the country R434 million per day, load shedding is at stage 3, the pressure gets enormous. So what you need to balance as a board member is dealing with those issues and the suspension of those executives – we needed more time which we didn’t have so the quickest way to get the ball rolling was to abide by the persuasion.

Mr Swart: I understand the intensity of the situation at the time, but have you ever in your life before experienced something where executives are suspended all at once, surely this was unheard of?  

Ms Klein: Absolutely not. That is why we pushed back.

Mr Swart: You said you would support the full commission of inquiry regarding state capture, so have you read subsequently on state capture or are you aware of any information about it?  

Ms Klein: I have.
 
Mr Swart: Are you aware that Eskom has not taken it on review?

Ms Klein: I am uncertain.
 
Mr Swart: The President has taken it on review on a small legal issue, but the factual findings in the report stand. Would you agree that it is advisable to take it on review?

Ms Klein: The information that I received was that the board could not take it on review because we were advised by legal counsel that there were no findings. There is a board resolution that we were going to take it on review, but we were advised by the head of counsel not to do so.

Mr Swart: There were a lot of factual findings in the Public Protector’s Report though, and they indicate a level of state capture which is of great concern to you, would you agree with that?

Ms Klein: I absolutely agree, I sit on the board of the Reserve Bank and it took a Public Protector report on review. I struggled to understand why we could not do so at Eskom.

Mr Swart: We have evidence from Ms Daniels that on the 9 March she was invited to a meeting with Mr Salim Essa, two days before that meeting, where she was told that the suspensions were going to happen in two days time by Mr Essa which we know is the right hand man of the Gupta family. So is that not a great concern to you given the fact what happened on 11 March when the executives were suspended. Those statements were coming from someone who was outside the company and furthermore, one of the people to be suspended was the financial director who had opposed signing The New Age breakfast sponsorship. Can you now connect the dots?

Ms Klein: I was horrified when I heard Ms Daniels say that, I am really in awe hence I said this thing (inquiry) must get going.

Mr Swart: A commission of inquiry is one thing, but as many have said that there is nothing to prevent the institution now of criminal and civil action at this stage based on the prima facie evidence that can be tested in a court of law. Does it not concern you that it does not seem that there is much progress in pursuing the prima facie evidence that is before us?

Ms Klein: I absolutely agree.

Mr M Gungubele (ANC): You come across as somebody who is willing to assist, but I struggle to reconcile some of your inconsistencies. For instance, in paragraph 35 you say, “No reasons were given for the suspension of the four executives”. Now, were you part of a process of explaining to the Eskom staff why the four were suspended?

Ms Klein: If I recall, the chairman asked me to accompany him to one of the meetings to speak to the staff members.

Mr Gungubele: What was the explanation that was rendered?

Ms Klein: Why the inquiry was going to take place.

Mr Gungubele: Specifically what was the content of what was said?

Ms Klein: I am struggling with what you are asking.

Mr Gungubele: My question is clear. Now that you agree that you were with the chairman when he explained to the staff why the four executives were suspended – what did you hear.

Ms Klein: The chairman told the staff that there is going to be an inquiry, therefore people will be suspended so that the inquiry can be finished within the targeted three month period.

Mr Gungubele: In your view were those the reasons for suspension? However, in your statement you say that none of the executives were given reason for the suspension – how do you reconcile the two?

Ms Klein: They were not suspended for a particular reason they were asked to step aside so that the inquiry can be completed within the said time frame.

Mr Gungubele: Its fine we can leave that. You said that at the 12 o’clock meeting you were the only vociferous one but later you are surprised that in the afternoon you are the only vociferous one. You said that what you remember at 12 o’clock was you were the only one; but as Mr Vanara was questioning you, you said people were not as strong in the afternoon as they were at the 12 o’clock meeting.

Ms Klein: Listening to the recording, in the morning meeting there were people who felt the same way.

Mr Gungubele: But you said that you were the only one who was vociferous earlier on, but I am trying to deal with these inconsistencies. It is fine if you do not agree that will be noted and recorded. You said the meeting took place at six o’clock and you said there were five people. When you were asked if Ms Mabude was there, you said you cannot remember, but it was only five of you. Do you understand that?

Ms Klein: Oh! I am uncertain of her presence in the meeting, but I am almost certain that wasn’t there. I am basing that on the fact that she had said in the meeting she will not be there.

Mr Gungubele: What happened at the six o’clock meeting?

Ms Klein: We got to the meeting and called Mr Koko into the meeting, Dr Ben put to him the charges in terms of the anonymous letter as well as some of the things that the Minister said. He was asked for the reason why he should not be suspended. His response was that he would respond to Dr Ben in a letter. I never saw the letter and never got it. This happened this year.

Mr Gungubele: When did you leave Eskom?

Ms Klein: On 12 May 2017.

Mr Gungubele: So until May you did not know what happened? You are in a meeting at six o’clock and Mr Koko said he would respond in a letter and by May you left without knowing what happened?

Ms Klein: There was a subsequent meeting on 28 March where this was discussed with Mr Koko; my disadvantage is that I do not have the date first meeting.

Mr Gungubele asked what was discussed and what came out of the meeting.

Ms Klein: The allegations and the charges, as well as that he was not suspended but he acknowledged in that meeting that his actions are suspendable based on what I said to him about the issue with the people, but the meeting of the board for that day was not to suspend him.

Mr Gungubele: Based on what you just said, now there is another gross inconsistency. In March 2015, can you tell us about your knowledge about the IT tender that was scrapped and the extension of the T-Systems contract?

Ms Klein responded that the P&G sub-committee did not deal with contracts.

Mr Gungubele asked her if she knows anything about the bail out.

Ms Klein asked which bail out.

Mr Gungubele replied the R23 billion paid to Eskom.

Ms Klein: We were given feedback that government was in the process of granting a bail out to address the going concern issues that Eskom was facing at the time.

Mr Gungubele: Did you have any knowledge about the Tegeta contract?

Ms Klein: I had no knowledge about the Tegeta contract and People & Governance would not deal with Tegeta.

Mr Gungubele: But there are issues of governance in that contract, and matters of contracts in the PFMA are matters of governance – in terms of how you procure and which processes to follow. So you know nothing about that?

Ms Klein: The terms of reference for P&G had nothing to do with any procurement contracts in Eskom. It may be an issue for future but certainly not for P&G.

Mr Gungubele: You explained your concern about defective reports either misleading, omitting critical information etc. But whose responsibility was it for monitoring and evaluation? Did it fall under your committee?

Ms Klein: That fell under the Audit and Risk committee; however one can pull everything into governance.

Mr Gungubele: What are the major features of governance as led by Ms Klein?

Ms Klein: That the board charter is correct, and the terms of references.

Mr Gungubele asked what the board charter covers.

Ms Klein: The overall functioning of the board.

Mr Gungubele: What about the Denton report where Eskom paid R20 million – when Shaheed asked this question in a letter drawing Eskom’s attention to the fact that the investigation of the individual’s conduct does not seem to be included in the terms of reference. Do you remember that, and was that before the investigation or after?

Ms Klein responded that she does not remember that.

Mr Gungubele closed by saying he does not think there is anything Ms Klein remembers.

Mr E Marais (DA): You were only appointed on the 11 December and prior to that there was this whole issue around the TNA deal. I note that you were against it in the round-robin resolution. Can I have your view on money spent on such a marketing exercise being an Eskom board member?

Ms Klein: Not being there at the time and reading the documents, I felt like the company did not get value for the money which is part of the reason I did not support it, together with the fact that I felt people needed to be held accountable, but that was not the recommendation on the round-robin which is the reason I didn’t sign it.

Mr Marais: By that time did you come to knowledge that there is a link to Gupta family as far as companies involved.

Ms Klein: At the time I was not aware of it.

Mr Marais: Was the round-robin resolution a single handed matter or were there other round-robin resolutions?

Ms Klein: There were other round-robin matters, we increased the number of people who have to sign up from 50% to 75% to ensure that people apply their minds and avoid too many round-robins.

Mr Marais: With regards to 11 March 2016 meeting, what action plans were put in place by the board to deal with non-payments by municipalities?

Ms Klein: That was one of the things that the board was non-wavering on. We were sitting in an organisation where we were asking government for help with the going concern issue but yet we were sitting with municipalities who were not paying their electricity bills. We cannot accept money from government if we cannot employ every single alternative to get the municipalities to pay and there was no appetite to try and recover that money. We had executives that were telling us that when they took on the municipalities, they would have certain Ministers calling from different places, but the board met with everybody concerned that it was clear that municipalities ought to pay up. Hence, there is now a payment plan. It may not be the best plan but there is a plan.

Mr Marais: Before you left Eskom, how would you describe staff morale?

Ms Klein: That was when Mr Koko was running the show and the morale was not good at that stage; people were not comfortable what to expect from a leadership perspective.

Mr Marais: Was there an outflow of capable staff to other institutions at the time?

Ms Klein: Definitely, especially people who had experience with nuclear, people were leaving. There was a huge concern about skills outflow specifically in that space.

Mr Marais: What is your view as an ex board member, tax payer and electricity bill payer, seeing the concerning cash flow of Eskom and how that impacts on citizens? What is your view on this?

Ms Klein: A lot needs to be done to bring the cost of electricity down, Eskom started stripping out costs and looking at alternative energy. But there is something that struck me when I was there that I did not appreciate before – is that Eskom funds a lot of initiatives and only gets the money back after two years. The example of that is the IPP – that money comes back to Eskom at a later stage which is a direct flow to the tax payer. Therefore, more needs to happen to educate people on how those decisions are made.

Mr Marais: Did you at any stage engage with the Deputy Minister, Ben Martins.

Ms Klein: I never engaged with him.

Mr R Tseli (ANC): There are two incidents where you declared a conflict of interest when you were board member at Eskom. I want to start with the incident where Eskom was awarding a contract of R401 million to McKinsey, you declared a conflict of interest at the time because you were going to be doing some work for McKinsey. Some board members felt that there was no conflict of interest which led to the board voting on the matter. So was there a conflict of interest?

Ms Klein: When McKinsey was on the agenda I informed the board about the fact that I was going to be doing some work for McKinsey in Africa. I asked the board to recuse myself, but the board said that it was not necessary because it was not any work related to Eskom.

Mr Tseli: Although the board felt that it was not necessary, you still felt that there was a legitimate conflict of interest?

Ms Klein: When the board decided that there was no conflict, I was comfortable with that.

Mr Tseli: The second conflict of interest is around the time you wanted to resign from the board, on the 7 June 2016 but the Minister asked you not to resigned then. The conflict of interest was around the Twin Peaks legislation and you sat on the board of the Reserve Bank. You thought that constituted a conflict of interest. So what happened?

Ms Klein: The conflict was not direct. The Twin Peaks legislation was in the process of being passed and the reason for the potential of conflict was that Eskom manages and owns the biggest self-insurance company in Eskom itself. So my concern was that sitting on the boards of Eskom and the Reserve Bank, if ever there was a problem where the Eskom self-funding unit of the insurance were under scrutiny for any reason where the Reserve Bank is monitoring the oversight of that, there would be a direct conflict of interest which is the reason I put it forward. However, the Act was only promulgated after I left Eskom.

Mr Tseli asked what was irregular about the R401 million McKinsey contract.

Ms Klein: I don’t think it was irregular; remember the project only comes to the board if it’s outside the investment level and the budget. They needed approval for help with the corporate plan and they asked the board for approval for that for eight months.

Mr Tseli: The audit and risk committee upon investigation said the coal supply contract was flawed from the testimony you gave us, so what corrective measures were applied by the board to deal with this?

Ms Klein: The audit and risk committee gave regular feedback in terms of the monitoring and evaluation. I was concerned at the time when it was monitored by people from the inside because there was room for manipulation but we were given assurance by the CFO and the CE that they would oversee it themselves with audit providing feedback to the board on the improvement over time.

Mr Tseli: What role did you specifically play with the coal supply contract?

Ms Klein: My role was being a member of audit and risk and assisting to ensure that monitoring and evaluation were done and fed to the board.

Mr Tseli: So you were key because you were chairing the committee that found the contract to be flawed.

Ms Klein: I never chaired the audit committee, I was just a member.

Mr Tseli: On the appointment of Mr Molefe, on paragraph 52, it is stated that the board was unanimous in terms of the appointment and motivated by the load shedding, the issue of finances, data, and the war room. You said some only had problems with it when it came to appointment without an external search process, and you said the board even came to the decision of seeking an external legal opinion. Is there any legal opinion that you can provide to the Committee?

Ms Klein: Absolutely, there are two legal opinions and the first one said that we could recommend one person to the Minister. The second opinion surfaced as the result of the questions that came from the Minister’s office after we submitted the recommendation that was encompassed by the first legal opinion indicating we could recommend one name. From that the Minister wanted to know whether submitting one name was not in contravention with the regulations for appointment of SOE executives.

Mr Tseli: In the role played by Ms Daniels in providing legal assistance as the Company Secretary, will you agree with me that at some stage there are certain things that could have been done better by her which led to some of the challenges we are talking about.

Ms Klein: I totally agree with that, but Ms Daniels had three roles – she was appointed as general manager in the office of the chairman. She then became company secretary, with that she also brought support from the outside. She then took on the role of head of legal. The pressure on her was probably so much that she could not handle everything; hence she then decided to take on one role.

Mr P Gordhan (ANC): Did the Koeberg steam generation issue come to the board?

Ms Klein: I am uncertain, and the actual decision was not made by this board.
 
Mr Gordhan: From 2014 to your departure in 2017, there has been a number of interesting developments. One of them was the IT tender and the controversy around T-Systems, are you aware of it?

Ms Klein: Yes, I am aware of it, although the board takes full responsibility but that did not come before the board.

Mr Gordhan: As the member of the Governance committee you become aware of the governance issues whether they are on T-Systems, IT contracts, etc. What did you do?

Ms Klein: You go to the people concerned and try to get to the bottom of what is going on.

Mr Gordhan: Why did you not get to the bottom of it?

Ms Klein: In January 2015 I was not the chairperson of Governance at that time.

Mr Gordhan: You do not have to be the chairperson to take responsibility, you are a board member.

Ms Klein: If every time there was an issue at Eskom, I would not have slept.

Mr Gordhan: You do not have to make your answers so frivolous, nobody said anything about sleep. So where did you fail?

Ms Klein: By not taking it into the board to ask for a full deliberation on the matter in question.

Mr Gordhan: So that adds to the corruption stories we are hearing right now, because there were no checks and balances from the board at the time, including you.

Ms Klein: Well, it is not like checks and balances were never conducted.

Mr Gordhan: What persuaded you on the suspension of the four executives?

Ms Klein: We needed to get our hands around the business, get the going concern issues sorted out.

Mr Gordhan: How did Mr Matona and company stand in your way? You actually suspended a CFO which would have helped resolve the going concern issues.

Ms Klein: That was the biggest opposition that the board had. The board wanted to do a detailed piece of work of fact-finding. It wanted to see why and what it was for that CFO was to be suspended.

Mr Gordhan: So the miracle would have been performed by the Dentons investigation, and uncovered whether your concerns were valid or not?

Ms Klein: No, but whether we could get to the base lining of what was wrong with Eskom at the time by having a look at the contract management, the different processes that were followed, making sure we followed through on the allegations made.

Mr Gordhan: What information was given to you that any one of those four people would stand in the way of uncovering the truth?

Ms Klein: None.

Mr Gordhan: As a person who has contributed in terms of the paper work to ensure that there is good governance in the private sector in South Africa, you stood by and allowed a person who was innocent to be suspended and smeared.

Ms Klein: Sadly, that is the case.

Mr Gordhan: There are many versions of the Dentons report. What did the board do to ensure that a genuine Dentons report was presented where it was required? Why were the changes allowed and by whom were those changes directed to be made?

Ms Klein: The Dentons report was going to be for three months was one of the resolutions agreed to with Mr Tsotsi. When the report was brought to the audit and risk committee, all the allegations were listed but we were told that about 50% of the allegations were not corroborated.

Mr Gordhan: What did you do about the 50%.

Ms Klein: That 50% was put into a formal report, and all of those findings were broken up into the different sub-committees to take control of the issues that were identified and needed to be corrected in the company. All the matters were resolved, that was the feedback that the board subsequently received.

Mr Gordhan: From the technical things that needed to be dealt with, it seems to suggest that there was rampant corruption at Eskom which included board members and top management, is it true?

Ms Klein: I don’t know if that they were in the report, and I did not see any board members names in it.

Mr Gordhan: Did the Minister request to have any changes made in the report or any modifications?

Ms Klein: Not as far as I know, she only got the report once it was corroborated as per my understanding.

Mr Gordhan: How do you know a copy was never given to her beforehand?

Ms Klein: I do not know, sir.

Mr Gordhan: Now with the Tegeta deal and the guarantee given by Anoj Singh of R1.6 billion via ABSA – that is a violation of the PFMA, and what did the board do about it.

Ms Klein: I agree with you, at the time it was brought before the board it was for signature. What came to us as a round-robin was R1.6 billion for coal supply which was an urgent request by the company, and that came on the 8 December 2016. It was based on my refusing to sign unless we had an IFP, at least get a technical background on why this was required. An IFP was then conducted first thing in the morning of the 9th, after input from Dr Pat who chaired that for us and it was revealed why we needed the coal and why it was necessary.

Mr Gordhan: This is the bank guarantee, and what did it have to do with the supply of coal.

Ms Klein: What we got as a round-robin resolution was for the purchase of coal, and nothing about the guarantee.

Mr Gordhan: Subsequently you would have heard that there was this guarantee that was given.

Ms Klein: That came out of the media briefing, and that was the first time I heard about it.

Mr Gordhan: Is it possible that senior members at Eskom kept that away from some members of the board deliberately.

Ms Klein: I do not think it was possible; it is definite that is what happened.

Mr Gordhan: You left in 2017. In October 2016, nuclear procurement is shifted to Eskom; was that done with the board’s approval?

Ms Klein: I remember the meeting very clearly, there was a meeting between Mr Koko and the Minister of Energy and it was brought to the board’s attention after the meeting took place. I remember the board feeling very strongly that it seemed like passing the buck because Eskom was never going to be running with that nuclear procurement. It was a long session and the board asked whether we are taking this on. We felt that Minister Brown should have been involved.

Mr Gordhan: There was this prepayment of R600 million to Tegeta, and the board was not aware of that?

Ms Klein: The board may have been aware of it because the BTC would have reported to the board but the transaction did not take place.

Mr Gordhan: Mr Pamensky joined the board at about the same time as you, as Governance board committee member and chair at various stages. The conflict of interest between Mr Pamensky role on the Eskom board and Oakbay Resources – did that ever arise?

Ms Klein: No, that never came up, we do not sit and go through every person’s conflict of interest. That was dealt with by the Company Secretary. Only when there were problems they would come and discuss it with me.

Mr Gordhan: Was there ever a conflict of interest?

Ms Klein: Without looking at actual structures it is difficult to say.

Mr Gordhan: But he is on the board of a company that is doing business with Eskom.

Ms Klein: There’s enough room to go and ask the questions and go look at it deeply, I assume.

Mr Gordhan: But it appears you didn’t quite get to the point where you did ask the questions. In the context of all the information that is available, it seems that Eskom is one of the most captured companies. How do you feel about your role in the period you served on the board?

Ms Klein: I thought it was of my finest moments until I saw all the noise in the media. I hope that the inquiry will take its course and those who transgressed will be held accountable.

Ms D Rantho (ANC): My main concern as I am listening to you is that the view you are giving us is that the legal team within Eskom is not helping the board or the executive members, because most of the issues that you have spoken about came from your legal people and some of them can be challenged. Do you agree?

Ms Klein: Referring specifically to the Public Protector’s report, I can totally agree with you. If you listen to Eskom you will find that most of the opinions are coming from outside and some of them are proven to be wrong.

Ms Rantho: You say that you were confronted with load shedding, and you were of the understanding that the arrival of Mr Molefe made a big difference and you were thus convinced in accepting that his appointment in Eskom was a good act. However, there is an opinion that the load shedding was done purposely so that Mr Molefe could be taken in as Eskom CEO so that all the deals that needed to be done could be done through Mr Molefe. Would you say that is a correct opinion or a mere baseless opinion?

Ms Klein: That is a very difficult one to answer. What I saw when we arrived from a load shedding perspective was caused by many years of not paying attention to maintenance. At the time we started, maintenance had not been done since 2008 to keep the lights on at all costs, even though the infrastructure needed to be maintained. If it was orchestrated, then it is something that needs to be investigated further. When I arrived, I was certainly of the understanding that load shedding was due to failed or lack of maintenance.

Ms Rantho: With all the contracts that you had, the five year contract and all the anguish that you have in appointing Mr Molefe, and then he stepped down, and then was re-appointed. Was he reappointed with a clear contract, because a big company like Eskom ought to know that standards needed to be set when bringing in a new CEO to steer the ship or continue steering the ship. In your case, it does not seem that there was a contract in place, but you were enticed by the impact that he had made at Eskom during his tenure as the GCEO.

Ms Klein: Eskom being as old as it is has never has this level of maladministration of the appointment of the individual and it has something to do with the fact that it was with this CEO that he was put under a contract of five years. The people who handled the paperwork or legal paperwork and the administration perhaps lacked the expertise or experience to handle the transition of a CEO whose appointment term suddenly changed.

Ms Rantho: What about the character of Mr Anton Minnaar, his character within the company – was he of help in building or developing Eskom?

Ms Klein: As P&G chairperson, I was probably the one who worked most closely with Mr Minnaar and he has been with Eskom the last 16 years and was responsible for bringing in the paperwork for appointment of senior executives and increases and salary adjustments. He comes across as someone who takes his job seriously so I would be surprised at the view that he would take down Eskom.

Ms Rantho: I take it he is the one who facilitated the appointment of a CEO and administered the pension fund of executives. A person who is appointed and has a legal background in the position he occupies, he should look at the ethical conduct of the individual and the company. Can you explain further?

Ms Klein: It is important to note that Mr Minnaar is not a lawyer, he executes on what the board has decided. The legal input and contracting would have been received from the legal department.

Ms Rantho: What was the Minister’s attitude when she received the appointment letter. Did she agree to the terms and conditions, or did she raise any concerns about that letter?

Ms Klein: I am not sure which letter you are referring to.

Ms Rantho: It was during the time of the pension issue and the re-appointment.

Ms Klein: When the pension fund issue first hit the papers, I was with the Minister but I am not aware of any other letters that were received by the Minister.

The Chairperson thanked Ms Klein for her time.

Witness: Devapushpum Viroshini Naidoo
The Chairperson read the oath to the witness. The witness took the oath.

Adv Ntuthuzelo Vanara: Please confirm your full particulars for the Committee.

Ms Naidoo: My name is Devapushpum Viroshini Naidoo.

Adv Vanara: You have prepared an 18 page statement with annexures. Do you confirm that?

Ms Naidoo: I do.

Adv Vanara: With your permission, the statement has been shared with the Committee. Do you have a problem with that?

Ms Naidoo: No.

Adv Vanara: I want to start with the suspensions of the four executives. Who triggers the suspensions, and on what basis?

Ms Naidoo: We had a meeting on 9 February 2015 chaired by our chairperson at the time, Mr Zola Tsotsi, who suggested that “in order to understand the financial situation of Eskom, load shedding, and other governance issues, we should have an internal and external inquiry. And he suggested that it was at the request of the President, and we needed to obtain unfettered and accurate information without any influence from anybody. And in order to have this particular inquiry, we would need to suspend the executives in the areas that we were going to do the inquiry in”.

Adv Vanara: What is the meeting’s response to Mr Tsotsi’s proposal?

Ms Naidoo: The board pushed back. We were not comfortable with making the decision. Mr Tsotsi advised us that we had a document – a two page document – and I remember we were very concerned that you can’t make this sort of decision on the basis of a two page document. We were also concerned that we would be deviating from procurement processes, and one of the suggestions was that the inquiry should be done within a period of three months. We were in a crucial stage so it seemed unreasonable for the executives concerned to be put on suspension when their services were needed at the time. One of the board members was particularly concerned that if we put the executives on suspension, it wouldn’t look right from a financial market aspect. Their positions were new. They were always positive and providing us with good information. We had good interactions with them. I think we were basically pushing back and saying that we needed more information. But because it was coming from the Presidency, we needed more comfort. Specifically we thought it would be best if the Minister addresses us and advises us whether this was necessary. The board at that meeting pushed back.

Adv Vanara: There is a subsequent meeting where the Minister comes and address the board on this. What is the Minister saying to the board around this particular issue?

Ms Naidoo: She basically said that she was concerned in terms of what was happening at Eskom. We were a new board and she expected us to deliver. It was up to us to decide what the right route was in identifying what the problem was. Basically, she just passed it on to us and said that we had to make a call on what we are going to do to resolve the matter. She was not happy with the situation.

Adv Vanara: The Minister doesn’t seem to say much at least from your testimony to move you as the board from a position of pushing back on Mr Tsotsi’s suggestion to what appears to have been a persuasion of the board because ultimately there was going to be an investigation, and there were suspensions. What is it that persuaded you from your initial position of push back to Mr Tsotsi’s proposal to agree, if you did agree with the suspension?

Ms Naidoo: Initially we really felt there wasn’t enough information on the table, except Mr Tsotsi saying to us that for us to get the best results from the inquiry, we needed no influence from the executives concerned. And then we have this meeting with the Minister and she says to us: “Guys, you are in a crisis situation. You have to make core decisions in resolving the matter”. So you have this pressure to say that you are now here and it is now your call to make this decision. We then had a subsequent meeting which was on 11 March 2015, the exact day we met with the Minister, and we started discussing what we were going to do. At that meeting, the chairman – Mr Tsotsi – advised us on certain aspects about the executives where he felt there would be a real reason to do this inquiry. He gave us a few examples which Ms Venete Klein has also mentioned. He was creating this atmosphere that there was governance judgement lapse here, and that if we continued with the inquiry “with all these people here, then you are not going to really find what the problem is because they are running the business, they are the management”. The conversation turned very different at the meeting of 11 March 2015.

Adv Vanara: You then decide to suspend the four officials, and one official comes back. Why are the others not coming back?

Ms Naidoo: Once the inquiry was decided, various subcommittees were allocated the task of running with the inquiry. The People and Governance (P&G) committee was tasked with the suspension, the Audit and Risk (A&R) committee which I sat on was responsible for ensuring that we got a service provider to do the inquiry and report to the board. From my understanding and feedback we got from P&G is that most of the executives wanted to leave, except for Mr Matshela Koko. That is why Eskom made a call that he can come back since there were no findings in the Dentons report that incriminated any of the executives or any serious issues.

Adv Vanara: Mr Tshediso Matona had challenged your decision in the Labour Court and was fighting for his job at the CCMA. Did the Dentons investigation find any wrongdoing on his part?

Ms Naidoo: No, the Dentons investigation did not. There was one thing that the terms of reference was clear in the Dentons report. It wasn’t directed at looking for issues around the executives. The purpose of the suspension was to ensure the inquiry happened without anyone influencing it. The intention of the inquiry was not to go and look for dirt on the executives. It was to understand what was really going on at Eskom. We were always talking as a board that “we have to treat the executives fairly”.

Adv Vanara: I like the fairness part of it. Tshediso Matona wanted his job back to the extent that he took you to the CCMA. Why did he not get his job back?

Ms Naidoo: My understating from P&G is that he eventually felt that the relationship between him and Eskom had broken down and that there was no trust in him. That is the advice I recall.

Adv Vanara: That was after Eskom had made it very clear to him that his stay at Eskom is not welcome. What is your response to that?

Ms Naidoo: I remember when the suspension was happening. P&G did discuss with us that when they were drafting the letter to the executives, they made it very clear that the letter stated “there was no wrongdoing on their part”. As I said to you, we were very concerned and did not want to suspend people without any serious evidence in front of us. All those things were presented in their letters and P&G reported to us that the executives were made aware that the purpose of the inquiry is simply to understand what is happening at Eskom.

Adv Vanara: Tshediso Matona was a Group Chief Executive Officer (GCEO) that had been appointed permanently. I want to interrogate the fairness. When he left, was there any attempt on the side of the board considering the circumstances under which he left, to buy him an extended pension?

Ms Naidoo: No. I am not aware of any of that. The one thing I remember P&G providing to us was that Tshediso was very upset and that they were treating him with the utmost fairness. I recall that conversation with the P&G chairlady, Ms Klein.

Adv Vanara: There was no Public Protector report pointing at any wrongdoing or suspicion of wrongdoing on the part of Mr Matona. Is that correct?

Ms Naidoo: Correct.

Adv Vanara: Even the Dentons report, which seemed to be the basis of the suspension did not find any wrong with him?

Ms Naidoo: No. But the terms of reference in the Dentons report was not to look at wrongdoing on the part of the executives, but to understand the core part of the business.

Adv Vanara: Remember, they are suspended on suspicion that they might interfere in the investigation to be conducted by Dentons. Does Dentons say: “Tshediso Matona in one or another way tried to interfere with our investigation”?

Ms Naidoo: No. He was suspended before they even started the inquiry.

Adv Vanara: Why then is the board treating him the manner it did, and later on when Mr Molefe who had been fingered in the Public Protector report, where there are adverse findings, he is treated differently by the same board?

Ms Naidoo: I can’t comment on the Molefe matter as I had already left about five months prior to that. I know on the Tshediso matter, P&G did report to us that they were treating him with utmost respect and making sure that they were fair in their process.

Adv Vanara: Is that what P&G reported to the board?

Ms Naidoo: Correct.

Adv Vanara: Then P&G must have been misleading the board. Can you talk to the probity checks?

Ms Naidoo: You have internal audit at Eskom which consists of assurance and forensics. I was a member of the Board Tender Committee (BTC). Every time a matter came before BTC, you would have to have probity checks done on them. It’s a twofold check; the first part was on the process – internal audit, or acquire the services of an external company to do a probity in terms of the process followed in a tender matter. The second part was forensics to see if there was any conflict in terms of Eskom, which basically is the executive procurement subcommittee, the board, as well as management that was running with the tender. These checks were done before any new tender came to the board.

Adv Vanara: Let us talk to the Tegeta purchase of Optimum Coal Mine (OCM) from Glencore and the prepayment. There is a meeting on 11 April 2016. When do you get to be notified about this BTC meeting?

Ms Naidoo: It was about 20:15 on 11 April. I received an email from the Company Secretary.

Adv Vanara: There is testimony before the Committee, and my understanding is that you had a scheduled BTC meeting two days later on 13 April 2016. Is that correct?

Ms Naidoo: Absolutely.

Adv Vanara: What goes through your mind when that evening you get a message about a meeting in an hour or so?

Ms Naidoo: At that stage it was common practice at Eskom, where you get these urgent meetings, and you would have to quickly read the documents. You would get a SMS or email and then have to quickly read the documentation, and you normally have a short space of time within which to make a call. On that day I was very upset because I wasn’t happy with the transaction in front of me.

Adv Vanara: Before we get to the transaction, you know there is a scheduled meeting in two days’ time. It is already eight o’clock in the evening when you get the message. Do you ever ask yourself what is it that is so urgent that it can’t wait at least until tomorrow?

Ms Naidoo: Absolutely. I did ask in this matter. We were told that there were two contracts that were expiring in three days, and if it waited until the 13th, it would be the day before the contract was expiring which would have been too late for them to resolve the matter.

Adv Vanara: Then there is a submission made. What is the decision of BTC?

Ms Naidoo: The decision here was to extend the two contracts for a period of five months subject to the Chief Financial Officer (CFO) basically giving the Committee assurance that it was financially viable, and that there was a guarantee against Eskom to protect the prepayment, and that the price of the coal was at discount.

Adv Vanara: Let’s interrogate what is presented to you. What is it that you are asked to apply yourselves on?

Ms Naidoo: We were asked to allow an extension of an existing contract for a period of five months at a discount on the price of coal. We were told that the coal is of a certain value and quality which is normally for export purposes, and that we needed to do this prepayment in order to secure supply. Failing this prepayment, we won’t get coal for this particular mine and as a result we could lose I think 600MW which could end up with us resulting in load shedding.

Adv Vanara: Are you told who you are pre-purchasing this coal from?

Ms Naidoo: On the 11th, it was not a pre-purchase; it was a prepayment of coal.

Adv Vanara: Where are you purchasing this coal from?

Ms Naidoo: The two companies were Tegeta and Umsimbithi.

Adv Vanara: Is it ever explained to BTC that this R600+ million is going to enable Tegeta to contribute to the purchase price of Optimum Coal Holdings (OCH)?

Ms Naidoo: Absolutely not. This prepayment was towards coal for Eskom because we needed it. Failing that, we would be short of 600MW, and probably lead us to load shedding.

Adv Vanara: Are you aware that the amount you approved under the pretence of a pre-purchase of coal went to the purchase price?

Ms Naidoo: Yes. Subsequent to that, I have read the State of Capture report, and I have watched the business rescue practitioner give evidence that he did not receive the money that was paid for the coal.

Adv Vanara: At the time was it explained to you where Tegeta was going to get this coal from?

Ms Naidoo: My understanding is that they were in the process of purchasing Optimum and they had an agreement in place with them.

Adv Vanara: So they are in the process of purchasing a mine and they are going to source this coal that you are pre-purchasing from the mine they are going to purchase. Is that your understanding?

Ms Naidoo: Yes.

Adv Vanara: You are a lawyer. Why don’t you ask the question; “Why don’t we go to the business rescue practitioners running the mine, instead of prepaying Tegeta?”

Ms Naidoo: My understanding was that we were actually getting the coal from the rescue practitioners, and that we were paying the rescue practitioners. That is why I asked the question, “if we pay the rescue practitioners, is there a possibility that we would lose our money?”

Adv Vanara: I have seen the submission made to BTC. It does not talk about the business rescue practitioners. It talks about Tegeta. Where did you get the impression that the prepayment was to go to the business rescue practitioners?

Ms Naidoo: It was in the public domain at the time.

Adv Vanara: Ma’am, you are called to a meeting at eight o’clock, you are sent a submission. Isn’t that correct?

Ms Naidoo: Correct.

Adv Vanara: You are expected to make a decision not on what is in the public domain, but what is before you, signed by three officials. I am asking you, in that document, does it bear any reference to the business practitioners?

Ms Naidoo: At the time it was in the newspaper that Tegeta was acquiring…

(Adv Vanara interrupted as Ms Naidoo was answering).

Adv Vanara: Ma’am, we do not have time. I am not asking you about the newspaper. I am asking you about a submission signed by Edwin Mabelane amongst others, and Koko, which you received, raised questions, and attended a meeting. And based on that submission you contributed to making a decision. That is where we are. And I am saying, in that submission there is no reference to a business practitioner. Where are you getting the idea from that the money is not going to Tegeta but it is going to the business rescue practitioners, just answer that question?

Ms Naidoo: It was in the public domain plus prior to that in December 2015, another matter on Optimum had come to us concerning this particular company being in financial strain. Between that period and when the matter came, there were a lot of articles in the paper about the acquisition as well as the company being in business rescue. That is why my question basically addresses that because I specifically remember that.

Adv Vanara: I hear all of that. Please just focus on the submission you had received from Suzanne Daniels. On that submission, is there any reference to the business rescue practitioners?

Ms Naidoo: I don’t recall it, but I remember the reason I asked the question is because of the articles I was reading in the papers.

Adv Vanara: Why do you agree to a prepayment when the business rescue practitioners are not on the document you are meant to be approving?

Ms Naidoo: Because I was of the impression at that time that Tegeta was in control of the mine.

Adv Vanara: The impression was based on what, because you had said a few minutes ago that they were in the process of purchasing the mine, they were not the owners of the mine. What was the basis of you assuming that they were the owners of the mine?

Ms Naidoo: I asked the question: “Will the money be paid to the business rescue practitioner, and if so, will we have the risk of losing the money?”, and I was advised: “No”.

Adv Vanara: So if the money is not going to be paid to the business rescue practitioner when it should be, why do you agree to the prepayment?

Ms Naidoo: Because at that stage I had the impression that the transaction was finalised. I only found out after the state capture report came out that the rescue practitioner only released the company in August 2016.

Adv Vanara: No, Ma’am. You said here on record, under oath that they were in the process of purchasing the mine. I want to find out, because that then becomes inconsistent with you now saying that “you believed the transaction was complete”. What informed your basis of thinking that the transaction was complete, when a few minutes ago you had the impression that they were in the process of purchasing the mine?

Ms Naidoo: Because I asked the question. When the matter came before us, I wasn’t sure at that stage that the transaction was finalised, and that is why I asked the question: “where would the money go to, and is this not the company that was supplying us before, is this the company that is not buying Optimum”. I asked those questions, and one of my questions specifically was: “Is Tegeta the new company that bought Optimum, was Optimum supplying us before and at a better rate, are they not in business rescue, by prepaying them, who gets the money, is it the business rescue practitioner, can we lose the money by it going to the administrator? And as a result of that question they gave me comfort that the transaction was finalised or that the control was in the hands of Tegeta. They did answer that to say “No. The money will not go to the rescue practitioner”.

Adv Vanara: Who told you that the transaction was complete?

Ms Naidoo: The answer to my question was: “The money will not go to the rescue practitioner, and there is no risk of us losing it”.

Adv Vanara: You see, there lies a problem. You are now telling the Committee that you are part and parcel, consciously so, of diverting funds that were due to go to the business rescue practitioner, and you willingly aided and abetted the shifting of those funds. What are you saying to that statement?

Ms Naidoo: Absolutely not. I was buying coal. I was told that we needed to buy this coal for the supply of a mine. There was no thought that we were aiding and abetting, or trying to assist Tegeta at all. The very first time I heard of that matter was when the state capture report came out and I was horrified. Even around this transaction, I was so horrified of the business transaction. It made no sense to me when we were so financially distraught that we were considering a prepayment for anybody - whether it was Tegeta, Optimum, or even the business rescue practitioner. And I was so convinced that this was because it was a necessity and that we really needed this coal.

Adv Vanara: Your first question that you raised, you were concerned that OCM was under business rescue and you are told you need to prepay for coal from a company that is under business rescue. You saw a risk in that, isn’t that so?

Ms Naidoo: Yes, that is correct.

Adv Vanara: And in order to avoid that risk, you had to be persuaded that the money would not go there, it must go somewhere else. But is it not breaking the law? The money ought legitimately to have gone to the business rescue practitioners. Isn’t that the case?

Ms Naidoo: In hindsight, as a result of what I found out, yes, absolutely. But at the time when this telecom was happening, I was given the impression that Tegeta was controlling the mine. And it is clear from my emails that I asked the questions, and I was given comfort. That is a risk for me.

Adv Vanara: Let’s go to the guarantee. The R1.6+ billion. What is your understanding of this guarantee?

Ms Naidoo: The first time I ever heard of this was on television. I think there was an Eskom press briefing, and I recall a journalist or somebody asking I think Zethembe Khoza and Anoj Singh about the R1.6 billion that was issued. I couldn’t recall this at all because that was definitely a threshold in the ambit of the board, and I tried to understand what was happening. I looked at my emails and discovered that on 8 December 2015, there was a late night email sent to the whole board concerning the pre-purchase of coal from Optimum. On the basis of the submission, my understanding was that this was the first time except the 23 April 2015 when the Optimum matter came before us. This was the first time that it really showed that Optimum was in real financial problems and the commitment from Eskom was a pre-purchase of coal. There were submission documents by the Department of Mineral Resources (DMR) to give some commitment to the agreement so that prospective buyers could be interested in this company. The company was put under business rescue and we were given the impression that there were a lot of people’s jobs at stake here. The submission was on the basis of a pre-purchase of coal and I saw it as a commitment to basically make the company look lucrative to prospective buyers and ensure that the company continues running so that we have a supply of coal. I think this particular mine was supplying Hendrina, and the risk would have been that Hendrina would have been affected.

Adv Vanara: I am going to read to you the agreement regarding the purchase of coal from OCM Pty Ltd entered into between Eskom and Tegeta. You are lawyer, please listen carefully and tell me if this makes any sense at all. It says “Eskom has obtained a mandate from its board of directors to enable Tegeta Exploration and Resources Pty Ltd, registration number referred to as Tegeta to pre-purchase coal from OCM for the supply and delivery of coal in accordance with Eskom’s approval framework on substantially the terms and conditions set out in the existing coal supply agreement”. It says “Tegeta is in the process of acquiring all shares on OCM from existing shareholder, OCH”. Let’s start with the first element of what I have read to you. So you, the board of directors are agreeing to this transaction to enable Tegeta to pre-purchase coal from OCM. Does that ring a bell?

Ms Naidoo: Was that the submission document, because the submission documents that came to us on the pre-purchase never mentioned the name of the prospective purchaser?

Adv Vanara: No. I am reading to you what is the basis of a guarantee that Absa Bank must now give Tegeta on behalf of its client Eskom. And this is what is given to Absa by Eskom. Does this make any sense?

Ms Naidoo: Absolutely not. We did not give any assurance on a guarantee.

Adv Vanara: Did you know anything about the guarantee before you made the decision?

Ms Naidoo: Absolutely not. The only time I found out that what we did was turned into a guarantee was after looking at my email and the news conference. If you look at my submission, I had after receiving this document sent questions to the Company Secretary, who had forwarded them to either Mr Anoj Singh or Matshela Koko, because either one of them responded specifically dealing with the price of the coal and whether we could get coal from somebody else. And I responded that “I support it on the basis that all the regulations are complied with, it goes to the Investment and Finance Committee (IFC) for approval. Being on the BTC, I understood the threshold, and the threshold of R1.5 billion had to go to BTC. I actually asked that question to the Company Secretary. I didn’t get a response back, but I understand that there was an IFC meeting the next day which approved this. And then after further investigation I found that on 19 April 2016, which was three months after that request came to us, the board ratified that pre-purchase of coal from OCM. We could never approve a guarantee. A guarantee threshold was R250 million, and at the same time, subject to a lot of restrictions. A guarantee submission of that nature would never have come to the board. Both management and the company secretary were fully aware of that.

Adv Vanara: So this document is a lie?

Ms Naidoo: Absolutely. We did not agree to a guarantee. There is no way you could have turned a prepayment into a guarantee. They are two completely different issues.

Adv Vanara: But this document talks about the pre-purchase of coal. Please help the Committee understand this; there is a mine called OCM which is a subsidiary of OCH owned by Glencore, which has been supplying coal to Eskom and it was burdened by a huge fine. This company is as a result in business rescue. You still want coal from this company. Why do you need Tegeta to go and get the coal instead of Eskom going straight to Tegeta and prepay the coal?

Ms Naidoo: The submission sent to us was that “We have an existing agreement with this particular company at the price of R150 per tonne, and that the company was not happy with the price on the basis that they were running at a loss. There was a submission made prior to this for an increase in the price per tonne, which the board pushed and said the CEO had to negotiate and finalise. From what I understand, from that period until he came to us in December, the company was in a financial situation, they were not making money in the contract as a result of their contract with us, and therefore this is the reason the company was in the situation it was in, and that they needed this sort of commitment in order to get a prospective purchaser that could rescue the company.

Adv Vanara: You see, the terms of the agreement 6.1 read as follows: “Eskom will make an advance payment to OCM to pre-purchase future coal supply in terms of the existing coal supply agreement in the amount of R1.68 billion payable on fulfilment of the conditions”. Not Tegeta. At this stage, Tegeta does not own the mine. Does this money ever go to the business rescue practitioner?

Ms Naidoo: I have no knowledge of that. My knowledge of that in hindsight is that the guarantee was issued but it expired, from what I understand.

Adv Vanara: If there was ever a guarantee, would that guarantee not have had to comply with: one, the delegation of authority, and two, the requirements of the Public Finance Management Act (PFMA)?

Ms Naidoo: Absolutely. The one thing we were very clear with is that once you reach a threshold in terms of the Department of Public Enterprises (DPE), you needed to go to DPE as well as National Treasury. As a tender committee, we were very aware of those thresholds, and that is why I asked the question to the company secretary. It is clear in our terms of reference that this board threshold for the board guarantee is R250 million, which is well below the particular figure which you have mentioned now. What the submission provided for is not what happened.

Adv Vanara: But I have just read you a document I got from ABSA saying that it is your board that has "resolved”. Do you understand my predicament?

Ms Naidoo: I do.

Adv Vanara: You plead ignorance but I have a binding document from Eskom’s bank and this is what is given them as a basis for a guarantee. I have in my possession a response to questions the Committee posed to Absa. One of the questions from the Chair, and was addressed to Ms Maria Ramos. The question reads: “The bank is requested to answer the following questions and provide a response to the Committee: Was there any conversation between representatives of your bank and representatives of Trillian Capital Partners (TCP) or any of its subsidiary companies?” Absa responded: “From the information obtained from Absa employees involved in the process, there was a telephone call from Mr Anoj Singh, the then CFO of Eskom to a representative of Absa on 10 December 2015. During the telephone call a representative of Absa understood that Eric Wood of Regiments Capital was with Singh.” I am not going to ask you about this issue, but what I am interested in is that you are a board of directors, you have an official in the form of Anoj Singh, who is communicating with a bank of the company binding the board, if your testimony is anything to go by under false pretences, next to him is seated Eric Wood. What do you make of that?

Ms Naidoo: I don’t understand how that could have happened because the board did not authorise a guarantee. The minutes are a clear reflection of what the board authorised. We did not authorise a guarantee.

Adv Vanara: Perhaps I was not clear enough, and I am sorry for that. From Absa’s response, it appears that while Anoj Singh is negotiating or arranging this guarantee with Eskom’s bank, next to him is Eric Wood, who is no employee of Eskom, who is no board member of Eskom and who seems to be intricately involved in the business of Eskom. I am asking you in your capacity as a board member associated with a board resolution that seems to be the basis of this guarantee, how do you feel about that?

Ms Naidoo: I was horrified the day when I found out that there was a submission sent to us for the prepayment of coal and it was turned into a guarantee. The matter never came before us in essence if you think about it. Something totally different comes, a totally different request. We deliberate and are given an answer as to what is expected in terms of the submission, and something totally opposite is done. I had already left when that was happening, but I was absolutely horrified when I realised what had happened. I have put it in my submission that there was no way a guarantee request ever came to us.

Adv Vanara: No, further questions Chair.

Members’ questions:

Dr Z Luyenge (ANC): Having listened to you and going through your written submission, I wish to seek more clarity on the following. Once you were ignored by management and alleged to be too operational. Seemingly there was some sort of interference in the manner you were conducting your work. And then the subcommittees took a decision to back off in order to allow management to do their work. That maybe is an indication of where the thin line between the board and management was not very clear. That is my understanding. I want you to elaborate on why you bought into that kind of an arrangement as there was a chaotic situation at Eskom.

Then there was the Dentons report which came into being at the time of the arrival of Mr Brian Molefe and Mr Singh into Eskom. Can I get the responses for these and then I will follow up.

Ms Naidoo: On the issue of being too operational, in the beginning when we started, we were asking a lot of detail. You would get about 500-600 page packs to read at an Audit & Risk (A&R) committee, and you would literally have to read all of this and come with a whole stack of post-its and have to ask a lot of questions and deep dive, and ask a lot of detail. For example, there were so many issues with the New Build, there were a lot of contracts, individual agreements in place whereby there was no EPC or turnkey agreements in place and as a result of which it was filtering through where we are sort of not complying with our obligations and as a result contractors were not complying with theirs, and there were a lot of penalties being implemented on us. There were no exit clauses, and no clauses to go back to and renegotiate some prices, or terms, or things like that. Because I am an attorney, the board asked me to actually have a meeting with management where we could discuss the lessons learnt in terms of the New Build project and things that were implemented, and there was a system in place. We were very detailed in terms of the questions and there was this complaint that we were being too operational. We were asking and probing so much information that management was constantly having to report back to us and they didn’t have enough time to deal with the work at hand, and that is why after discussions at that meeting we decided that we will step back and give them an opportunity to start proving themselves. Specifically at that time the Dentons report was out and the intention was for management to basically comply with all the recommendations within the Dentons report. And if they did do that, then obviously it was a chance for the company to move to a different level which is more sustainable.

Dr Luyenge: To what can you attribute the flaws in the numerous contracts you came across?

Ms Naidoo: It was very strange. We were told that there was so much lack of planning in terms of the New Build that they had obviously misjudged the duration of when particular situations would be finalised. For example, you would have an agreement in place with a contractor who would be doing excavations of a site, and then you would have an agreement, second in nature, for one who would be doing the construction, and then one doing the boiler. You would have all these different agreements instead of an entire turnkey project. And because you had dilemmas in the first agreement, it meant the second contract which was supposed to start in January for example, couldn’t start because the guy that was behind him will only finish the following year in July as a result of which the contract which was supposed to start in January couldn’t start. There were clauses in place which meant that if he couldn’t start, penalties would kick in for which Eskom was liable. It was the entire system in which we entered into these agreements. As Venete Klein mentioned, being a lawyer, exit clauses are something you insist and convenience clauses in terms of going back and renegotiating prices. Eskom’s contracts were following the NEC template. A lot of these agreements were signed off as a template. There were no specific changes made to customise the agreements to the benefit of Eskom, and this resulted in so many penalties and situations where we had to negotiate between two contractors to keep them talking to each other, because in the end if we did not get them talking to each other, we ended up losing. It was really extraordinary the extent to which we would have to assist contractors to talk to each other so that they don’t end in a dilemma which we end up paying for.

Dr Luyenge: Are you suggesting that a compliance officer be seconded from Transnet, and it happened at the same time that Mr Molefe and Mr Singh are seconded. Can you tell me what the condition of Eskom was at the time that Mr Molefe came into the institution?

Ms Naidoo: If you really want to understand what this board did on governance, you need to look at the A&R committee. At every single meeting, we had submissions by the Compliance Officer and Head of Legal, and we dealt with internal audit, external audit, reckless and negligent expenditure, wasteful expenditure. It was a constant thing at every one of our meetings where these issues were coming up. The reason I put those things in there is that you needed to understand that there were so many issues in various sectors but the board committee was always pushing for things to be resolved, or for systems to be put in place so that we can rectify the situation and then monitor. The suggestion to second the compliance officer came from Mr Singh because he said that they had made great changes in Transnet to achieve these things, and that is what we needed.

Dr Luyenge: Do you then justify the suggestion that Mr Tsotsi put forward that the executives be suspended. Is it on the basis that there was this turmoil, why were you ignored when you wanted to have access to the board minutes up until the processes that have led you to be here? And on the Tegeta prepayment, you did not buy into that and you have noted that because of the financial status of Eskom you could not make a prepayment. Also, on T-Systems – the R1.12 billion – in your statement you say “I don’t want to say anything. I can’t tell you what actually transpired”, I want to know what that something is that you do not want to say.

Ms Naidoo: On the issue of Mr Tsotsi, yes, just check the submission document between the period January 2015 and July/August 2015, it was just very depressing. There was no light at the tunnel. It was really bad, specifically in A&R, there was so much wasteful expenditure. I know you are all sitting here and thinking in hindsight the situations that came before us, and Adv Vanara, I would never have signed off on that transaction if I thought it was going anywhere but to purchase coal.

In terms of the minutes, my attorneys and I wrote to Eskom. Because I left, I had given Eskom all the packs and the computer given to me when I became a board member. My saving grace was that I used my Gmail account most of the time, and if I had not, I would not be able to provide this information I have submitted.

I was very uncomfortable to do the prepayment. It was unordinary. Coming from a corporate environment, no one prepays. Business is done very differently. The T-Systems matter was finalised prior to my becoming a BTC member. I was not part of the payment and decision that was made.

Ms N Mazzone (DA): In your submission you say: “the perception in the public domain is that the board failed in its duties of ensuring that governance principles at Eskom were upheld and monitored”. I don’t think it is perception. It is absolute fact. Given your statement and everything you have given us here today, it is very clear that to call a meeting one hour before R600 million is about to change hands, and for people to do this kind of thing late at night, you didn’t even have a printer with you, I’ve got your emails in front of me. You questioned: “Is it alright if just say okay, or do I need to print it out because I don’t have a printer with me?” R600 million is an awfully large amount of money. Would you like to change your statement now and say it is not a perception, and that Eskom indeed failed in its duty to ensure governance principles were upheld?

Ms Naidoo: In hindsight, specifically in terms of what I have read and where the money went, yes.

Ms Mazzone: The R1.6 billion guarantee on page 16. You say the first time you heard of this was when watching an Eskom briefing. This is very concerning because if not someone with your background who had been taken into confidence and shown these documents, if not you, then who is lying because there’s clearly very muddy water here and if you in all honesty did not know the R600 million was a bailout, and you honestly thought this money was being paid for coal then clearly someone told you otherwise. Who did wrong here, if it was not you?

Ms Naidoo: It is definitely management. They never brought the R1.6 billion to the board.

Ms Mazzone: I need you to be a little bit more specific because management is a large term. Who told you that this money was for the purchase coal, we need names?

Ms Naidoo: On the pre-purchase teleconference, I remember writing to the Eskom chairman and BTC chair asking who the executives on the coal were because the people that answered were the Chief Procurement Officer – Edwin Mabelane, and a lady called Ayanda. At the time, my impression hd been that it was Ayanda Noah, who was an executive, because in every one of our meetings, an executive has to be present and they signed the submission document. So I was of the impression that that was the executive on the call. Subsequent to that, when I wrote to the chairman asking who the executive was on the call, he did not reply. My understanding is that the executive on the call was probably Matshela because I sent him all my questions, and the submission document when it came before us was signed by him. The email that was sent to me was also cc’d to him, and I understand that Ayanda that was on the call, was not Ayanda Noah the executive, it was a manager, Ms Ayanda Nteta.

Ms Mazzone: I also have an email in front of me marked “Optimum annexure C”. It is an answer to an email that you originally sent Ms Daniels and it says “Hi, from the current documents, does it mean we are buying coal at the same price in terms of our current agreement. Further, advise if there are any other means of getting coal elsewhere? Your urgent reply is needed for me to consider the enclosed documents. Signed Viroshini”. This is then forwarded and it says “Dear Anoj/Matshela, please see the query from said board member” and it is answered “confirmed. The coal price is for the current coal agreement with OCM. Further advise if there are any other means. “There are no other means of getting coal for Hendrina at a price of R150 per ton. The open inquiry of similar coal quantities for Arnot power station has not yielded similar results”. Are we being lied to, is this email a lie?

Ms Naidoo: That is the email that I received that the coal was for R150 per ton.

Ms Mazzone: This is what they said and you believed them even though it might not be true?

There was a rather large expose done on you and I can understand that is the reason you want to clear your name. In the expose you are quoted as saying “You guys have been targeting the wrong people” and at the time you got very emotional when you were addressing the media. If we as the Committee are targeting the wrong people – and by no means do I think we are targeting you, all we are doing is questioning you – who should we be targeting, and who should we be questioning?

Ms Naidoo: You need to check those emails and those answers, and ask those executives what they presented to us and what they did. They did exactly what Ms Klein said. It is horrifying that you ask board members to sign off on a prepayment and then you go and issue a guarantee for the same amount of money. You ask board members and tell them, “We need this coal and if you don’t do it, these are the circumstances” and then you go out and do something else. You need to call these executives and ask them. You’ve got the emails in front of you.

Ms Mazzone: At the first hint of possible trouble, it is my duty to report this and lay charges in terms of the Prevention and Combating of Corrupt Activities Act. And I have done it for many board executives at Eskom and many companies you have mentioned in your statement. When you smelt a rat, may I ask why you didn’t lay charges or take this further because unfortunately you went ahead with things and clearly you were uncomfortable? It is clear from your evidence that you were uncomfortable, but you still attached your signature to documents. Why didn’t you lay charges?

Ms Naidoo: I only found out about the R657 million not been paid for coal the date the state capture report came out in November 2016. I left on the first of July 2016. I only found out about the guarantee being issued instead of a pre-purchase of coal this year. Between the state capture report and now, my life has been extremely difficult. I firstly did not have these documentations, I have had to pay for my own legal representation, and I was told I can’t take the Public Protector report on review because there were no findings, only observations. The first thing I could have done was take Cliffe Dekker and Eskom to task because they replied to the Public Protector report on my behalf without even contacting me, but I don’t have the capacity or even financial situation to do all of those things right now. You find out about these things almost every day as reading the newspaper or in the inquiry. This stuff has reduced me to tears on more than one occasion because I was passionate about saving Eskom. I am not in a position to go around laying criminal charges when I am also trying to defend myself.

Ms Mazzone: An elephant in the room unfortunately, and I really don’t like to get personal but I have to because it is in your submission, could you please explain to the Committee the issue regarding your husband and the fact that he was the owner of Albatime. Did Albatime contribute to the purchasing of Tegeta and Optimum? When you started at Eskom, you do have a disclosure of interest. You did not originally disclose the fact that your husband [Kuben Moodley] was the advisor to Minister Zwane, who we now know was intricately involved in the purchasing of this mine. You later did disclose it. Why didn’t you originally disclose who your husband was, what he owned, and who he advised?

Ms Naidoo: I was employed by Albatime around April 2015. He was then appointed an Advisor to the Minister from 1 October 2015 to 31 March 2016. At first, because he was reporting to Minister Zwane, and I was reporting to the Minister of Public Enterprises, I did not see the conflict of interest. In January when there were all these articles about Minister Zwane’s involvement in the Optimum transaction, and I remember reading about the Switzerland trip and things, I wrote to Eskom and said “the stuff in the public domain, and my husband is an advisor, I think I should not participate in any matters where we were voting in terms of mining companies”.

Ms Mazzone: Thank you, Chair.

Mr T Rawula (EFF): We have had evidence here of members of Eskom, some were board members, and they indicated that some of them met the Guptas. Remember that this is about state capture, informed by the influence of the Guptas and how their companies have been found to be at the centre of manipulative deals from Eskom. Some of the people that have come here have indicated having met with the Guptas, and some of them have even indicated having been invited to weddings. Some have met with the Guptas together with Ministers and Deputy Ministers. I want you to give us an account of the influence of the Guptas, specifically in the board, and how you guys at the level of the board have been manipulated to ensure that Gupta companies are able to find expression.

Ms Naidoo: I don’t know the Guptas. I have never been influenced by them in terms of anything that came before me at Eskom. I honestly personally don’t mind any company doing business with Eskom. What I really can’t stand is when Eskom is on the losing end. That is passionately I felt about Eskom. I can’t respond in terms of other board members, but I can assure you that no one influenced me in terms of any transaction that came before me. The sad part is that I was influenced by the documentation in front of me that got me to believe that I was doing things in a certain way to benefit Eskom.

Mr Rawula: You have indicated about seven detailed questions you asked prior to signing the prepayment. Did you get detailed answers on the questions you asked, was the prepayment part of the standard practice of Eskom, and was there a provision that enabled Eskom to do that, and if there was not, would you say that the prepayment was a better way of stealing money?

Ms Naidoo: From the time we started at Eskom, we were specifically related to the coal agreement. The one thing that Eskom provided was information that we had cost plus mines. At the beginning of the year we would have contractual obligations with these mines, and I understand that our power stations were built around these mines. I understand that it was built around the mine so that we receive the coal via a conveyor belt as opposed to transport. Therefore it was cheaper and more convenient and fell into the strategy of Eskom to provide electricity at a cheaper price to the consumer. Over time, the cost plus mines worked where you would pay a set budget say R100 million for the mine to operate, and then separate and subsequent to that you would also pay them per ton of coal. In essence that seemed like a prepayment. When this matter came before us, even though it was extraordinary and not what happens in the corporate sector, it was very unusual but was constantly happening where you would get a late night ‘round robin’ to approve a contract for R70 million. It was well below my threshold and I didn’t understand why these matters were coming before us. At A&R we kept asking for the delegation to be looked at. From the time I was there till the time I left, the minutes of the meeting will say that the board asked to look at the delegation and it never happened. The scariness of knowing that we would go on load shedding because of my decision and cost millions to the country is what made me agree to it. It was not something that was normal.

Mr Rawula: Coming to Mr Tsotsi. From the previous witness here, we have received an indication that the majority of the board members were not happy with him because he was running the show and doing as he pleased. And eventually they persuaded him to resign and he eventually resigned. But the decisions he took have cost Eskom. Was there ever a resolution in the board to hold him financially liable and accountable for all the decisions he had taken a chairperson, or has he left as a “walker” for the decisions he took, reckless as they were?

Ms Naidoo: At the time I was there, no. You must understand the board had been there for a short space of time and then we had to do the suspensions, and the Dentons report. And the ironic thing is that Mr Tsotsi left after a short space of time. His exit happened during an uncomfortable situation because of what transpired with Mr Tsotsi and a gentleman called Nick Lennell which the board did not feel comfortable with and eventually resulted in Mr Tsotsi leaving. Right after that we had a board member playing that role and Brian Molefe was seconded. We never sat and looked back and addressed the issue that happened prior to our time that we are going to hold all these people accountable. At that time, it was just trying to rescue the company because of where we were and the situation we were in.

Mr Rawula: I want to know specifically, have you met with Mr Salim Essa, or does the name ring a bell to you? Also did your husband ever talk to you about Eskom or his dealings with the Guptas?

Ms Naidoo: Yes, I do know Mr Salim Essa. My husband knows Mr Salim Essa. We have been in the same social circles. Two years ago we attended the same wedding, and Mr Essa and his wife were present at the wedding and we were seated at the same table. My husband never talked about Eskom. He doesn’t discuss his relationship with me in terms of the Guptas, but I do know he does know them.

Mr Rawula: As a follow up to the question asked about the fact that your husband was doing business with Eskom and also related with the Guptas while you were working at Eskom, would that not constitute part of the conflict of interest you had as an employee of Eskom with your husband linked directly to the Guptas who were milking the assets of Eskom?

Ms Naidoo: I have no knowledge of my husband ever doing business at Eskom. When I worked for Albatime, he had never done any work for Eskom. The perception out there is that he obviously knows Mr Salim Essa and the Guptas and that is what is in the newspapers. I never discussed my matters before with him and he was fully aware that I was on the Eskom board and there was no way he would do business with Eskom.

Mr S Swart (ACDP): Have you ever served on a board before?

Ms Naidoo: Yes, I have. I have been on three boards; South African Women in Mining, BLK Insurance and other private companies.

Mr Swart: Any other SOEs?

Ms Naidoo: No.

Mr Swart: So you apply for this board – Eskom being the biggest SOE – what made you think that with limited understanding that you would be able to add value, or that you qualified to serve on the Eskom board? I am sorry. It is quite personal but we are trying to deal with lack of governance there and issues around the board’s competence. This SOE is in a mess, what made you think that you had the necessary qualifications to remedy what was going on?

Ms Naidoo: I have almost 20 years in legal. I have been a corporate lawyer for a very long time. I sat as an executive in corporate, so I was very confident that I had the abilities as an attorney to apply my mind in terms of being on a board, and that is why I applied for the position. In hindsight, in terms of everything I did, I added tremendous value. With due respect to Dr Pat, he was the only engineer on the board and there are certain things he took for granted simply because he has been in this industry for so long and he saw it happen like the demand side management and so on, but when you come from corporate, and you come from legal, you have different experiences in the private sector in terms of the way business is done, because it is all about the bottom line, and then you come to an SOE and realise the bottom line doesn’t even factor, it is about survival even though they can afford to be so profitable. That sort of knowledge you bring in from a different perspective, and I can confidently say the probing that I did was very valuable to Eskom, and I feel I did contribute.

Mr Swart: You probably heard of our questioning around the suspension of the four executives that resulted in the credit downgrade of Eskom. With your corporate experience and in hindsight now, at that time, did you seriously consider the implications of the suspension of those four executives, and the implication it would have, given your limited experience on a public SOE board?

Ms Naidoo: We did not see that coming. I will be honest with you. We did talk about how it would affect the financial market, specifically because of Mr Pamensky and it is because of his experience. Under no way did the concept even come up or were there even discussions about a downgrade. That was really shocking when it ended up happening. It was devastating to us as a board.

Mr Swart: It seems that at the time there was very little evidence against those executives. Ms Klein indicated that there was no evidence, yet the board agreed that those executives should be suspended and this has a huge detrimental impact on their careers. In hindsight, are you sorry for what happened to those executives?

Ms Naidoo: If it affected their careers, of course. Absolutely!

Mr Swart: The Finance Director gave evidence that it was a push back due to certain decisions they had taken such as her refusing to sign the TNA breakfast contract with a Gupta related company, and that this process was a push back to rid certain people that were obstacles to the promotion of certain interests of Gupta related companies. What is your response to that?

Ms Naidoo: I only found out about it when I listened to the inquiry. Also, when I requested the minutes from Eskom, I said to them I want from the day I arrived till the day I left. Ironically, they only sent me the minutes for December 2014. It was so clear that the board was deliberating specifically on TNA. When the matter came to us, we didn’t receive the minutes from the previous meeting, there was no hand over, and we never had a discussion with any of the board members. The only people that we had discussions with were Ms Mabude and Mr Tsotsi. We should definitely have had a handover because when I read the minutes, it was clear there were a lot of issues concerning this agreement. The one thing that came before us in terms of that resolution was an opinion, not by an auditor or the accounting firm you mentioned, but by a law firm. Basically it set out what the repercussions of the agreement were, specifically that Mr Matjila had signed it with no authority, and that if we chose not to ratify that, this company could chose to sue us for the full value of the contract and the legal fees.

Mr Swart: As a board member and as a lawyer, you are aware of the PFMA, and the fact that the contract was not signed by the Financial Director meant that it was in breach of the PFMA. In reality, you should never have approved that, and disciplinary action should have been taken against Mr Matjila. It was not done. Can you explain why it was not done?

Ms Naidoo: In one of our minutes, we had spoken about it and that the matter was supposed to be investigated. I have been trying to see if the matter came back as an action or not, but it probably was an oversight. There was a discussion that something needs to be done on this matter.

Mr Swart: Would you be in agreement with Ms Klein’s statement that “the board struggled with not having all the required information at hand when submissions were presented, and that it now appears that many of the submissions that were presented in my time contained misleading information or completely omitted information”. You have already given evidence about the Tegeta contract.

Ms Naidoo: Absolutely. Look at my submission on McKinsey. Even in the submission document, it said over and over again that it was a sole agreement.

Mr Swart: But the problem is that responsibility lies with the board members and that is a challenge.

You probably heard me referring this morning to Ms Daniels meeting with the Head of Generation, Mr Koko, and going to meet Mr Essa who you say is a friend of yours. This is two days before the firing of those four executives where he indicated that, “This is what is going to happen in two days’ time” and that is in fact what happened. Does that not corroborate a “capture” version that Mr Salim Essa who is known to be a lieutenant of the Guptas was basically running Eskom or had very strong impetus as to what was going to happen at Eskom?

Ms Naidoo: Mr Essa is not my friend. I just want to place that under record.

Mr Swart: But you knew him, you said that you went to a wedding, and you sat at the table with him, and met in the same social circles. Isn’t that friend?

Ms Naidoo: No. He is not my friend.

Mr Swart: But you mix in the same social circumstances. Let us just move on.

Ms Naidoo: Nobody told us that. That never came forward to us. Even, for example, Ms Daniels said she knew about it. She had almost two years to let the board know about it, but nobody came forward and told us anything. Now everybody is coming and saying these things happened two years ago. Why didn’t they come forward and talk? I mean, there were these odd emails and what you heard on the telecom, where people would meet us in the lift and tell us problems which we tried to resolve and rectify. But none of these things happened.

Mr Swart: What we are trying to do is to put the dots together. Dr Ben Ngubane, appointed as chairman in September 2015, he served as a co-director with Mr Essa; Mr Mark Pamensky is a board member in the Gupta’s Oakbay company; you Ms Naidoo are the wife of Mr Kuben Moodley, friend and business associate of the Guptas and Mr Essa; the other board director, Mr Romeo Khumalo, was a co-director with Mr Essa; Nazia Carrim who is married to a first cousin of Mr Essa; Ms Mariam Cassim, a former employee of the Gupta owned Sahara Computers. Do you understand the whole perception that the whole board was captured by Gupta related companies. Would you not agree that that it is a fair perception?

Ms Naidoo: My entire life in the last year is based on perception and association because I knew certain people I am perceived to have done things wrongly at Eskom or to have been influenced or created undue influence to benefit others. I can assure you, and I swear under oath, I did not. Irrespective of whom I knew. It doesn’t mean because I knew somebody, went to a function and they were there, or had coffee with somebody that I would use undue influence to destroy a company that basically runs South Africa. When that article came out, I wrote to the Minister because I wanted to take the journalist up and the Minister said we were not supposed to respond. By perception, it is really unfair to assume that I am captured.

Mr Swart: But it is very strange the links of all these members of a new board with one particular individual which we know from other evidence is linked to the Guptas. So it is more than perception, it is reality. But what stands for your credibility is the stance you took on the Tegeta mine and the questions you asked in that regard. Thank you for coming this afternoon and I hope we haven’t been too harsh on you.

Mr M Gungubele (ANC): In what capacity were you invited to the meeting on 11 April 2016?

Ms Naidoo: I was a member of the BTC.

Mr Gungubele: What role were you going to play in that meeting?

Ms Naidoo: As a tender board committee member.

Mr Gungubele: Who was chairing that committee at that time?

Ms Naidoo: Mr Zethembe Khoza.

Mr Gungubele: Are there any specific qualities that identified you to be on that board?

Ms Naidoo: When I joined Eskom, I was initially on A&R; Sustainability; and I was on the New Build committee. Then on 2 June 2015 I was on P&G as well, as Dr Ngubane reshuffled the committees and put me on, and to be honest with you, I didn’t want to be on that committee. I objected to my role. Dr Ngubane said that when he saw the questions I asked, he thought I could add value and I needed to accept the role.

Mr Gungubele: So when you finally agreed to this entire process of prepayment, what was the resolution based on?

Ms Naidoo: The resolution was based on that we approve the extension of the two contracts for five months and the CFO must approve the basis for the prepayment and secure the fixed coal price on the extension, granted there is a discount on the price, and the supplier offers a guarantee in favour of Eskom, and that the CFO can provide assurance to the Committee that the transactions are economically viable for Eskom.

Mr Gungubele: So that was the resolution?

Ms Naidoo: Yes.

Mr Gungubele: At that point, you knew that Tegeta did not own OCM but the money was going to be paid to Tegeta in the resolution?

Ms Naidoo: Yes, it talks about the two companies. The two companies were Tegeta and Umsimbithi.

Mr Gungubele: Which company was this money being paid to?

Ms Naidoo: The money was paid to Tegeta.

Mr Gungubele: What role do you have as far as due diligence is concerned as a member of that board?

Ms Naidoo: For me at that stage…

Mr Gungubele (interjecting): Is it one of your responsibilities?

Ms Naidoo: Yes.

Mr Gungubele: Did you exercise it?

Ms Naidoo: Yes, I did. In a short space of time, I think I had 40 minutes to read the submission document.

Mr Gungubele: What was the result of your due diligence?

Ms Naidoo: Two days later we had a meeting with the tender bid committee, and the CFO who normally does not attend, attended that meeting.

Mr Gungubele: I am saying, here is a resolution in front of you, individually yourselves, you want to exercise due diligence. What were the results of your due diligence?

Ms Naidoo: I applied my mind, and to the best of my knowledge …

Mr Gungubele (interjecting): What were the results of the application of your mind?

Ms Naidoo: It was prepayment of coal. As a result of my questions, we were given a guarantee to ensure that the money paid was sort of guaranteed against the share so that there was a protection. My concern was that if we make a prepayment we were going to ….

Mr Gungubele (interjecting): Did Tegeta own a mine at that time?

Ms Naidoo: My understanding at the time was that they were controlling this mine and that is why I asked the question.

Mr Gungubele: Where did you base that?

Ms Naidoo: On the information that was provided to me, and also the information that was circulating.

Mr Gungubele: Which information?

Ms Naidoo: The submission documents together with what was circulating in the public domain.

Mr Gungubele: Are you suggesting that in that meeting you had documents that were a basis to demonstrate that Tegeta owned the mine?

Ms Naidoo: I asked the question “Is this the company that is buying Optimum?” They said yes. I then asked “Is this money going to go to the business rescue practitioners, is there a chance of losing the money?” They said no.

Mr Gungubele: Doesn’t exercise of due diligence dictate that there needs to be a demonstration other than you being told by them? Remember when that position exists, it exists in their presence and their absence. So if you do due diligence, you are looking for the existence of that position in their absence. When you exercise due diligence, you want an independent verification that demonstrates indeed that what they are telling to you is true.

Ms Naidoo: In hindsight, no, but you are right, we should have. 

Mr Gungubele: What is your qualification?

Ms Naidoo: I am a lawyer.

Mr Gungubele: You even owned a firm. So in other words, your academic background obligates you to exercise some fiduciary duties based on your natural honesty and academic training. Am I correct?

Ms Naidoo nodded.

Mr Gungubele: On the suspension, there is something you called pushback points. Here you say that the board chair said to you “This thing must be done!” and you were reluctant, but you say the chair was convincing. What elements in the articulation of the chair made you to be convinced?

Ms Naidoo: He obviously highlighted the two incidents that Ms Klein and I spoke about earlier. He also said that even if we go ahead and the executives hang around, because the inquiry was based on the inquisition of information, these are the people that are going to provide the information and they are going to divert the information. It could be biased. And on that basis, we need to have people not around who could influence it.

Mr Gungubele: How was he convincing? As a lawyer, you need hard facts. What is that was put before you by the chair?

Ms Naidoo: It’s like you are a child on your first day of school….

Mr Gungubele (interjecting): In other words, you were vulnerable to the chair’s authority?

Ms Naidoo: Absolutely.

Mr Gungubele: Did you ask for the documents?

Ms Naidoo: He said he had it. He had it on his table. He said the instruction was coming from the President, and I think we were taken aback. It was so new. Here is the President of the county presenting a document and he wants us to do something. So no, we did not look at it. We said we needed the Minister to come and look at it.

Mr Gungubele: He says: “Boom! President! And then you moved?

Ms Naidoo: You had to be there to understand.

Mr Gungubele: Because the President said so?

Ms Naidoo: Of course.

Mr Gungubele: If people have not committed anything specific, on the basis of prima facie evidence, don’t you think as a lawyer ethically you were committing to a journey of destroying people’s images?

Ms Naidoo: At the time when we did the suspension we did not see it that way. It was very clear in their notices that we did not find any wrongdoing on their part. We made sure it was clear in the public domain. We made sure we took care of all the detail.

Mr R Tseli (ANC): How many were you in the tender bid committee?

Ms Naidoo: It was myself, Zethembe Khoza, Nazia Carrim, and Chwayita Mabude.

Mr Tseli: This R28 000 you are owed by Eskom regarding your legal fees around state capture. Tell us about that, and also why you are not being paid, according to Eskom?

Ms Naidoo: That is my legal fees up until state capture. When the inquiry was disclosed in the public domain and I wrote to Eskom, they sent us a standard letter to say they would support us in the inquiry and pay our legal fees, but nothing has happened. These fees have nothing to do with this inquiry; it had to do with my responses to the Public Protector. To date, they have not paid it, and I knew they were not going to pay for the inquiry to have a lawyer. I have done everything myself. I am here on my own and there is no lawyer behind me. I am at a stage where my attorney doesn’t take my phone calls because I am not paying him.

Mr Tseli: I would appreciate if you talked about the BTC meeting of 10 December 2015 because there are a lot of things not very clear.

Ms Naidoo: I think this had to do with the Duvha matter. I was not there when the Duvha matter was being finalised. I’ll give you a quick background – the Duvha matter came before me at the Recovery and Build Programme board committee where we ascertain all the technical aspects, and when it became technical we sent it back to BTC to sort out all the technical aspects. The matter first came before us because of the value of the claim, there was a loss adjuster, and the loss adjuster was basically dealing with an assessment of the damages, and they also nominated a contractor for doing the repairs. Eskom was not happy with that because the information we received was that the repairs that the loss adjuster’s company was recommending was not like for like. It was something new to South Africa, there would not be spares and there would not be guarantees later on. As a result, it was more feasible for us to take the cash settlement from the insurance company and acquire the services of a contractor to rectify. That is what happened on the 10 December. The whole matter went to the board and the board made that call.

Mr Tseli: Just for the record. The issue of your husband being the adviser to the Minister of Mineral Resources, surely the BTC chairperson did not know at the time when you said you are no longer going to attend BTC meetings because your husband is an advisor to the Minister of Mineral Resources. What is confusing here is that you attended the next meeting when your husband was no longer part of the ministry. But before 31 March 2016 when he resigned, you were attending these meetings. I fail to understand why you are only seeing the conflict of interest now.

Ms Naidoo: My husband was an adviser from the 1 October 2015 to 31 March 2016. I advised Eskom in the beginning February. And the first tender meeting for Eskom was on 10 February. At that meeting, the matter of Optimum came up. I wasn’t excluded from the whole meeting. When the matter came up, I reminded the board that my husband was an advisor to the Minister of Mineral Resources and I was excused. The next tender meeting was in March, and there was no awarding of any contracts, it was only related to strategy. I advised the board again that I should be excused. The board deliberated and said that because they were not issuing any tenders, I could sit in. My husband left at the end of March 2016, and the next meeting of 11 April, I was told by the Chair that there was no conflict and I needed to be present.

Mr Tseli: Thanks, Chair.

Chairperson: Ma’am, you can switch your mic. Thanks for coming…

Mr N Shivambu (EFF) interjecting: Chairperson, you are out of order. You can’t prevent us as members from asking questions. There is no other opportunity to ask questions on burning observations that we are going to ask questions on. You must allow us to ask questions.

Chairperson: I can’t.

Mr Shivambu: But when the Chairperson was Ms Rantho things were running smoothly. Are you deployed to come and disrupt this process?

Chairperson: You are of order.

Mr Shivambu: But you must allow me to ask questions here. I want to ask a few questions, I even wrote to you that I want to ask a few questions.

Chairperson: You can insult me as you like, but I am not going to allow you.

Mr Shivambu: I have a right as a Member of Parliament to ask questions.

Chairperson: Can you allow me to explain to you and respond on record since you have insulted me on record?

Mr Shivambu: Yes. But I want to ask questions after you have responded please.

Chairperson: This witness has been here the whole day and she indicated that she has to leave at 6pm. That is the latest she can be here because she has to catch her flight and her kids are young and alone. She has to leave at 6pm… Mr Shivambu interrupted.

Mr Shivambu: It is long after 6pm, and five minutes won’t change anything.

Chairperson: Wait! When I opened this I indicated that I am opening the list, and I indicated when I was closing the list. You did not raise your hand. We have kept this witness the whole day, and she allowed us to do that. Now that you are delaying us, she is going to miss her flight.

Mr Shivambu: I need five minutes to ask a few basic questions….

Chairperson (interjecting): No. No. I did ask members to raise their hands at the beginning of the process.

Thank you Ma’am for coming before the inquiry and we appreciate you staying here beyond the time that was allocated to you and wish you safe travel. Thank you.

Mr Shivambu: Are you deployed here, Chairperson?

Mr Gungubele: I take exception to the view that the Chair has come to disrupt the Committee. She has been running this Committee very smoothly, and I think when you are a Chairperson you must be given discretion to manage difficult situations. Amongst others, at least one has been allowed to engage the witness. The dictates of the day were such that the witness could not stay beyond 6pm. She has not been deployed here to disrupt the inquiry.

Mr Shivambu: Chairperson, we are going to write an official complaint on your disruptive behaviour because we are asking a simple request and you are refusing that.

Chairperson: Go ahead. Thank you very much.

Mr Shivambu: We are running smoothly and you are coming with factionalist mandated processes to come and disrupt this process.

Dr Luyenge: Chairperson, I did not hear as to what happened but I want to appeal to Honourable Shivambu. We are in this Committee, and we have been operating well, and we are still operating well. I want to also appeal to you, Chairperson, that whatever has happened we are not of that view. If there is any kind of a feeling from any of us as Members who have been engaging each other in a manner that is not political, let us do that. If there is any feeling that any of us have, let us do it in the manner we have been doing our work since we started this operation.

Chairperson: Thank you very much. I would like preparations for our next witness to take their seat.

Witness: Brian Molefe
The Chairperson read the oath to Mr Molefe, and asked if he would like to take an oath or affirmation.

Mr Molefe took the affirmation.

Adv Vanara: Can you for the record state your full names?

Mr Molefe: Brian Molefe.

Adv Vanara: Is it correct that you have prepared a 20 page statement dated 21 November 2017?

Mr Molefe: It is indeed correct.

Adv Vanara: And that you have furnished the Committee with annexures to your statement.

Adv Vanara: With your permission, the statement has been furnished to the members of the Committee, and subsequently because these sessions are open, it will be furnished to members of the public. Do you have any difficulty with that?

Mr Molefe: I do not have a difficulty with that, Chairperson, but I would like to read the statement.

Adv Vanara: In all fairness, if you want to read the statement, please do so.

Mr Molefe: Thank you sir.

Mr Molefe proceeded to read the statement (see document)

Mr Molefe: Thank you Chair.

Adv Vanara: Are you done with your statement, Mr Molefe?

Mr Molefe: Yes, I am done.

Adv Vanara: If you want to finish the interaction with your counsel you can do so because I am not going to allow you to do so once we start interacting. If there is anything you want to sort out, you can finalise.

Mr Molefe: By saying “You will not allow interaction”, are you saying I will not be allowed to confer with him when I am asked a question?

Adv Vanara: Unless it is a matter of legal nature. On a factual issue, you cannot confer with counsel.

Mr Molefe: If you insist, sir.

Adv Vanara: No, no. you have had a discussion with counsel. Has this issue been clarified?

Mr Molefe: Yes, I hear what you are saying.

Adv Vanara: First I want to thank you that when the Committee invited you, you did not get sick, or offer any resistance to coming to the Committee, and you have furnished us with a statement with annexures that you have gone through, and I personally am grateful for that.

Adv Vanara: I might have missed your media statement on your exit from Eskom. Is it in the document you have included in your statement?

Mr Molefe: No. I did not include it. It was not the formal document by which I exited Eskom. The formal document by which I left Eskom to go on retirement was the letter I wrote to Dr Ngubane.

Adv Vanara: When you left Transnet, what was the form of you exiting Transnet, was it by resignation or by early retirement?

Mr Molefe: I resigned.

Adv Vanara: So you went having made a decision that you had secured employment somewhere and are leaving Transnet?

Mr Molefe: Yes, having been persuaded.

Adv Vanara: And it was a unilateral decision. You did not need Transnet to grant you permission to leave?

Mr Molefe: No, I did not.

Adv Vanara: You are correct because resignation is a unilateral act by the employee. In other words, you do not need the employer to give you permission to leave. You can confer with counsel.

Mr Molefe: It is advised that it is unilateral to the extent that it becomes accepted.

Adv Vanara: You made a decision and communicated it to Transnet that you are on your way to Eskom. Early retirement is different from resignation because you need to source consent from the employer as your leaving is not only at your discretion. Is that your understanding?

Mr Molefe: Yes, that is correct.

Adv Vanara: And that is why you have then addressed a letter to Eskom asking for permission to retire early.

Mr Molefe: Yes.

Adv Vanara: Let us go to your press statement after leaving Eskom. I do have it here. I don’t know if you still recall it.

Mr Molefe: Yes, I recall it.

Adv Vanara: Do you want me to give it to you to read for the record?

Mr Molefe: No. That is not necessary.

Adv Vanara: Okay, let me read for the record.

Adv Vanara proceeded to read Mr Molefe’s press statement (see document).

Adv Vanara: Everything said in this statement that is attributed to you, do you associate yourself with it?

Mr Molefe: I associate myself entirely with that statement.

Adv Vanara: The reading of this statement makes it clear that you have decided to “leave your employ at Eskom”. That sounds like a unilateral decision. Do you agree?

Mr Molefe: Mr Vanara, I don’t know if you are trying to say that that statement was a letter of resignation, and if I have not done anything but write that statement, if my employment at Eskom would have been terminated. I am not sure, maybe this is matter that will be decided by the courts next week, but if I had written a statement like that and put it in the public domain, I don’t know if that would jolt the Eskom HR department and Eskom Pension and Provident Fund (EPPF) to start paying my pension benefit because of that public statement.

Adv Vanara: We are coming to the pension. Not so fast.

Mr Molefe: No, I wasn’t talking about the pension. I was just saying I don’t know if you are trying to say that was a resignation letter.

Adv Vanara: You have eloquently articulated the point that this issue is a source of a legal dispute.

Mr Molefe: Indeed.

Adv Vanara: And we are trying to get ourselves out of the mist, and that is why we need to look at all the relevant documents to assist us to understand what you would’ve meant in your media statement. It forms part and parcel in assisting us because your Minister that you thanked in your press statement, is challenging your assertion that you did not resign.

Mr Molefe: Is the Minister saying that she understood that press statement to be a resignation letter?

Adv Vanara: You see, it is the other way around, unfortunately. I ask the questions and you respond.

Mr Molefe: I am asking for clarification of your question. I want to understand if you are saying to me that the Minister’s conclusion is therefore that the statement was a resignation letter. Is that your question to me?

Adv Vanara: No, that is not my question to you. The Minister will come and testify for herself what her understanding is of your stepping down from Eskom. All I am saying is that the Minister in court documents is challenging your assertion that you did not resign. She is of the view that you resigned. Do you want to dispute that?

Mr Molefe: I cannot speak for the Minister. If she has said something or made a challenge in the court documents, she has made the challenge. And if she wants to explain it further, then she will explain it when she comes here.

Adv Vanara: I would never make a mistake of asking you to speak for the Minister. Listen to the question. You want to find out why I am bringing all this information. The point I am making is that it is a source of legal dispute. That is the point I want to make. Let’s move on. Going back to the press statement, I am asking you that my reading of that statement reflects a unilateral decision by yourself to walk away from Eskom. Is that understanding correct or incorrect?

Mr Molefe: Mr Vanara, the matter will be determined by the courts next week as to whether that statement was a resignation letter. The statement may have expressed the fact that I have decided to move on. The question is was the statement to be classified as a resignation letter in terms of the formalities at Eskom. I don’t know, and that is why the matter is before the courts.

Adv Vanara: But you are before Parliament and you have a constitutional obligation to account to Parliament. You were a Group Chief Executive at Eskom, I hope you haven’t forgotten about that constitutional obligation. Have you?

Mr Molefe: I have executed it in the sense that I do not consider that statement to be a resignation letter.

Adv Vanara: You must answer the question that I ask. I am saying, my reading of your statement when you say “I have in the interest of good corporate governance decided to leave my employ at Eskom”. To me that suggests that you on your own took a decision that you were leaving Eskom. Is that a right understanding of what you have written in your statement, yes or no?

Mr Molefe: It is, however, not a straightforward answer of yes or no. The question is does that statement constitute a resignation letter?

Adv Vanara: Your stepping down is your unilateral decision and it is for “good corporate governance”. Those are profound words. And it is because the Public Protector’s report has made these observations and you want to give the process time so that you can clear your name. Have you had an opportunity to clear your name to date?

Mr Molefe: The Public Protector did not make any findings. The advice that I got was that in the absence of findings, there is nothing to clear. She just made observations. She doesn’t even say that I met any of the Guptas. She says “I was in the Saxonwold area”, I don’t know Mr Vanara if you have ever been to Saxonwold?

Adv Vanara (laughing): I have not. I don’t know what Saxonwold looks like, but let’s come back to where we are today. There appears to be a contradiction that you are making. You say that there are no findings in the Public Protector’s report, just observations, and that there is nothing to clear. But in your statement it is your decision that you made because you want to clear your name. Can you record your response?

Mr Molefe: It is my decision that I want to clear my name, but low and behold, when I go and get legal advice as to how do we then start clearing my name to this Public Protector report, the lawyer says “but there is no finding. What is there to clear?” I had a strong feeling, and Venete Klein also said this earlier today that “that report needed to be taken on review”. The lawyer asked: “What are you taking on review? There are no findings. There is only one thing that the Public Protector said for certain, that the President must establish a Commission of Inquiry” and he has instituted a review. The lawyer said it is ridiculous to think that you can say that the Public Protector said, “you were in the area of Saxonwold” and you want a judge to review that observation.

Adv Vanara: I am not interested in what you found out subsequent to making the statement. I am at the time when you made the statement. Is it correct that at that time that you wanted to clear your name?

Mr Molefe: Yes, it is correct.

Adv Vanara: I am asking if there has been an opportunity, because you seem to be saying in your statement: “these things are going to be investigated further because the report itself is not complete and the Public Protector has recommended a Commission of Inquiry”.

Mr Molefe: No, I did not say that. I said: “The Public Protector herself says, these things must be investigated further” so, there has not been an opportunity to clear my name because she did not create an opportunity to clear my name. If there had been further investigations, perhaps findings that could be challenged or proper observations that alluded to, I don’t know, wrong doing and so on, maybe there would be an opportunity clear my name. The frustration that I had and the thing I was very emotional about was that the Public Protector had written this report that said neither yea nor nay but yet had weight in the public domain.

Adv Vanara: Let’s just focus on these proceedings for now. The employer at the time, Eskom, through the board issues a similar statement on the same day. Do you know about the statement?

Mr Molefe: Yes, sir.

Adv Vanara: Let me remind you what media statement by Eskom said.

Adv Vanara proceeded to read Eskom’s media statement (see documents).

Adv Vanara: From this statement, I read the following – that they are looking behind you to get your replacement. From this statement, what is your take?

Mr Molefe: I think you are not correct, Mr Vanara. The operative word there is “decision”. Mr Brian Molefe has taken a decision to step down. At that point I had issued a statement, Eskom issued a statement. Do the two statements constitute action of resignation, or just contemplation of, just communicating a decision? You see, you can decide to go to Bloemfontein as you are sitting here now. It doesn’t mean you are in Bloemfontein or have gone to Bloemfontein until you actually do it. That was two statements that talked about a decision that had been made but not implemented. A decision was implemented two days later when I formally wrote a letter requesting early retirement. Had that early retirement been declined, I would still be at Eskom.

Adv Vanara: With the greatest of respect, and if this is your attitude to responding to questions, then we will leave here at 1am.

Mr Molefe: Perhaps that is why we must leave it up to the courts.

Adv Vanara: No. You must please assist the Committee by responding to the question. I have now gone through the trouble of reading Eskom’s statement. Not your statement. For now we are done with your statement. We are now talking about the statement issued by your employer and I am saying to you that what I read from the statement when they say for instance “Eskom will soon be announcing the interim leadership agreement once agreed with our shareholder representative”. They are thinking behind Brian Molefe. Is that a fair reflection?

Mr Molefe: I think Eskom was appreciating the fact that something was about to happen.

Adv Vanara: So when the board says “Eskom board sincerely thanks Brian Molefe for his relentless dedication”. Was this a thanking in advance?

Mr Molefe: No, it was just about thanking me for my relentless dedication.

Adv Vanara: The Minister will be here tomorrow and one of the questions she will be responding to is her understanding of you leaving Eskom. But the papers that I have read seem to be consistent with your decision that you communicated through your statement, and seems to be consistent with what I read from your employers, and it is a version that she has put before court. I don’t know if it is still going to put it forward tomorrow, but I am saying the one before the court is that you resigned. What is your response to that?

Mr Molefe: Mr Vanara, if you go through the documents you will see that the Minister put a version before court at the beginning of the high court application under oath and in that version of hers that was deposed in an affidavit under oath, she said that she accepted the common mistake that has been done and accepted that therefore the legal position was that Mr Molefe could return and that Mr Molefe has not reigned. Later on, she changed a version that she had already put before court under oath to another version, and even later on, a third version. I will say to you, Mr Vanara, that if you go through those documents, you will find three versions under oath by the Minister.

Adv Vanara: In the internal communication that Eskom sends to the staff that you left behind at Eskom, Dr Ngubane tells the officials at Eskom that you had resigned; which seems to be consistent with the statement made by the board. What is your take on that?

Mr Molefe: Do you have the internal communication, if I can look at it?

Adv Vanara: Yes, I do. I can read it for you. The statement from the chairman reads as follows; “Dear colleagues, the Eskom board recently announced the resignation of Mr Brian Molefe as Eskom GCEO effective 1 January 2017. To minimise the impact on business operations, the Eskom board is pleased to announce that Mr Matshela Koko, currently Group Chief Executive: Generation Division, has been appointed as the Acting GCEO as from 1 December 2016. Mr Koko will act until a new GCEO has been appointed. Mr Koko is a member of the executive committee and has worked alongside Brian in turning operational performance of Eskom. We have full confidence that Mr Koko will continue to steer the organisation with the same determination and drive. Mr Koko holds a BSc in Chemical Engineering from the University of Cape Town, and an MBL from UNISA. He has been with Eskom for the past 21 years. I would like to thank all employees during this transition period. I encourage you to continue with your effort under Mr Koko and the new executive team as you continue to contribute to South Africa’s growth and development. Please join me in congratulating Mr Koko on his new appointment.” Unfortunately I don’t see a date on this statement, but I am sure it is an issue that could well be clarified. But the point I am making is that there seems to be consistency: One, your unilateral decision; two, the communication from Eskom to the world, and Eskom internally, to your having resigned. What is your response to that?

Mr Molefe: I don’t know if Mr Ngubane wrote that statement or when he wrote it. What is of significance is the letter that I wrote to him to request for early retirement. The reason I was asking when he wrote that was to determine if he wrote that statement after he had received the letter I had sent to him. In which case I would be surprised why he did that. Needless to say, Mr Ngubane had an opportunity to make an affidavit under oath in these court proceedings, and in that affidavit he says “I took early retirement, and I did not resign”.

Adv Vanara: I accept that, and we will deal with Dr Ngubane when he is fit to come testify before the Committee. From what we have in front of us, would you accept that it would appear that the evidence suggests that you resigned from Eskom?

Mr Molefe: I do not understand why you are choosing to ignore the official document that I wrote that would determine whether or not I get early retirement, and insist that I had resigned when I had never written an official letter of resignation that would go into my file. I don’t know why you ignore the fact that I wrote a formal letter to the Chairperson as is expected of a person in my position to say that I am in fact taking early retirement. You try to insist that I resigned because the unofficial document says so.

Adv Vanara: Unless you want to disown your statement that you voluntarily communicated to South Africans and the world. Is that your stance now?

Mr Molefe: No, I am not disowning it. I am just saying that it was not a letter of resignation.

Adv Vanara: We will get to the internal communication, but for now, you must agree with me that from your statement on 11 November, confirmed by the board statement on the same day, that based on these documents the only inference to draw is that you resigned?

Mr Molefe: Mr Vanara, if you make a statement that you want to get married, it does not mean that you got married until you appear in front of the marriage officer and finalise the marriage. I do not understand why those statements which are not official documents constitute a resignation letter. But then again, I am not a lawyer, and you are an advocate, so maybe there is a legal side to it.

Adv Vanara: Let’s go to the pension fund. In your narration of your statement, you come across as an individual who is very eloquent in the rules of the pension fund. Is that a fair assessment?

Mr Molefe: No. I wouldn’t say I am eloquent in the rules of the pension fund.

Adv Vanara: To the extent that you have been able to identify relevant issues that pertained to you getting a pension from Eskom, you seem to be demonstrating to the Committee that you understand those rules at least.

Mr Molefe: The rules of the pension fund, I understand because of the legal advice that I have received and it has been explained to me what the rules say. On my own, I cannot say I understand the rules of the pension fund.

Adv Vanara: So this statement of yours, did someone draft it for you?

Mr Molefe: I drafted it, and because I have lawyers working on this case, I asked them to read it and we edited it together.

Adv Vanara: And you are satisfied that the statement reflects what you want to share with the Committee?

Mr Molefe: Indeed, Mr Vanara.

Adv Vanara: And therefore when I say: “reading your own statement” that you are happy with, I gather that you have a fairly good understanding of the rules of the pension fund, at least those that are applicable to the pension regime?

Mr Molefe: What I am saying is that I do not consider the statement that I have drafted to make me an expert on pension fund matters.

Adv Vanara: I can assure that you can after these proceedings play this tape repeatedly and you wouldn’t find me making a reference to you being an expert on pension fund rules. The question is a very simple question. If you don’t want to answer it, please say so because I feel you’re wasting the Committee’s time. The question is, you’ve prepared a statement, you own the statement, you’ve taken us through the statement, and I am saying that “my reading of you is that you understand the relevant rules of the Fund that are applicable to your pension regime”. Is that correct or incorrect?

Mr Molefe: No, it does not necessarily mean that I understand the rules.

Adv Vanara: Let me point out a very simple rule, and before I get there, earlier on you made two distinctions. You got a letter from both the Minster and Dr Ngubane saying that you had been permanently employed. That was your testimony?

Mr Molefe: Yes.

Adv Vanara: Based on that, you were then admitted to the pension fund as a permanent employee. That is your testimony?

Mr Molefe: Yes.

Adv Vanara: Within a matter of days, this confusion seems to be sorted out. I sympathise with you. Your employers did not seem to understand the regime under which they were employing you. Some were saying you were permanently employed and others were saying it should be a five year contract. I get that. That is the message you were communicating, isn’t it?

Mr Molefe: No. It was not a matter of days. I was employed as a permanent employee. A month later a letter was received from the Minister that I should sign a five year contract. The five year contract was signed in March the following year (2016). So it was not a matter of days, and in fact in my head, there was no confusion. I had been employed as a permanent employee, which had been changed to a five year contract.

Adv Vanara: Exactly. When your employment status changed, the pension fund is on record that they started receiving contributions later than the date you had joined, but the contributions were back paid. Is there any reason to dispute that statement?

Mr Molefe: I don’t know when the pension fund received the documents or when they loaded me on the system. I have never investigated that.

Adv Vanara: If you don’t know, then you must accept the wording of those who know. Isn’t it so?

Mr Molefe: Are you talking about faith when you say “if you don’t know, you must accept those who know”?

Adv Vanara: I am saying, because you don’t know when your contributions started to be paid to the pension fund, at least they know when they started receiving your contributions and you cannot challenge them on that.

Mr Molefe: Yes.

Adv Vanara: When you knew that employment status changed from permanency to a fixed five year term, the rules of the pension fund preclude contract employees from membership of the Fund. On what basis did you think you could become a member of the Fund?

Mr Molefe: I received a letter from the Minister on 2 October which had no limitation on that. And I subsequently received a letter and contract from Eskom. On 1 November, the Minister wrote a letter to Dr Ngubane, and after the Minister wrote the letter to Dr Ngubane, I received a letter from Dr Ngubane which is in your evidence. The letter from Dr Ngubane on 11 November, page 52 says: “You will be required to enter into a fixed term employment contract”. The actual entering into the fixed terms contract, happened in March 2016, the following year.

Adv Vanara: March of which year? But it is backdated to 1 October 2015. Is that not so?

Mr Molefe: Yes. It is backdated to 1 October 2015, but between 1 October and when I signed the contract, I was a permanent employee until that changed. What is interesting is that that contract I signed in March also says: “You will continue to a member of the Eskom Pension Fund”. In the rules of the Eskom Pension Fund, rule number 13, if I am not wrong, it says that “If you have become a member of the pension fund, you will continue to be a member of the pension fund as long as your service continues”.

Adv Vanara: No, no. We are not there. Clearly that means if you are eligible and you join, you become part and parcel of the furniture so long as you are in service; it cannot be interpreted to entitle eligible candidates who erroneously find themselves in the pension scheme to continue to be members of the pension fund?

Mr Molefe: I don’t know, perhaps you are saying that therefore when I signed the contract in March, my membership should have been revoked?

Adv Vanara: Not only from March, remember, your contract of employment albeit signed in March, you started earning a salary of GCEO from October 2015. Is that not the case?

Mr Molefe: That is correct.

Adv Vanara: So your actual employment on that contract basis starts on 1 October 2015, and on 1 October 2015, you are not eligible to become a member of the Fund, in terms of the Fund rules which you claim to belong to.

Mr Molefe: But, Mr Vanara, the letter I got on 2 October and the contract that I signed shortly thereafter in October did not specify the term of contract.

Adv Vanara: Let us be clear on one thing. You are permanent at a specific time, it is communicated to you, I sympathise with you. That decision gets to be changed, and you had an option then to say “I am suing you for breach of contract, or I am walking away from this thing or I accept the new terms”. That was the new decision you had to make. Do you accept that?

Mr Molefe: Yes, I agree.

Adv Vanara: And you voluntarily took that decision to accept that five year contract of employment?

Mr Molefe: Yes, I did, sir.

Adv Vanara: And by accepting that contract of employment, you could not have been a member of the Fund because the rules of the Fund says “contract employees are not eligible to be members of the pension fund”.

Mr Molefe: Legal counsel has just showed me a section in the rules of the pension fund that says that “an eligible employee is an employee who is eligible at the date of becoming a member. I don’t know if your point therefore is that in March when I signed the contract retrospectively, my membership to the Fund should have been revoked retrospectively.

Adv Vanara: I am saying that when you were employed on a contract, that employment is 1 October. It gets resolved sometime in March 2016, but by virtue of the nature of employment with Eskom, you are disqualified from being a member of the Eskom Pension Fund. That is the testimony of the Chief Executive and Principal Officer of the Eskom Pension and Provident Fund – Mr Sbu Luthuli – what is your response to that?

Mr Molefe: I don’t know, this is a matter before the courts. I also don’t know why you are ignoring the fact that I had been a permanent employee until the change was made, although it was applied retrospectively. I accept that it is a matter before the courts, but the point is that even if I had not been eligible to be a member of the pension fund, I have accepted that there was a mistake. What you are simply proving is that there were a lot of mistakes. That I did not qualify for early retirement, which I agree. And now you are saying I was not allowed to be a member of the pension fund, maybe the court will agree with you. It is a matter that will be ventilated between the legal people. I accept that. I have said that the whole thing was a mistake, and I have asked, where does that leave me? Where do these mistakes leave me?

Adv Vanara: I accept your candidness. There could well be another perspective to this transaction, that you resigned, and the issue of early retirement was an afterthought. How do you respond to that?

Mr Molefe: There is no other formal document that I wrote to the board about early retirement or resignation. There is only one document which said: “I hereby request for early retirement”.

Adv Vanara: Either way, you are requesting for early retirement in terms of the nine February resolution of the P&G resolution. Is that correct?

Mr Molefe: Yes.

Adv Vanara: But clearly in terms of that resolution, you do not qualify. Do you accept?

Mr Molefe: Why do you say so?

Adv Vanara: Let’s go back to that resolution. Do you have it?

Adv Vanara: Is it part and parcel of your annexures? Can you draw me to it?

Mr Molefe: Page 64.

Adv Vanara: It says: “It this meeting on nine February, the P&G committee resolved the following; the current pension and provident fund role that employees may proceed on retirement from age 50 with 10 years’ service remains applicable”. Now, you were at Eskom for less than two years so this can’t be applicable to you. What is the answer?

Mr Molefe: Sir, paragraph two of that resolution says: “in cases where executive directors decide to take early retirement and there is a shortfall regarding the EPPF 10 year rule, Eskom shall …” so it dealt with the instant where you don’t have 10 years’ service.

Adv Vanara: No, no. that is not what I am reading you. Perhaps let me assist you.

Mr Molefe: Perhaps you should read paragraph two.

Adv Vanara: Perhaps you need to read the entire resolution. Let’s read the entire resolution.

Adv Vanara proceeded to read the resolution by the P&G committee (see annexures under Brian Molefe statement).

Adv Vanara: So you must be 10 years at Eskom.

Mr Molefe: You must be 10 years at Eskom, but if you’re not 10 years at Eskom and you are an executive director whose decided to take early retirement and there is a shortfall of the 10 years, Eskom shall breach. That is my understanding.

Adv Vanara: It is an issue of interpretation which I defer with you. Nonetheless, you were not a member of the Fund irrespective of what they were trying to do.

Mr Molefe: Not only was I not a member, this resolution is wrong because it says in terms of the pension fund, but the pension funds don’t say so. I have admitted that the P&G made a mistake in the court papers. This mistake was the basis that made the legal advice to say the situation must therefore revert to status quo ante because of the common mistake.

Adv Vanara: Okay, I mustn’t waste time. You accept that there was no basis for Eskom to pay money the Eskom Pension Fund as a pension because of this mistake.

Mr Molefe: Yes, I accept that.

Adv Vanara: Sorry for wasting your time. Can we then move to others? You awarded for a very good work you did at Eskom. I have no evidence to challenge that. But two of your non-executive directors this morning and afternoon complained about documents that were submitted by your executives that were incomplete and misleading to a board of which you were a member of. What is your take on that?

Mr Molefe: That was a big problem. The practice at Eskom which was very foreign to me was that members of the executive could compile documents and take them to board subcommittees as well as the board without going through some process at executive level. It is a culture that I tried very hard to change. If you look at the governance structure of Eskom, you must also look at the governance structures below the board. So we have BTC, you had a committee in the executive that reported directly to BTC. CEO was not a member of that committee and did not necessarily see the documents from that committee. It was a source of huge frustration for me. In fact, we tried to change that governance structure. The way that I would have preferred to operate was that all subcommittees at Exco levels are subcommittees of Exco. Everything that goes to board subcommittees and the board must actually come from Exco itself. It was not always the case that things came from Exco to the board. In fact that was more the exception than the rule. The practice had been that there are subcommittees that could meet, that are Exco subcommittees and then directly go to Exco without going through the executive committee, or even without having made recommendations to the CEO.

Adv Vanara: Lastly on my side, let’s deal with the Tegeta prepayment. How come that Eskom prepays coal to a company that does not own a mine?

Mr Molefe: Firstly, let me put in a disclaimer. You would’ve have noticed from Ms Daniels evidence or testimony that a meeting was called on 11 April 2016 in the evening, and I was not in that meeting nor was I invited. Having said that, it does not mean that I do not know anything or the subject of that meeting, if you read Piers Marsden’s testimony, he says they had sold the coal to Tegeta. Let me quote him verbatim: “I think first of all the rationale for the money would need to be interrogated. OCM was in business rescue, so clearly was financially distressed. We had however negotiated better payment terms on the Hendrina contract. This coal supply agreement was between Tegeta and between Eskom, and not between OCM and Tegeta. In terms of a very OCM point of view, we never supplied the coal to Eskom. We supplied the coal to Tegeta on 30 day payment terms”. What he describes there is a transaction for whatever reason where the business rescue sold coal to Tegeta. Tegeta then turns around and says to Eskom: “we have coal. We can sell you coal” and that is how the prepayment was agreed. The prepayment was a pre-purchase because it was necessary. We were in winter. It is a very long story Sir, if you can allow me. The story doesn’t star there. It starts in December. I heard during the testimony that there was a lot of confusion as to why Tegeta was selling coal to Eskom at R400 per ton. There was a mine there at Arnot power station. They were been supplied by Exxaro on a 40 year contract that ended in December 2015. The price of coal on that contract was R1132 per tonne compared to the R150 per ton we were paying at OCM. I suspect the reason OCM wanted an increase was because of this differential, but there was a contract coming to an end in December 2015. Exxaro wanted to renew the contract at R1400 per ton and we said no. we allowed the contract to lapse because it was expensive, and they were not prepared to come down to R400/R500 which is what I say would have been the market price. We were not going to renew at R900, R700, or R600, and they wanted R1400. When the contract ended, we went to buy coal from other coal mines in the area, nine of them, including OCM. That coal they were selling to us at Hendrina, they had an opportunity to sell it to us at R450 or R476 at Arnot. And at Arnot it was a good deal because we had been paying R1132 per ton. In May, this contract came to an end. Six of the nine suppliers said they could not continue supplying coal, three said they could. Of the three, OCM was there. They were in the original nine. Umsimbithi was also one of them. OCM started selling coal at R475. What was interesting was that they started supplying coal there, by the time we wanted to buy coal for winter, the judicial manager said “we have sold the coal to Tegeta on 30 day payment terms, and so the prepayment was done with Tegeta. The R576 million was for coal for May, June and July. By the end of July, in August, all the coal that had been bought in terms of that contract had been delivered. We bought coal for R576 million and it was delivered. There was no question that we lend money. Prepayment was very normal in this business. It had been done over and over again. Piers Marsden also said that. That is my understanding of what happened. It is the understanding I get from interrogating the officials, CFO, and the Head of Generation. I believe they will come here, and they can explain the matter better, especially because I had not been to the meeting on the 11th.

Adv Vanara: Let’s quickly deal with the guarantee. One or two questions, why the guarantee?

Mr Molefe: Which guarantee?

Adv Vanara: That Absa gives to Tegeta.

Mr Molefe: In December?

Adv Vanara: In December 2015.

Mr Molefe: That is a long story. But let me tell you about the story. On 1 December 2015, I had a ‘rotator cuff repair operation’ which was to repair the rotator cuff under general anaesthetic. During that operation I had pulmonary edema, which means my lungs were flooded with water and I was on life support. For the rest of December, I was at home recuperating. I came back in the middle of January 2016. The agreement you are talking about with Absa was concluded in December, but I can assure you it was never exercised. Eskom did not lose one cent. By March 2016 that guarantee was cancelled without been utilised. I was briefed about it when I returned, but it was never utilised. I can’t say I stopped it. It was never utilised, and in March it lapsed. When Mr Singh comes here, he can explain better. I think he was the Acting GCEO at the time.

Adv Vanara: You are very emphatic in your statement that whoever buys the mine must buy the fine. Can you explain the statement?

Mr Molefe: Yes.

Adv Vanara: Why does the fine then disappear after Tegeta acquires the mine?

Mr Molefe: Did it?

Adv Vanara: Yes. They didn’t pay R2.4 billion. Did they?

Mr Molefe: No. they paid R600 million. It did not disappear. Let me tell you how R600 million was arrived at. Remember also that I took early retirement at the end of December. Between January and March, there was an arbitration process, and it is out of that arbitration process that the fine was reduced to R600 million. Mr Singh and Mr Koko will tell you exactly about the size of the coal and the issues that led to the arbitration award of R600 million. What I do notice however is that Glencore had refused to go on arbitration on the matter. Piers Marsden refused to go on arbitration on the matter, and he says this in his testimony. He says we used the rules of business rescue to avoid arbitration. When I was there, my position was that the fine of R2.1 billion stands. And I even said to Mr Glasenberg: “You can’t ask us to write off R2.1 billion when we are trying to recover debt from Soweto”. How do we go to Soweto and ask people to pay for electricity and yet we write Glencore’s debt off? I was quite adamant that they should pay the R2.1 billion. But after I had left, it was reduced to R600 million through an arbitration.

Adv Vanara: No, further questions Chair.

The Chairperson: Thank you very much. While I am pointing out the hands, you can stretch your legs Mr Molefe. You have been seated for more than two hours.

Discussion
Dr Luyenge: Let me indicate from the very onset the importance of this particular session to clear your name in light of what is been said about you and other Chief Executives of SOEs. You came from Transnet before you were second to Eskom. Did you have any knowledge of any service providers at Transnet who had anything to do or owned by the Gupta family because this will be seen as we are beating about the bush. The problem that we have in the country is that there is a hypothetical view that says there is a looting of state resources in the SOEs, and in particular Eskom and Transnet. Can you clarify this Gupta issue?

Mr Molefe: At Transnet, I am not aware that there had been any business between Transnet and any Gupta owned company. At Eskom there was. There had been several coal supplier agreements. There had been Brakfontein, and then eventually they bought OCM. The Brakfontein and other Gupta owned or Oakbay and Tegeta contracts had been entered in at least prior to my arrival at Eskom. These were coal supply contracts like any other coal contract.

Dr Luyenge: Is there any knowledge that you have pertaining to any of the Guptas that stops them from doing business with Government? I want to establish if there is anything criminal with doing business with a person of that particular nature, is there anything that says these companies are not supposed to be used in our supply chain?

Mr Molefe: Mr Gordhan will correct me if I am wrong, but it is clear in the PFMA that a supplier who is unethical or does not behave properly must be blacklisted after a process. You have to go through a process and then notify them before blacklisting. But they have a right to be heard before you blacklist them. I am not aware that the Gupta’s or any of their companies have been blacklisted or found guilty of a crime in South Africa. There is a lot of things that have happened, but if you are sitting there, you have to be objective before you can say to the CFO that you cannot do business with the Gupta’s. He will ask you: “where is the blacklisting?” and to my knowledge it doesn’t exist.

Dr Luyenge: There is Glencore and Anglo American. Those are other big companies that we know of with long term supply contracts with Eskom that we know of. Glencore with a 25 year contract. What is the difference between with these? There are insinuations or witness reports before the Committee that there is work that these Gupta related companies received payment without having any contract with Eskom.

Mr Molefe: People are talking about state capture, but if you want to talk about substantive capture properly, you have to go to all these power stations and mines close to the power stations, and the contracts between the mines and these power stations. The cost plus mines which we were developed with Eskom’s money. What happens is that you Mr Luyenge get a mining license to open a mine next to a power station, Eskom gives you the money to sink the shaft, and then you get a 40 year contract to supply Eskom, and the price is agreed to. In the case of Exxaro, it was R1132. In the case of OCM, which is a 25 year contract, it is not that the contract was bad, the problem with that contract is that the bulk of the supply had been for export so when the export price tanked, they had problems and wanted to recover from Eskom, which we did not allow. By the way Mr Piers Marsden said in his statement, which I found amusing. He “could not believe that anybody could talk like that to Glencore in the way that I had spoken to Glencore”. Something somewhere we must have touched a wrong nerve and shaken a long existing relationship that has to do with these mines. If Parliament wants to understand state capture, with this OCM deal you are scratching on the surface. You must go into the 40 year contracts. They specify even where black people must stay and where white people must stay in the mine with Eskom’s money. Nobody wants the truth commission about that, no one wants the truth about that. Those contracts continue as they were drafted 40 years ago. In fact, in the case of Glencore, they had the audacity to say they want to change the price from R150 to R530 at an additional cost of R1.96 billion per annum, R6 billion over three years that Eskom didn’t have. And then Mr Marsden says “he couldn’t believe that anybody could talk to Glencore like that”. Personally I think that was my problem.

Dr Luyenge: McKinsey is contemplating to pay back the R1.6 billion which they term to be dirty money which was paid directly by Eskom. What is your take on that?

Mr Molefe: Well I know that Ms Daniels has said in public that the monies must be paid back. I have not examined her reasons or the reasons why McKinsey wants to pay back that money. I am sure the CFO when he comes here, will give the details of that contract and explain what happened.

Dr Luyenge: If these matters of this nature where there is this perception of state looting in relation to Eskom, would you be shocked if someone came with enough and sufficient evidence where there was proof of certain individuals or organisations meeting or planning to loot state resources, would you be shocked if your name was on that list?

Mr Molefe: No, I have never been in a meeting to discuss the looting of state resources anyway. In fact if I can expand on that. When I arrived at Eskom we had a War room. Prof Eberhard was here, perhaps he didn’t like what I was saying, but he left. What struck me about the War room is that the problem we had was load shedding. The problem that needed to be confronted head on was load shedding, the War room was shifting the back chairs. Prof Eberhard was a member of the war room. To the point that we made presentations about how we could deal with this thing, on Tetris, and how we think we can improve the operations of the company. Government decided the War room was no longer necessary because Eskom was got this thing under control. When the War room shut down and load shedding ended, some of the members of the War room said this thing was ending because there must have been looting. So now looting becomes the issue, not load shedding. Somebody said that load shedding cost R450 million per day. It cost billions of rands per day just to have load shedding. When that ended another crisis had to be manufactured because that one was gone and it is gone for good because those young engineers embedded at Eskom now have a way of managing the electricity generating plants in such a way that we have enough capacity to generate electricity every day.

Dr Luyenge: Here we are not investigating state capture. We are conducting our oversight. Whatever we find to be in breach of any law, we will recommend to parliament to go to where you say this is the scratching of the source and maybe the true judicial commission of inquiry appointed by the President will go into that. As a citizen of the country, you have a responsibility to give us that evidence to that effect, and send it to Parliament. If it does not get to where it is supposed to be, then you are engaged and provide other evidence, and other people who might not know of that particular fact. We are on a fact finding mission, not a witch hunt.

Mr Molefe: I will cooperate Sir.

Ms Mazzone: Mr Molefe I would like to start off with discussing the PP’s State of Capture report. I would like to start off and say you are 100% right, you were not accused of seeing Mr Atul Gupta as you said earlier. The PP spoke of Ajay Gupta. And what the PP said is that there were 58 telephone calls between Ajay Gupta and Brian Molefe between August 2015 and March 2016. At 19 times at or near the Gupta’s Saxonwold compound, you were there between 5 August and 17 December 2015.

Mr Molefe: The compound?

Ms Mazzone: At or around the compound. What makes these times relevant is that they coincide with the acquisition of OCM by Gupta owned Tegeta. Mr Molefe, my first question based on the PP’s observations would be this; at the now infamous press conference where you read your statement and you were with Dr Ngubane. To refresh your memory, the one where you cried, you spoke of a shebeen, and you told South Africans that you were not at the Gupta compound, but at a shebeen near Saxonwold. Now I am sure you will agree with me that every South African is interested to see where this shebeen is. Journalists have looked for this shebeen, and politicians have driven around looking or this shebeen. Would you tell this Committee where exactly the location of this shebeen is?

Mr Molefe: Chairperson, this is a very respectable hearing, and I would appreciate it if members did not manufacture facts. If you were listening to the statement I read, I read it out because I knew some members would not read it. Paragraph 53 says “Although the PP makes notes of my telephone calls, she did not ask me for my side of the story. Paragraph 5.97 refers to contact between myself and Mr Ajay Gupta on a number of occasions. The PP fails to provide any other details about the phone calls. She does not provide the phone numbers, nor the dates and times when the phone calls were made. It is therefore difficult for me to determine the veracity of the claims she makes in paragraph 5.97 of the report.” Where I talk about Mr Atul Gupta is where the PP says I made one phone call to him that was not a phone call. Mr Atul Gupta did call, the call was not answered because there she provided a date and time so I was able to check in my records. There was a call at exactly that time but I did not answer and there is no record in my phone that I returned the call. That is what I said and not the facts that you are now trying to manufacture. On the issue of the shebeen, I complained to the press ombudsman man about the Sunday Times reporting that I was at the shebeen. The press ombudsman asked Sunday Times to apologise because I had not said I was at the shebeen. What twisted was what I had been saying, and if you go and listen to the video that was recorded when I was making that statement, I also said “every day when I leave home and go to Eskom, I pass within one km of ‘Teasers’, and when I go home I pass there on the highway in Midrand. I get picked up by the same cell phone tower as the one that is at Teasers. Would you therefore come to the conclusion that I was at Teasers two times a week? I made that statement in that context. The ombudsman rule against the Sunday Times and I am surprised that some members of the press continue to say that I was at the shebeen. I wasn’t. It was investigated by a retired judge – he was at UNISA, I forgot his name, he has a bald head – he found that I was not at the Shebeen. It will be better that we do not manufacture facts and sensation Ms Mazzone.

Ms Mazzone: Adv Madonsela said and I quote: “We have evidence from a driver who recorded the registration numbers of cars coming in. He has a whole book of high profile visitors including Molefe”. That is at the Saxonwold shebeen. Will you please tell this Committee a simple yes or no answer, have you been to the Saxonwold Gupta compound?

Mr Molefe: When did she make this statement?

Ms Mazzone: She made it recently.

Mr Molefe: When, when did she make the statement… Ms Mazzone interrupted.

Ms Mazzone: It is irrelevant. I am asking you now, did you or did you not ever visit the Saxonwold compound?

Mr Molefe: I cannot comment on it. It is not part of the official documents.

Ms Mazzone: But it is a simple yes or no answer, either you have been there or you haven’t. Have you been to the Saxonwold Gupta compound, yes or no?

Mr Molefe: Yes, I have. I have never denied that I know the Guptas, I have said in this Committee that I had been invited to Diwali, I had met the Gupta’s. Incidentally, on 30 August 2015, we suspended the Tegeta contract to supply copal from the Brakfontein mine because of the quality issues. The Gupta’s were very angry with us. They requested meetings, they phoned, and there was a lot of exchange to the point where we agreed with them because they were disputing that the people that are saying their coal is not of a good quality have been paid by their opposition and people who do not like them. So we took the coal to the South African Bureau of Standards (SABS) to have it tested. During that period I did have contact with them and we spoke about that issue. I have said in this Committee that I have known them for some time since they came into South Africa. They tried to do a deal at the Public Investment Corporation (PIC) that never succeeded. I knew them from that time, but that does not mean that I have done anything wrong as far as they are concerned.

Ms Mazzone: Let’s talk about your time at the PIC.

Mr Molefe: With respect Chairperson, my understanding is that we are going to talk about Eskom issues and the ... Ms Mazzone interrupted.

Ms Mazzone: Chairperson if Mr Molefe wouldn’t keep interrupting me he would see that I am creating a chain of events.

Mr Molefe: But I am trying to object to you raising the PIC because that is not what I understood to be called here for, and I have not prepared to talk about the PIC or my time at PIC.

Ms Mazzone: Chair, can I finish my question because I has nothing to do with the PIC?

The Chairperson: Mr Molefe you have a right to say yes or no, and also you can indicate if you feel uncomfortable. But the member also has a right to ask a question. For you it is just to respond in the manner that you feel comfortable to respond.

Mr Molefe: Thank you Chairperson.

Ms Mazzone: Mr Molefe you worked at the PIC, and then you worked at Transnet, and then you worked at Eskom. In-between working at the PIC and at Transnet, you had an 11 month break. Did you do any consultation work for the Gupta’s or any Gupta owned company?

Mr Molefe: No.

Ms Mazzone: The former Minister of Mineral Resources, Mr Ramatlodi says that on an occasion Mr Molefe and Dr Ngubane pressured him to help the Gupta’s take Glencore coal mine in 2016. What is your response to that allegation?

Mr Molefe: I have spoken about it.

Ms Mazzone: I would like you to respond to me please.

Mr Molefe: I will read it again for you. “About the time of the sale of the Optimum mine, DMR announced that that Glencore’s mining licenses have been suspended. The reason for the suspension was that Glencore had not followed due process in proposed retrenchment of their workers. The effect of the suspension of the mining licenses would be to guarantee the suspension of coal supplies by OCM to Hendrina. We were relieved when a few days later the suspensions of the licenses was withdrawn. Minister Ramatlodi has said “we tried to get him to suspend the licenses” but he had in fact suspended the licenses, and that is in the press reports”.

Ms Mazzone: Why would Mr Ramatlodi lie, why would he say there was pressurisation when there wasn’t?

Mr Molefe: I don’t know. I have never said Mr Ramatlodi lied. I have a lot of respect for him. He is very senior to me, a senior member of the ANC, I have never said he lied. Perhaps he made a mistake or maybe he had forgotten some of the facts. I have never said that he lied or that he would lie. I respect him immensely.

Ms Mazzone: During your tenure as CEO of Eskom, the relationship between Eskom and Trillian well and truly blossomed. On 14 April 2016, an amount of R30.7 million was paid by Eskom to Trillian for a corporate plan. On 10 August 2016, R113.3 million was paid by Eskom to Trillian for management consulting. Coincidentally, also on 10 August 2016, an amount of R122.2 million was paid for a financial advisory service by Eskom to Trillian. And on 14 December 2016 an amount of R152.8 million was paid by Eskom to Trillian for management consulting fees. Now in a question I asked Minister Brown about Trillian, I asked whether or not there was business going on between Trillian and Eskom, and Minister Brown answered: “No, and not applicable” to the follow up questions. She is claiming that Eskom did not tell her and give her the truth about the relationship between Eskom and Trillian. Do you know why the incorrect information was given to Minister Brown which then led her to mislead Parliament?

Mr Molefe: When was the incorrect information given to Minister Brown?

Ms Mazzone: In a question I asked her earlier in the year.

Mr Molefe: Which year?

Ms Mazzone: Last year.

Mr Molefe: I do not have details of what happened there, of those transactions, and I am sure that Mr Singh can shed light on them.

Ms Mazzone: This is what I am finding worrisome. You were the CEO of Eskom. The largest SOE. It has the monopoly to hold our country’s economy to ransom. On 10 occasions at the very least tonight, you have said to myself, to colleagues, and to Adv Vanara that we must wait for Mr Singh to come and answer these questions. Surely you as CEO of this enormous entity have knowledge of amounts of money going into R100s of millions, and you know what is going on in your company because if you don’t then you failed very badly at corporate governance, and that not only reflects badly on, it reflects badly on the way Eskom is being run. I fail to understand why you cannot give me details because if you didn’t know then were things deliberately been kept from you, is that your assertion?

Mr Molefe: I can understand why you fail to understand. The Committee sent me a letter with specific issues they would like me to discuss. Trillian was not on the list of things. I would’ve gone and researched it, and jogged my memory about what happened at Trillian. But for you Ms Mazzone to come here and hijack me on a transaction that happened on a specific date at a specific minute while I was at Eskom. In Eskom, there are millions of decisions that get taken on a daily basis by Eskom employees that do not require the CEO to know about. There is a procurement decision that is being taken today at Majuba power station. There is a procurement decision that is being taken today somewhere in treasury. There is a decision being taken today about Eskom bonds that the CEO will not know about on the spot or remember the details of when a period of time has elapsed or even if it has not elapsed. It would’ve been helpful if you had indicated that you would have a desire to know about those transactions so in can prepare for those transactions.

Ms Mazzone: Let me make it easier for you then so that we both understand because clearly that is what we need to do. Did you know that Eskom was doing work with Trillian, yes or no?

Mr Molefe: No.

Ms Mazzone: I am one of the millions of South Africans who was deeply perturbed at your resignation/retirement/ reinstatement because I don’t know what to call it yet. I am one of the millions of South Africans who read what I strongly feel to be your resignation letter. The reason I don’t agree with you that it can be viewed as a retirement letter is because, I quote from your very statement: “I will take time to reflect before I decide on my next career move”. If you are retiring, you are not going to have a next career move. How can we not view this to be resignation letter, you stated clearly that you’re “going to take time to reflect before deciding on my next career move”? If you were retiring, I would expect the line to say: “I am going to time and reflect, and enjoy my rounds of golf and spend time with my family” as so many people who retire do. But you specifically mention that you are going to think about your next career move.

Mr Molefe: If you go to page 85 of the document, there is a letter there addressed to Dr Ngubane, chairman of the Eskom board: “I hereby request approval for early retirement in terms of the rules of the pension fund”. I do not understand why you choose to ignore that letter as my formal communication with Eskom about my formal retirement.

Ms Mazzone: I choose to ignore it because you called a press conference and you read that press statement to the country in which you informed the country that you would decide on your next career move.

Mr Molefe: Yes. I would decide. But what did I do? I applied for early retirement.

Ms Mazzone: Mr Molefe I think you are grabbing at straws there, but nonetheless… Mr Molefe interrupted.

Mr Molefe: The feeling is mutual.

Ms Mazzone: Oh, there we go. That’s great. I am so glad we finally agree on something. I have the answering affidavit, the third and final one that Minister Brown submitted. It says: “On 11 November 2016 Mr Molefe resigned as CEO of Eskom. I issued a press statement found in finding papers that I respected his decision to resign. At the time I made the statement, I was not aware that Molefe had in fact applied for early retirement and that Eskom had on 11 November 2016 accepted such application. I was under the impression that this was a case of unilateral resignation and nothing more. In particular at the time, I issued a press statement not aware of the following fact; an early retirement agreement had been concluded between Eskom and Mr Molefe. This agreement as I now understand it was to construe Mr Molefe’s resignation as early retirement in terms of the rules of the EPPF”. I would like to know from you, did you deliberately resign and then decide to retract your resignation when you found out that you would be able to apply through Dr Ngubane for early retirement?

Mr Molefe: Ms Mazzone, as I was saying to Mr Vanara, you would have to consider my press statement as a resignation letter. Something that I dispute. I do not know that if I had issued the press statement and done nothing else that I would have resigned. Or that if I had issued the press statement and Eskom had issued a press statement that the two press statements would have amounted to a resignation. I think the courts will have to determine the status of the press statement with respect to my formal employment and employment contract at Eskom.

Ms Mazzone: Minister Brown is the stakeholder and has therefore very close dealings with the boards of these SOEs, and one would assume in the resignation/retirement of one of their CEOs, she would have a discussion with you about it. Minister Brown says: “All the correspondence past without my knowledge. I was not party to the early retirement agreement between Eskom and Mr Molefe”. Did you at any time discuss the issue with Minister Brown that you decided to retire, or you decided to resign?

Mr Molefe: I did as a matter of courtesy go to Minister Brown’s house and talk about my impending departure. The matter is in the court papers. We did talk about it when I went to her house in Cape Town.

Ms Mazzone: And did you tell her that you had decided to take early retirement or did you tell her you had decided to resign?

Mr Molefe: Minister Brown says her recollection is that I said I resigned, and I disputed that in the court papers.

Ms Mazzone: So there is a very clear dispute between yourself and Minister Brown as to the resignation or retirement.

Ms Mazzone: You had a brief stint in Parliament as an MP. You were sworn in very close after the time of your early retirement/resignation. One would assume that if you retire you would not commence work and be remunerated for it. Be that as it may, Parliament has an ethics code which MPs sign and adhere to. One of those is; if you have any remuneration or other employment you declare it on a declaration of interest. When you filled in the declaration of interest while you were an MP, did you declare your retirement income from Eskom?

Mr Molefe: I can’t remember that I filled in a declaration of interest. If I did, I would have, but I can’t remember that I did.

Ms Mazzone: Another rule of Parliament is that if you have any employment outside of being an MP, your Chief Whip has to sign off on it. In your case your Chief Whip would have been Honourable Jackson Mthembu. Did you have any signed agreement with Jackson Mthembu that you had alternative income because when you returned to Eskom in what was called a reinstatement, Eskom issued a statement to simply say you were on a leave of absence at the time and that your employment/resignation/retirement actually hadn’t taken place? So effectively that means according to the ethics code for MPs and the Powers and Privileges Act, you actually did not qualify to be an MP.

Mr Molefe: I did not have other employment. I was a pensioner. I do not know if you consider a pensioner to be employed such that they have to declare their salary or income. At the time I had a letter from the Eskom Pension Fund that welcomed me as a pensioner. I am not aware of any rule in Parliament that precludes pensioners from being MPs.

Ms Mazzone: So Eskom then erred when they said that you had been reinstated following a brief stint away from the company?

Mr Molefe: I had not in fact strict speaking being reinstated if you read the court papers. My contract of employment was still valid because the early retirement had been void ‘ab initio’ – it was a common mistake – so the original contract of employment was still in place, and that was the legal opinion, and it is on the basis which Eskom asked me to return to work.

Ms Mazzone: So strictly speaking, if your contract of employment was still in place then you were employed by Eskom and you did not qualify to be an MP, strictly speaking?

Mr Molefe: No. I was not aware that the contract of employment is still in place. I laboured under the false impression that I had retired. It is only when the mistake was discovered, that Eskom agreed to ask me to written to work because the contract of employment was still valid. And when that mistake was discovered, I promptly resigned from Parliament.

Ms Mazzone: I see Eskom’s corporate governance is really under scrutiny here. To make a mistake of that magnitude is worrying. I am sure you will agree with me.

Mr Molefe: The Pension fund as well.

Ms Mazzone: You have until November to pay back the pension money. Do you have to pay back that money with interest to the pension fund, or have you reached an agreement?

Mr Molefe: We had reached an agreement when I went back. Part of the reinstatement agreement which governed my coming back to Eskom said that the money that had been paid to me would have to be repaid back to the pension fund and I agreed and signed the agreement that I would pay back the money that had been paid in terms of the pension arrangements. But then that was rescinded.

Ms Mazzone: So it was rescinded, and that money is in your bank account earning interest until 30 November when it gets paid over?

Mr Molefe: No, until the courts determine what my status is. I don’t know now what I am.

Ms Mazzone: We don’t know either.

The Committee was amused, and Mr S Swart (ACDP) said through the microphone: “I think you are a colonel now”.

Mr Molefe: The matter will be determined in court I hope next week. This thing is very strange. I went to the labour court and the judge said: “Go back to the High court on the DA matter”. At the High court I am the respondent, and the judge refused to hear my case where I was the applicant asking; “excuse, what is my status now, can the courts please determine?” and the judge says “Go back to the High court” where I am the respondent. So we are going back to the High court and I am not sure what they are going to say. We may have to go to the Labour court after that and we will have to get clarity of what is happening.

Ms Mazzone: In your stint as an MP, MPs pay to the pension fund of Members of Parliament. Did you receive a pension pay out, did Parliament pay into the pension fund for you, and upon your resignation as an MP, were you paid any form of money for your pension from Parliament, or did they transfer any sum of money to another pension fund for you?

Mr Molefe: No. I don’t know what happened to that pension. It was three months. I never followed it up. I was not paid that money for the contributions I made when I was here.

Ms Mazzone: Do you not think it is strange that you have not followed it up because there is a lot of complications here, this is a very intricate web we are developing here. If your retirement is now viewed to be void Ab initio, your contract at Eskom is deemed to have never cancelled because your retirement is deemed to be void Ab initio, your qualification to be a MP is now brought into question because were you employed at Eskom because of the void Ab initio, should you have been receiving Parliamentary pension money? That is a lot of South Africans contributing toward the Government Employee Pension Fund (GEPF).

Mr Molefe: But it is not prejudiced. I did not take the money there. If anything I made contributions. But I resigned from Parliament so those would have been resignation benefits. I am not sure how much it could have been.

Ms Mazzone: Are you sure you resigned from Parliament?

Mr Molefe: Yes, I did.

Ms Mazzone: One of the things you brought to our attention was that OCM; a) threatened to stop supplying which would result in load shedding; and b) that they were going to charge us R530 per ton for coal. Yesterday Glencore released a statement and I quote: “At no stage did OCM raise the topic of load shedding in its discussions with Eskom, and the last offer under Glencore’s control was R300 a ton until 2018. There is a dispute now, did they threaten load shedding, and from R500 to R300. It is quite a difference. Can I have your comment please?

Mr Molefe: Well they can come and testify here if they wish and dispute what I said, but they did talk about “there would be more load shedding if they stopped supply of coal to Hendrina” in fact they didn’t have to say it, there would be load shedding if they stopped supplying. Now, R300 I don’t know why that makes you comfortable. Increasing the price from R150 to R300 … Ms Mazzone interrupted.

Ms Mazzone: I didn’t say it made me comfortable, I said that I am quoting directly from an article that said that the negotiations said R300. So let’s not manufacture anything here.

Mr Molefe: They had a contractual obligation to supply us with coal for R150 until 2018. Agreeing to increase that by five cents would have been wrong.

Ms Mazzone: Do you have any overseas bank accounts perhaps in Dubai or Switzerland, and are they declared?

Mr Molefe: No, I don’t have bank accounts outside South Africa.

Mr Shivambu: Should we refer to you as Mr Molefe or as Colonel Molefe? Is that an appropriate title when referring to you?

Mr Shivambu: When we dealt with the terms of reference for this process we are engaged in, we ultimately adopted a document which said that the object of this process is to investigate allegations of governance failures at Eskom, Transnet, and Denel. And broadly because of a genuine observation that was made that there is the Gupta family which appoints board members of SOEs. Influence the appointment of senior executives, determines how procurement should be handled, and who should be recipients of such procurements. Amongst others, that is the context within which we are working at. All the questions we will deal with here are ultimately directed at finding certainty in terms of what we are dealing with.

Mr Shivambu: Did you have any work in-between PIC and Transnet?

Mr Molefe: When I left PIC, I had an agreement with Investec where we agreed to look for investments in property with Investec Property division. We were going to work together to identify these opportunities. But eventually I decided that I would go to Transnet.

Mr Shivambu: You decided to go to Transnet or you were approached to go to Transnet?

Mr Molefe: I decided to go to Transnet.

Mr Shivambu: There was a vacancy there and you applied for it?

Mr Molefe: Yes, there was a vacancy for Chief Executive Officer.

Mr Shivambu: At what time did you meet with members of the Gupta, was it during that time when you were working for Investec, or at Transnet, or far much earlier?

Mr Molefe: Before. I had said that they had applied for funding at the PIC, which we declined. I knew them from then already.

Mr Shivambu: Of those Gupta members, who did you specifically meet?

Mr Molefe: Mr Ajay Gupta.

Mr Shivambu: When you were working for Investec, was there ever a time where Fana Hlongwane came to you and said that they could find you a better job elsewhere than working for Investec taking a small desk?

Mr Molefe: No.

Mr Shivambu: You have never had any interaction with Fana Hlongwane during that period?

Mr Molefe: No. I met Fana Hlongwane at Norman Mashabane’s funeral. We talked a little bit and that was it.

Mr Shivambu: Before applied for the Transnet job, did you ever meet with Mr Jacob Zuma in that period?

Mr Molefe: No.

Mr Shivambu: Did you meet with any member of the Gupta family, or any of the following people; Salim Essa; Garry Pita, Nazeem Howa; or Anoj Singh before you took the job in Transnet?

Mr Molefe: No. I actually have never met Mr Salim Essa. Gary Pita, I met at Transnet. I also met Anoj Singh at Transnet.

Mr Shivambu: When did Anoj Singh arrive in Transnet, before or after you had arrived there?

Mr Molefe: I found him at Transnet. Mr Chris Wells was the Acting CFO.

Mr Shivambu: Have you ever met with Eric Wood?

Mr Molefe: I think Eric Wood came to Transnet once trying to do some kind of complicated financial transaction. I didn’t understand and I dismissed him

Mr Shivambu: Have you ever met with Nazeem Howa?

Mr Molefe: Nazeem was at The New Age (TNA).

Mr Shivambu: You met him when you were at Transnet?

Mr Molefe: Yes.

Mr Shivambu: And what was the context of the meeting?

Mr Molefe: It was at TNA. They wanted sponsorships for the breakfasts. He called me about news related things at the time

Mr Shivambu: What ended up happening, did you give them any contracts at Transnet?

Mr Molefe: Yes. Transnet did sponsor several of TNA Breakfasts.

Mr Shivambu: Did Duduzane Zuma ever speak to you about anything when you were at Transnet or Eskom?

Mr Molefe: No. we have never spoken about anything, but I have met him. We were at some birthday party of a one year old party and he came.

Mr Shivambu: When you were at Transnet, how would you rate your performance there, do you think you brought some degree of stability and proper governance in the executive?

Mr Molefe: My performance was rated by the board, and I can’t remember that the board had issues of underperformance from me.

Mr Shivambu: Who approached you to go to Eskom?

Mr Molefe: It was Minister Brown who said to me “we have very serious problems at Eskom. Would you consider going there on an acting capacity?”

Mr Shivambu: When did Minister Brown come to you?

Mr Molefe: I can’t remember the exact date, but it was before I went to Eskom.

Mr Shivambu: Were you aware who was leading Eskom at the particular time when the Minister approached you?

Mr Molefe: There were problems there. People had been suspended.

Mr Shivambu: So you don’t remember that there was a Mr Matona who was appointed less than six months, and was a former Director-General of Public Enterprises which is a department you are reporting to?

Mr Molefe: Did you say Mr Matona was suspended?

Mr Shivambu: Yes, didn’t you say when they approached you there were problems in Eskom?

Mr Molefe: Yes. Mr Matona was suspended.

Mr Shivambu: So you are not worried that here is the DG whom as Transnet you reported to, and was now an executive in Eskom and is now suspended. Didn’t that raise some red flags around your though process?

Mr Molefe: At about that time, I had actually gone to a standard bank branch during the day to do something there. I found the manager at 11 o’clock during the day with his arms folded, and he said “you can’t go inside the bank because there is no electricity”. At about that time I remember being caught up in Traffic in Sandton. Sandton during load shedding became pitch black and it took hours to get from Sandton to Irene where I was staying. And I was very angry as a South African that Sandton has shut down. Sandton needs candles. A branch of Standard Bank is not operating at 11 o’clock during the day because of load shedding. When the Minister said “will you go to Eskom and solve those problems?” I said “yes, I will go and do my best!”

Mr Shivambu: Do you know why I am raising the issue of Mr Matona? It’s because when he came to give evidence here he said that he was employed as GCE, and a new board was appointed to Eskom. In a meeting in which he was supposed to be there, they suspended him without clear reason of why he is been suspended. He said that he didn’t want to waste his money trying to fight against a huge SOE and going up and down because he didn’t have the big pockets. Amidst that, you are then brought in as the GCE. Didn’t you question what happened to the previous CEO, I want to have a hand over process of what was happening before because one of the things Mr Matona said is that “Brian can’t claim that he brought stability to Eskom because we were on our way to bringing stability and dealing with load shedding long before he came there”?

Mr Molefe: I never engaged with Mr Matona on those matters, nor did I involve myself in the issues with Mr Matona. He was suspended, and they asked me to be Acting GCE. While I was acting, I don’t know if he resigned or what happened, but he left on a permanent basis, and then they said “would you consider being the actual GCE? And I said “well, that is fine” especially because at that point we were working on something that I think could help us with load shedding, because at that time it was about plant availability. I said today that I did not resolve the problem of load shedding. I mentioned young engineers who came up the idea of ‘Tetris’ that helped us resolve the problem of load shedding.

Mr Shivambu: Is that how you arrived in Transnet as well, where you just arrive in a huge SOE like Eskom and you do not care to get information from your predecessor, you didn’t even get to know what was happening or the developments? You just hit the ground running and focussed on the way forward?

Mr Molefe: I think this thing of hand over is overrated. The best way to appraise the situation is without the baggage of what had been happening in the past, and to get in there objectively, listen to everybody and make an appreciation on your own without being bombarded by the perceptions or problems of the past.

Mr Shivambu: And then the process of requests for proposals and requests for information which Eskom issued concerning the nuclear build programme, it had happened when you were in Eskom. How was that decision taken that Eskom was going to procure nuclear?

Mr Molefe: It was a cabinet decision.

Mr Shivambu: It was a cabinet decision that you must the RFI and RFP process for nuclear?

Mr Molefe: Yes. I think there was a cabinet subcommittee, and then a cabinet decision.

Mr Shivambu: You said perhaps elsewhere that you went to familiarise yourself with how nuclear energy functions. When did you do that and where?

Mr Molefe: I did it in the course of 2016 at Massachusetts Institute of Technology (MIT). There is a nuclear reactor technology course there.

Mr Shivambu: Do you know the time that Oakbay bought the uranium mine, was it not around the same period?

Mr Molefe: No. they bought the uranium mine when I was at the PIC.

Mr Shivambu: When did the listing happen, didn’t it happen during the period when you were in Eskom?

Mr Molefe: I don’t remember. I never followed up on that.

Mr Shivambu: How do you respond to a view that the whole rush to utilising nuclear as another source of energy was linked to Gupta’s interests and that senior government officials took a bribe from the Russians in order to implement the nuclear energy programme?

Mr Molefe: I don’t know anything about those allegations. But from what I know from a technical point of view, and what I know about Koeberg is that Koeberg is currently giving us the cheapest sources of electricity. The problem with nuclear is that the upfront costs are very high but the life of a nuclear plant is about 80 years with very cheap electricity. The issues are with regards to safety, which can be managed. The United States has 99 nuclear reactors all over the country. France gets over 70% of its electricity from nuclear. The Chinese are doing it, they are building nuclear reactors. I do not understand why we in Africa who do not have electricity are afraid of nuclear or are being made to fear nuclear. From a technical point of view without bringing in the politics and Russians and so on, and look at the matter objectively, if we say let’s procure nuclear from a country that is reliable and provide us with nuclear reactors. Without naming what the country is, would you arrive at the same conclusion? People have a fear of Russia. But I don’t mind if we obtain it from the United States or from China, or from the Japanese, or the French. The thing is we have to get technology that is compatible with what we already have and what we already know.

Mr Shivambu: What about the concern that the present fiscal capacity cannot accommodate a usually expensive nuclear build programme. Isn’t that a genuine concern?

Mr Molefe: I have said that it is possible to fund this thing without touching the fiscus. What you do is ring fence future revenue from the nuclear plant and raise capital against that. That was my view anyway. At the time when the PP came out and I decided to take early retirement, we had been working on possible financial models to do that. It is objective. If people want to criticize that you can’t do that, then it must be on a technical basis, and not that the Russians did that, or Minister signed a contract and so forth.

Mr Shivambu: Are you saying that we must not care about the fiscal complications and consequences of nuclear, and that we must just look at the technical issues narrowly like that?

Mr Molefe: No, but we are going to the other extreme here. We are forgetting the technical issues completely.

Mr Shivambu: Your justification of the Tegeta deal is that Optimum had already sold the coal to Tegeta, and you then gave the prepayment to Tegeta so that they could give you the coal, and ultimately delivered the coal. And then through an arbitration process, the R2.1 billion that OCH was owing was later on reduced to R600 million. Why is it that the prepayment that you gave to Tegeta was exactly the same amount that Tegeta needed to purchase OCH?

Mr Molefe: It wasn’t. If you look at Piers Marsden’s testimony, they were short of R600 million.

Mr Shivambu: And how much did you pay?

Mr Molefe: We bought coal for R586 million.

Mr Molefe: I think you must revisit those figures because the figures that were given here point to the fact that the exact amount that was needed is what Eskom ultimately paid in a meeting called at minute days before the deal could expire. Don’t you think you were been utilised as a vehicle as a means to close a deal the for Gupta’s and Duduzane Zuma’s company?

Mr Molefe: Firstly, I have said that I was not at the meeting on the 11th. Secondly, in understanding the transaction, Piers Marsden’s evidence talks about R600 million that he even went to the banks and tried to borrow. The deal was R586 million to provide coal for three months; May, June; and July; and the coal was provided. The cost of load shedding, which is the cost if we had not had coal for winter for one reason or another, I heard Venete Klein today saying it is R450 million a day. If we can avoid load shedding by doing a prepayment and buying coal, you would be asking us today Mr Shivambu: “Why did you not do that deal so that we can avoid load shedding?”

Mr Shivambu: Can you take us through the process that reduced the amount which reduced the fine from R2.1 billion to R600 million. What exactly happened?

Mr Molefe: That was after I had left. My understanding is that the matter went for arbitration.

Mr Shivambu: So the person who did that was Matshela Koko who was the acting CEO?

Mr Molefe: Yes. And the CFO. They will come here. You can ask them.

Mr Shivambu: And the McKinsey - Trillian services happened while you were in Eskom. Did the services happen while you were at Eskom?

Mr Molefe: The consulting services happened.

Mr Shivambu: I am speaking about the specific one which ended up with the R1.5 billion. Did it happen while you were at Eskom?

Mr Molefe: The payments were made during this year. There was an agreement with McKinsey, and that they would subcontract to Trillian. The question is, was there a subcontracting agreement? There are different versions of what happened there, but I am sure when Mr Singh comes here he will explain. It involved getting permission from Treasury to get the subcontracting agreement to be done. There is a difference of opinion as to whether that permission was granted or not. That can be shed light on by Mr Singh and Mr Koko.

Mr Shivambu: You said that you have not subjected the state of capture report of the PP to a judicial review because of a legal advice. What legal advice is that? I am saying this because in your official submission, you are trying to turn the observations of the PP upside down. You go into town and say the telephone calls were not nine, and that they were actually this number and so on. What kind is legal advice is this that you should not do a judicial review?

Mr Molefe: It says the report has no findings, so there is nothing to review.

Mr Shivambu: Even if it doesn’t have findings Colonel Molefe, the status of it is that it has legal standing as a perspective, and your countenance to what is contained in the PP report means absolutely nothing because you are an authority, you are not law. The PP’s office as has been conferred by the Constitution has authority.

Mr Molefe: Senior counsel disagrees with you, and I am not am lawyer. I take legal advice.

Mr Shivambu: Isn’t that pretty obvious that a report of the PP which is established by the Constitution, and which is established additionally by the PP Act makes certain observations about your movements and your conduct, and you fold your arms and say: “I am not going to say anything”, but when you come here, you want us to listen to you, and you want us to believe what you are saying against a legal document that is a product of investigation by the office of the PP. How should we relate to your information vis-à-vis the PP’s information?

Mr Molefe: Counsel says the Constitutional court says findings… Mr Shivambu interrupted.

Mr Shivambu: What is the name of the counsel?

Mr Molefe: Mr Noel Graves.

Mr Shivambu: What does he say?

Mr Molefe: He says the Constitutional court has said findings are binding. I don’t know what the means. It is a matter which has been ventilated about. My understanding of it is that until there are findings, it is just fresh air.

Mr Shivambu: Findings and remedial action are a product of investigation in terms of what the PP would otherwise do. You can’t say that in a PP report the only thing that is binding is the tail end and what has been the observations, and that the building blocks toward the finding do not matter. Let’s give an example with Nkandla, there are certain findings which are possibly one page, and those findings are a product of the events that happened with Minentle, the architect, officials in the public works department, and all of those things there. Those are the building blocks to the ultimate end, and the findings are the ones which say this is what we think should be remedial action. Isn’t that basic logic Colonel?

Mr Molefe: Well, that was the legal advice that I got. I am not competent in that area. Maybe I will live to regret it one day.

Mr Shivambu: I think that should be the attitude of the Committee as well that unless the observations and building blocks of the PP have been reviewed in a judicial process, we are going to take them as fact because you are not an authority of law. We can’t say that Colonel Brian Molefe has given us an alternate version, and we are going to compare that against the PP which is a Constitutional establishment, and we don’t know we are going to believe. We have no choice as Parliament to pick the part of the PP. Is that a sensible approach?

Mr Molefe: No.

Mr Shivambu: Why not?

Mr Molefe: It just isn’t a sensible approach?

Mr Shivambu: Are you saying that compared to your information, we must believe you instead of the PP?

Mr Molefe: I have given you the answer that there was nothing to review. There were no findings.

Mr Shivambu: Who do we believe now between you and the PP?

Mr Molefe: Can you tell me the phone calls from Mr Ajay Gupta, one phone call, from which number, when?

Mr Shivambu: But the PP has dealt with that. I am not investigating the issue.

Mr Molefe: No, she hasn’t.

Mr Shivambu: But it is there in the PP report.

Mr Molefe: It’s not there. She just says there were phone calls. She doesn’t say when, how, and from which number.

Mr Shivambu: But it has legal standing.

Mr Molefe: No. it does not have legal standing. Just because you want it to have legal standing does not mean it has legal standing. I know you are a very powerful man from the EFF, but just because you have a desire for it to have legal standing does not make it to automatically have legal standing. I am sorry to disappoint you.

Mr Shivambu: I don’t know what the tragedy is now because your lawyer is sitting next to you and he is misleading you in a profound and spectacular way. It is just basic logic.

Mr Molefe: I would rather choose him as my lawyer than you.

Mr Shivambu: Or you can choose a Constitutional structure powered by the Constitution.

Mr Molefe: No. I will not choose Ms Madonsela as my lawyer.

Mr Shivambu: Or you could choose the Constitutional court’s interpretation of the PP report which says that the reports of the PP are binding unless subject to judicial review.

Mr Molefe: There is no findings.

Mr Shivambu: The context is that the findings are a product of a process of investigation and observation.

Mr Molefe: The PP says these matters must be investigated further. That process was not finished. She was in a hurry to finish this report. It was not finished properly. I don’t understand why she did not allow the new PP to finish the investigation.

Mr Shivambu: What is your definition of retirement?

Mr Molefe: I can google it.

Mr Shivambu: Please do.

Mr Shivambu: My reading of retirement is that when you leave employment permanently, in the public statement that you issued you saying “I am leaving Eskom to explore what next steps to take”, and then less than four months you were sworn in which is a next step and nullifies the notion of a letter that you retired from Eskom. Isn’t that the case?

Mr Molefe: Ja. Retirement has the effect that you have left.

Mr Shivambu: So if you leave employment, is that retirement?

Mr Molefe: No. you can resign, you can retire, or...

Mr Shivambu: I am asking for your understanding of retirement. Are you saying that if I leave Parliament and decide to be a full time International Relations Officer in the Head Office of the EFF tomorrow, I’ll say I have retired?

Mr Molefe: If you write a letter to Parliament to ask to retire, and Parliament says they have approved your application to retire, then you have retired.

Mr Shivambu: Isn’t that simplistic Colonel?

Mr Molefe: Things don’t need to be complicated.

Mr Shivambu: We will deal with the merits and assessment off your submissions. The fact of the matter is that Mr Brian Molefe did not retire from Eskom. He resigned, and publicly communicated that to the board and the Minister, and when the narrative of his pension fund could not be fit properly by his resignation he then claimed that he resigned and backdated a letter of retirement to Mr Ben Ngubane who by all means and purposes is not a credible human being. But we will deal with that when we come to assessment and recommendations of what should happen with the whole information that has been provided here.

Mr Molefe: Chair, I think that is unfortunate what Mr Shivambu is trying to do. He is trying to force feed the findings of this august Committee in its work. Today we made a presentation, the questions were asked, and that comment must be reserved for when you want to make the findings. I think it is premature for you to be jumping to conclusions at this early stage.

The Inquiry Committee adjourned for five minute break.

Mr Graves: Chairperson may I raise a point of procedure which is a question for these proceedings?

The Chairperson: Unfortunately you may not engage with me. You can write it down and we will look at it.

Mr Graves: What I will do then is write it down and pass it to Mr Molefe because he certainly has a right to do so. Thank you, I am grateful to you.

The Chairperson: Mr Molefe would you want to raise anything no or shall we proceed?

Mr Molefe: We can proceed.

The Chairperson: Thank you very much Mr Molefe. I appreciate your cooperation. Mr Swart you may proceed.

Mr Swart: You were here earlier today when Ms Klein and Ms Naidoo gave evidence here today. Is that correct?

Mr Molefe: Yes.

Mr Swart: One of the issues they raised is the state of Eskom when they arrived, which would have been around the same time you arrived and you also gave an indication of almost a chaotic situation when you arrived. What steps did you take in terms of the PFMA to report that state of affairs to the shareholder, and do you think that sufficient steps were taken to alleviate your concerns in terms of the PFMA which sets out obligations from a board perspective?

Mr Molefe: The issues of the board and governance and so on were very well known. That is why there was so many changes because there was unhappiness. When you arrive in situations like that, you choose the battles you want to fight. The battle that I chose was load shedding and that is the matter that I focussed on. I would sit and listen to arguments on issues that at that time I considered to be very peripheral and even petty in the face of load shedding. What I did, and what I tried to focus the executives on was a single mindedness to end load shedding. I am happy to report that was achieved. But unfortunately, I think I always thought we would resolve the other issues as we go on.

Mr Swart: We have heard evidence about the four executives that were suspended, and then there was the Denton’s report, and you came soon after. Did you take steps to implement the Denton’s report as well which highlighted a lot of issues related to diesel expenses and a lot of procurement issues which in their view breached the PFMA as well?

Mr Molefe: Actually, I never read the Denton’s report. The issue of the four executives I considered as an issue above my pay grade. What I did when I was there was ensure that by the time I stopped load shedding, we also stop diesel expenses. I think we even came to this Committee and reported that the diesel expenses came down from R1.6 billion a month to zero over a period of time. We worked on practical ways to resolve these issues rather than arguing about it.

Mr Swart: The Denton’s report was drafted at great expenses, and it’s quite strange that you didn’t read it. Was it because it was held back by Dr Ngubane, or what was the reason for not reading that?

Mr Molefe: It was a board document about matters that happened before I got to Eskom. So I didn’t want to concern myself with who had done what. My focus was load shedding

Mr Swart: Correctly, but it did highlight some of the major issues relating to diesel procurement. The McKinsey representative who came here claimed credit for reducing the diesel cost as part of justifying the R1 billion expenditure. Would you dispute that?

Mr Molefe: Anybody can claim the credit for having done it. What matters for me is that the expenditure was stopped. Whether it was myself, Mr Matona, or McKinsey, it doesn’t really matter. The most important thing is that it was stopped. Whoever wants to take credit for it can take credit.

Mr Swart: One of our challenges is the evidence given by yourself when you arrived at Eskom and the state of documentation of the board, record keeping, and this morning Ms Klein said “the board struggled not having all the required information at hand when submissions were presented. She said it now appears that many of the submissions that were considered in my time contained misleading information or completely omitted information. What compounded matters even further for me is that there are now differing versions of matters that I previously thought I fully understood”. Our challenge is that how can we believe what board members tell us if that is the state of documentation and the state of evidence presented by board members? Are you able to comment on that?

Mr Molefe: I don’t know now. But when I was there, there was scope to improve the way we did things and it had to do with the way we defined the structures of the board, and the structures of management, and the role of Exco, and the fact that it should not have been possible for members of Exco to take documents to the board that have not been seen by the GCE.

Mr Swart: You correctly pointed out in your statement that I refer to findings in the PP, and maybe you are correct that there are a lot of observations instead of findings in the PP’s report.

Mr Molefe: There were simply no findings.

Mr Swart: Let’s just look here on page 339, paragraph J which says “Mr Molefe’s relationship with the Gupta family as well as the Directors of Tegeta cannot be ignored. There was a firm line of communication between Mr Ajay Gupta and Mr Molefe”. In my view that is a prima facie finding. It might not be under the heading ‘findings’ but that is factual prima facie evidence and I appreciate your dilemma that you took legal advice but that statement stands as factual evidence. Most of the report says that it is apparent and that those are observances.

Mr Molefe: You say that, that is a finding?

Mr Swart: Well, it is prima facie evidence.

Mr Molefe: I have just been at pains to explain that what she calls “firm line of communication” was this phone call she refers to, and there is nowhere where she mentions exactly the time, telephone numbers, or where the call was made from with Mr Ajay Gupta. She then jumps to this firm line of communication.

Mr Swart: I agree with you on your disputing in the building blocks. But she reaches that point of conclusion that sadly is an issue that you could have reviewed because that is a conclusion of facts that you dispute. If you then look at paragraph 8.1.1 where in terms of the PP’s Act, in terms of section 6(4) (C) (1) where she even noted the NPA and the Hawks that those matters identified in the report where it appears that crimes were committed. In legal parlance, that is prima facie evidence which she then sends for investigation to the NPA and the Hawks in terms of the PP Act. Without debating, I understand your dilemma, and I am saying that in my view, that could be seen as a finding. You are welcome to differ with me and say it is not a finding.

Mr Swart: If we can take this issue of the PP’s observations/findings further… Mr Molefe interfered.

Mr Molefe: Sorry. With respect, there is no observations/findings. It is just observations.

Mr Swart: Well I beg to differ. There are certain findings that appear.

Mr Molefe: Which findings did you find?

Mr Molefe: I gave you the illustration of the one finding.

Mr Molefe: No. that finding is under the heading of “Observations”. Paragraph seven.

Mr Swart: In my view it is a factual finding and we can agree to disagree.

Mr Molefe: I do not believe it is a factual finding because she says that “There is a firm line of communication”. Now where was that firm line of communication demonstrated?

Mr Swart: We are going to be here all night. I am saying, “In my view that is a factual finding” and that is my view. I am entitled to it and you are entitled to differ from me on that.

Mr Molefe: I don’t mind staying here the whole night.

Mr Swart: It doesn’t mean that we should argue back and forth. I am also legally qualified, and in my view that is a factual finding.

Mr Molefe: Because you are a very powerful person.

Mr Swart: No. I am not a powerful person. That is my view, and you are entitled to counter and say it is an observation. But I am saying it is a firm finding that was a firm line of communication. Whether it is based on something erroneous is something different.

Mr Swart: Here is more of an observation. On page 326 she says: “what is further more apparent is that Mr Molefe and Mr Singh stated the following with regard to the contract awarded to Tegeta and the prepayment, and there is a long story here, and that Tegeta indicated that the prepayment would enable them to purchase coal”. Is that correct?

Mr Molefe: Yes.

Mr Swart: Are you 100% sure? What do you mean by purchase coal?

Mr Molefe: The prepayment was a payment for coal to be delivered over the next three months.

Mr Swart: The prepayment in your version here would enable them to operationalise plant and equipment that had been placed on care and maintenance during the shutting of the export component of the mine. That has nothing to do with purchase coal. It is to operationalise plant and equipment. Do you dispute that version of what is put in the PP’s report?

Mr Molefe: With respect Sir, the reasons the money was paid was to get coal. I will not get into what the money was used for. Whether it was to operationalise plants or paid for Optimum or whatever they did. It is a bit like when you buy a car from Volkswagen, do you ask the garage manager what they did with your money after you paid for the car?

Mr Swart: Have a look at the top of the page 326, paragraph O says: “Mr Molefe and Mr Singh stated the following with regards to the contract awarded to Tegeta and the prepayment. Tegeta indicated the prepayment would enable them to operationalise plant and equipment that had been placed on care and maintenance during the shutting of the export component of the mine”. That is what you said the payment was used for, or Mr Singh. And if you say you are not aware of it then we will ask Mr Singh about it do you not remember that, or do you dispute that?

Mr Molefe: Our objective was to get coal for winter.

Mr Swart: Have a look at the top of the Page, paragraph M: “further more apparent given the timing of the prepayment which was approved on 11 April 2016, it appears highly improbable that some or all of the Eskom board approved a prepayment had no knowledge of the true nature of the payment”. Now we know that in this version, the true nature of the payment was the payment to purchase OCM. That is one version and you are welcome to dispute that. I think you have already disputed that. There is other evidence that it went to the purchase of OCM, and that is what is alluded to there.

Mr Molefe: But she does not state it as a fact. She says “what is furthermore apparent” so she is speculating.

Mr Swart: No. She is not speculating. She has evidence before her. She refers to the evidence. Look at page 325. Have a look: “Finding for the purchase of shares in OCH”. There has been speculation as to how Tegeta sourced the funds needed for the purchase. Now she reaches a conclusion that the prepayment of R600 million was used to purchase the issues. That is not the only evidence we have heard, but you are entitled to your own view.

Mr Molefe: I don’t know about you Mr Swart but English is not my first language but it says here “There is much speculation as to how Tegeta sourced the funds”. And then she says “What is furthermore apparent”. It is all speculation.

Mr Swart: Let me assist you Mr Molefe. Let’s read paragraph K: “Mr Howa, on behalf of Tegeta, in an interview with Carte Blanche stated that the funds were sourced using a mixture of debt and their own funding. Mr Howa further states the prepayment was used to service the Arnot contract. And that the drag line was de-commissioned in June, and that the cost to restart this is R1 billion”. This is nothing about operationalising plant and equipment, but anyway. Paragraph L: “These statements made by Tegeta and Mr Howa appear to be false. The prepayment of R659 million inclusive of VAT appears to be entirely for the purchase price of OCH. She uses the word ‘appears’ but that links the prepayment to the purchase price.

Mr Molefe: The moment she says ‘appears’ it is the end of the matter for me because she is speculating.

Mr Swart: She might be, but she builds a case similarly with the other evidence; banking details, movement of funds; and again, you are quite right, you might say you don’t accept that, but there is a lot of evidence before us that all culminates to the conclusion that the prepayment was used to fund the purchase of OCM. And then she says “In the light of the above, it appears that the conduct of the Eskom board was solely (so it’s an observation) to benefit Tegeta in the awarding a contract… Mr Molefe interfered.

Mr Molefe: It wasn’t even an observation. It is speculation. “Appears” “appears” appears” Sir!

Mr Swart: No. These are observations.

Mr Molefe: When something appears to be like this, it is not an observation. (Holding his water bottle), it could appear to be a bottle of beer, but it isn’t.

Mr Swart: Do you dispute that? Do you dispute that the conduct of Eskom board was … Mr Molefe interfered.

Mr Molefe: I don’t dispute that … Mr Swart interfered.

Mr Swart: Mr Molefe, we are going to be here whole night because you are not allowing me to put questions to you. Allow me to complete my questions.

Mr Swart: In the light of the above, it appears that the conduct of the Eskom board was to solely benefit Tegeta in the awarding of a contracts to them and that it appears to be inconsistence with the PFMA. Would you disagree with that?

Mr Molefe: She does not say it is in contravention of the PFMA. She says “it appears”.

Mr Swart: Why do you think the business rescue practitioners filed a report with the Hawks that had been a contravention of section 34 of the Prevention of Corrupt Activities Act following a request to them to find R600 million that Tegeta was short, and the same amount which was R586 million was a prepayment?

Mr Molefe: I don’t know.

Mr Swart: Did you read that in the PP report?

Mr Molefe: No. I also saw that Piers Marsden talked about when he was here. I don’t know why they filed a complaint with the Hawks.

Mr Swart: So you did not read it in the PP report?

Mr Molefe: I did. And Piers Marsden also talked about it when he was here.

Mr Swart: Correct, and it was a great concern to them.

Mr Molefe: If I may, I have also reported Ms Mazzone to the police. And nothing came of it.

Mr Swart: Okay. So you have a similar complaint with the Hawks. The interesting aspects of this whole issue relating to state capture is the reluctance of the Hawks to investigate the observations in the PP’s report. Would you agree that is a matter of concern?

Mr Molefe: No. I can’t speak for the Hawks. They are very competent people. They take their work seriously, and I do not want to speculate like that.

Mr Swart: But just on a factual basis, it is over a year since the PP report was issued and we have had no progress in this matter that was referred in terms of the PP Act to the Hawks.

Mr Molefe: I think you must take that matter up with the Minister of Police, or the Minister of Justice.

Mr Swart: Have you ever found a situation where you have so many board members as you had at Eskom that had direct links to two persons; Mr Salim Essa and the Gupta family. And just to remind you what I put to Ms Naidoo; Dr Ben Ngubane served as co-Director with Mr Salim Essa; Mr Mark Pamensky sat on the board of the Gupta owned Oakbay Investments; Ms Naidoo is the wife of Mr Kuben Moodley – a friend and business associate of the Gupta’s and Salim Essa; Mr Romeo Khumalo was a co-Director with Mr Salim Essa; Ms Nazia Carrim is married to the first cousin of Mr Salim Essa; Ms Miriam Cassim is a former employee of the Gupta’s Sahara computers. That’s six board members newly appointed that have all have links to Mr Salim Essa and the Gupta’s. Do you not find that strange and something that is inexplicable, or have you ever experienced something like that in your board experience?

Mr Molefe: I think those board members should answer for themselves. Ms Viroshini Naidoo was here and she explained, and I think the rest of them should explain. When I arrived at Eskom, my primary focus was load shedding. I was not going and investigating who has a relationship or whose husband has a company where and so on. In fact I stayed out of those issues because there was a very important job to do which was to eradicate load shedding.

Mr Swart: And I appreciate the work that you did there. As a concluding comment, you have admitted that you also had a healthy relationship with Mr Gupta, and I am not sure if you also indicated your relationship with Mr Salim Essa?

Mr Molefe: I have never met Mr Salim Essa. I have never talked about a relationship with Mr Gupta, but I have said I know him. I cannot sit here and say I don’t know them. I do know them. I have been to their house, they have invited me to their house for Diwali, and other social functions in the past that I have honoured just like I have been invited by other people. I know them, I have been to their house, but I have never done anything illegal with them.

Mr Swart: Were you aware of the Transnet locomotive deal that has been in the news a lot and the role that Mr Salim Essa played in the purchase of a number of locomotives from China South Rail contract?

Mr Molefe: I am not aware that Mr Salim Essa played a role. There’s a journalist who called and said he has got an email that there is an email that was sent to me by the Chinese asking to view a facility at Koedoespoort and I forwarded the email to Mr ‘Khama’ and he said “are you aware that Mr Salim Essa has got that email” and I said “I am not aware, I don’t even know how you got know that information, and I am not aware of Salim Essa’s involvement in the locomotive contract”.

Mr Swart: Just to assist you, and you might not be aware. But the ‘Tequesta’ company that brokered the locomotive deal with the Chinese manufacturer and then obtained a R5.3 billion commission for the introduction. And that is in the Gupta-leaked emails and in the OUTA documents SOE 34. What is outstanding is that there is a contract with a clause that requires certain work to be done by ‘Tequesta’ and says here “it is hereby noted and agreed between the parties that the services that are to be provided have been provided and will conclude in the company signing the contract for the project”. That clause is worth R5.4 billion, R10 million on every R50 million locomotive, but you have indicated that you are not aware of that so thank you very much Mr Molefe.

Mr Tseli: This request for variation of price that you found Eskom dealing with when you joined them. Was it something strange or something you have across, maybe from your previous employment?

Mr Molefe: Not to this extent. The financial implications of this would have R6 billion over three years, R1.98 billion per annum. Optimum supplied 5.5 million tons of coal per annum to Eskom at R150 per ton. If you take R150 multiplied by 5.5 million, and then R530 multiplied by 5.5 million, and minus R150 multiplied by 5.5 you get the difference of R1.98 billion. That is what we would have had to pay extra. I found this preposterous, and I said this to Glencore and I was even shocked that the matter had even been entertained at Eskom. Now I hear Piers Marsden saying that everybody was surprised that Mr Molefe had dared to talk like that to Glencore. This means that in the past, things like this had been done and people just looked the other way.

Mr Tseli: Was the decision ready by Eskom that you were not comfortable with, or was it almost a written conclusion around this particular matter?

Mr Molefe: Glencore as well as Piers Marsden say that when I arrived, they were close to reaching a decision and then in Mr Marsden’s words “A hornet’s nest was unleashed when Molefe arrived because he refused to do the deal”.

Mr Tseli: From what the other witness was saying earlier, it looks like this change of contract from permanent to contract was not something that was to affect Eskom alone. Am I right?

Mr Molefe: The letter from the Minister was just about the Executive Directors at Eskom. My experience is that this change of contract was actually happening across all SOEs.

Mr Tseli: Do you have an ideas as to how other affected people were handling this matter?

Mr Molefe: No. I don’t have an idea.

Mr Tseli: The R600 million shortfall for Trillian that one of the witnesses spoke about, from what they were saying, they went to the banks, the banks could not approve, and later they realised that it was Eskom that paid the R586 million. Do you know anything about this?

Mr Molefe: As I said, the meeting to approve that transaction happened on 11 April. A meeting that I was not part of but I subsequently got to know about exactly what was approved. It was for the pre-purchase of coal for the month of May, June, and July for Arnot at the price of R475 per ton. It is coal we required to keep Arnot alive because we did not continue with the contract of R1132. I got to know about it subsequently and I had no problems with the transactions.

Mr Tseli: What was the role of Ms Daniels in the company as the Company Secretary and Head of Legal at some stage, my take is that she was advising the company and working very closely with your office?

Mr Molefe: Yes. Ms Daniels when I shortly arrived at Eskom, the Company Secretary resigned and she moved to the office of the Company Secretary. I must say to you that under her, the record keeping, minute taking, and producing minutes on time improved immensely. A lot of the transactions that happened and drafting that happened also happened while she was the Chairperson’s Advisor or something like that, so she knew a lot about the contracts and the historical backgrounds to the contracts. Even when I was there, she assisted a lot in giving advice to the board as a Company Secretary. She was extremely competent. That included also on the matter of the pension where she was very involved. She was my point of contact to the board to communicate my return to Eskom when I was in Parliament. She facilitated the meetings, provided the legal advice and so on and so forth.

Mr Tseli: At the time that you were confirmed as the CEO, the board was unanimous that you have played a very significant role in turning the company around. From what the other witness was saying that was part of the factors they considered that remain the person they consider for the position of CEO. The problem that other board members had was the appointment without due process or not having considered other external recruitment processes. What is your take on that?

Mr Molefe: I am not sure if it is in the MOI or some other founding document of Eskom which says that if a person has been acting in a position for a period of at least six months, that person can be appointed into that position without much further ado. My understanding when I was appointed was that I had finished acting for six months and that the board was ready to recommend that I would be appointed officially after acting for six months. The recommendation went to the Minister and then it was approved by Cabinet.

Mr Tseli: At the time you were applying for early retirement, was there any interaction between you and the Minister around this issue?

Mr Molefe: No. there was no real interaction to discuss early retirement. I did however pay her a courtesy call at her house that I had decided I would not be continuing at Eskom, she then says her recollection of that meeting was that I had said I had resigned, but I did not mention the word resignation in that meeting. The matter is in the court papers.

Mr Gungubele: My history about you is very bright, glorious – based on a number of things you have done for this country. Things that are independently standing on their own, but I am not going to be friendly when asking questions because I want to be convinced that you are not what you been projected to be. I had an opportunity to be one of your students in ‘Global Division Potential’ at Stellenbosch. I spent two weeks there and learned a lot. The things that are being reported about you requires you to apply your mind to acquit yourself. I want you to demonstrate that even that which is said to be speculative you respond with sensitivity and not pure mechanical way of who is wrong and who’s right. There is a need for you to demonstrate that you are sensitive when there is a concern about a particular developments even if it’s not factually based. The kind of positions you have been holding call for that sensitivity.

Mr Gungubele: I heard you say to the evidence leader that if you say you are going to marry, until you have married it cannot be said that you are married. I could see that you are arguing from a position of lack of knowledge of law. Anyway, you even said earlier that you are not a lawyer. In law, when you make an offer to marry and the other one accepts, even if there are no document signed, you reduce it down to legalities. I saw that sometimes when you responded to Adv Vanara, you were simplistic on some matters. I appreciate that you said you are not a lawyer.

Mr Gungubele: When Honourable Mazzone said from R150 to R350, you said “why are you so comfortable with R350?” I picked some inconsistencies with that because when you were speaking about one mine, you said you wanted to reduce it to R400 because that is the market price. If R400 is the market price, tell me what is highly unfair about R300, and from your astute economical liberal background, I want you to say to me if as you said R400 is the market price, is it fair not to respond in an economic sensitive way to one who has a contract of R150 per ton until 2018?

Mr Molefe: R150 per ton until 2018. There was a way in which the price was growing over a period of time. This was originally a cost plus mine, which means Eskom had sunk the shaft before even Glencore bought it. This was a 25 year contract that expires in 2018. At that time, the price was R150 until 2018. What had happened at that mine was that during the good times when the international price of coal was very good, Glencore mined the coal and sold it in the international market at a very good price. Those profits were not shared with Eskom despite the fact that the original capital cost were incurred by Eskom. Eskom incurs the capital cost, and the return is that they will supply Eskom with coal at these prices, and during the 25 years, these are the prices, and in 2018 it is R150. During that period there was a time when they exported coal. When I arrived at Transnet, the big issue was the coal miners were saying there were not enough trains to take their coal to Richards’s bay and that Transnet is not performing. That’s when we started to buy locomotives. But to get locomotives we need capital. The only way we can get capital is if we buy locomotives, provide the locomotives, and send a train to your mine to take the coal to Richards Bay and you will pay for that train. If you say you want a train tomorrow at three o’clock and we send it there and you say you don’t need a train but the train has arrived, you will pay for it. They call it take or pay. We wanted to sign take or pay agreements with the entire coal industry and use those agreements to raise capital to buy the locomotives. Glencore was refusing to sign the take or pay agreement at OCM and the other mines. I had a very big fight with Mr Clinton Ephron of Glencore, Mr Khama was there, he had been negotiating and eventually said, “You need to help us”. It was a very unpleasant meeting where I said to them, “you will not get a train from us if you don’t sign the take or pay agreement.

Mr Gungubele: What was mutual benefit of a take or pay approach?

Mr Molefe: There is certainty you will for example get a train every Monday, Wednesday, and Friday at 10 o’clock for example. If we arrive there on a Wednesday and you say you don’t need a train, you pay for it. If we say we will deliver a train and it doesn’t arrive on Wednesday at 10 o’clock, there is a penalty to us. Those are the take or pay agreements.

Mr Gungubele: Let’s say I take optimal advantage of the take or pay agreement, between you and the coal mines, what is the benefit of the take or pay?

Mr Molefe: The benefits is that you’ve got certainty of revenue and if there is certainty of revenue then you can borrow money.

Mr Gungubele: What is your response to the narrative that recently against the background where most mines have been close to power stations at a low cost, translating in the affordability of electricity to the ordinary people there is a new behaviour by Eskom towards the established coal mines in terms of making unusual demands, in terms of contracts, finding reasons to cancel contracts, opting for Gupta mines as opposed to mines closer to power stations?

Mr Gungubele: I do not think it is true. But if you are referring to Arnot, the fact is that Exxaro is the one that has been saying exactly what you are saying. Exxaro had a 4o year contract that was coming to an end in December 2015 at a price of R1132 per ton, and when we said we cannot renew the contract at the new price they were requesting of R1400, they started saying things like that to the mines. At Arnot, we found nine other suppliers that were not next to the mine but could give us the coal at less than R500, and that is where we bought the coal.

Mr Gungubele: So there is facts to that that are documented.

Mr Molefe: Yes. I have the names of the companies that supplied coal that I can supply to you. If you say this mine has to supply this power station because it is right next to it. What I said in the past is that it doesn’t matter really, there must be a competitive process to supply the power station with coal. The person that can give us a competitive price must be able to supply the coal even if they are 50km away. In the instance of Arnot, we could get coal from cheaper other suppliers than the mine that was there that had been a cost plus mine 40 years ago.

Mr Gungubele: What is your comment on this Mafube mine – jointly owned by Exxaro and Anglo, cost substantially low. Do you want to make a comment on that?

Mr Molefe: No. I do not have the details of the Mafube mine. Which power station do they supply?

Mr Gungubele: I don’t know. I’ll check. Just keep it on record because there is that story.

Mr Molefe: The person who has intimate knowledge of the mines and who they supply are the people from the generation department.

Mr Gungubele: When you make your press statement about stepping down, it appears in the content of your statement the concept of allegations and observations is already in your statement. Am I right?

Mr Molefe: Yes. When the report of the PP came out and she had these observations about phone calls and so on, what I couldn’t understand was how the PP could go and finalise a report that has evidence that implicates me without asking me. That frustrated me, without having my rights to be heard. I was also confused because I had not had an opportunity to interrogate these allegations in the manner that I have now.

Mr Gungubele: Sorry for interrupting you, my point why I am asking this question this way is that the impression I have, and you will correct me, is that when you issue a press statement, at that time, you had a view that you are under siege, and later you get advised that these are mere allegations and observations which are of no material significance, and in that narrative what concerns me is that there are two scenarios that I am thinking of. There is a point where you reacted quickly and felt under siege and wanted to step aside, and there is a point that you were advised that these are mere allegations and observations. If I read your statement in the manner that it is, you knew these are mere allegations and observations. I have questions on both of them; if based on what is contained in your press statement and sae these are mere allegations and observations, why step aside? The brilliant Brian I know would have said “nonsense. I am going on with my work. I was not given a chance to articulate my side. It is mere allegations”. Why would you act on an immaterial statement to the extent you step aside?

Mr Molefe: Maybe in hindsight I may have overreacted, but I think I was overwhelmed because these things were been said by the PP. she had not followed a process, and it was been written about as if Brian Molefe stays in Saxonwold and is there all the time. I became confused. I agree. Maybe I should have stayed and strong, but sometimes even when you know you haven’t done it but you are been accused by the PP in a fake report like this, although you can’t remember how these things came about, maybe I did overreact. I take your point.

Mr Gungubele: On the fine of R2+ billion, the question was asked: “Why did the fine disappear?” and you said it didn’t disappear, it was down to R600 million as a product of arbitration. My immediate reaction was that arbitration between who and who? I already had a view that it can’t be between Tegeta and Eskom because I move from the point that Tegeta did not own OCH. But you said based on Marsden. You have to correct and clear that, because based on Marsden and what Tegeta said, when this prepayment was done, they were owning OCH.

Mr Molefe: Tegeta did not own the mine. They owned the coal. Piers Marsden sold coal to Tegeta.

Mr Gungubele: Last time I remember, Piers Marsden was a rescuer and he said they were looking for money.

Mr Molefe: Yes. They were looking for money, and then they sold coal to Tegeta.

Mr Gungubele: How did he sell coal to Tegeta when Tegeta apparently was not owning the mine?

Mr Molefe: They sold coal to Tegeta. They could have sold it to you.

Mr Gungubele: Was Tegeta owning coal?

Mr Molefe: Tegeta was involved in the coal industry.

Mr Gungubele: Clarify that. Are you suggesting that they can just come to me and buy coal from me?

Mr Molefe: Yes. If you go to Piers Marsden and say “I want to buy coal, they will sell it to you!”

Mr Gungubele: So Marsden sold coal to Tegeta, how did Tegeta pay for it?

Mr Molefe: By the way this is Marsden’s own evidence. I don’t know. It is something that he did between the two of them. What I am told is that you could not buy coal from Marsden because he had sold it to Tegeta so the deal had to be with Tegeta.

Mr Gungubele: I need to be clarified. Marsden who wants to rescue OCH in the process does not have the money to assist him when sought from the banks, and Tegeta also had no money to buy OCH. The same Tegeta becomes available to buy coal from Marsden. That is the area where I need clarification.

Mr Molefe: From what Piers Marsden says, Tegeta bought coal with a 30 day payment. What Tegeta did I think is that they did an arbitrage which means they signed contract to get coal and pay after 30 days.

Mr Gungubele: Did Tegeta at any point in time sell coal?

Mr Molefe: Yes. They have other mines. They were even supplying Eskom at Brakfontein and so on.

Mr Gungubele: How does OCH become part of that process? What happens to OCH once Marsden sold coal to Tegeta?

Mr Molefe: It was under business rescue. Let me go back one step. When Optimum went into business rescue, in terms of the rules of business rescue, they had 30 days to give the creditors a plan of how they are going to rescue the mine and this when they stopped supplying us with coal. Their plan was that Eskom must increase the price because if you don’t increase, we are going to stop supply. We didn’t increase the price, and they stopped supply, and we didn’t close the mine. They did not come up with a business rescue plan. They are supposed to file it with the court. They kept on asking for extensions after extensions and I think they got desperate. Tegeta was prepared to buy the mine. Somewhere in those negotiations I think Tegeta said we can buy this coal from you and pay you after 30 days, and then they sold it to Eskom on a forward basis, as a prepayment.

Mr Gungubele: What confuses me is that in my own interaction with this process, Tegeta had no money to do this thing. This is where I move. When Tegeta wanted to do this thing, they needed assistance so that they can buy. What confuses me is now, here’s Marsden selling to Tegeta and that can only be from Tegeta not been able to buy. That is where I am confused. How does Tegeta ends up owning Optimum when they could not get money and all those stories?

Mr Molefe: Yes. It happened like that.

Mr Gungubele: After a long investigation by Budlender on the relationship between Eskom and Trillian, they reach a point where they discover that a lot of items claimed by Trillian are items that were executed under Regiments but they are invoices submitted to Trillian, not Regiments. But during this period, you were the CEO of Eskom and the money is huge, a quarter of a billion. Is there anything you know about that?

Mr Molefe: I agree. It was a huge amount of money. I do not have first-hand knowledge of the nature of the invoices that Trillian submitted or Regiments. The first person who has first-hand knowledge of the invoices and payments paid was the CFO.

Mr Gungubele: When Matona was here I asked him why he did not know about these material procurement flaws. He said: “At my level that is not my responsibility”, and I said “Are you suggesting that if I am your political principal, a Minister and you account to me, I must be comfortable with the fact that hundreds of millions, such procurement values I am not sure how palatable it is when such procurement values a CEO says to me I am not involved at that level”. What does this say about the system of accountability?

Mr Molefe: I admit responsibility for it, but at the same time I have also said that at that time, my primary concern was dealing with load shedding. I trusted the CFO and the generation head to deal with some of the procurement issues. I was concerned about plant availability and load shedding.

Mr Gungubele: One of the reasons we are involved in this is because what sparked this thing was your strange return in our eyes, whatever explanation now gets given behind it and how certain answers were been given. We then said we need to check on the governance systems of the institutions and check if there are certain vulnerabilities and be able to deal with those. If I was listening to you, do you agree with me that in your approach you would have achieved load shedding and left Eskom under?

Mr Molefe: My approach was the opposite. I did not achieve. Load shedding ended.

Mr Gungubele: I am saying having ignored a lot of other things and having focused on load shedding, you were getting more operational and the reason was good, but at your level, the decisions you made about the things you had no time for, would you agree with the hypothesis that you would have improved load shedding and left Eskom under?

Mr Molefe: In a situation like that, the best thing to do is focus on the area which as the highest impact if resolved. At the time that was load shedding. It was big problem for the South African economy. In that situation you deal with the most significant thing first and then deal with the rest in their order of significance.

Mr Gungubele: On Brakfontein, you said you took a decision that the contract could not continue because of unsuitability. In 2014, you were not at Eskom, Brakfontein was found to be unsuitable and they could not proceed with supply to Eskom. In 2015 March Brakfontein contract was signed despite Tegeta’s noncompliance with the various legal requirements. It soon increase to 100 tons a month and the contract is extended from five to ten years in 2015. And then in April 2015 when you come in, Brakfontein begins coal deliveries to Majuba. And then you move to increase Brakfontein contract to 200 tons. In 2015 August Eskom suspends Brakfontein coal mine. The interest thing happens in 2015 September when Koko lifts the suspension of Brakfontein contract and suspends the scientists who did the quality tests. Brakfontein continues to fail quality tests, Treasury report indicates 34% of Tegeta stockpile rejected for not meeting standards, but Eskom pays anyway.

Mr Molefe: That was done by Prof Eberhard. We suspended the supply of coal from Brakfontein in August 2015 and the Gupta’s were unhappy. The agreement was that we would take the samples they supplied to our scientists to SABS and have them tested because they were saying that our scientists are corrupt and been bribed by other people to reject their samples. SABS passed the coal and said there was no problem with the coal. When that happened, Mr Koko lifted the suspension and suspended the scientists.

Mr Rawula: I think the previous witnesses that we had here, I think it is Mr Qoma. He outlined a narrative, in fact a discussion between Mr Khoza and him together with Dr Ngubane and he indicated there that the Minister of Public Enterprises is captured and controlled by the Gupta’s. That was indicated when they needed to put a CEO, because of Mr Koko, despite the fact that he was suspended, the Gupta’s insisted that her must be put as CEO. While you Mr Molefe seem to be comfortable to have the proximity with the Gupta’s and my problem with it is that all the issues that have been linked to you are on the basis of the influence of the Guptas under your span in Eskom. For example, the short stint you had in Parliament was preceded by speculation that amongst the Ministers been appointed by the Guptas, your name featured that you would be the Minister of Finance because you were a preferred candidate of the Guptas and now you say that you were persuaded to come to Eskom, but you have not told us who persuaded you, perhaps I’ll assume you were persuaded by the Minister who is captured and under your span the Guptas have managed to milk Eskom. The question I want to ask is that don’t you think that the comfort and warmth you have towards the Guptas is the one that paints you as a corrupt person because you are not doing anything to dispel the notion about Guptas. Seemingly you continue to warm up to them. You once indicated that they are nice people when in fact they are milking the state. I want to hear your comment on that.

Mr Molefe: I don’t know Sir if as the CEO of Eskom you were expecting me to switch off their electricity because they are corrupt so that they can’t use South Africa’s electricity because they are corrupt.

Mr Rawula: I never asked that question. Perhaps you want me to go to detail. You came to Eskom and made it clear that after you have gone to Eskom you are not going to allow Glencore to increase the price, and also with Phembani, they could not take it with a price of R15 per ton. Eskom has settled for Tegeta. So the point I am raising is that majority of the businesses with Eskom even those that were consultants were linked to the Guptas and all the witnesses have indicated on the influence of Guptas in Eskom.

Mr Molefe: Eskom did not settle with Tegeta. It was Glencore who sold their mine to Tegeta with the approval of the banks, competition commission and the creditors. We did not do that deal. I cannot speak for the people that say they were influenced by the Guptas. I was not.

Mr Rawula: What is it exactly that you did at Eskom that could not be done by CEO before you or any other CEOs for that matter?

Mr Molefe: We focused on the issue of load shedding and in my submission have indicated that there are some young engineers that deserve credit for this who came up with a system of maintenance for our plant in such a way that the management of the system is like an optimisation tool that optimises the time that our machines are out for maintenance and plant availability. We do it in such a way that at all times we get maximum plant availability of our plant. Plant availability improved to the point where we had sufficient electricity to stop load shedding. That’s how Tetris works I am not saying that I manufactured the system of Tetris. It was done by the young engineers. I was very interested in it and made sure that the system was implemented by the power stations and people in generation responsible for maintenance. I agree with Mr Matona that I did not stop load shedding.

Mr Rawula: McKinsey was supposed to have an agreement with Eskom, together with Trillian and other companies. On the evidence that we have received from David Fine of McKinsey indicated that the R1.6 billion would be paid back because they don’t want tainted money. They secured services with Eskom and there was supposed to be an agreement between McKinsey and Eskom but it transpired that there was never an approval from Eskom. McKinsey was a consulting company working with Trillian which is a company linked with Essa and the Guptas. It basically means that the money which Eskom paid was accumulated corruptly because there was never a contract with Eskom. This feeds to my question earlier that through the influence, it was the Gupta Company Trillian that benefitted through that deal.

Mr Molefe: I did enquire about that and what I was told was that the work was done. McKinsey did the work. Trillian did some work at Eskom, but in terms of the detail of what work was done and how much was it, I am sure that if we include in the invitation to the CFO, he will.

Mr Rawula: The agreement was supposed to be with McKinsey and Trillian was supposed to have agreement with McKinsey. But there is money that Eskom paid further to Trillian whilst there was no agreement between Trillian and Eskom. The agreement supposedly which was never approved by Treasury was supposed to be with McKinsey. The accumulation of that excess of R1.6 billion the argument I am making is that it was made out of a deal on which there was no contract because it was never approved

Mr Molefe: That payment was done during this year when I wasn’t at Eskom. So as I say, if you include this Trillian thing in the invitation to the CFO he will come with all the information.

Mr Rawula: The money that was paid to you coming to R30.1 million was effected as a result of a decision of the board to amend the pension rules, and they believed that they could amend the rules to accommodate you and suit you so the payment they have done to the tune of R7.7 million paid to you was paid under the disguise that the amended rules of the pension fund would be able to be carried out.

Mr Molefe: Just a correction. There was no rule that was amended. It was a wrong interpretation of existing rules.

Mr Rawula: The submission made by Ms Daniels here, I think its paragraph 68 says that the P&G committee resolved that they would amend the existing rules to …

Mr Molefe: I am not aware that they were going to amend the existing rules or that they in fact did amend the rules. I am not aware that the rules of the pension fund was amended at that time. Now the R7.7 million that was paid was a standard approach of paying up to the envisaged amount of money of R30 million. So far they have mistakenly paid the R7.7 million and she has indicated here that there is a decision which you have confirmed for you to pay back that amount of money and from where you are sitting you are not sure given your status if you’re going to pay back that amount of money but it is money that was paid to you erroneously.

Mr Molefe: Yes, I have agreed that the money should be paid back. It is just the decision for the money has also been rescinded in the process.

Mr Marais: Good morning Chairperson. I have to wake up everybody here. It seems everyone is sleeping. I have few questions.

Mr Marais: Mr Molefe, the PP uses the word apparent in her report, and when you google it, it means “manifestly” “visible” or “obvious “and it states definitely not speculation. My first point, you said you met Mr Eric Wood at Transnet. Didn’t you meet him at Investec?

Mr Molefe: No.

Mr Marais: I am not a legal person but normal commons sense would say to me once you have made a choice to sign a five year contract with Eskom backdated to October, you invoke your right to be a member of the EPPF. You don’t have to respond to that. That is my view.

Mr Marais: According to McKinsey, this R1.6 billion that was paid, do you think really that Eskom and the tax payers of South Africa have received value for money?

Mr Molefe: I am told that the work was done. The payment was done during this year and if you request the CFO to come with the details of the work that was done then he will. I just do not have access to the records at Eskom now. But the work was done.

Mr Marais: You met with Minister Brown about leaving Eskom. Did you at any stage engage either by phone or direct contact with the President of South Africa?

Mr Molefe: No.

Mr P Gordhan (ANC): Who approached you to become a Member of Parliament?

Mr Molefe: North West Province.

Mr Gordhan: Who? Provinces can’t come and walk to you and talk to you.

Mr Molefe: The Secretary as well as the Chairperson.

Mr Gordhan: Reasons given to you?

Mr Molefe: I was at home on retirement and they asked “what are you going to do now? We think you should become a member of the National Assembly for North West Province. Would you agree to that?”

Mr Gordhan: Mr Rawula’s point to you that there was actually a purpose for you to become a MP. You don’t accept?

Mr Molefe: No. I don’t accept that.

Mr Gordhan: You should also know that people find that incredulous.

Mr Molefe: I equally find it incredulous.

Mr Gordhan: On nuclear you said that it is the least expensive. The facts I have is that nuclear is R1.20 per kilowatt; wind is 65-89c per kilowatt; gas is 1c per kilowatt at the moment. We can argue about the figures but take a note of that. The narrative has been heard for some time to justify nuclear but the facts don’t bear that out. I do not need a response to that.

Mr Molefe: Just for the record. I do not think those figures are correct.

Mr Gordhan: No. Sure. As you think we think otherwise, so we can all think at the early hours of the morning.

Mr Gordhan: You say that you were so preoccupied with load shedding that you didn’t look at the Denton’s report, but the Denton’s report was in fact asked for so that the problems within Eskom could clearly be identified, and as the incoming CEO, your responsibility would be to implement. We were then given reports at executive level and to Parliament as well that various aspects of the Denton’s report had in fact been implemented, but you didn’t look at it. So you don’t take any responsibility for it?

Mr Molefe: Yes. The Denton’s report was a report to the board. It involves previous executives. I made a conscious decision to steer away from it because I had in my opinion a mission to do which was eradication of load shedding. What we started doing may have coincided with what was reported in the Denton’s report and may have been reported as implementing some of the things in the Denton’s report but I never went out consciously to implement the Denton’s report. This thing of hand over is a bit overrated. I would like to get my facts as they come.

Mr Gordhan: One of the things in the Denton’s report was the apparent corruption in Eskom and one would expect the Chief Executive to be very anxious and it would be in your interest to wipe out corruption would it not?

Mr Molefe: Well if you say the Denton’s report talks about corruption, I did not look at it.

Mr Gordhan: Earlier you said Transnet with the Gupta’s. My information is that you personally signed off on a contract which required that T-Systems cede their contract to a company called Zestilor which was in fact a Gupta company.

Mr Molefe: I don’t remember who the owners of Zestilor are.

Mr Gordhan: I am telling you who they are.

Mr Molefe: Was it directly the Guptas?

Mr Gordhan: So I am told.

Mr Molefe: Who tells you?

Mr Gordhan: It is well known in the public domain. Some of my colleagues seem to know as well.

Mr Molefe: Ja. Which public exactly?

Mr Gordhan: Not the fake news. The real news!

Mr Molefe: I admit that I may have made a mistake. If we are going to say that it was a Gupta company, it must be established to be so as a fact.

Mr Gordhan: I am just asking you if you are aware. You can go and establish if it was a fact.

Mr Molefe: No. I am not aware.

Mr Gordhan: You spent a lot of time defending your friendship with the Guptas. You seem to be overanxious to deny that they do anything wrong in this country as some other colleagues have pointed out. That is just a statement. Certainly you kept referring earlier on to blacklisting as a mechanism for certain people to be tagged in a particular way and you made reference to Treasury and the PFMA. But just for the record so that we are not misunderstood, you know as well as I do that blacklisting follows a court order that a particular firm having committed certain offences must be blacklisted. Given our current environment, and this is a statement, the likelihood of anybody associated with the Guptas is a dim possibility. Let’s leave that aside. How long would you say you have known one or other person in the Gupta family?

Mr Molefe: The fact that the blacklisting hasn’t happened or that the process hasn’t happened, I was presenting it as a problem… Mr Gordhan interfered.

Mr Gordhan: As I said, that is just a statement, the question to you is how long have you known one or other person in the Gupta family?

Mr Molefe: No. I thought I should remark on your remark and say that it ties the hands of people that must deal with them if they have not been blacklisted and yet the public demands that they must not be dealt with. I have known the since my days at the PIC.

Mr Gordhan: Let’s switch to Optimum. On a number of occasions you have made reference to the OCM, and in fact what the Gupta’s bought ultimately is OCH. Am I right?

Mr Molefe: Mr Molefe nodded.

Mr Gordhan: And that OCH had three components; Richards Bay terminal, OCM, and Koornfontein mine. Is that correct?

Mr Molefe: Yes.

Mr Gordhan: Let me put it to you that the capture of Optimum has a fascinating force field structure. First it’s a visit to Mr Ramatlodi, you were part of that “delegation”?

Mr Molefe: I went to see Mr Ramatlodi to ask him not to suspend the license which he had suspended.

Mr Gordhan: So the assertion is obviously the opposite, but who was in your company when you went to visit Mr Ramatlodi?

Mr Molefe: Dr Ngubane.

Mr Gordhan: And anybody else? There was no Mr Duduzane Zuma?

Mr Molefe: Okay.

Mr Gordhan: The fact that Phembani had actually bid for OCH. How and why did they lose out?

Mr Molefe: Because they said: “We need to agree that the R150 price must increase and that the penalty must either be reduced or completely written off”. And at the time I said that anybody who buys this mine must know that they are buying it with the penalty as well as the price of R150 per ton. I even said to Phembani that if we increase the price or reduce the fine after you buy it, then why are we not doing it with Glencore? That was the reasoning and they found the deal not attractive.

Mr Gordhan: Ultimately, arbitration sorted out the R2.1 billion fine and was reduced to R600 million.

Mr Molefe: What is interesting about arbitration is hat Piers Marsden confirmed that they were avoiding arbitration and also that before it went into business rescue, arbitration was an option that Glencore could have taken and not business rescue. The problem was that with business rescue they could suspend the supply of coal. With arbitration they couldn’t.

Mr Gordhan: The advance of the R1.6 billion guarantee, Mr Singh conceded that this was improperly done and not with the consent of the board. You are aware of that?

Mr Molefe: I have stated my circumstances during that period. It happened during December 2015… Mr Gordhan interrupted.

Mr Gordhan: No. I am asking whether you knew about pre factor, post factor, or at the particular time, are you aware?

Mr Molefe: No. I am not aware of the legalities or whether he has conceded that it happened without the knowledge of the board. What I know is that nothing came out of it. The guarantee was not implemented.

Mr Gordhan: That is not the point. The point was that after your recovery in December 2015 did it come to your knowledge that a R1.6 billion was given free of any governance process by the CFO you keep referring to?

Mr Molefe: I became aware, but I was not aware that it had not followed proper governance processes.

Mr Gordhan: When did you come aware?

Mr Molefe: Actually, I am hearing it from you

Mr Gordhan: Do you expect this Committee to take that seriously?

Mr Molefe: Well Mr Gordhan, if you don’t think that I should not be taken seriously it is also fine.

Mr Gordhan: That is the problem with your approach the whole day. We will talk about it another time.

Mr Gordhan: Minister Zwane then comes into the picture and tells Switzerland to pressurise Glencore, it is alleged to sell Optimum to the Guptas. Are you aware of that?

Mr Molefe: I am not aware of that. I heard about it. I do not have any personal knowledge of what happened there.

Mr Gordhan: But you interact with Minister Zwane?

Mr Molefe: No. actually, we have not met.

Mr Gordhan: You don’t know him, you never met?

Mr Molefe: Yes. We have never met. I know about him.

Mr Gordhan: Mr Marsden says that the R586 million you call prepayment never actually got to Optimum. It went to Tegeta when it actually should have gone to Optimum.

Mr Molefe: The agreement was with Tegeta. Optimum had sold the coal to Tegeta.

Mr Gordhan: I am telling you what Mr Marsden says.

Mr Molefe: Oh okay. Is that what he says?

Mr Gordhan: Yes. Do you agree with him that the R586 million should have gone to Optimum?

Mr Molefe: Honourable Gordhan I had just been explaining my understanding of that transaction and you told me that you are telling me what Mr Marsden says. Mr Gordhan interrupted.

Mr Gordhan: Do you agree with him or not?

Mr Molefe: I cannot express an opinion on what he says.

Mr Gordhan: He says that money should have gone to Optimum. Do you agree or don’t you agree?

Mr Molefe: I don’t agree.

Mr Gordhan: In respect of the PP, you kept making reference to the fact that there’s no numbers, no time, but surely that is not the issue. The issue is whether regardless of which phone was used or what time it actually happened, where there phone calls made between yourself and the Guptas. Simple.

Mr Molefe: Yes, there was.

Mr Gordhan: You could have admitted that a long time ago.

Mr Molefe: There was. The thing is that I cannot say the PP says 57 phone calls. There was no 57 phone calls. I am not aware that there was 57 phone calls.

Mr Gordhan: There might have been five, there might have been 10.

Mr Molefe: There might have been five, there might have been 10. We suspended their contract at some point. There were other quality issues.

Mr Gordhan: But that was in relation to Brakfontein?

Mr Molefe: Yes.

Mr Gordhan: But her assertion is that much of these phone calls happened around the Optimum deal?

Mr Molefe: Yes. That is her assertion.

Mr Gordhan: So there was regular contact at one time or another or one stage or another?

Mr Molefe: At one stage or another there was contact of one form or another.

Mr Gordhan: Mr Singh is suspended at the moment. Do you agree with the suspension?

Mr Molefe: I don’t have the facts as to why he was suspended.

Mr Gordhan: You keep referring to him as person of affairs whose knowledge we should rely on.

Mr Molefe: Yes, he does have knowledge.

Mr Gordhan: Why did he come from Transnet to Eskom?

Mr Molefe: He is a very competent CFO.

Mr Gordhan: In more ways than one?

Mr Molefe: Can you explain Mr Gordhan?

Mr Gordhan: In more ways than one.

Mr Molefe: I don’t understand what you mean.

Mr Gordhan: He gives guarantees. That’s one example.

Mr Molefe: He is a competent CFO.

Mr Gordhan: And honest?

Mr Molefe: As far as I know him, yes. He is honest.

Mr Gordhan: And Mr Koko?

Mr Molefe: Mr Koko is a competent engineer and he was very instrumental in managing the generation unit to help us achieve the end goal.

Mr Gordhan: And the allegations about him giving contracts to his relatives?

Mr Molefe: I do not have first-hand knowledge of those allegations.

Mr Gordhan: And if they were true, what would you think?

Mr Molefe: If they were proven to be true then my image of him would probably diminish somewhat, but I do not have any evidence. I am not in the habit of presuming people guilty until they are proven innocent.

Mr Gordhan: There is a lot of evidence in the public domain for those who are interested and I think you have just given a good example of ‘apparent’. If one has an open mind and not committed in a particular way, one can fairly come to a conclusion of what could be eventually be persuaded if we had a proper criminal justice system in this country.

Mr Gordhan: That’s all Chair. Thank you.

The Chairperson thanked Mr Molefe for coming and appearing before the oversight inquiry and having waited for many hours. The Committee appreciated that. With those words, we wish you a safe journey back to your destination.

The meeting was adjourned.