The Chairperson provided a summary of the situation with Eskom to date. The Committee had previously resolved to undertake an inquiry into the matters and allegations made against the Chief Executive Officer of Eskom, after the power utility had sat on the information for a period of 13 months. The Minister of Public Enterprises had written to the Committee requesting that it suspend its inquiry, in light of Eskom’s subsequent decision to undertake an internal inquiry.
The Committee highlighted that it would be problematic for the Committee to continue with its inquiry, in that it would result in parallel processes and waste State resources. It was emphasised that the allegations against the Chief Executive Officer included financial irregularities and racism. No action was taken by Eskom’s Board in this regard despite the provisions of section 63 (2) of the Public Finance Management Act. Eskom had also failed to be transparent about the absence of the Chief Procurement Officer at the previous meeting. It was initially stated that he was on sick-leave and later found that he had been suspended. The Committee expressed dissatisfaction in the manner in which Eskom had handled these issues.
The Committee was taken aback regarding the media statements issued by Eskom. Queries were raised regarding the scope of Eskom’s internal inquiry and whether it covered both the racism and financial allegations. Concern was raised as to whether suspending the Committee’s inquiry would breach the Committee’s mandate in terms of being the ‘watchdog’ of public finances.
The Committee proposed that its inquiry be suspended pending the outcome of the Eskom internal inquiry. It was suggested that the Committee monitor the process of the investigations undertaken by Eskom and that a period of 90 days be given for the investigation to be completed. It was highlighted that a number of pertinent hearings had been postponed, one of the most significant being the situation with Oracle Corporation. It was suggested that the Committee should continue with its core-business relating to the annual financial reports of Eskom.
The Chairperson stated that the Committee had resolved a month before to conduct an inquiry into the matters and allegations made by the Chief Procurement Officer (CPO) against the Chief Executive Officer (CEO) of Eskom. The Committee was scheduled to meet with Eskom on the issues relating to the audit outcomes, expansions, deviations and annual report. The Committee began communicating with the Secretariat, Parliamentary Research and Legal services with respect to the inquiry processes.
He had received correspondence from the Minister of Public Enterprises, indicating that Eskom was investigating the matters that the Committee had proposed to investigate. It was requested that the Committee suspend the inquiry, as Eskom was investigating the matters.
The Committee had received the terms of reference drafted by the Parliamentary Legal Services in this regard. In addition, the terms of reference were requested from the special Council, on Eskom’s internal inquiry, in order for the Committee to ascertain the extent and scope of the investigation that Eskom was engaged with. He had not responded to the Minister’s letter as it required a Committee decision. The response would be sent once the Committee had considered it.
Mr M Dirks (ANC) stated that the dilemma was that Eskom had decided to conduct an investigation and had already commenced on this process by appointing Council. This created a dilemma in that the Committee had taken a decision to do an inquiry, and now there was an inquiry within Eskom. It created a situation where the Committee could not possibly conduct a parallel process with the Board of Eskom. It would be a waste of State resources and have a parallel effect of conducting inquiries on the same matters.
It was important for the Board of Eskom and the public to understand the dilemma that the Standing Committee on Public Accounts (SCOPA) was facing. The CPO submitted a letter 13 months ago to the Board of Eskom, with serious allegations, that included financial irregularities and racism against the CEO of Eskom. The Chairperson of the Board publicly stated that he received that letter but had not discussed it with his colleagues. No action was taken by the Board or the Minister to deal with these allegations against a senior official in the Department. In terms of section 63 (2) of the Public Finance Management Act (PFMA), that dealt with the financial responsibilities of executive authorities, it was very clear as to what was expected of the Board in the matter, but they failed to take action. 13 Months later, when the Committee dealt with the reports, financial irregularities and over expenditure at Eskom, and questions were raised regarding the signatory of the report, it was stated that the CPO was on sick leave. It was later established that he was suspended. The Board of Eskom failed to take SCOPA into confidence; it failed to inform the Committee that the CPO was suspended. It was a serious matter, and he did not know why the Board had behaved as such instead of being upfront with SCOPA.
Based on this information, the suspension and allegations against the CEO, the Committee had decided to conduct an inquiry. It was disingenuous on the part of Eskom, that after the Committee decided to conduct an investigation, Eskom then decided to do the same thing internally and publicly announce this. He suggested that the Committee consider suspending the investigation and await the outcome of the Eskom inquiry. As SCOPA, they needed to send a strong message to the Board to express their displeasure in the manner in which they conducted themselves and the manner in which this matter was handled. SCOPA should not be undermined in future. The Committee could not start the investigation at present, as Eskom had jumped the gun. SCOPA should keep a close eye on those investigations, not only on the outcome, but the whole process.
Ms B van Minnen (DA) stated that she was not sure what the urgency was in conducting the meeting during the constituency period. There were other issues at Eskom that were urgent that deserved the Committee’s attention. She had warned at the previous meeting, that the Committee should be careful not to be distracted by letters written to SCOPA with a very short timeframe before a hearing was due. What she found particularly difficult about the situation was that the Committee had twice postponed hearings with Eskom pertaining to issues that really were extremely pertinent, not least of all the situation with Oracle. The situation with Oracle threatened to plunge the country into serious crisis. The Committee needed to learn not to be distracted by allegations to the point where it postponed meetings that should take place– the Committee was quite capable of multi-tasking and should have done so from the beginning.
She had seen in the Press the previous week, before Easter, that Eskom stated that it had submitted a long affidavit to SCOPA, that she had not seen. She asked whether SCOPA had received this. She stated that the Committee needed to learn from this incident and reschedule the meetings with Eskom that were postponed and proceed. SCOPA did not have the luxury of sitting around waiting for things to happen. It needed to move forward. Investigations could happen in parallel. The Committee would be erring as a Committee of Parliament, if it did not do so.
Mr A Lees (DA) stated that it was important to emphasise the point that the Committee’s core business, in terms of the annual reports, should proceed with Eskom. The Committee should not be diverted from this, regardless of who conducted the investigations. The crisis at Eskom was much bigger than this particular investigation, which may or may not have any validity at all, time would tell. He looked forward to the investigation being conducted by Eskom and completed as quickly as possible so that the Committee could assess the reliability of the claims and hold those responsible accountable. Such processes did not seem to be happening very fast. He realised that the Special Investigating Unit (SIU) was working hard, given its small resource base, to achieve a massive job of bringing people to account. The same applied to the Hawks and the National Prosecuting Authority (NPA). That was where the real focus should be to ensure that those people were brought to account and that Eskom got run like a proper business and not some kind of ‘enrichment scheme.’
Mr B Hadebe (ANC) stated that as the Committee, they did not want to interfere with operational matters, as they related to disciplinary issues in Eskom. However, the issue raised by Mr Dirks, was correct, because from where they stood it appeared as if there was no willingness from Eskom to act on these allegations when they were first brought before the Board. Eskom only responded, suddenly and expeditiously, when the matter was brought before SCOPA. When the Chair of the Eskom Board appeared before the Committee, and spoke on behalf of the Board, he made it clear that he understood the reasons why there were allegations levelled against the CEO from the CPO – this did not go over well with the Committee. One hoped and believed that the investigation that had been undertaken by Eskom would not be ‘malicious compliance.’ He agreed with Mr Dirks that they needed to keep a close eye on the processes; the Committee did not want to waste State resources by conducting two parallel investigations – where they would likely arrive at the same conclusion.
The Committee had seen the media statements put out by Eskom – which did not go over well with the Committee. The ‘arrogant’ nature of the media statements revealed a lot about character. He was aligned with the proposal by Mr Dirks, to leave the matter to Eskom, monitor it closely and appeal to Eskom not to undermine the intelligence of the Committee. He hoped the actions taken – and he was not accusing Eskom of malicious compliance – he hoped it would not be in a form of ‘just by the way.’ Eskom had an opportunity 13 months ago to act on the matter and they did not do that.
Mr S Somyo (ANC) echoed the views expressed by Mr Dirks and Mr Hadebe. These views took into consideration the fact that, though the Committee would allow Eskom to continue with their investigation, the Committee would maintain its interest in receiving the final report and progress relating to the investigation. It was not a matter of trust or distrust; it was a matter of the Committee’s responsibility. They would like to have a decent and orderly closure of the matter. He echoed that they could not have parallel processes running.
Ms V Mente (EFF) stated that their terms of reference, in terms of the inquiry in its entirety, as stated on the report that was sent to the Committee, were not any closer to what she had read from media statements and the Eskom Board. The Committee’s mandate was not similar to that of Eskom. Eskom was dealing with its own internal matters that they were supposed to have dealt with 13 months before, when they received the report. The Committee was not only dealing with this matter as a result of receiving the report from the CPO, it was emanating from the three reports, the Auditor General Report, Treasury Report on their deviations and expansions as well as the SIU Reports. The issue of the CPO came as additional information to what the Committee knew was going on at Eskom under the CEO. She did not understand why the Committee would breach its mandate and trust that Eskom would do the Committee’s work on its behalf and conduct the investigation according to the stipulations of the Rules of Parliament, PFMA and Treasury regulations. She was against the Committee’s decision to not go ahead with the inquiry. The Committee needed to satisfy itself, in terms of being the ‘watchdog’ of the ‘public purse’ and deal with the matters that came to the Committee’s attention through the financial and SIU reports.
Mr Hadebe stated that the challenge in getting ‘to grips’ with the terms of reference was that they received the reports the day before after 4pm. This was not sufficient time to compare and contrast – especially where Members had commitments to other portfolio committees during the Parliamentary recess. If there were, indeed, fundamental differences in the terms of reference, it would not be advisable to ignore such a plea – as raised by Ms Mente. It needed to be clarified so that the Committee members were on the same page. He asked whether Ms Mente could highlight the differences with respect to the terms of reference, which would assist them in arriving at a ‘sober’ and amicable consensus on the matter.
The Chairperson was surprised that Mr Hadebe had received it so late, as the instruction went out long before – he would follow-up in this regard. This would be a serious shortcoming. In terms of Ms van Minnen’s question, they were doing this with a view towards scheduling of the inquiry. There were responses that the CEO gave, which would have been circulated, but was dependent on whether the Committee was proceeding or not. Those would be given to Members, regardless of the decision taken. He was taken aback when reading about this in the media, but he realised that they were dealing with a PR exercise more than a legitimate exercise, on the part of some.
The pertinent question was whether the Committee should proceed or not with the inquiry. The allegations made by the CPO were not a response to his disciplinary hearing. They were made 14 months ago; by admission of the Board that was when they received the allegations. The matters did not receive attention. The Committee would not be conducting a ‘disciplinary hearing.’ The Committee was not dealing with the suspension of the CPO, which remained in process. Eskom was well within its rights to investigate the CPO on related matters. The allegations against the CEO had a material bearing on the work of the Committee – because it spoke to financial mis-management. The seriousness of those allegations required attention. The fact that Eskom decided to open an investigation after the Committee had decided to do so, spoke to the fact that it needed to be looked at. He did not take kindly to the manner in which Eskom had ‘jumped the gun’ – pre-empting the process that was unfolding as a result of the Committee, when Eskom had sat on the issues for 14 months. It was also credit to the Committee that it was able to trigger entities and departments to do that which they needed do. It was clear that the investigation that Eskom now realised it should have done and was doing, was at the behest and pressure that was applied by the Committee. Whilst he disagreed with the approach taken by Eskom, the credibility of process was important – whether it was a SCOPA or Eskom lead investigation. The issues required attention.
The Minister requested that SCOPA suspend its investigation. Eskom would report to the Committee on the outcomes of the investigation. Judging by what he had heard so far, Members were in agreement in acceding to the request. As a Committee they would suspend their investigation for Eskom to do what they were supposed to have done 14 months before. He hoped that this was not a malicious compliance on the part of Eskom and that the work would be done thoroughly and correctly. He hoped it would not resemble the investigation into the Chief Operating Officer (COO), which took 11 days and came out with a conclusion that left much to be desired. The message should also go out that it was completely unacceptable for government departments and entities to sit on matters, and pray and hope that they would not come to light, and only pursue them when they were before SCOPA.
Mr Lees stated that they would go along with the suggestion to put on hold the investigation. He felt the point he made earlier was important regarding continuing the Committee’s normal work in terms of oversight of the annual report. There were two delays relating to that already. He urged the Committee to continue on that one.
Ms Mente referred to Mr Hadebe’s question regarding the terms of reference, firstly if the Committee was suspending its own inquiry, what were they basing the suspension on? Were they delegating their powers and mandate to Eskom? Secondly, the media statements that were released by Eskom – she had not seen the full report of what Eskom would be dealing with in their inquiry. Their statements indicated that they were basing the whole inquiry on racial matters – Eskom would be dealing with the accusations of racism levelled against the CEO. That was not within SCOPA’s mandate. SCOPA was not dealing with racism. If there was an issue of racism – it would be dealt with at the level of the portfolio committee. SCOPA dealt with matters of money. The Committee had heard of deviations submitted by Treasury. Companies that were deviated for and requests for deviations. In terms of Treasury, no substantial reasons were given regarding approval. When the CPO of Eskom wrote to the Committee, he indicated that some of the companies’ deviations were questionable – not legitimate in terms of following the PFMA and Treasury regulations. That was their mandate as SCOPA – that was not what Eskom would deal with. Eskom was dealing with the issues of racism. The Minister might have requested them to suspend, but what was that request based on? The Minister’s reasons were not sound reasons to satisfy her. Their primary mandate was to be the watchdog of public finances, if they were delegating their powers as SCOPA to Eskom, they might as well ‘shut down’ and not perform their daily work of supervising and monitoring all the entities and departments in terms of expenditures and relevant reports. If one considered the establishment of SCOPA through the rules of Parliament, SCOPA dealt with any report that came to them, not only the report that came from the Auditor General or the Treasury – but any report that came to Parliament through the Office of the Speaker. Those issues needed to be attended to – why were they now suspending their own inquiry into the financial matters.
Mr Hadebe suggested he clarify what they were proposing. SCOPA would continue with the hearing as it related to the Auditor General’s findings and the annual financial statements of Eskom. They suggested the suspension in relation to the letter addressed to the Committee by the CPO levelling certain allegations against the CEO. He suggested the Committee allow Eskom to continue with its investigation that was prompted by the Committee. That was the only matter they would give Eskom time to deal with. The work as it related to the terms of reference and rules adopted by Parliament, in terms of considering annual financial statements and dealing with the Auditor General’s recommendations and findings, would continue as per their plan. The process was only delayed as a result of not having the CPO present, as a result of his suspension.
Mr Somyo stated that Ms Mente’s point was valid up to a point. He had a similar understanding until he had seen the terms of reference. When he saw the terms of reference, he thought they somewhat addressed his concern of not aligning with Eskom’s investigation. If one followed the press releases, they focused on matters of racism. If one looked into the terms of reference of the Eskom inquiry, they went beyond that, addressing each and every element which came out of that letter that was written by the CPO. He therefore suggested that Ms Mente may not have received a copy of those terms of reference. He urged her to look into those terms of reference, as her fears would be somewhat allayed. He did not think they were giving over their responsibility to Eskom. There was no need for them to conduct a parallel process. The Committee could continue with the process of ensuring accountability relating to the expenditure by Eskom in a similar way as they had done previously. They were suspending but registering their interest as those matters came before the Committee. The Committee’s interest was prescriptive in the sense that they encouraged Eskom to do its own inquiry but to report back to the Committee. The Committee would therefore remain empowered in instructing Eskom to remain accountable to that fact. This was not an issue of negating their own responsibilities.
The Chairperson stated that the points made were valid as they sharpened the Committee’s outlook and put the Committee in a position to continuously do better. It would have been preferable for the Committee to continue with its investigation, for precisely the reasons expressed when the Committee decided to engage in an inquiry. There was merit to the argument of not duplicating the activities. The Committee would assess the Eskom report when it came out from the Special Council and satisfy themselves as to whether every aspect had been investigated as it should have been. The consensus was that the Committee would hold the investigation in abeyance, but Eskom needed to understand that the Committee would continue with its work. The hearings into the annual report and other substantive matters at Eskom would continue. It was important that they dealt with every aspect of the irregularities that prevailed at Eskom. All was not well at Eskom, the problems were huge. The country had experienced rolling load shedding since 2008. There were incomplete power stations; there were issues with coal supply, issues with contract management. Instead of things improving, the situation kept worsening. All of sorts of political interventions were instituted. It was not desirable to have two Chiefs at Eskom fighting. When ‘two elephants fight the grass gets trampled on.’ In this case the ‘grass’ was the financial management. The Board would come in to brief the Committee on the scope of the investigation they were undertaking, in terms of the terms of reference they gave. Once Parliament’s programme allowed, they would make special application for such matters, the issue of the annual report for Eskom would take precedence during the recess. He hoped they would have a hearing before the end of the month.
He hoped that this did not set into motion a precedent for the Committee. The Board would need to explain to the Committee why they sat on the allegations for 14 months and then initiated an investigation after the Committee had decided to do so. He gave credit to the Committee in that they had triggered people to do work that needed to be done – the flip side of that was that they needed to explain to the Committee and the public why they sat on allegations that warranted an investigation. That was a dereliction of duty. They would not ‘praise a fish for swimming.’ Explanations were due. The CPO’s allegations did not mean that the Committee had passed a judgement on anyone. The substantiveness of the allegations required investigation. The Committee would want reports on that, and they would need to make a determination as to when the investigation should be completed – it could not be left open-ended. He hoped he had captured the Members’ views correctly.
Mr Somyo stated that the Chairperson’s summary captured the spirit of the meeting. On the matter of a timeline, as Eskom would need to arrange for the South African Police Services to be rendered, he suggested a period of three months.
Ms van Minnen stated that three months was probably a good period of time, but they needed to move forward. They needed to, as a matter of urgency, continue with the hearings into the annual financial statements – which had been delayed twice before.
The Chairperson noted the suggestion of 90 days. A special application would be made to the presiding officer for a hearing during the recess period. He asked Members to indicate any other issues that needed to be dealt with during the recess time. The issue relating to Prasa would be dealt with. Another complaint was received regarding the Housing Development Agency – the Committee would need to consider how to proceed with that. The communication and responses would be circulated to the Members for record keeping relating to Eskom – so that when the Eskom report reached them they would be informed. The late receipt of documents would be dealt with. The Committee would suspend its inquiry and request that Eskom’s investigation take no longer than 90 days. The hearings into Eskom would proceed as a matter of priority.
The meeting was adjourned.
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