Video (Part 1)
Video (Part 2)
The Standing Committee on Public Accounts convened in Parliament to receive a briefing by the Eskom Board regarding the former Group Chief Executive Officer’s (Mr Andre de Ruyter) allegations of corruption, theft, maladministration, sabotage, cartels, lack of consequence management, and other financial irregularities at Eskom.
The Eskom Board Chairperson recounted that after the eNCA interview in question on 22 February 2023, the Board convened a special meeting to discuss the impact of the content and utterances that the outgoing GCE made during the interview regarding Eskom. At the commencement of the board meeting, Mr de Ruyter was afforded the opportunity to provide his perspective and he acknowledged that the interview had indeed taken place. He further stated that, if the Board considered the contents of the interview to have caused embarrassment to Eskom, he would be agreeable to a variation of the term of his notice period, from 31 March 2023 to 28 February 2023, in line with his resignation letter of 12 December 2022. Upon Mr de Ruyter’s recusal from the Board meeting, the Board deliberated on the matter. The Board was of the view that some of the utterances he made brought the company into disrepute and therefore resolved to agree to the variation of his notice period to 28 February 2023. The Board further resolved to release him forthwith from the obligation to serve the remainder of his notice period, with immediate effect.
The Board highlighted that when it said that the former CEO brought the entity into disrepute, it was because a lot of the allegations that were tabled during the interview misled the public to think they were new developments that had been shared firstly with the Board, which was not the case. Secondly, it misled the public by indicating that there were no actions taken internally at Eskom because, since the establishment of the State Capture Task Team, a lot of disciplinary hearings had occurred at Eskom. And it is known publicly that around mid-September and mid-October, about 26 former executives, including a former Acting Chief Executive of Eskom, had been arrested and appeared in court in relation to the allegations that were made. After the allegations made by Mr de Ruyter, the new Eskom Board asked the Task Team to investigate whether there were any other matters that the Board may not be aware of that could not have been cited in the various documents.
The Board further resolved that, in keeping up with exercising its fiduciary duties and responsibilities, an independent legal panel must be appointed where a senior legal council could revisit everything that has been done up to date internally by Eskom and the Task Team, to see if the Board should do anything further. The independent legal panel is currently going through the procurement processes, led by the Head of Legal of Eskom to ensure that it is appointed and will be reporting to the Audit and Risk Committee Chairperson of the Board to ensure that a full and comprehensive independent investigation is conducted so that the dots can be connected to ensure that nothing is left unhandled.
The Committee said Eskom should not miss the opportunity to interrogate the issues raised by the former Group Chief Executive Officer. The Committee Chairperson said that, whilst Mr de Ruyter’s conduct in participating in a public interview may be questionable, the opportunity to interrogate the substantive issues he raised that go to the heart of the problems at Eskom should not be missed.
Members highlighted that Mr de Ruyter had said that there was resistance to implementing controls, conducting investigations, and implementing disciplinary actions as they uncovered more. It had just become clear that the rot was much worse than he had anticipated when he took over. They asked if the current Board did not see it fit to ask him to furnish the Board with the intelligence report and all the information at his disposal when it had an opportunity to sit with him in its meeting and instead chose to terminate his contract. They questioned whether they acted in the best interests of Eskom by letting him go without furnishing him with the necessary information
The Committee expressed its disappointment that the people who are investigating the allegations as well as the Acting CEO are not available in the meeting and said that this was concerning because the public has been waiting to hear answers regarding the allegations since they were made. A Member was concerned about how seriously the Parliamentary process was being taken by the Eskom Board because there seems to be a wilful ignorance about what is going on, what was reported, and what is in the public domain. And it is becoming impossible to determine what or if anything is being done to get to the bottom of the serious allegations.
The Chairperson said that the Committee is scheduled to meet with the Minister of Public Enterprises, Mr Pravin Gordhan, next week Wednesday, 17 May 2023, on the same matter.
Opening Remarks by the Chairperson
The Chairperson welcomed the Members and the delegation from Eskom, as well as the former Eskom Board Chairperson who joined virtually, to the meeting. The Committee had met with Mr de Ruyter, Former Eskom Group CEO, on 26 April 2023 to discuss the allegations that he made in the TV interview with eNCA, which aired on 23 February 2023. The allegations he made relate to corruption, criminal activities, and maladministration at Eskom. Some of the allegations are new to the Committee while some of them had come to light in prior engagements with Eskom and during the Zondo Commission of Inquiry into State Capture and its report.
Mr de Ruyter’s submission to SCOPA had informed the Committee of the actions taken by him to alert law enforcement agencies or persons regarding the corruption, malfeasance, and misconduct in the entity. He also claimed to have informed the new Eskom Board of the intelligence operation or privately funded intelligence report of Eskom at a meeting held in November 2022. This becomes key in determining whether there was any compliance with the relevant sections of the Public Finance Management Act (PFMA) regarding the disclosures of any material losses through criminal conduct and any irregular, fruitless, and wasteful expenditure that occurred during that financial year.
The former CEO had also stated that, given his resignation at the end of February 2023, he is not in possession of documents or other material that remain in the possession of Eskom or in the hands of the law enforcement bodies to corroborate or substantiate some of the allegations. The meeting with the former CEO had shed light on certain matters. However, there was a lot at was left unanswered on the alleged criminal and unlawful activities that resulted in the misuse of public funds.
The purpose of this meeting was to find out from the Eskom Board the extent to which they are privy to the allegations made by Mr de Ruyter, and to take the Committee into confidence about the steps they undertook to deal with the alleged criminal activities at Eskom. The Chairperson did not think the meeting would be difficult because, on 26 April, shortly after the meeting with Mr de Ruyter, Eskom commented that nothing was new from what was shared by Mr de Ruyter. So, if it is not new then there should be no problems.
Eskom Chairperson’s Remarks
Mr Mpho Makwana, Board Chairperson, Eskom, said that one of the key thrusts of responsibility that lies before the Board is to restore the reputational integrity of Esko, and to eradicate the scourge of corruption and the effect that it has had on institutions such as Eskom. Any Chief Executive, whether in the public or private sector, has three primary responsibilities in fulfilling their responsibilities. The first is to drive the business of the entity that they lead, in terms of the numbers – be it the technical numbers or financial numbers. The second part is to ensure that there is the requisite enabling culture that ensures that there is a functional corporate culture that allows for proper operations of the organisation. The third part is to ensure that they lead people to drive the performance of the organisation.
Any Board of Directors, once they assume office, has a clearly defined set of responsibilities. One is to satisfy themselves that there is a leader to drive the organisation, ensuring that there is a Chief Executive and an executive team in place. Secondly, any Board has a duty to ensure that there is a strategy in place to define the direction that the organisation is taking. Thirdly, the Board has a responsibility to ensure that there are requisite performance measures put in place to ensure that results are achieved. In doing all this, central to this, matters of ethics and reputational integrity are a joint responsibility of any executive management and Board to ensure that the organisation that is being led is led from a platform of solid values and integrity. It is in this context that the Eskom Board takes the responsibility of ensuring that it outroots any remnants of corruption very seriously, especially corruption made by the State Capture environment that prevailed for nine years in the country.
He said Eskom is grateful for the active partnership that it received from key stakeholders such as the Government, the Security Cluster, Organised Labour, Business, and employees, to manage this serious matter in the best interest of all hardworking South Africans who depend on them to keep the lights burning.
In addressing the matters relating to corruption, and specifically with reference to the utterances made by Mr de Ruyter in the ENCA television interview on 23 February 2023, he felt it was prudent to briefly summarise some of the immediate actions taken by the Board. After the ENCA interview in question, the Board convened a special meeting to discuss the impact of the content and utterances that the outgoing Group CEO (GCEO, GCE) made during the interview regarding Eskom. At the commencement of the board meeting, Mr de Ruyter was afforded the opportunity to provide his perspective and he acknowledged that the interview had indeed taken place. The Board Chairperson recounted that Mr de Ruyter further stated that, if the Board considered the contents of the interview to have caused embarrassment to Eskom, he would be agreeable to a variation of the term of his notice period, from 31 March 2023 to 28 February 2023, in line with his resignation letter of 12 December 2022.
The Chairperson asked Mr Makwana to send his statement to the Committee, as it would be helpful to the members.
Mr Makwana agreed and continued with his statement. He recounted that, upon Mr de Ruyter’s recusal from the Board meeting, the Board deliberated on the matter. The Board was of the view that some of the utterances he made brought the company into disrepute, and it therefore resolved to agree to the variation of his notice period to 28 February 2023. The Board further resolved to release Mr de Ruyter forthwith from the obligation to serve the remainder of his notice period, with immediate effect. Recognising the impact that this may have had on employees, over the subsequent eight weeks, Eskom committed to an intensive employee engagement and crisis communication plan, which it called a 60-day EmpowerU Plan.
The key priorities of the EmpowerU plan were to keep employees abreast regarding the organisational changes in leadership, including the GCE’s departure and the appointment of an acting GCE, Mr Calib Cassim, to stabilise the business and allay panic amongst employees.
Mr S Somyo (ANC) asked for the statement to be sent immediately, as the Committee wanted to be able to refer to what was written.
The Chairperson said that the meeting should be paused momentarily to have the statement sent to the Members because the only presentation the Committee had received was the slides.
Mr Makwana said that the presentation would follow his statement, and he would also ensure that it is sent to the Committee immediately after he was done reciting it.
Mr B Hadebe (ANC) said that he had assumed the Committee invited the Board to present the steps that were taken by it after the interview. So, that information was not meant to be presented to the Committee in the meeting. It would have been best if the information was submitted alongside the presentation on the days prior to the meeting. The Committee had prepared questions based on the information it received and not on the statement being made by Mr Makwana, which was the information the Committee needed and was not given. He wanted to know why the information in Mr Makwana’s statement was not sent to the Committee before.
Mr Makwana said that, in any of his appearances before the Committee, he always gave opening remarks and was never asked to share them with the Committee. He recognised the Members’ request, and indicated that he would send the remarks statement to the Committee Secretary, as he proceeded to recite them.
The Chairperson said that, in the context that the Committee invited the Board to speak on the steps that were taken after Mr de Ruyter’s interview, the answer could not just be part of the opening remarks
[There were audio issues for about 5 minutes]
Mr A Lees (DA) asked why the Acting CEO was not in the meeting and why there were only two members of the Board present in the meeting.
Mr Makwana said that the response to that question was part of his opening remarks, as he was going to address that but was stopped in his tracks.
The Chairperson said that the point that was being made was that Mr Makwana started making a substantive presentation on issues during his opening remarks. So, to contextualise it as being stopped in his tracks was a mischaracterisation of what happened. Members needed clarity with what they were dealing with because all they received was the 11-page submission. The opening statement must be shared as it was read into the record, and the Members would make notes of what was said.
Mr Somyo said that there must be an acknowledgement that what was shared by Mr Makwana was even more substantive than the 11-page submission that was made to the Committee. He maintained that, if Mr Makwana’s statement was electronic, he should forward it to the Committee without hassle.
Ms A Beukes (ANC) also wanted to know the people who were present in the meeting and noted that the invite to the meeting was specific.
The Chairperson noted that Mr Makwana said he would mention who was present during his statement.
The Chairperson adjourned for 15 minutes so that the statement could be sent to the Committee.
Eskom Chairperson’s Opening Remarks Continued
Mr Makwana said that the key priorities of the EmpowerU Plan were to:
- keep employees abreast regarding the organisational changes in leadership, including the GCE’s departure and the appointment of an acting GCE, Mr Calib Cassim;
- stabilise the business and allay panic amongst employees;
- share information on available Employee Assistance Programmes;
- afford employees an opportunity to share their views and talk openly about the situation, which was facilitated through a three-week employee engagement and crisis communication pulse check (which revealed some very interesting employee perspectives);
- encourage employees to keep focused on business continuity and organisational alignment, while driving security of supply and overall business performance;
- emphasise to employees the important role and impact of Eskom to South Africa, and;
- promote overall employee engagement.
He said that, in the handing over of the Judiciary Commission of Inquiry into State Capture on 29 April 2022 by Justice Zondo, Eskom subsequently created its own internal task team on State Capture. At that time, Eskom and the Special Investigating Unit (SIU) had already recovered up to R2 billion in Eskom funds that had been unlawfully paid out (to Deloitte, McKinsey, ABB, and Meagra Transport CC, etc.). The new Board was informed in depth of what the previous Board had done in terms of oversight over the State Capture Task Team (SCTT), as the new Board assumed office in October 2022. The report of the SCTT had already been submitted to the Public Enterprise Department in July. So, everything the Board knew about any of the allegations that were made by Mr de Ruyter was contained in that report.
When the Board said that the former CEO brought the entity into disrepute, it was because a lot of the allegations that were tabled during the interview misled the public to think they were new developments that had been shared firstly with the Board, which was not the case. Secondly, it misled the public by indicating that there were no actions taken internally at Eskom, because, since the establishment of the SCTT, a lot of disciplinary hearings had occurred at Eskom. It is also known publicly that, around mid-September and mid-October, about 26 former executives, including a former Acting Chief Executive of Eskom, had been arrested and appeared in court in relation to the allegations that were made.
Regarding the ongoing work of the SIU, he said that, in November 2022, Eskom reported to SCOPA that it had recovered about R1 billion from SAP. There is also ongoing work being done by both Eskom and various professional bodies, including the Registrar of Directors at the Companies and Intellectual Property Commission (CIPC), to render the past Eskom Board Directors that were alleged to be involved in corrupt activities as delinquent directors. After the allegations made by Mr de Ruyter, the new Eskom Board asked the SCTT to investigate whether there were any other matters that the Board may not be aware of that could not have been cited in the various documents.
The Board further resolved that, in keeping up with exercising its fiduciary duties and responsibilities, an independent legal panel must be appointed where a senior legal council could revisit everything that has been done up to date internally by Eskom and the SCTT, in order to see if the Board should do anything further. The independent legal panel is currently going through the procurement processes, led by the Head of Legal of Eskom, to ensure that it is appointed. The panel will be reporting to the Audit and Risk Committee Chairperson of the Board to ensure that a full and comprehensive independent investigation is conducted so that the dots can be connected to ensure that nothing is left unhandled.
Working together, they can ensure that the organisation can be turned around and Eskom can be restored to its former respect as a top-performing power utility, and this is a commitment that the Board is committed to achieving. The Acting Group Chief Executive could not attend the meeting because he was in China alongside the Minister of Public Enterprises. Ms Pule, who is the delegated fill-in for Mr Cassim, also could not attend the meeting because she was at the peak of the annual negotiations with the Industrial Relations Negotiations team. He then introduced the rest of the delegation that was present.
Briefing by Eskom
The Eskom delegation included: Mr Segomoco Scheepers, Group Executive: Transmission; Ms Jainthree Sankar, Chief Procurement Officer; Mr Monde Bala, Group Executive: Distribution; Mr Bheki Nxumalo, Group Executive: Generation; and Ms Karen Pillay, General Manager: Security. They presented Eskom’s overarching position on matters raised by the former Group Chief Executive in detail, with a specific focus on the procurement and supply chain irregularities, non-technical losses, the alleged fuel oil irregularities, as well as Eskom Security’s critical successes.
Key to the presentation was that the executive team of Eskom was not aware of nor involved in the privately funded intelligence investigation that was referred to by Mr de Ruyter. Eskom requested that SCOPA refer the matters relating to Mr de Ruyter’s opinions on matters relating to Eskom, and the apparent actions that he took during his tenure back to the former GCEO. Regarding the procurement and supply chain irregularities as well as the alleged inventory corruption, Eskom confirmed some irregularities relating to warehouse management, with culprits tracked and criminally charged. Closer inspection of the surpluses and deficits indicated that the issue predominantly related to a data management gap, i.e., where the movement of stock was not captured timeously or not captured at all.
Regarding fuel oil consumption irregularities, the executive team said that Eskom identified and actioned irregularities pertaining to fuel oil theft, and the entity is currently addressing matters relating to litigation with the supplier. Grootvlei Power Station’s milling plant has had several challenges due to a lack of funding for maintenance over the years, thus requiring units to run on continuous fuel oil support. Majuba Power Station’s high fuel oil consumption is due to maintenance backlog and long lead time for spares. The high fuel oil usage was also impacted by the number and combination of mills out of service, resulting in delays in the maintenance of operational mills.
The Committee Chairperson asked if the Acting CEO went to China with the Department of Public Enterprises (DPE) and whether that visit was not about Transnet and locomotives matters.
Mr Makwana said that there were also Eskom matters, which was the reason the Acting CEO was part of the trip.
The Chairperson said that Mr de Ruyter, on page 13 of his submission to SCOPA, wrote that he reported the matter to the then Interim Chair of Eskom, Prof Malegapuru Makgoba. He also informed the new board of Eskom of the intelligence operation at a meeting held at the Eskom Academy of Learning in November 2022. Furthermore, on 05 July, the Former GCE attended a meeting with the National Joint Operational Centre at the SAPS College in Pretoria where he shared high-level concerns about corruption and theft at Eskom, with the National Commissioner and his staff and offered to avail the intelligence to designated individuals. In the preceding paragraph, Mr de Ruyter spoke about the intelligence gathering and private investigation, wherein he indicated that the officer who was designated by the National Commissioner had full access to all the intelligence that was gathered. The Former GCE also stated that he had kept his line command informed. He asked the former Eskom Chairperson to respond to the intelligence report.
Former Interim Eskom Board Chairperson Remarks
Prof Malegapuru Makgopa Former Interim Eskom Board Chairperson, said that what was presented by the Board does not contradict what Mr de Ruyter had said because he alluded to all the issues in his presentation. Progress had been made. He may have not articulated it in detail in terms of oil fuel and other matters, but he did indicate that progress was made. If the South African Police Services (SAPS) and the Hawks had done their work effectively and efficiently, the Committee would not have held such a meeting. The issue that Mr de Ruyter undertook was operational, because, at the time, Eskom was besieged with sabotage and corruption, and the entity was not getting any mileage from the law enforcement agencies.
In a few meetings that Mr de Ruyter had with the former Director of Prosecution, Advocate Cronje, where he expressed concern that they reported matters but there were no returns, and the Hawks was taking too long in moving the cases forward. This was repeating itself in several cases that were taking place from both SAPS and the Hawks. Eskom was concerned that the entity was being destroyed while the security cluster was asleep. The concerns were raised by the Board to find out what actions were being taken, and this task was left to Mr de Ruyter as the management responsible because they were operational matters. The law enforcement agencies let the entity down, which is why Eskom is in its current situation.
He confirmed that Mr de Ruyter informed him about the challenges in the entity and that, on 05 July 2022, Mr de Ruyter also informed Mr Mufamadi and Minister Pravin Gordhan. On 16 July, he took the Minister of Police, Mr Bheki Cele, Minister of Public Enterprises, Mr Pravin Gordhan, and the Minister of Mineral Resources and Energy, Mr Gwede Mantashe, to the Tutuka Power Station for them to have first-hand information of what corruption and sabotage means in a single power station. The President was also there. Later, the President went to meet with some of the power station managers at Megawatt Park to discuss what he had learnt. On 09 February 2023, in his State of the Nation Address, the President mentioned that the SAPS has established a dedicated team with senior leadership to deal with the pervasive corruption and theft at several power stations that have contributed to the poor performance of the stations. The President also said an intelligence-driven operation at Eskom-related sites had so far resulted in 43 arrests. He asked which intelligence operations the President was referring to. When listening to what the Security Director at Eskom, it seems like the SAPS and Hawks only woke up after they heard about the intelligence-related information.
He said that, as the Interim Board Chairperson of Eskom, he never received any evidence or documentation, but he did receive word-of-mouth information. He also confirmed that the exco at Eskom was not privy to what was going on in terms of intelligence gathering.
The Chairperson asked for confirmation that the former Eskom Board Chairperson was informed about the intelligence operation that was underway at Eskom.
Prof Makgopa confirmed that he was informed, and this matter was brought up by the Minister of Public Enterprises because of hearing that Eskom was besieged, which prompted him to ask the former CEO to gather some intelligence to be on top of the problem.
The Chairperson asked the current Eskom Board to confirm if Mr de Ruyter informed them of the intelligence operation in November 2022.
Mr Makwana said that is not correct.
Mr Somyo noted that Mr Makwana’s, in his opening remarks, made a disclaimer on the document that he submitted that the statements of that report exclude any verbal statements made during the meeting. Mr Somyo wanted to know what that meant.
Mr Makwana said that he did not understand the question.
The Chairperson pointed Mr Makwana to the disclaimer at the bottom of the opening statement that he submitted.
Mr Makwana said that this meant that whatever else he may have said during his opening remarks may not be included in the statement – for example, when he mentioned the Acting CEO’s visit to China.
Mr Somyo said that, when one presents a disclaimer, it implies that one is not taking ownership of the statements that one is making. In this instance, Mr Makwana could have made an entirely different speech. Mr Somyo wanted to persuade him to use a different word.
Mr Makwana said that he would be happy to be assisted with a different word, but the simple intention of the disclaimer was to remind Members that, in the process of rendition of the statement, other remarks that are not written were made.
Mr Somyo persuaded Mr Makwana to change the sentence to say that the statement included whatever he had said during his verbal statement, because a disclaimer meant Mr Makwana was not taking ownership.
Mr Makwana said that he accepts the advice.
Mr Somyo recounted that the executive explicitly said it did not know nor was it involved in what Mr de Ruyter referred to as the intelligence investigation, but the Board was silent about its knowledge or lack of knowledge about what Mr de Ruyter referred to.
Mr Makwana said that the new Board had no knowledge of the intelligence report. The first time that it heard of it was through the Amabhungane article indicating that they were in possession of the report and that they were going to publish it in installments The Board is on record asking the executive team about the report, and the executive team said it had no knowledge of it. The Board does not have the intelligence report in any format other than what it read or heard of in the media.
Mr Somyo asked if the entire Eskom did not have records of the intelligence report.
Mr Makwana said they do not have the records of the intelligence report. It was not an Eskom process, as was indicated by Mr de Ruyter. It was a privately funded intelligence-gathering report. So, there is no formal documentation in Eskom’s Board documents.
Mr Somyo asked the executive team if there are any elements of the report that would have driven them to act otherwise.
Mr Scheepers said, in the ordinary course of this type of investigation, a few people are involved – the Head of Legal, the Head of Audit and Forensic, the Chief Executive, Head of Security. And perhaps an executive that might be pertinent to the investigation. He said these issues have never been tabled at an exco meeting according to his knowledge.
Ms Pillay said that, insofar as the intelligence-led operations conducted by Mr de Ruyter are concerned, she was not privy to any of the reports from the entity and neither was she aware of the activities that were being undertaken by the group. She said that Mr de Ruyter addressed the Nat Joints, which was headed by the National Commissioner of Police on 05 July, wherein he briefed them on the potential threats on Eskom infrastructure and acts of sabotage directed at the entity, which necessitated that law enforcement assists in safeguarding power stations and critical infrastructure.
Mr de Ruyter spent a lot of time sharing with the National Joint Operational Intelligence Structure (NATJOINTS), Committee the impact of tampering with plants and equipment on the stages of load shedding and exacerbating the situation. At that point, it was clear that the NATJOINTS Committee had accepted the briefing, which resulted in the priority Committee being set up in mid-July. The security component within Eskom was cognisant to work with the authorities, as they are obliged to act within their mandate which is limited in many ways. For example, it is not authorised to conduct intelligence operations, as this is the mandate of the state. When they discover matters that require the intervention of crime intelligence or the State Security Agency (SSA), they escalate the matters accordingly. Under no circumstances did the Eskom security prepare, participate in, or present any intelligence report.
She said that, based on the interactions with the NATJOINTS in August 2022, Brigadier Burger was assigned by the National Commissioner to engage with Eskom. She was one of the parties that were invited to a meeting with Brigadier Burger where he requested specific information from Eskom pertaining to incidents of crime within the organisation. She gathered from that request that the intent was to probe specific areas of criminality and organised crime within Eskom. All reports that were provided to Brigadier Burger were provided in consultation with the former GCE, but there were no secret intelligence reports in the possession of the Eskom security cluster. Whatever was shared with the structures was also shared with the Department of Public Enterprises and the Justice, Crime Prevention and Security (JCPS) Cluster, along with other entities that had an interest in criminal matters within Eskom.
Mr Somyo asked if it is not in Ms Pillay’s purview to indulge and to act in a way the intelligence legislated institutions would deal with matters of that context.
Ms Pillay said that, in her role as Head of Security, it is incumbent on her to cooperate and liaise with the agencies insofar as their mandates are concerned, and that is what she did.
Mr Somyo asked if she was aware of a security company whose security services were procured shortly after.
Ms Pillay said that she was aware because, after the notification was made to the NATJOINTS of the threat, there was a request for them to safeguard the infrastructure of Eskom and a contract was given to a security company.
Mr Somyo asked if the system for procurement of contracts used at Eskom was SAP related.
[There was a brief connectivity problem]
Ms Sankar said that free text is a way of capturing a request within SAP. So, under ideal conditions, one should not allow free text in that an end user can describe what they want in their own words. Eskom blocked the ability to use free text or a long-winded description when they want material; they request that it is codified or catalogued when buying material.
Mr Somyo said that there were some interventions by National Treasury, which gave rise to the implementation of Instruction Note Three in April. Subsequently, Eskom made appreciation statements around the enactment, which made several waivers for procurement occurrences. He asked Ms Sankar to comment on the existence of some form of privatisation of the procurement services as was alluded to by Mr de Ruyter.
Ms Sankar said that the National Treasury’s Instruction Note Three is not so much a waiver, but it is a rule for all state-owned entities (SOEs). Eskom welcomed the fact that National Treasury was cognisant of the delays in processing expansions and deviations that may have an impact on operations in the power stations. Regarding privatisation of procurement, she said that, as far as she knows, Eskom does procurement internally, and it has no outsourced procurement. Eskom has instances where it augments resources in procurement and supply chain with additional staff on site, and there is no additional system as the entity only uses SAP, even their tendering is done through National Treasury. On exemptions, departures, and applications, the entity is working closely with National Treasury, DMRE, DPE, as well as the NATJOINTS force which meets weekly to look at the extent to which regulation notes or any legislation is slowing down generation’s ability to procure goods and services and maintain them.
Mr Somyo asked if what Mr de Ruyter referred to did not apply at Eskom.
Ms Sankar said that it does not apply.
Mr Somyo said that the former Eskom Board Chairperson’s confirmation was that Eskom is where it is because of the failures of the SAPS and Hawks after they had meetings pertaining to the serious matters of criminality and corruption at Eskom. He asked if that statement confirms that the former Board Chairperson and the former Board were aware of the intelligence related investigations that were happening at Eskom and that the investigation may have been sanctioned by them.
Prof Makgopa said that the operations were declared as operational matters and not as matters for the Board. The Board was frustrated about the lack of action from the SAPS and the Hawks in that cases were reported to them but little or slow actions were made. The SAPS and Hawks reacted too slowly, and people were impatient and said the Eskom Board and the executive were not doing anything. So, the executive and the shareholder decided to find a way to get on top of the matter. When Mr de Ruyter decided to gather the intelligence, he decided to do it on his own without involving his executive, as he told him that he would not involve them because of the information leaks, the little trust that existed, and the fact that some Eskom officials were going to be investigated in the matter. The Board did not sanction the request because it was an operational matter that Mr de Ruyter had the authority to deal with as the GCE.
Mr Somyo asked if Prof Makgopa was confirming that the Board’s responsibility was to sanction the intelligence investigation.
Prof Makgopa said that, as a former CEO in his other capacities at different institutions, there were operational matters in which he had to conduct intelligence investigations due to operational matters, and he did not have to consult the Boards to do that. So, Mr de Ruyter did not need to be sanctioned by the Board to conduct this investigation because the matter was operational. Chief Executives are not hired to be controlled by the Boards, but they are hired because they are competent enough to run the organisations and make appropriate decisions and go to the Board for guidance and strategic direction.
Mr Somyo noted that Prof Makgopa said that he was aware of the intelligence operation, but the Board was not aware. The Board of Eskom remains an accounting authority, and the denial of an accounting authority on matters of accountability is itself an act of dereliction. In this instance, Prof Makgopa denied the Board the information that was necessary for it to act on.
Prof Makgopa did not agree with Mr Somyo’s statement. He said he understood what he was saying, but the reality of what happened was that, when the matter was declared an operational matter, it meant that Mr de Ruyter had the responsibility to do what needed to be done. This was not unusual for him to do because he was acting in the interests of Eskom, and he had to decide on the best way to handle the issue. The shareholder was aware of his actions.
Mr Somyo asked if the responsibility to Mr de Ruyter was pointed out and sanctioned by the Board, or if it was done by Prof Makgopa.
Prof Makgopa said that the Board was concerned about the company being besieged with corruption and sabotage, and the GCE and some of the members of the executive would report the incidents of sabotage and corruption to the Board.
The Chairperson asked Prof Makgopa to answer the question directly on whether the responsibility to Mr de Ruyter was sanctioned by himself or the Board. Were any Board members aware that the operation would take place?
Prof Makgopa said that the Board was aware that there is corruption and sabotage and wanted the executive management led by the GCE to come up with solutions to that.
Mr Hadebe recounted Mr Makgopa said he was told about the intelligence report by word of mouth, but he did not see the actual report. Did he not see it fit or necessary for him to get the findings of the report after he had been told about it and especially with the concerns that were raised? Mr Hadebe raised this based on his fiduciary responsibility as enshrined in Section 50 of the PFMA.
Prof Makgopa asked Mr Hadebe to read the section so that he could answer the question.
Mr Hadebe read it as follows: “As the accounting authority, you must exercise due and utmost care in ensuring reasonable protection of the assets and records of the public entity.”
Prof Makgopa said he did not deem it necessary at the time because, when he was told of the intelligence report, he asked Mr de Ruyter if he had referred the matter and received guidance from the Minister of Public Enterprises and whether he had shared it with anyone in the Office of the President, the Hawks or the SAPS. Mr de Ruyter said that he was going to do that because he did not have the written report at the time.
Prof Makgopa said he tried to get the report from the former GCE, but he could not get it because it was not ready.
Mr Hadebe asked when the word of mouth was shared with him.
Prof Makgopa said it was around the middle or end of May 2022.
Mr Hadebe said that there was a meeting with the NATJOINTS in July where Mr de Ruyter made an undertaking to avail a report, which was also attended by the Head of Security. So, the report was already available at that time, meaning Prof Makgopa had sufficient time to get the report when it was available. Why did he not do that because other law enforcement authorities were furnished with the report? After having interacted with Mr de Ruyter in May, did he not follow up on the matter after the report was concluded?
Prof Makgopa said he followed up with Mr de Ruyter on whether he had informed the police, the Hawks, the shareholder, and the President’s Office, but he did not think it was necessary for him to know because such matters must be dealt with as normal criminal cases where they are reported to law enforcement authorities.
Mr Hadebe asked if he wanted everyone else to be informed other than himself as an accounting authority with the responsibility to protect the assets.
Prof Makgopa said that was not the case.
Mr Hadebe asked if executive authorities operate by asking for information that they know to be reported to other authorities without understanding the gravity of the contents of the information.
Prof Makgopa said he thought the report would be provided to him when it was ready, but these processes had to happen before he could have access to the report.
Mr Hadebe said the report was ready by 05 July and asked why Prof Makgopa did not get it or request it.
Prof Makgopa said that because it was being handled by law enforcement agencies.
Mr Hadebe said that, when the interview took place, Mr de Ruyter said there was resistance to implementing controls, conducting investigations, and to implement disciplinary actions as they uncovered more. It had just become clear that the rot was much worse than he had anticipated when he took over. He went further to mention issues of cartels and people washing money with 18-year-old expensive champagne bottles, as well as issues of car dealers in the Mpumalanga high veld and informants and operatives, suggesting that he got an intelligence report. He asked if the current Board did not see it fit to ask him to furnish it with the intelligence report and all the information at his disposal when it had an opportunity to sit with him in its meeting and instead chose to terminate his contract. He asked if they were acting in the best interests of Eskom by letting him go without furnishing him with the necessary information.
Mr Makwana said that it is speculative to assume that Mr de Ruyter would have willingly, and voluntarily handed over the intelligence report to the Board for exactly the reasons that were articulated by Mr Makgopa that it was done privately outside of Board protocols. The clear process that any Chief Executive would follow under the circumstances is that, when the current Board assumed office in October 2022, the Board would outline the issues that are before him. He said that, since assuming office, he met Mr de Ruyter on their Tuesday fortnightly status meetings, and all the reports that he gave covered every issue within the organisation, except the issue under discussion.
Even on the first day that they met, which is the day Mr de Ruyter found a tracker under his seat, there was no comprehensive report on that. Mr de Ruyter mentioned it in passing. The Board also did not receive any report regarding the cyanide poisoning of Mr de Ruyter. He said that the Board would probably have not received the benefit of information regarding the intelligence report because there was no intention from Mr de Ruyter indicated from Mr de Ruyter that he would have if information to the Board.
He said that, if Mr de Ruyter intended to release the report, Parliament would have been the perfect place to do so. The current Board will appoint independent legal counsel to ensure that, independent of it and the executive team, it will work with the legal counsel through its Audit and Risk Committee to get to the bottom of what transpired.
Mr Hadebe asked if Mr Makwana was aware of the report on the four organised cartels who are well-trained and sophisticated, and are allegedly operating within Eskom.
Mr Makwana said that the report had never come to his desk nor the desks of any Board Committee.
Mr Hadebe asked if he was aware of an Eskom buyer that was arrested for defrauding Eskom and was released the following day with nothing having been done thereafter.
Mr Makwana did not recall receiving such a report.
Mr Hadebe asked if he was aware of the R1 million lost per month in fuel oil corruption with which the buyers were identified and arrested but were released on R500 bail.
Mr Makwana said that he was not aware of it and noted that the burden lies with the one who alleges.
Mr Hadebe said that these are the matters that were raised in the interview. In Eskom’s responding statement, they said that nothing new was raised by Mr de Ruyter in that interview, yet they claim to know nothing about them when asked about them. There is a lot that Eskom does not know that was raised by Mr de Ruyter in the interview. Were they not interested in finding out more detailed information about the four cartels operating within Eskom and other issues that were raised in the interview?
Mr Makwana said that the matter of cartels predates the current Board’s time as it was already documented and in the investigations of the Hawks and the SIU. So, it is nothing new. Through Mr de Ruyter in November last year, Eskom had said that the Power Station Manager at Tutuka is one of the station managers that must go to work wearing a bullet-proof vest and have his family under police protection. This points to the investigations that Mr de Ruyter presented as new information during the interview. These matters have already been reported to the Committee. The duty of the Board is to have an independent individual investigate where there might have been anything missed in the ongoing investigations.
Mr Hadebe was confused about what the correct answer was between the matters not being new and Eskom not knowing about the four cartels. He asked if the matters are not new, what was done about the four cartels and the other cases that he had asked about, and whether there were any follow-ups on them.
The Chairperson said that Mr Hadebe was trying to find out that, after having met with Mr de Ruyter after he did the interview, did the Board test the information that was brought up, or was he just told that he brought the entity into disrepute and was dismissed? Was the Board not interested in finding out why Mr de Ruyter had not provided the details internally as he did on the public platform?
Mr Makwana said that Mr de Ruyter was not dismissed; he had already resigned and was serving notice, and the end of that notice was the end of February 2023. The Board had previously asked him to stay for handovers, but it was becoming clear that, during that period, he was no longer interested in working for the greater good of Eskom. So, the Board did what any Board would have done when the Chief Executive no longer served the company’s best interests. He said that there is a broad view that wants to position Mr de Ruyter as a victim and as a whistle-blower.
Mr Hadebe tried to interject.
The Chairperson said that he understood that some of the issues that were raised would raise eyebrows but felt it was important for the Committee to hear them and understand the thinking at Eskom, as uncomfortable as they may be.
Mr Makwana said that, in any organisation, private or public, when a person of authority acts in a manner that is in contrast with the role and responsibility that he or she is entrusted with, it is common cause that, if they have not resigned, an investigation is undertaken; if they are exonerated, they may come back; and if they are guilty, a suitable would be given. That is a globally established practice. He did not see why the Board would have let Mr de Ruyter stay in the organisation because it wanted to test the allegations. The Board still has the wherewithal to get to the bottom of the allegations he made whether old or new through the investigative processes that it will embark on. The Board believes that it acted in the best interests of the organisation letting him go.
Ms B Van Minnen (DA) was concerned to hear that Mr de Ruyter was asked to leave earlier than his notice period because he was embarrassing the organisation. In her view, what is bringing the organisation into disrepute is the apparent deep reluctance to investigate matters by the Board and the law enforcement agencies. The Committee was told that the people who are investigating the allegations as well as the Acting CEO are not available in the meeting, and this was concerning because the people have been waiting to hear answers regarding the allegations since they were made. She was concerned about how seriously the Parliamentary process was being taken by the Eskom Board because there seems to be a wilful ignorance about what is going on, what was reported, and what is in the public domain. And it is becoming impossible to determine what or if anything is being done to get to the bottom of the serious allegations.
Looking at the presentation from the Board, there seemed to be some serious denials going on in terms of the information that was highlighted by the former GCE to SCOPA two weeks ago. Does the Board deny that Eskom loses about R1 billion monthly? Does the Board deny that there are cabals in Mpumalanga? Or are they simply claiming that this is old information and thus should be classified as nothing new?
Mr Makwana said that there needs to be a demarcation of the answerability that should be before the Committee from the various agencies that were cited by Mr Makgopa and the Members. The task at hand for Eskom is to keep the lights on, as an electricity utility. When they encounter problems, they report them to the requisite authorities. When the new Board started participating actively in the National Energy Crisis Committee (NECOM) in January 2023, it saw good traction of more than 2 000 dockets being processed by the Security Cluster and the requisite law enforcement officers. And from the perspective of the Board, the matters are well underhand in process and being dealt with. Any Chief Executive of a company would have gone to its Board Chairperson to inform them of the critical issues that are of concern and requested assistance with the removal of certain obstacles in resolving them.
In the Annual Financial Statements published by Eskom on Christmas Eve in 2022, there is a long list of irregular activities and expenditure that the Board fast-tracked their reporting in keeping with its quest to ensure that it dents any misconduct and irregularities in Eskom so that it runs a cleaner organisation. Mr de Ruyter did not play within the rules of good governance to ensure that Eskom continues that trajectory. All the information about cartels is already before law enforcement agencies. And whether there are delays in those processes, it is outside of Eskom’s jurisdiction because is not in the business of law enforcement and it has done its part to share the information with the relevant law enforcement agencies.
Ms Van Minnen pointed out that the lights are not staying on and that a very large reason for that seems to be the reluctance of the Eskom Board to properly investigate allegations that they now admitted that they know about. Surely, in exercising their duties, they should be doing something about these allegations. Other than giving the Committee vague assurances that the law enforcement agencies are dealing with the allegations, is Eskom driving the issues and are they communicating with the law enforcement agencies? What is the Board doing to deal with the serious allegations, including the allegation that at least one senior politician is involved in this?
Mr Makwana said they are doing something about it and he had mentioned at the beginning of the meeting that at the beginning of the year. The Board resolved to have the internal SCTT continue to expand the investigation to look at anything that may have not been addressed coming from the eNCA interview. Secondly, he had mentioned that the Board had an Independent Investigator review the investigations independently of the Board and the executive to see if anything had been missed. That process needs to be allowed to unfold so that reports can be made.
The Board is doing what any other Board would have done that is within its realm of authority and powers. In terms of law enforcement agencies, there is a stream out of the nine NECOM streams that is purely dedicated to law enforcement and the Board gives regular information to it when required to do so. The house should appreciate that, once a matter is before law enforcement, it is in the realm of prosecutions and arrests, which is out of Eskom’s purview. Eskom can only account for what it has control over in its purview, and the Board believes that it has done that.
Ms Van Minnen argued that law enforcement agencies are also there to gather evidence to build a case before it gets to prosecution, which is where the ‘what did you do’ clause comes in because this appeared to be attempts to evade answering what the Board had done in terms of investigating the serious charges that were made. The Board seems to be hiding behind the blanket that it did not receive a formal report, which is not the be all and end all. Merely appointing independent investigators is not enough. What are they investigating? And what is happening with the charges that the Board admitted to already knowing about, including the issues of the cabals, the fuel theft, and the senior politician who is alleged to be involved in corruption and theft at Eskom?
Mr Makwana said that the matter about the political players is in the public domain. According to his understanding, Mr de Ruyter would have had to go and report the politician at the nearest police station. That is not an Eskom matter because he or she who alleges needs to go to the requisite authority and lay the charges. He said that he was unsure why members wanted to lump everything on the door of Eskom on the matter because he did not see how the Board could do its job while also playing in the realm of investigations. Perhaps other role-players should have been invited to answer questions relevant to them, including SAPS and other law enforcement agencies. Respectfully, those are not questions that should be answered by the Board.
The Chairperson asked Mr Makwana to be fair to the Committee because, when Mr de Ruyter made the allegations, he was the CEO of Eskom regardless of the number of days he had of his notice. This makes it an Eskom matter because he did not make the allegations after the fact of his resignation.
Mr Makwana said that the beauty of this is that SCOPA had invited Mr de Ruyter not so long ago, and he did not respond to the same question. So, if the Committee could not get him to respond to the same question, it did not make sense to have Eskom speak on his behalf. The one who alleges is the one who has the duty to report.
The Chairperson said that Mr Makwana was mischaracterising the sequence of events because, when Mr de Ruyter made the allegations, he was in a position of responsibility at Eskom, and the Board was his supervisor, and when he met with the Committee, he pointed it towards the direction of the Minister of Public Enterprises and the Presidential Advisor. He did not point to the Eskom Board because it did not probe the matter. The bottom line is that Mr de Ruyter made several allegations publicly whilst he was in a position of responsibility under the supervision of the Board, and what the Committee heard is that the Board did not test the allegations when it met with him, rather it cut short his notice days.
Mr Makwana said that the matter was not reported to Eskom as the Chairperson pointed out. Mr de Ruyter indicated publicly that he reported to the shareholder and a Ministerial Advisor to the highest office in the land, and at no point did he mention that he reported it to the Board. He requested that matters that should not be answered by Eskom should not be forced down Eskom’s throat.
Ms Van Minnen said that if Mr Makwana was arguing that Mr de Ruyter alleging corruption and involvement by a senior politician, which he reported to the shareholder and the highest office in the land, was not an Eskom matter, it would be bizarre because it is certainly an Eskom matter in which the Board should be concerned about. The Committee was not asking for the name of the politician but was merely pointing out that it is an Eskom matter, which was also one of the major factors in Eskom struggling to keep the lights on.
Mr Makwana said that, even if Mr de Ruyter had disclosed the name of the politician and all the information was known to Eskom, the entity would still not have the power to arrest the politician or act on the matter. The matter must be left to the law to take its course to bring that person to book.
Ms Van Minnen said that the SCTT which is tasked with investigating information that flows and the assertions by the former GCE, and the issue of the joint SAPS task team set up in June or July last year and was based at Megawatt Park was rejuvenated in January 2023. What is their mandate and how are the two different task teams working together? If the SCTT is not dealing with the allegations of corruption as made by the former GCE, what are they doing?
Ms Pillay said that the mandate of the Energy Security Priority Committee which was instated in July was to focus on crime within Eskom including acts of sabotage, plant tampering, theft, fraud, and corruption. Since the Committee was revived in January, the mandate was further enhanced to also facilitate coordination across the different government agencies with the intention of protecting the national grid.
Mr Makwana said that the SCTT follows up on consequence management regarding delinquent employees when information comes out from disciplinary procedures and ensures that law enforcement agencies follow up on the issues. It also focuses on criminal proceedings. So, the 26 executives that were arrested resulting from the ABB matter were also linked to the work of the SCTT. It also focuses on civil recoveries where both Eskom and the SIU work with the Hawks in terms of blacklisting delinquent contractors and suppliers. The SCTT is an important committee that ensures that all the internal mechanisms are actioned.
Ms Van Minnen said it was problematic that the Board appeared before the Committee without a lot of important people who could have responded to the questions of the Committee. The statement that was given to the Committee in the morning, as issued by the Eskom media desk, clearly talked about the SCTT being tasked to investigate the information that came from the former GCEO, yet the response by the Board spoke of something different. This points out the wilful refusal from the Board to face what is going on at Eskom.
Mr Makwana said that that was not true because he spoke exactly to that in his opening remarks. He had said that, after the February interview, the SCTT was asked by the Board to also investigate the allegations. It was written in the opening remarks. The Board was not refusing to deal with anything; it was dealing with the matters.
Ms C Mkhonto (EFF) said that she would refrain from asking questions regarding the allegations by Mr de Ruyter, as the Committee was not getting satisfactory answers. She said the country is sitting in the dark and the former GCEO of Eskom decided to abandon a very high position to turn into a whistle-blower, and that should not be taken lightly. When did Eskom’s Risk Management Unit realise that there are challenges such as the institution being under attack that might have led to the current stages of load shedding? What were the mitigation plans in the Risk Management reports? Some of the issues reported by the former GCEO are old and some of them are new.
Mr Makwana said that, when Eskom came before the Committee in November, Mr de Ruyter recounted the history of the challenges of the security of supply going back to the 1990s. When the New Board was appointed in October, it appointed a Board Operations Technical Committee comprising of most of the engineers and technical members of the Board. The new Board grappled with the matter of putting in place a generations recovery plan that would ensure that Eskom restores lights back to normalcy. The generations recovery plan was engaged with various key stakeholders and has been implemented since January to ensure that, in line with the allocated funds, Eskom achieves critical milestones at the end of each financial year.
Mr Nxumalo said that, in terms of the recovery plan, Eskom is still focused on achieving the 65% Energy Availability Factor by end of March this year. However, the entity is operating at a backlog because of the three units at Kusile that are off, which are equal to 2 100 megawatts, but the entity is working hard to bring those units back online by the end of the year. It is still going to be difficult during this winter because Eskom will be operating without a unit at Koeberg, and the life extension project is still on course in the power plant to ensure that it can operate beyond 2024.
Mr Martin Buys, Acting CFO, Eskom, said that, since some of the risks were identified, Eskom has relooked its audit plan to try and identify some of the key areas that need to be audited to ensure that the corrective actions have been taken. For example, in inventory control, they involved their internal audit function to ensure that all processes and procedures are in place and that employees are following the audit procedures. In the forensics environment, because of the backlog of investigations, they sourced external resources that can assist them to deal with the backlog and try to find solutions to some of the issues. There is a collaboration between some of the parties within Eskom to identify flaws or concerns around some of the procedures and update each other on them so that there can be improvements in the risk areas identified. He said they meet with the external auditors weekly and meet with all the parties within Eskom weekly to track and monitor any progress in terms of the audit function.
Ms Mkhonto said that the questions were answered but the answers pointed to the fact that the issues that were alleged by Mr de Ruyter might be the nucleus of the challenges of the institution because the backlog exists because the risks within the institution cannot be identified internally. The issues that were raised by Mr de Ruyter are the issues that Eskom should be concerned about resolving. Mr Makwana said that the Independent Legal Panel assists the Board to execute its fiduciary responsibilities. How many people are part of the panel, and what are the financial implications thereof? Are there any recommendations that have be brought forth by that panel, and is this panel assisting in bringing back the country to normalcy in terms of electricity supply?
Ms Makwana said that the Senior Counsel review is still underway and is not yet completed, and it will be purely looking at issues of the integrity of the organisation relative to the allegations made by Mr de Ruyter and relative to the existing internal investigations ran by the SCTT to connect the dots to any blind spots that may exist to ensure that nothing is missed in protecting the best interests of the organisation. The panel will not have the wherewithal to impact on keeping the lights on. There is an independent reviewer that the Board Operation Committee caused to be appointed, including an engineering technical analyst organisation that started working with the Board at the end of February, which will have the benefit of checks and balances of ensuring that Eskom produces quality reports to the public.
Ms Mkhonto wanted to know the financial implications of the independent legal panel.
Mr Makwana said that the legal panel will be drawn from lawyers that are already within the preapproved procurement systems, which will be lawyers that are already doing other work for Eskom, and it should not be an exorbitant process.
Mr Lees asked Ms Pillay if Mr de Ruyter had briefed the various security agencies about the intelligence report in July 2022, and he asked when she became aware of the intelligence report.
Ms Pillay said that, when Mr de Ruyter briefed the security agencies in July, he made no mention of the intelligence report, and he also did not mention anything about a private company that was doing the work. He only briefed the Committee on the threats of sabotage that he believed were going to unfold. About the intelligence investigation, she said she only became aware of the involvement of the private company in September 2022, when Mr de Ruyter made statements of a bugging device on his vehicle.
Mr Lees said that, if she knew in September, then it is not correct to say the executive was not aware of it until it was announced by Mr de Ruyter in the interview, because she is part of the Eskom executive team. On the one hand, Mr de Ruyter said that he informed the Board. And on the other hand, the Chair of the Board denies that Mr de Ruyter informed the new Board and mentioned something about a Microsoft Teams group between Board members and the executive and spoke on behalf of the other Board members. He asked each Eskom Board member who was present in the meeting to speak on the record and mention whether they were aware of the intelligence report.
The Chairperson said the Board members who were present in the meeting would be allowed to mention when they became aware of the report, and those who were not would have to submit in writing by next week.
Mr Bheki Ntshalintshali, Eskom Board Member, said that he only heard about the report when the matter was circulating around the sector and when people were asking about it in the WhatsApp group.
Dr Claudelle von Eck, Eskom Board Member, said that she was unsure about the dates when she found out about the external investigation, but she heard about the existence of an intelligence report through the media.
Mr Lees said that he assumed that what Ms von Eck meant that Mr de Ruyter did not inform the Board as he claimed to have done so during the interview with eNCA.
Dr von Eck said that she thought what Mr de Ruyter was referring to when he spoke of an investigation was what was happening at Eskom, and that there was nothing that gave a clear indication that an external investigation was run outside of Eskom.
Mr Lees asked if Mr de Ruyter told the board about an ongoing investigation but was not clear about whether it was conducted externally or internally.
Dr von Eck said yes, but it also sounded like he meant there was an investigation, as it was expected that an investigation would be done.
Mr Lees said that the point was that he did inform the Board that there was an investigation.
The Chairperson recounted that Mr de Ruyter’s submission said he informed the new Board of Eskom of an intelligence operation at a meeting held at the Eskom Academy of Learning in November 2022. The Chairperson asked if that was the meeting Ms von Eck was referring to.
Dr von Eck said that she was unsure of the date, but that is what she was referring to.
Mr Lees asked if she remembered where the meeting took place.
dr von Eck said that it was at the academy, if her memory served her well.
Mr Lees asked if there is a member of the executive who was part of the Board, who could confirm this, because Mr de Ruyter had mentioned that he informed the Board.
Mr Makwana said that the only executives who are part of the Board are the Acting CEO and the CFO.
Mr Lees asked if the Acting CFO was present in the meeting.
Mr Buys said he was not at the meeting.
Mr Lees found the lengths at which Eskom went to prove that Tutuka could not have possibly saved R100 million per month on diesel as if that was going to achieve anything. The statement said that the theft of fuel oil at Tutuka is well documented. In curtailing this theft of oil, Eskom saved R100 million per month. Is it feasible that the steps taken to control the theft of fuel oil at Eskom resulted in a R100 million saving?
[The response to this question could not be captured because the video disconnected for a while].
Prof Makgopa said it is not that nothing was being done, but it was the prioritisation of activities that troubled Mr de Ruyter. He recalled him discussing with Mr Cronje how Eskom could assist the National Prosecuting Authority (NPA) to accelerate some of the cases, but there was no progress in that regard.
The question that prompted the above response could not be captured as the video resumed in the middle of Prof Makgopa’s response.
Ms Beukes said that she was getting WhatsApp messages from rural areas where she is from to ask whether the grid will collapse this coming winter. The people did not care about what was happening in the meeting because they wanted answers. What are the plans to address the technical challenges at Eskom, especially to help in curbing load shedding? According to Mr de Ruyter, he fulfilled his duty under the Prevention of Electronic Crimes Act; what is the view of the Board Chairperson on that? What is the role of the security at Eskom and are the security loopholes within the entity already identified? Eskom spent almost R2 billion on security; was this to assist existing security operations within the entity, or was it for external security? How long had Ms Pillay been Head of Security at Eskom? The Board considered the contents of the interview to be embarrassing; what specifically was embarrassing for the entity? What part of the interview brought the company into disrepute? Where did the money for the private investigation come from? Was the Board not interested in finding out where the money came from? What is the status of the case that Mr Mmusi Maimane opened against Mr de Ruyter?
Mr Nxumalo said that to address the grid collapse, Eskom is implementing its recovery plan that talks to the three-year programme. They report to the Board on the progress because if the plan is executed diligently, that will lead to the improvement in the EAF (energy availability factor).
Mr Scheepers said that their task is to avoid the grid collapse, and they try to reduce demand to match the available supply, but it may lead to load shedding if necessary. If it cannot be avoided, that is what they need to do to maintain the system in balance.
Mr Bala said that they launched a programme to supplement what they already have on the demand management to ensure that South Africans in all walks of life use only what they need. He said that they sincerely believe that there is a lot of scope here for them to be more efficient in how people utilise and consume electricity. If everyone does so responsibly, they can ease the strain on the grid. Eskom is involved in several programmes that include industry and commercial, but that is also extended to residential households.
Ms Pillay said that the role of security is to safeguard the assets of Eskom, and that includes people, information, processes, systems, etc. It also includes an element of investigation that is necessary, notwithstanding the fact that there is a separation of roles between the Security Investigations Department and the Audit and Forensics team. Insofar as vulnerabilities are concerned, this is an ongoing exercise at Eskom, but control deficiencies seem to be a major issue, and these are matters that were also determined from investigations about the legacy technology which also poses a risk to Eskom.
It creates risks of compliance and opportunities for the bypassing of processes. As a result, having looked at the security landscape, Eskom made an informed decision to invest in improving security at its sites, and that is where the R2 billion goes to, which is replacing security technology, legacy systems, and supplementing resources at sites. Eskom has an aging security workforce, so they heavily rely on the private industry to supplement those resources and they utilise other mechanisms to deploy specific technology within areas of high vulnerability – for example, in the weighbridges at power stations. She said that she was Acting Head of Security since 2019 and was formally employed in the position on 01 August 2022. On the case against Mr de Ruyter, she said the feedback that they received was that the matter was registered and is under investigation by the SAPS.
Mr Makwana said that considering that any Chief Executive of any organisation is an executive director of the company that they lead, two things come to play: one is to always act in the best interest of the company, and the other part is to avoid conflict and finding yourself in conflict to those best interests. In terms of how he conducted himself as an incumbent chief executive even though he had a few weeks left to his end of tenure, he said that he found himself in breach of those two principles of putting the best interests of the company that he led.
The Chairperson said that he was advised that the presiding officers indicated that they needed to vacate the venue at 2pm, meaning the meeting had to end. The Committee would have to continue with the Eskom process because the more things were said the more questions were raised. The Committee got some sense of Eskom’s thinking on the matter. Whilst Mr de Ruyter’s conduct may be questionable in terms of the public interview that he did, it should not be a missed opportunity to investigate the issues that he raised. There are substantive issues that Mr de Ruyter placed on the table that are at the core of the problems at Eskom.
The Eskom Board Chairperson repeatedly pointed out that the investigation of the allegations is the responsibility of others and not of Eskom, but Eskom cannot divorce itself from the investigations that are taking place because it has a direct interest in them. The Chairperson asked if the Eskom Board has a copy of the intelligence report.
Mr Makwana said that they have never had sight of that report and they do not know what is in the report.
The Chairperson said that the reason this is important is that Mr de Ruyter was never vetted, yet he presided over an intelligence operation. This means the finding the intelligence report should be of interest to the Eskom Board, because it may constitute a breach of Eskom’s own security that information about the entity was sourced by a private investigator. The entity cannot have an elusive report to the tune of R50 million while the price on its own said something about the scope of the investigations that is currently not in Eskom’s hands. The Committee will find time to revert on this probe to the Eskom Board.
The Chairperson thanked the Eskom Board and executive team, the former Eskom Board Chairperson, as well as the SIU for availing themselves at the meeting. He reminded Members that, on 17 May 2023, the Committee would meet with the Minister of Public Enterprises on the allegations levelled by Mr de Ruyter.
The meeting was adjourned.
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