Eskom Inquiry: Ben Ngubane
07 March 2018
Chairperson: Ms Z Rantho (ANC)
The Committee heard evidence from Former Eskom Board Chairperson Dr Baldwin Sipho “Ben” Ngubane.
The Committee questioned Dr Ngubane on the pre-purchase of coal from Optimum Coal Mine (OCM); former CEO Brian Molefe’s resignation; the suspension of the four executives; his relationship with the Gupta family; and corporate governance during his tenure as Eskom Board Chairperson at the power utility.
In his statement, Dr Ngubane, he informed the Committee that in the funding of the pre-purchase of coal, Eskom was told it was going to achieve a value benefit of R238.9 million. The motivation by management indicated that the proceeds of the R1.86 billion pre-payment of coal was to be used by Optimum Coal Mine (OCM) to extinguish existing liabilities to ensure that the business continued as a going concern. The shutdown of OCM would potentially result in loss of thousands of jobs.
The Committee said it was not happy or impressed with Dr Ngubane’s responses to questions. It was of the view that Dr Ngubane refused to take responsibility for the collapse of corporate governance at Eskom.
The Committee noted inconsistencies in Dr Ngubane’s answers when compared with evidence provided by others appearing before the Committee Inquiry.
During questions by Members, Dr Ngubane looked to the Chairperson and said he could not sit in the Committee and “listen to this rubbish” – referring to the manner of questions being asked. The Chairperson told Dr Ngubane that he could not use such language in Parliament. Both the Members and the witness needed to be patient with each other.
When asked to draw conclusions from evidence before the Committee, Dr Ngubane kept telling the Committee to wait for the Commission of Inquiry into state capture to commence its work so that evidence could be presented there and witnesses could be cross examined.
The Chairperson said the Committee was scheduled to meet with Dr Ben Ngubane, former Eskom Board Chairperson, and Ms Dudu Myeni, former South African Airways (SAA) Board Chairperson. Dr Ngubane was running late due to traffic, but was on his way to Parliament. Ms Myeni indicated via email to the Committee that she was not in a healthy condition to travel to Cape Town via airline or road, and her doctor had booked her off from travelling. She however made a written submission and hoped that it would suffice. The Committee needed to engage with each witness that provided a written submission to the Committee and therefore her submission could not be supplied.
The Chairperson said that Ms Myeni had told her what illness she had but was not at liberty to share in front of the media. She would disclose the illness to members privately.
Committee members requested that Ms Myeni should appear before the Committee Inquiry in not more than seven days.
The Chairperson said Minister Malusi Gigaba had asked for an additional 10 days to be given to him so that he would able to source the information from the Department of Public Enterprise and come with credible information before the Committee. The Chairperson asked for input from Committee members on this.
Dr Z Luyenge (ANC) said that 10 days was a fair request.
Ms Mazzone suggested that the Minister be asked to appear before the Committee on 13 March 2018 since there was no sitting or cabinet meeting on that day.
The Chairperson said the Committee was scheduled to meet with the Guptas and associates on 13 March 2018, and the Committee needed to be prepared to continue on the 14th. The ‘associate’ of the Guptas referenced was Mr Duduzane Zuma.
Dr Luyenge suggested that the Committee meet with the Guptas first, but if the Minister would only available on the 13th then they could meet with the Minister first.
Mr M Dlamini (EFF) agreed that the Committee should meet with the Guptas first, followed by Minister Gigaba.
Mr R Tseli (ANC) asked if the lawyer of the Gupta brothers was the same lawyer for Mr Duduzane Zuma.
The Chairperson replied that Mr Duduzane Zuma had his own lawyer and would be interrogated separately from the Guptas even though the invitation was for the Guptas and Mr Zuma to appear on the same day.
Mr S Swart (ACDP) asked if there was written confirmation that the Gupta brothers would definitely appear before the Committee on 13 March 2018.
The Committee Secretary responded that the lawyers of the Gupta brothers had indicated that the brothers would attend the inquiry on the date they had been invited to appear.
Mr Swart was doubtful that the Gupta brothers would in fact appear.
The Chairperson said that the Committee would write to the Chair of Chairs and request more time for the Committee on 13 March 2018 so that they could deal with Minister Gigaba, Mr Duduzane Zuma, and the Gupta brothers.
The Chairperson said the Committee would now be interacting with Dr Ben Ngubane, the former Eskom Board Chairperson.
Witness: Dr Baldwin “Ben” Ngubane
The Chairperson read the oath to Dr Ngubane who took the oath to tell the truth.
Dr Ngubane read his statement.
Adv Vanara: Firstly, I would like to confirm that your statement forms part of record of proceedings in its entirety together with annexures. Secondly, I would like to go a board meeting on 2 March 2017 that you were you were chairing.
Dr Ngubane: I think it was a People and Governance (P&G) board committee meeting on 2 March.
Adv Vanara: What were the issues you discussed at that meeting?
Dr Ngubane: I think there were a couple of issues touching on the recruitment process and other P&G issues. However I brought to that meeting a document that I found on my desk which was not dated or signed, and contained certain allegations about Mr Matshela Koko. I gave this document to the Board members and we came to the conclusion that we had to give this document to Mr Koko and ask him to respond by end of the working day. The statement was duly given to Mr Koko. Somewhere in the afternoon before the scheduled meeting he came to me and said the timing was not sufficient. He also told me that he was facing a lot of difficulties as acting Group Chief Executive because he was moving people around at Medupi and Kusile because of certain serious issues such as fictitious companies being created and funded, but he was handling this as the Group Chief Executive. I went back to my colleagues, and when we came to the meeting at about 6pm the intention was to suspend Mr Koko and institute an inquiry, but in our discussions it emerged that we needed to give him 48 hours to respond before we could suspend. Also there was no name to the document which made this not a grievance letter but a whistleblower document. I was reminded that Eskom policy requires whistleblowers to be dealt with through the Audit and Risk (A&R) committee and through the Assurance and Forensic division of Internal Audit. We then took a decision to submit this document to the A&R committee who subsequently dealt with it through Assurance and Forensic, which eventually led to the inquiry taking place.
Adv Vanara: The subsequent Acting Chair of the Board testified here on this particular issue that it was your unilateral decision not to suspend Mr Koko. That is Mr Zethembe Khoza. What is your response to that?
Dr Ngubane: I don’t know where he takes that from. We had a meeting and discussed this matter quite extensively. And then ultimately I said we should refer the issue to A&R and let it be handled as a whistleblower document. There was no time where I took the decision alone. We were all at the meeting.
Adv Vanara: We do have on record the meeting in question, and if you want we could play the meeting. It was very clear that it was not only the complaint you had received but rather most members of the Board had received various complaints in respect of the same individual. That meeting was clear that there would be a meeting at six o’clock and Mr Koko would be called in to give reasons why he should not to be suspended. Is that your recollection?
Dr Ngubane: That is correct.
Adv Vanara: Your testimony is that you outside of the meeting went to meet Mr Koko.
Dr Ngubane: After he received the document to which he had to respond, he then asked to see me.
Adv Vanara: I guess you didn’t know what he wanted to see you about?
Dr Ngubane: I assumed that it was because of the document he had received and had to respond to, so I granted him the meeting.
Adv Vanara: Sorry, you have lost me a bit. You assumed it was in connection with a document he had received?
Dr Ngubane: No. he got the document to which he had to respond or else face suspension.
Adv Vanara: How did he get the document?
Dr Ngubane: It wasn’t me who delivered the document personally if I remember correctly. There are people at Eskom who do those tasks.
Adv Vanara: I guess the question is on whose instruction was that document sent to Mr Koko?
Dr Ngubane: It was a decision of the meeting we had earlier where we decided that he must respond or face suspension.
Adv Vanara: I recap the decision of that meeting to which you agreed. He was to be called at six o’clock to provide reasons why he should not be suspended. In other words at six o’clock he comes to a meeting, and he is given the allegations against him, and is told to respond to those allegations.
Dr Ngubane: Your take puts it differently. The earlier meeting took the decision that we must get a response from him in terms of the allegations. And the decision was that he would be suspended if those reasons or responses were not to the satisfaction of P&G or the Board.
Adv Vanara: That record will show that you people had already taken a decision to suspend him until you were persuaded by Mr Zethembe Khoza to call that meeting at six o’clock where he would be given an opportunity to respond in the same manner when you called the meeting on the 11th of March to suspend Mr Matshela Koko, Mr Tshediso Matona, and Ms Tsholofelo Molefe. That is the process you followed, isn’t it?
Dr Ngubane: That as a totally different process which was brought upon us.
Adv Vanara: That record is very clear. It has not been disputed by any of the other Board members that attended the meeting. You had made up your mind, having been persuaded by other Board members that you wanted him gone as in yesterday until you were persuaded by Mr Khoza at two o’clock. What is it that persuaded you personally from what Mr Koko told you, resulting in your not suspending him?
Dr Ngubane: The issue of time was raised for the first time. That before suspending we need to give a person 48 hours to respond as to why the person should not be suspended. That arose for the first time in my meeting with him.
Adv Vanara: What is the other reason beside the 48 hour notice that stopped you from suspending him, if any?
Dr Ngubane: This was a dynamic process. You may have formal discussion in your minutes, but we were all at Megawatt Park talking about this, and it was clear that we had also omitted the policy requirement that this must got to A&R who must deal with it through Assurance and Forensic. It’s a policy at Eskom. To suspend him directly on a whistleblower note without having gone through this process would have been illegal.
Adv Vanara: You took into consideration that this was a whistleblower document. What other reasons if any did you take into consideration?
Dr Ngubane: This was part of the discussions we were having. Obviously he would have taken us to the CCMA and Labour Court and won if we had taken steps that were not in law or policy.
Adv Vanara: To add to the reasons, so it was a threat of litigation?
Dr Ngubane: Yes.
Adv Vanara: Let’s look at these three reasons you have advanced. To entertain how rational your decision was. One …
Dr Ngubane: It wasn’t just my decision. We were there as members of the Board and members of P&G. I did not just say “No, suspension anymore. It was a product of our consultation”.
Adv Vanara: I take your evidence to the extent that you are testifying that. But I need to take into account what other Board members have said as well. But on your version it was a collective decision. 48 hours had lapsed and you had not suspended him so we can tick that off as not the reason he was eventually not suspended.
Dr Ngubane: No. By that time we had referred the matter to the A&R committee. We had taken it further, and eventually it led to dealing with the issue.
Adv Vanara: That after 48 hours he had not been suspended?
Dr Ngubane: That’s correct.
Adv Vanara: Who was the Chairperson of Audit and Risk, was it not Ms Mabude?
Dr Ngubane: Yes.
Adv Vanara: She was at the earlier meeting of P&G.
Dr Ngubane: Correct.
Adv Vanara: She was also vocal that Mr Koko had to go.
Dr Ngubane: Correct.
Adv Vanara: Over and above the whistleblower report, there were other issues that you had raised, including yourself. You had a note from a meeting between yourself and the Minister where the Minster had raised serious concerns about said individual. Is that not correct?
Dr Ngubane: That’s correct.
Adv Vanara: Why were those factors not considered in the meeting as part of the reasons not to suspend, is that not correct?
Dr Ngubane: Absolutely.
Adv Vanara: Why did that package of other issues, except the whistleblower which formed part of your decision to suspend him, not stand at the six o’clock meeting to suspend him barring the whistleblower?
Dr Ngubane: I don’t have a copy of the whistleblower document before me, but there were many issues raised in that document, and it was the collectiveness of those issues that made us decide to suspend him. And also, I checked the note from the Minister with the same Board members and we knew that it was something that has to be dealt with.
Adv Vanara: The point I am making Doc is that you had received this whistleblower note which you had shared at that P&G meeting earlier that day, correct?
Dr Ngubane: That’s correct.
Adv Vanara: Over and above that document, you contributed other reasons why he should go. You have just admitted to that.
Dr Ngubane: That’s correct
Adv Vanara: And Ms Mabude contributed additional reasons why the man had to be suspended.
Dr Ngubane: That’s correct.
Adv Vanara: Ms Klein who said you people must stop pussy footing around this man and advanced reasons around why this man had to go.
Dr Ngubane: That’s correct.
Adv Vanara: In your meeting with Mr Koko, and one of the reasons you did not suspend was because of the whistleblower report. I understand that, and I am saying put it aside. Why when you were at that meeting based on the contributions of yourself, Ms Klein, Ms Mabude, and others at the meeting which had made you come to the conclusion that he must go, why on the basis of that meeting did you not suspend him?
Dr Ngubane: But I have said Advocate that the issues contained in that document encompassed a lot of other matters. However, even if it was on a single matter that had been seen on its own separately, you would still have to follow procedure in suspending a person.
Adv Vanara: We have dealt with the 48 hour issue and the reasons in terms of eliminating. There is only one reason, and that is the threat of litigation. That same board, and I heard your response earlier on how you treated Tshediso Matona, Tsholofelo Molefe, and others differently, but you still maintain it was the same Eskom policy applied by the same board. How can you explain the different standards that your Board applied to different people?
Dr Ngubane: You are bringing me to a more complex situation. When Chairman Tsotsi said the four people must be suspended, we differed with him because he did not give us cogent reasons as to why they must be suspended. And remember this was our very first meeting as a new Board in March. We said the reasons he was giving us were defamatory, unsubstantiated, and we could not suspend them. We suggested that they take special leave while the concerns he had raised were being investigated. It was Head of Legal he had brought into the meeting who said special leave only applied in special cases. Not for investigation purposes. That’s how we ultimately agreed to go with the suspension. Our resistance to that led him to call in the Minister to our meeting on 13 March where we voiced our concerns. But the Minister while not saying “Suspend the people” also raised her concerns. The concerns were from the War Room which was claiming it was not receiving consistent information from management at Eskom and therefore it could not develop strategies to turn around Eskom and stop load shedding. After that we resolved to go on with the investigation, but the people concerned were heading the departments that the investigation dealt with and therefore they must be put aside for three months. It was clear this would be for three months and they would be informed of the outcome. That’s how we took that decision. On 14 July 2015 Mr Saeed Suleiman who was the link between the A&R committee chairperson and the Dentons inquiry wrote a letter stating;
“Dear Ms Cassim,
Investigation into the affairs of Eskom Holdings SOC Ltd.
1. I refer to the above,
2. I note that the terms of reference in respect of the investigation do not require that misconduct by any specific individual be investigated,
3. Accordingly make no recommendations concerning action against any specific individual.
Saeed Suleiman, on behalf of Dentons”.
That’s why I said you were bringing in a very different situation. Here was a set of allegations which were known by all of us. Before there were nebulous allegations being made such as Mr Tsotsi saying Ms Tsholofelo Molefe had contacted people who had tendered during the evaluation of tenders. He promised a document that would detail all those allegations but he never did.
Adv Vanara: But the point I am making is that arising from your decision on 11 March you were taken to court by Tshediso Matona. What is your answer?
Dr Ngubane: Yes, I was at the CCMA with Mr Matona. I persuaded him that…
Adv Vanara: We will get to those details. I just want you to confirm that Matona did take you to the Labour Court as a result of your decision.
Dr Ngubane: Yes.
Adv Vanara: Then subsequent to this incident after Mr Molefe came back and you terminated or rescinded your decision to re-employ him, he took you to court?
Dr Ngubane: As far as I know he took the Minister to court. Not the Board.
Adv Vanara: The Democratic Alliance (DA) took you to court because of your decision is that correct?
Dr Ngubane: That’s correct.
Adv Vanara: Solidarity took you to court on the same decision, correct?
Dr Ngubane: Partly true. Essentially the DA and Solidarity wanted to block Mr Molefe’s return and his receiving any benefits.
Adv Vanara: Essentially, the point I am making is it is decisions you made. The EFF also joined in challenging your decisions. If you couldn’t suspend Mr Koko for threat of litigation, why did the same threat of litigation not prohibit you from taking some of the decisions that you went to court for and which you eventually lost?
Dr Ngubane: I really don’t follow. Here was a situation where we were not giving enough time, and the allegations were contained in a whistleblower document. Those were very different circumstances.
Adv Vanara: Just to make you understand so that we move on from this point, I am entertaining the rationale of this threat of litigation having persuaded you against you suspending this person after you had taken a clear decision to suspend him. How sustainable is that in light of the various other decisions that you took?
Dr Ngubane: I beg to differ. Circumstances were quite different. Here we had taken a decision but not based on legal requirement and on Eskom policy requirement. We had taken a decision. If one is made aware that the decision we have taken is not correct, is there anything wrong to following the right procedure because we then referred it to the A&R committee to deal with it. We took action to proceed in a proper way where we would be sure we followed the rules.
Adv Vanara: Did you receive a call from the former Minister of Public Enterprises not to suspend Mr Koko on that day?
Dr Ngubane: No. we had met almost half the day or the entire day talking about this matter. The Minister used to call me quite often, particularly when she finished work in Parliament or whatever, to ask me about the happenings in Eskom because there were a huge number of concerns in terms of stability and so on. She did phone me, but she had phoned many other times before.
Adv Vanara: I am asking a very specific question. Did the former Minister of Public Enterprises Ms Brown call you at any time between your earlier meeting where you took the decision to suspend Mr Koko, and before or during the meeting when you were to suspend Mr Koko?
Dr Ngubane: She phoned me, but that was not about Koko.
Adv Vanara: It was about what?
Dr Ngubane: It was about Eskom business. I did not keep a note of the conversation I had, but it was about a whole lot of processes that dealt with stability.
Adv Vanara: You can’t recall them?
Dr Ngubane: I can recall them. For instance there was an issue about archival for some of our power stations; there was an issue of succession; there was an issue of management. If I go back, Mr Abram Masango wanted an urgent meeting with me. I was at Tintswalo having another meeting with business people totally unrelated to the business of Eskom. So I said to him “If it is so urgent come, come and see me. I will be here till around 5pm”. He came and told me he wanted me to intervene because Matshela Koko was forcing him to go to Harvard. Harvard has a programme for upgrading the skills of Eskom people. They go there on rotation. Even Brian Molefe went there to learn about the management of nuclear power stations and so on. He said Matshela was wanting him to leave his work and go to Harvard. He had family issues with that. I should intervene because it was causing a problem between him and Matshela. Subsequently I called them both to the meeting and asked him to explain why Abram had to go to Harvard at all costs. Matshela explained that it was a rotational system. He had ordered Masango to take his lot on the Harvard issue. After a long discussion, Abram had agreed to go.
Adv Vanara: I am sorry Doc. I don’t have time. The Minister called you to discuss business of Eskom. What is it that the Minister called you about?
Dr Ngubane: For a briefing of what is happening at Eskom.
Adv Vanara: Remember we eliminated these calls between you and the Minister which are natural and normal. We are between your two o’clock meeting and the six o’clock meeting where you said the Minister called. I want to know what it is that the Minister called to talk to you about.
Dr Ngubane: I have told you that this was to me a normal call.
Adv Vanara: Whether it was abnormal or normal, I want to know the reason, what is difficult about you saying “The Minister called wanting me to go to her residence or this and that”?
Dr Ngubane: We had a number of meetings with the Minister with the company secretary present, with Ms Venete Klein present to discuss various issues around Eskom. I really don’t know what you want me to say.
Adv Vanara: I give up Doc. There is evidence before this Committee that you received a call where the Minister instructed you not to suspend Mr Koko. What is your response to that?
Dr Ngubane: I presume she told this to some people. I talked to the Minister, it was on my phone, and it wasn’t on speaker, so I don’t know where that comes from.
Adv Vanara: I just want to move to the employment of Mr Molefe. On page 18, why did you write to the Minister in the first place about the employment of Mr Molefe?
Dr Ngubane: Because the Minister’s rule was that she would only get letters from the Chairman.
Adv Vanara: I understand the protocol part of it, but what was the rationale behind writing to the Minister regarding Mr Molefe’s employment issues?
Dr Ngubane: Because the change from permanent employment to fixed term caused a lot of problems in terms of handling Mr Molefe’s benefits and so on. Therefore with the possibility of Mr Molefe going, because he said he had lost out a lot from moving from one organisation to another, P&G worked out a proposal to keep Mr Molefe at Eskom by all the things I have …
Adv Vanara: I am not there as yet. I am at a stage where Mr Molefe was seconded from Transnet and then you recommended that he be appointed permanently, and you had engaged lawyers that advised on the process. Then you wrote to the Minister that letter of 9 November 2015 about Mr Molefe’s employment. I am saying what is it you wanted from the Minister, did you want the Minister to say “Yes I am employing this person?
Dr Ngubane: Let’s go back. Mr Molefe came at the height of load shedding. Within three months we started to notice changes. The whole mindset at Eskom began to change. Where the person at Generation was not talking to the person at Transmission, and the person at Transmission was not talking to the person at National Control, all of this changed. There was synchronisation of the actions of all the main players: Generation, Distribution, National Control. It was a significant shift. The three months were ending, and the rationale was we cannot remove this man at this point when we are seeing progress.
Adv Vanara: Let me be correct, you wanted the Minister to employ Mr Molefe?
Dr Ngubane: It was to ask her to extend by three months which she did. But the problem was not completely over then. We were still struggling with New Build projects. We were spending huge amounts of money on diesel. The program was not completed. I wasn’t the only one who decided. It came from P&G to request the Minister to keep Molefe here because he is doing a good job.
Adv Vanara: I am not asking you to justify why you wanted him to be employed. All I am asking is when you wrote to the Minister, when you had now made the decision that you wanted to keep your man you wrote to the Minister to engage the terms of Mr Molefe’s employment.
Dr Ngubane: But we had to do that because …
Adv Vanara: I am not questioning that.
Dr Ngubane: You said “rationale”, and that’s what I am trying to give you.
Adv Vanara: Did you write to the Minister having now as the Board made the determination as a Board that you want to keep your man? In writing to the Minister did you want to get her approval or inform her you had appointed your man?
Dr Ngubane: The Minister had to approve this because it was a deviation from usual practice.
Adv Vanara: But before you received the Minister’s approval, on 9 November you presented to Mr Molefe a permanent contract of employment where you say at that stage you had not received the Minister’s response because you say “For some or other reason the Minister’s letter dated 4 November sent to me and addressed to Ms Daniels did not come to my attention or the attention of the Board”. The question is why did you offer Mr Molefe a permanent contract of employment when you did not receive the approval you sought from the Minister?
Dr Ngubane: The sequence is wrong. The Minister approved the employment of Mr Molefe. Remember Ms Ruthnam in the Minister’s office sent us the guidelines for the appointment, and this was responded to through a second legal advice, and the Minister approved.
Adv Vanara: Let’s go to the construction of the pension. You say on 25 November 2015 “Mr Minnaar assisted me in drafting a letter to the Minister recommending that a retirement arrangement be reached with Mr Molefe in order to allay his pension concerns”. This is after you became aware that you had to offer Mr Molefe a five year fixed term contract as opposed to a permanent contract. Is that correct? And you had given reasons why you had to accommodate Mr Molefe’s pension concerns. You wrote a letter to the Minister motivating why the pension proposals needed to be amended, correct?
Dr Ngubane: That’s correct.
Adv Vanara: At the time you wrote the letter to the Minister were you aware that Mr Molefe had been previously employed at National Treasury for seven years?
Dr Ngubane: Yes, I know he moved from Treasury to Public Investment Corporation (PIC); from PIC to Transnet.
Adv Vanara: Were you aware that he had moved from Treasury where he had spent seven years?
Dr Ngubane: No. I wasn’t aware of the time.
Adv Vanara: So you did not look at his CV when you employed him?
Dr Ngubane: Yes, definitely we did. I knew he was from Treasury but I wasn’t cognizant of the number of years he had spent there.
Adv Vanara: But you ought to have known if you looked at his CV.
Dr Ngubane: I am sure at some stage I had looked at it.
Adv Vanara: You would have known that he moved from Treasury to become PIC CEO for another seven years?
Dr Ngubane: That’s correct.
Adv Vanara: Further that you would have known he moved to Transnet for an additional four years from where you recruited him.
Dr Ngubane: That’s correct.
Adv Vanara: Was it your view then that he would not have amassed a pension in those respective roles?
Dr Ngubane: That was the issue he raised. We consulted Mr Minnaar, and he confirmed that he would lose out if he didn’t work the full period to reach pensionable age.
Adv Vanara: Forget about what Minnaar said to you. I am saying what the information ought to have been in your minds when you wrote the letter.
Dr Ngubane: That’s correct but you need to verify information when you write such letters.
Adv Vanara: Did you know what his salary was at Transnet?
Dr Ngubane: Not off hand.
Adv Vanara: But you would have known at the time?
Dr Ngubane: It was not far from what he was earning at Eskom.
Adv Vanara: You are giving this man a five year fixed term contract at a remuneration package of R5.56 million per annum is that correct?
Dr Ngubane: That’s correct.
Adv Vanara: So he was the highest paid at Eskom?
Dr Ngubane: Not at all. Other Eskom CEOs received much higher than that range as permanent employees.
Adv Vanara: No. I am saying when he was an Eskom employee at the time he would have been the highest paid.
Dr Ngubane: I can’t agree to that because I would need to see the figures again.
Adv Vanara: When you took a decision to buy 10 years additional service to increase a pension of somebody who earned R7 600 000 per annum as a total package, who in his previous job would have earned around R6 million. Did you for once think about those officials at Eskom who earn a very low salary? Did it ever cross your mind that perhaps you had employees earning far less than what this man was earning?
Dr Ngubane: Eskom is both a market company and a state company. So the benchmarks have always been to accommodate that aspect. Molefe’s salary was no different in terms of basic package than all the previous CEOs at Eskom. The fact that there is a pay differential in this country between top CEOs and the lowest worker in a company may be a basis of serious inequality but this is the system in which we operate.
Adv Vanara: All I am asking is that at the time you were considering Mr Molefe’s pension, did you take a minute to think about the other 40 odd employees in relation to the same issue of pension?
Dr Ngubane: Advocate, that is a very unfair and loaded question. I can’t come to Eskom and change the processes there. I don’t set the levels of payment at Eskom or in any other SOC. The Chairman of the Board does not set the level. He gets that from the system.
Adv Vanara: You are aware the court recently ruled on this matter?
Dr Ngubane: Certainly.
Adv Vanara: Let me remind you what the court said in relation to your Board that took the decision. Three judges ruled “The decision of Eskom to waive penalties and buy Mr Molefe an extra 13 years of service totalling R30.1 million stretches incredulity and is unlawful for want of compliance of the rules of the pension fund”.
Dr Ngubane: Well, I wonder…
Adv Vanara: I am not asking you a question sir. I am just reading. What is most disturbing which you perhaps need to take note of is the total lack of dignity and shame by people in leadership positions who abuse public funds with naked greed for their own benefit without a moment’s consideration of the circumstances of fellow citizens”. What do you want to say to that indictment?
Dr Ngubane: That indictment can apply to Steinhoff and many multinationals in this country. I agree there is a lot of greed at the expense of an ordinary person. But that is the nature of the state in which we are in. Our clause said if the contract reaches the end of the five year term then we would buy Mr Molefe an extra number of years to sustain his benefits. It was clearly stated in the resolution.
Adv Vanara: Let’s move to the meeting of 9 February 2016 para 2.5.7 where you resolved to reconstruct this pension regime for Mr Molefe. Mr Molefe was at the meeting correct?
Dr Ngubane: No.
Adv Vanara: He was.
Dr Ngubane: Well, if he was he would have recused himself. I don’t have the minutes of that meeting. We never discussed prescribed officers’ salaries with them in the meeting. We always went in committee.
Adv Vanara: Are you disputing that he was at the meeting where you were discussing his pension benefit?
Dr Ngubane: I would say he could have been in the general meeting, but when it comes to discussing prescribed officers’ salaries and remuneration, they always recuse themselves. It happens all the time.
Adv Vanara: That happens when corporate governance reigns supreme in an organisation. But where it has collapsed, those things don’t happen. What is your comment?
Dr Ngubane: Well, I am telling you that this is what we always do.
Adv Vanara: Let’s hear what the court says about that aspect, para 9.7. [Adv Vanara read the paragraph]. That is a collapse of corporate governance, would you agree?
Dr Ngubane: Well, I wish to see the minutes of that meeting because I can’t believe that happened because every time we discuss salary issues they are asked to leave.
Adv Vanara: I am saying there is a court judgement where three judges have said what I have just said, and based on what they say, I am putting it to you that this suggests a collapse of corporate governance.
Dr Ngubane: Well, I am denying that. Let me see the minutes.
Chairperson: I am sorry to interrupt. I want Dr Ngubane to put it on record that he denies what the court judgement is saying or he denies the fact that Mr Molefe was part of the meeting according to what he understands in the governance of Eskom. Is that proper?
Dr Ngubane: I am not disputing what the judge is saying. They will say based on the information they have. What I know is that every time we come to discuss the remuneration of prescribed officers, whether short term, long term, they leave the meeting. That is what they do. It is the practice.
Chairperson: Thank you very much. You can continue, Advocate.
Adv Vanara: You are aware that your decision to give Mr Molefe early retirement was inconsistent with Eskom Pension and Provident Fund rules?
Dr Ngubane: Well, the guideline say people can take early retirement when they reach age 50. Those are the guidelines we got from the administration and Mr Minnaar. We did not say when Molefe applied for his early retirement that the clause of five year service was eliminated or discarded. Based on the rule that they can take early retirement is what we agreed to.
Adv Vanara: But why then did you sign that Mr Molefe was retiring on early retirement in terms of the resolution of 9 February 2016 when you knew that the purpose of that resolution was wrong as it was reserved for him after he had served five years?
Dr Ngubane: People can retire any time once they have reached a certain age. He was 50, but it did not mean he would get the benefits he would have got if he had served five years.
Adv Vanara: So is it your contention here today that when you signed a letter to Mr Molefe that it was not your intention or your Board’s that he would be entitled to the Eskom Pension Fund?
Dr Ngubane: He was contributing to the pension fund every month. If he reaches 50 which was allowed by Eskom rules, then he will receive whatever his contribution has been.
Adv Vanara: Just help me and the Committee in terms of your decision making process. When faced with the matter you had just received a briefing on and based on the briefing you say yes or no, or did you interrogate issues that were brought to you by the managers, and apply yourself to those issues?
Dr Ngubane: The issue of his retirement had been dealt with ad nauseum in P&G and in letters to the Minister. This wasn’t a new matter. P&G met, they took a resolution. Mr Minnaar came to me with a letter that was coming from that meeting. The company secretary was present at that meeting. I had no reason to doubt the correctness of it.
Adv Vanara: But why did that P&G committee agree to a pension dispensation on the same issues you had raised to the Minister and the Minister had not provided a response to it?
Dr Ngubane: I say in some of the documents the letter setting out the arrangements for Molefe’s benefits were stated in the letter sent to the Minister. The acknowledgement came from the Minister’s PA, it came from the Registrar in the Minister’s department. There was no reason to question whether the Minister had accepted it.
Adv Vanara: So you assumed the Minister had given her go ahead?
Dr Ngubane: Well, that was the conclusion.
Adv Vanara: You testified earlier that the two of you would interact at any time on issues that related to Eskom. Before that meeting, did you pick up the phone and say “Minister, we have written a letter to you, you have not responded, we are about to make a decision?”
Dr Ngubane: No, I didn’t.
Adv Vanara: And that to you it amounts to a Ministerial approval?
Dr Ngubane: No, it doesn’t. It amounts to the fact that the Minister is aware of what we are doing.
Adv Vanara: My last parting shot relates to this early retirement. If you were thorough and applied yourself to submissions that were brought to you as a Board or subcommittee of the Board, and relying on the Eskom Pension Fund rules as you did in your letter to Mr Molefe, how did you miss that he was a temporary employee who did not qualify to be a member of the Pension Fund?
Dr Ngubane: He was on the Pension Fund. He was contributing to the Pension Fund
Adv Vanara: You took time and you earlier said you have dealt with this thing almost routinely, this issue of constructing the pension fund. And in your mind you had an idea that he must benefit from the Eskom Pension Fund. You had the Rules in front of you, you went to Rule 28 that you quoted. I am saying, how did you miss the finishing section of the Rules, the portion that talks to eligibility in the Rules?
Dr Ngubane: We were considering the end of his tenure after five years. That five year contract could be extended in which case he would fit in with everybody else at Eskom. Or if it is not extended, he would not lose out. Therefore we made the provision.
Adv Vanara: The last question. You say on page 25 you had approved a prepayment which was later converted into a guarantee and you learned that from the press. What did your Board do upon learning about what had transpired?
Dr Ngubane: I was no longer at Eskom.
Adv Vanara: Thank you very much.
Questions asked by Members
Ms L Mnganga-Gcabashe (ANC): Reading from the minutes and resolutions of the Board committee that you have provided as annexure one, page 37 talks about what transpired in the P&G committee where Mr Minnaar was presenting and discussing the matter of Mr Molefe’s appointment and pension. My interaction will be comments and some questions. I’ll repeat what I said to Mr Minnaar when he appeared before the Committee. Mr Minnaar started to mislead that board subcommittee because it says in paragraph 7.5 “Mr Minnaar noted that a fixed term five year contract at his level was a first for Eskom and was also not aligned with best practice”. That statement alone is misleading - the part that it is not aligned with best practice. Metros as I have come across personally have fixed five year contracts in our country. Mr Minnaar should have sought clarity from the Director General of Public Enterprises to get clarity for the DG to unpack if Eskom did not understand what is entailed in a five year fixed contract. He decided to mislead the subcommittee and by extension that Board. He went on and on motivating why this cannot be practical and totally disregarded the instruction of the Minister based on the resolution of Cabinet. The Board can seek clarity from the Minister, but none of that happened. Cabinet had taken a resolution that CEOs and DGs would from now on be employed on five year contracts. We have a serious problem with the total disregard of a cabinet decision. If this had been unpacked they would have learned that on a fixed five year contract you do not qualify for pension. You are given a package which is benchmarked on the market and other spheres of government and arrive at a particular package. To me, you were misled and officials were thinking of themselves.
Dr Ngubane: I take your point. However, the five year provision hinged on whether his contract is extended in which it becomes a normal pensionable contract.
Mr R Tseli (ANC): While you were responding to Adv Vanara earlier, you said when you agreed to the early retirement of Mr Molefe it was on the basis that he would be paid only what is due to him as per the age. But the resolution talks about the waiving of the penalties which would be at the cost of the company. Is that not a contradiction?
Dr Ngubane: Advice to us was that other senior executives had Eskom pay the penalty when they took early retirement. That was the point of departure. In our case it was only to be applicable after five years’ service, not just immediately without that service. I presume we could have unpacked this even more, but that was the assumption.
Mr Tseli: The court judgment Adv Vanara read we all agree to be a true reflection of what transpired. If found to be correct, will you admit that you lied under oath about Mr Molefe’s presence in the meeting, where you discussed his benefits?
Dr Ngubane: I would like to see the minutes of that because I didn’t attend all P&G meetings.
Mr Tseli: I agree. I am saying in the light of you still verifying this and it is found to be correct, would it be right to say you lied under oath that he was not there when the matter was discussed in the committee?
Dr Ngubane: Can we please accept the fact that to lie is a deliberate act. Here I am quoting practice at Eskom that when we discuss prescribed officers’ salaries and benefits, they are asked to recuse themselves.
Mr Tseli: Let’s go to the whistleblower document you did not bring along. Would you agree with me that it is one of the very important documents you should have brought along?
Dr Ngubane: Unfortunately at the end of the meeting the Company Secretary should have those documents. I searched for that document but I did not find it.
Mr Tseli: But you agree it is one of the very important documents you should have brought?
Dr Ngubane: Absolutely.
Mr Tseli: Have you ever shared the identity of the author of the document with any other person?
Dr Ngubane: I did not know the author of the document. It was undated, it was unsigned. But now that Mr Masango claims he wrote it, I know who wrote it.
Mr Tseli: Mr Masango says he had a one to one session with you and you advised him to write all those issues he had in one document, and I think that is the document he wrote.
Dr Ngubane: I differ. The only issue we talked about was his being sent to Harvard. He was violently against that. If he had given me a document it would have amounted to a letter of grievance against Mr Koko. There was no such letter.
Mr Tseli: How would you describe your relationship with Salim Essa?
Dr Ngubane: I came to know him around 2013 for oil business in West Africa. I was sitting at JBs with some people involved in West Africa – Mali, and Salim came to me and introduced himself, and then I introduced him to the people I was with. He knew we were talking about oil business and said he also has an oil company and wanted to be part of my company which was Gade Oil and Gas. He was going to arrange the trip to Central African Republic (CAR) to go for oil blocks there. It was a business relationship.
Mr Tseli: So he ended up being part of that company?
Dr Ngubane: He ended up being part of the company. But because of the violence in CAR we ended up cancelling the whole project and that is when he resigned from this company.
Mr Tseli: Have you ever declared your interest in relation to Salim since joining Eskom?
Dr Ngubane: No. I declared Gade Holdings. Under Gade Holdings was Gade Oil and Gas. That company became dysfunctional. It did not trade. It was an oversight of me when I declared Gade Holdings, I should have also declared Gade Oil and Gas.
Mr Tseli: What role did you play in the R1.8 billion prepayment?
Dr Ngubane: The Company Secretary requested an urgent meeting. But because people were in different places we agreed on a round robin discussion. It had first to go through the Investment and Finance Committee (IFC). IFC had its own round robin. They approved the emergency payment in order to secure coal supply. It was a proposal that came from management. Since IFC said it made sense, the Board agreed on the round robin and it was approved.
Mr Tseli: Do you think there is anything wrong with this R1.8 billion prepayment to Tegeta?
Dr Ngubane: Let’s go back to the situation. The situation was horrible in South Africa. We were in danger of a national black out.
Mr Tseli: In essence, to be direct, there is nothing wrong?
Dr Ngubane: Well, at the time we could see nothing wrong because of urgency.
Mr Tseli: That extension of T-Systems was procured while the procurement process had already started. Why the motivation when the procurement process had started?
Dr Ngubane: I think this issue of replacing the IT supply had been going on before 2014. I came in 2014 around Christmas. The Chairman then, Mr Tsotsi, asked me to Chair the Board Tender Committee (BTC).
Mr Tseli: My apologies Doc. My interest is why motivate the extension of a contract in the middle of a procurement process?
Dr Ngubane: That happens all the time at Eskom. Many calls for tenders are cancelled, modified, and re-issued. It wasn’t anything new. Exco switches the Exco procurement subcommittee. They recommended that because of lack of capacity in IT, this contract must be cancelled.
Mr Tseli: You spoke about Mr Laher who was accused of flouting procurement processes, but the very same Salim Essa is now paid a settlement amount. Why was there that kind of suggestion?
Dr Ngubane: This happened before my time.
Mr Tseli: There is SekelaXabiso which was appointed to undertake a sensitivity analysis. What exactly were these people expected to do?
Dr Ngubane: I was not part of those processes. It is what I elicited when I enquired what happened with Dongfang. Consultations with lawyers and audit firms took place, and they came to the conclusion that Dongfang was the right company to appoint. I have just brought that in as a document which I have elicited on preparing for this meeting.
Mr Tseli: I am sure by now you have heard about a meeting that is said to have taken place in Durban that was attended by Mr Tsotsi and Dudu Myeni?
Dr Ngubane: Well, that is what Mr Tsotsi said.
Mr Tseli: What did he say?
Dr Ngubane: He said he was instructed to suspend certain officials and so on. That is what we were discussing at our first meeting, and we even called for the Minister to come in because we did not believe that story. Ultimately we decided to appoint Dentons to carry out a forensic fact finding inquiry.
Mr Tseli: And what was the outcome of the inquiry?
Dr Ngubane: It came with a lot of recommendations.
Mr Tseli: If you can just share with the Committee.
Dr Ngubane: The inquiry looked at the poor performance of our coal fleet which was causing the load shedding. It inquired about the delay in the New Build programme which was characterised by billions of penalties and claims, and questioning the ability to handle contracts at Eskom. It looked at the financial challenges of Eskom, the fact that NERSA had cut down on the tariff, and how the financial gap would be covered in terms of revenues that would be low. It looked at the security at Eskom as a key national point. It looked at the integrity of the procurement process and how it complied with the rules. Dentons gave us a big report and we handed it over to A&R. A&R came up through Mr Molefe Nkabu who is the Head of Internal Audit and Forensic and Assurance. He gave each division of Eskom issues that had to be corrected. By the time I left, I think about 18 of the issues had been corrected and implemented.
Mr Tseli: To your knowledge Dr Ngubane, what work has been undertaken by Regiments and or Trillian with regards to the Duvha 3 boiler insurance claim? Specifically, what did they do?
Dr Ngubane: I was not really part of that process. What I received did not mention Trillian or Regiments. It just talked about the process which is before court at the moment. Murray & Roberts took the matter to court on an interdict. The interdict was granted but the review of that tender is still before the court and has not been settled.
Mr Tseli: Was there any other work conducted by Trillian while you were at Eskom?
Dr Ngubane: The trouble at Eskom is that appointment of consultants is a managerial function. They don’t come to us to ask to appoint companies. What comes to the BTC is anything above R750 million. Anything below that is dealt with by management.
Ms N Mazzone (DA): I have it on record that Andy Macaulay was the CEO of Gade Oil and Gas; Iqbal Sharma was a Director; and Salim Essa was a Director. Can you tell me if any Gupta brothers or any children of the Guptas were involved in this company of yours?
Dr Ngubane: Long before I came to Eskom, I was the owner of the company. I was the Director, and Salim became a Director because he was going to arrange for our prospective exploration in CAR. Just two people.
Ms Mazzone: So at no stage did you know of any involvement of the Guptas through Salim Essa?
Dr Ngubane: No.
Ms Mazzone: Your wife is Sheila Ngubane, and together you own Huntrex 305 which owns Zululand Quarries, Natal Sands, and Hanis Investments. It has been reported that R50 million was borrowed from the state owned enterprise, Ithala Development Finance Corporation. Has that money in fact been paid back?
Dr Ngubane: Chairperson, with due apologies this matter is before the court. It has nothing to do with Eskom or my role in Eskom. It happened in 2011 so I will not discuss that issue.
Ms Mazzone: Former Minister of Mineral Resources, Mr Ramatlhodi, has very openly accused you and Mr Molefe of trying to strong arm him to withdraw the Glencore mining licences. Can you please explain the situation between the three of you?
Dr Ngubane: Minister Ramatlhodi suspended Glencore mining licences. Glencore was supplying Hendrina, Komati, and Arnot power stations. He suspended them because they did not do retrenchment in the way it was supposed to be done. We appealed to him not to do that because it was going to cause massive load shedding. That is what we discussed.
Ms Mazzone: Did you know of any meetings that took place in Switzerland with Minister Zwane and any coal mine executives?
Dr Ngubane: No. In fact I hardly ever get involved in that type of work. It is managerial. If there is a decision to be made it goes to BTC.
Ms Mazzone: During Mr Qoma’s testimony, he discussed with us your almost protective nature over Mr Molefe. In actual fact he testified that on the day that Mr Molefe was dismissed you requested him and Suzanne Daniels to accompany you give moral support to Mr Molefe. Is this in fact true?
Dr Ngubane: The only time I met Mr Molefe after he left Eskom was after the meeting with the Minister where the Minister said the R30 million pension was untenable and needed to be changed. Either Molefe was to resign or agree to a lower payment. Qoma was not there. It was Suzanne, Venete and myself dealing with those issues. There was no time where Qoma accompanied me to see Molefe.
Ms Mazzone: Chair, just for the record there is a disparity in the testimony there. On 2 March, it was in fact testimony of Ms Daniels that you convened that meeting and that a unanimous decision was taken to suspend Mr Koko. And there is a recording to that extent. Do you deny that there was a unanimous decision taken to suspend Mr Koko?
Dr Ngubane: We agreed on that. It was simply the modality of dealing with the issue that became the question.
Ms Mazzone: Mr Qoma further testified that you personally told him that Minister Brown had phoned you and told you that the suspension had to be lifted. Why would he come to this Committee and lie?
Dr Ngubane: I don’t know. To me Mr Qoma said Mr Khoza told him that at a party at Mr Khoza’s house he had phoned the Guptas to ask the Minister to insert me. I phoned Khoza to ask him about Mr Qoma and he denied this. The issue of the Minister talking to me came from Mr Qoma saying that is what Mr Khoza told him. I don’t know why he is doing that.
Ms Mazzone: Suzanne Daniels testified that she had mocked up the offer of employment following a letter sent to Mr Anton Minnaar by DPE. It was clear from the inception this was going to be a fixed term contract. Why was this even brought into question, because we have seen the original contract and it stated it was a fixed term contract?
Dr Ngubane: That was a later contract after we had concluded a permanent contract. All these movements we were trying to deal with, that initial situation of permanent contract subsequently going to a fixed term contract.
Ms Mazzone: I find this extremely disturbing that there are contracts after contracts; before contracts; subcontracts; maybe contracts. Was this the normal goings on at an entity such as Eskom?
Dr Ngubane: Initially all we knew was the Minister had given us authority that Molefe was going to be the Group Chief Executive, and that he was on permanent employment. There was no mention of any fixed term contract and that is why he got registered on the Eskom Pension and Provident Fund (EPPF), and that is why money was deducted for the EPPF every month. This came later and complicated issues.
Ms Mazzone: I am afraid I don’t buy that. And I put it to you in fact that this pension initiative mark-up was a scheme enacted as a get rich quick programme. I would like your opinion on that.
Dr Ngubane: Then you must assume that all of us at Eskom are crooks, are terrible people to think of such things. Why should we want to enrich Brian Molefe? The only thing we were trying to deal with was his disgruntlement with the new situation where he had assumed permanent employment and then we told him he was on fixed term. He was very unhappy about that. In fact he could have left. We wanted to keep him in and try to work a scheme that would be sustainable after five years.
Ms Mazzone: Why the obsession with keeping Brian Molefe in his position?
Dr Ngubane: You are making assumptions. At that time we were on the cusp of a national blackout. At that time Molefe had brought a lot of joy to us when people’s food was not rotting in their refrigerators, and people could have normal lives. There was no one who could have turned Eskom around in such a short period of time; reduce the expenditure on diesel which was a billion rand a month; fast track the commissioning of Ingula; fast track the commissioning of the first unit of Medupi; and fast track the whole build programme. It was a fantastic change from the billions of rands that were flowing out of Eskom from poor leadership.
Ms Mazzone: Eskom has gone through remarkable downgrades, they are in a state of complete and utter financial ruin; the board has been forcibly removed and replaced with a new board and suspended people that were a part of that board. This isn’t my assumption. I also look at the fact that FEDUSA requested that you and Mr Molefe face a Commission of Inquiry. NUM said “The entire Board of Eskom is a disgrace to the power utility and government”. How can you say that such a fantastic job was done when there has been downgrade after downgrade, and we almost face an economic crash in this country thanks to Eskom?
Dr Ngubane: When we came in the problems were already there. The Minister complained, and at one stage Chairman Tsotsi together with Matjila who was the Acting CEO actually phoned her while she was having lunch and said “We will not be able to pay salaries at the end of January”. It was almost a disaster and here comes Molefe. The international funders buying Eskom bonds resumed buying Eskom bonds; we accumulated enough money and made an EBITA of R30 billion first time. By the time I left the finances were shooting up because we were having a buy-in by all the bond holders. I will put it to you that the devastation that would come with Molefe going away was a disaster for Eskom and the people of this country because we were on a trajectory to change the whole situation. Then came the people in acting positions, and senior Eskom people and engineers started fighting, instability started going. General Rakau was reporting to the Minister that people were almost killing each other at the power stations and I and Suzanne were at that meeting. I knew that removing good leadership would be calling for trouble, and that’s why I made an emotional statement to say this was not only a blow to Eskom, but also to the people of this country.
Ms Mazzone: We are going to have to agree to disagree on this because I am of the opinion with millions of South Africans that don’t think that the leadership at Eskom was in any way the leadership that we as a country deserved. I think you need to take ownership of what happened at Eskom. I think you need to accept that state capture is a real thing that this Committee has proved time and time again, and piece by piece utilities were sold to the highest bidder at the expense of South Africans. You were Chairperson at SABC, it collapsed; you were Chairperson at Land Bank, it collapsed; you were Chairperson at Eskom and it collapsed. I would put it to you that you are a delinquent board member and if I were you I would certainly hang your head in shame and not make excuses for what has happened at Eskom. No further questions.
Dr Ngubane: It is a real denigration of my service to this country. Ask Phakamani [Hadebe] who is now the CEO at Eskom, he was the CEO at the Land Bank. We worked together, we recovered the Land Bank. No one was refusing to roll over their bonds. It shot to the sky. SABC you mentioned was broke from 2007. We raised money, and got advertisers to come back. When I left we had paid off Nedbank a R2 billion loan supported by a government guarantee. I don’t know where you get this thing. The press may write whatever they write. I have never been a favourite of the press or anyone. To now come and paint such a picture is ridiculous. Load shedding was stopped under our command. It changed the whole situation. The fact that NERSA reduced the tariff and caused a serious revenue gap in Eskom is an issue that even this present Board will have to deal with. The municipal debt running into billions is an issue that this present Board will have to deal with. The pass through to independent power producers (IPPs) which are billions of rands is an issue which this new Board will have to deal with. Unless they find another methodology, a new model, these issues will continue. They are not just with us.
Mr M Dlamini (EFF): In your statement you say Eskom was supposed to get R238.9 million savings. Did Eskom get that saving?
Dr Ngubane: I am not sure about that. It is the finance department that would know. But that is what we were told, that if we continue with the cost plus mine type of purchase, the money we spend in the short term and medium term contracts would be reduced, and that was the amount we were referred to.
Mr Dlamini: So as Board Chairperson you are saying the finance department comes to you and says they are going to make a prepayment of R1.8 billion and that you are going to have a saving of R238 million, and you don’t follow up to check if that happened or not?
Dr Ngubane: Internal Audit certified that the coal was delivered.
Mr Dlamini: Did you read that audit that you are talking about now?
Dr Ngubane: They gave a catalyst report from month to month.
Mr Dlamini: But I am asking you, did you read that audit because I don’t want to go through this process and then you come back and say you didn’t read it?
Dr Ngubane: If the rationale is that we get cheaper coal compared to short term and medium term coal supply, and I am told through the catalyst report that the coal has been delivered, then obviously that has been achieved.
Mr Dlamini: That is why I am asking a simple question, did you read the report?
Dr Ngubane: I read the report.
Mr Dlamini: In your statement you are saying BTC approved a prepayment to Tegeta of R659 million. That was in April. How much was actually paid from Eskom to the Tegeta account in April so that we can get clarity on this?
Dr Ngubane: It is the amount on the statement that was approved.
Mr Dlamini: When you are saying this amount was approved, are you saying that is the amount paid from Eskom to Tegeta?
Dr Ngubane: Yes.
Mr Dlamini: What was it for?
Dr Ngubane: It was to supply Arnot. There had been strikes at the mines that normally supply Arnot.
Mr Dlamini: That was a prepayment to supply Arnot. Was it executed in full, payment done and coal supplied in full?
Dr Ngubane: Absolutely.
Mr Dlamini: Was there an audit report, and who gave the report to say that on the R659 million spent the actual work had been done and there was proof of return.
Dr Ngubane: Absolutely. And proof of that was that we survived that winter with sufficient coal stocks. Had we not, we would have had load shedding.
Mr Dlamini: Was the prepayment for six months, five months, or 12 months?
Dr Ngubane: I think it was five months.
Mr Dlamini: I need you to give me clear answers.
Dr Ngubane: I will have to check that.
Mr Dlamini: Okay, check.
Dr Ngubane: I think it was five months.
Mr Dlamini: Okay, five months. And how much was the tonnage required for Arnot per month?
Dr Ngubane: I wouldn’t know off hand.
Mr Dlamini: 485 000 was the tonnage required per month. How much was the tonnage, because Koko came here and said the tonnage required was 485 000. Are you disputing that?
Dr Ngubane: I am not. It is not my area of work. It is reports that I get so I can’t remember all the details.
Mr Dlamini: But the report was given to you and you said you read it to make sure the work was done. These are the key major items for the R659 million – to say we are giving you R659 million on a five month contract and here is the tonnage. That can’t be difficult?
Dr Ngubane: But surely if our audit system certifies that the coal was delivered, that is enough for me.
Mr Dlamini: So you have no idea how much coal was delivered? Did you read the report?
Dr Ngubane: I read the report.
Mr Dlamini: What did the report say about how many tons were delivered per month?
Dr Ngubane: Tons equivalent to the amount of money paid.
Mr Dlamini: No.
Dr Ngubane: No, chairman in this country…
Mr Dlamini: But I am not talking about other chairmen in this country, I am talking about you. I am saying to you the coal that was requested there per month is 485 000, and Koko confirmed that. Are those figures making sense to you? You were the Chairman, at least you know what you are dealing with.
Dr Ngubane: Yes. I read these reports. I can’t carry it in my head all the time. I would need to actually see these reports in front of me. What I am reporting here is what was reported.
Mr Dlamini: What was reported?
Dr Ngubane: What I have in this document.
Mr Dlamini: Koko came here and said that the output of Arnot, Hendrina and Komati combined was 485 000 tons per month. Koko is an operator and he confirmed that. Are we in agreement?
Dr Ngubane: Yes, that’s his job.
Mr Dlamini: There was an issue with the rate in terms of the negotiation – that the rate you agreed to was R150 per ton. Do you know how much the rate per ton paid to Tegeta was in this agreement?
Dr Ngubane: First of all, the R150 per ton as far as I know applied to Optimum. Arnot uses a higher grade of coal. It cannot be R150 per ton.
Mr Dlamini: On the prepayment how much was the rate per ton?
Dr Ngubane: But I think, Chairperson, I am being asked operational matters. I am not an operational chairman. I deal with reports that come to the Board through the normal channels. Koko is the operator, they do the negotiations. All I know from where I sit is that the price of coal to Arnot is much higher than R150 per ton because they use almost export quality coal, and not the rubbish that comes from the washing.
Mr Dlamini: I am not asking you operational matters. I am asking you on matters in the report that you said you read which you were satisfied with as Board Chairperson.
Dr Ngubane: I read the report from Internal Audit, not the BTC report.
Mr Dlamini: So Internal Audit did not show you in the report how much per ton was paid. I am going to tell you how much per ton was paid on that contract. It was R155 per ton for Arnot, Hendrina, and Komati. Those were the three power stations supplied under Optimum.
Dr Ngubane: Well, you have that information. I do not have it. As far as I know Arnot was supplied by seven companies.
Mr Dlamini: But how do you dispute the information? I am saying to you this is what happened and you are saying it is not correct. So what is the correct version?
Dr Ngubane: I am not saying it is not correct. I am saying that is what you have. I don’t have all that information. All I know is that the tonnages that were paid for were received.
Mr Dlamini: And you don’t know what you paid per ton. As a Chairperson you do a prepayment for five months but you don’t check on what was presented and compare with the closing up report that the rates match each other?
Dr Ngubane: You are asking an unfair question.
Mr Dlamini: It is not unfair. What other contracts am I talking about?
Dr Ngubane: You want to say I must know in detail all the sale …
Mr Dlamini: If you don’t know, you must tell us.
Dr Ngubane: But I told you. I said I read the catalyst report from Internal Audit which said these things were delivered.
Mr Dlamini: It doesn’t look like you know what happened. Let me tell you, that contract proposal was R150 per ton but when you calculate the numbers the money paid to the Guptas was about R372 million for the coal. When you take the number of tons multiply by the R150 that was agreed on for five months. But you paid the Guptas R659 million. Those are the facts in the report that you should have read. What is your understanding of the fixed term contract pertaining to Brian Molefe?
Dr Ngubane: It means you are a contracted worker. You do not get pension rights. Your medical aid, car allowance, and other items are lumped into your salary. It becomes much higher than a permanent employee who has pension because it is concentrated in a five year period.
Mr Dlamini: Why was there extra consideration for pension incentives for Brian?
Dr Ngubane: He thought he was employed on a permanent contract, and he was a contributing member of the Eskom Pension Fund.
Mr Dlamini: Chairman Tsotsi wanted to suspend those four executives. Initially you did not agree with that thinking. Is that correct, or did you agree with it?
Dr Ngubane: Initially we didn’t agree. That’s why we had a meeting with the Minister.
Mr Dlamini: But eventually you voted in favour of the suspension.
Dr Ngubane: Because there was no other way. We thought of special leave but it was denied by Legal.
Mr Dlamini: Do you know the Guptas, have you met any of them?
Dr Ngubane: Yes, of course I have.
Mr Dlamini: Which one?
Dr Ngubane: Almost all of them.
Mr Dlamini: Where, have you been to their house during your tenure at Eskom?
Dr Ngubane: Of course I have been to social events, to their weddings, to the South African of the Year awards.
Mr Dlamini: No. I am talking specifically during your tenure at Eskom.
Dr Ngubane: Yes I have.
Mr Dlamini: Is there any day where you took any of your board members to the Gupta house?
Dr Ngubane: No, I didn’t.
Mr Dlamini: You just went alone?
Dr Ngubane: I was invited for special occasions and I went.
Mr Dlamini: What is your take on the Guptas with everything that has come out through the email leaks, Estina farm, and everything else?
Dr Ngubane: I am waiting for the Commission of Inquiry to happen and then I will know the facts.
Ms G Nobanda (ANC): What are the criteria for being in the Eskom Pension Fund?
Dr Ngubane: If you are a permanent employee of Eskom you get registered for pension, pay your subscriptions, and when you retire you get paid out.
Ms Nobanda: So only when you are a permanent employee and not a fixed term contract employee?
Dr Ngubane: That’s correct.
Ms Nobanda: So what was Mr Molefe exactly, permanent, fixed, half permanent?
Dr Ngubane: Mr Molefe started as a permanent employee registered on the EPPF. Later on that was changed to five years, and then the adjustment was made that after five years if his contract is not extended he would be compensated in terms of the resolution.
Ms Nobanda: Can you give me the date of his employment when he started as a permanent member?
Dr Ngubane: 1 October 2015.
Ms Nobanda: So he was effectively a member of the pension fund on 1 October?
Dr Ngubane: Yes.
Ms Nobanda: According to the Pension Fund Board when they were here, what they had received from Eskom was that Mr Molefe was joined the fund on 14 September 2015. On the exit form, 25 September 2015 is cited as the employment date. According to them he was employed on 25 September. According to you he was employed on 1 October 2015.
Dr Ngubane: I will have to check those dates.
Chairperson: Could you please the mic closer to your mouth when you speak.
Dr Ngubane: He was acting until he was appointed. So I am not sure how he could have become a member of the pension fund.
Ms Nobanda: It’s okay. It is on record that he was formerly employed from 25 September and you know him from the 1 October. Is 1 October 2015 the first contract or second contract of Mr Molefe? Remember in para 2.5.0 it states that “Mr Molefe signed a second contract of employment”. If he is employed on 1 October would this be the first contract or second contract?
Dr Ngubane: On 10 September 2015 the Board resolved that the P&G committee should submit a recommendation to the Minister about the employment of Mr Molefe as GCE.
Ms Nobanda: Chair, page 21, paragraph 2.1.16 [read out].
Dr Ngubane: I don’t see the contradiction in that because he was first employed on a permanent basis. Subsequent to that the terms of employment are changed and that’s when he signed the second contract.
Ms Nobanda: So in 2015 he was appointed for the second time.
Dr Ngubane: In?
Ms Nobanda: In 2015, according to this.
Dr Ngubane: Yes. That’s when he signed the fixed term contract.
Ms Nobanda: From 2.4.16 to 2.4.18 [read out]. All these paragraphs show me that there was no clear date of employment for Mr Molefe. If every now and then you change your contract of employment you would sign something and give it to the Minister, and the Minister would sign and bring it to you. But you were not aware that he was actually not permanent, it was supposed to be fixed. And the Minister is not agreeing with permanent. And then the following year on 7 March there is another contract where he is now fixed. According to the pension fund, they know him from 14 September 2015. Would you say if it was not you but an ordinary South African looking into this, there was something brewing here with all these dates?
Dr Ngubane: As a person who has no access to information I would certainly say that.
Ms Nobanda: There was a Committee meeting on 23 May 2017 at Townhouse Hotel where you and Ms Daniels were part of the meeting. The Committee enquired about the R30 million given to Mr Molefe, and in that meeting none of you mentioned the fact that Mr Molefe was not a permanent employee, he was on fixed contract. All your explanations were on the fact that he was a permanent employee and part of the pension fund, and you had followed all the requirements in paying out all that money. Do you still agree with that?
Dr Ngubane: Honourable Chair, I have explained in detail…
Ms Nobanda: Chair can you ask Dr Ngubane to answer the question. Does he still believe that everything they said on 23 May 2017, and what has been happening, and what he has said today, does he still believe that every process they were supposed to follow was followed in calculating and paying out Mr Molefe the R30 million?
Dr Ngubane: All the actions we took were with legal consultants, administrative staff, and it was informed by extensive consultation. That’s all I can say.
Chairperson: Do you believe that you did the correct thing as the Eskom Board to agree to a resolution to pay Mr Molefe R30 million?
Dr Ngubane: The R30 million was not calculated by us.
Ms Nobanda: Chair, does he agree that the processes they followed were correct?
Dr Ngubane: I do.
Ms Nobanda: Thank you. Having worked with Ms Daniels, how would you characterise her?
Dr Ngubane: Ms Daniels is a very gifted young woman. She is very astute at law but also very astute at company management as a company secretary.
Ms Nobanda: Do you believe she provided credible advice on the reinstatement of Mr Molefe?
Dr Ngubane: Well, she didn’t only provide advice. She went out to Senior Counsel and Legal Counsel, and I believed what she advised.
Ms Nobanda: Looking back on all these issues, especially the Brian Molefe issue, do you believe that from his appointment to stepping down/resignation/retirement/sabbatical leave or whatever happened, and the conclusion of the pension fund up to the point where Mr Molefe decided to resign and he then becomes a Member of Parliament, and then he comes back and you reinstated him. Do you believe you could have done anything differently?
Dr Ngubane: Well, we did what we did on best advice. If we had advice to the contrary, that is what we could have followed.
Ms Nobanda: Dr Ngubane, with all the advice that you were given, you are now sitting here looking back. Do you think you could have done anything differently?
Dr Ngubane: No, I don’t think so, facing those circumstances.
Ms Nobanda: Thank you. Do you believe you were a good Chairman, efficient, honest, and all that?
Dr Ngubane: We did a Board evaluation as is required by the PFMA and Company Law, and we scored good marks as evaluated by external auditors.
Ms Nobanda: Do you believe, given the opportunity of being Chairperson at Eskom, that you were a good and honest chairperson?
Dr Ngubane: I was a good and honest chairperson who did his best.
Mr S Swart (ACDP): You quoted from the Public Protector and you indicated that you had taken legal advice not to take it on review. One of the findings of the Public Protector Report is that she says “It appears the conduct of the Eskom Board was to solely benefit Tegeta in awarding contracts to them and that it appears to be inconsistent with the PFMA”. The short question is would you not agree that the evidence in the Inquiry and in the media is overwhelming to the effect that the conduct referred to in this Public Protector report was to the benefit of Tegeta in awarding coal contracts to them?
Dr Ngubane: That’s why I look forward to this Commission because the books will be examined and the truth will come out. What has been printed in the media is what people believe. We worked with documentation that satisfied me that proper processes and steps were followed.
Mr Swart: A lot of evidence has been tendered before this inquiry as well, and of course there is also investigations taking place, and we know the Asset Forfeiture Unit (AFU) has already acted in terms of the Trillian – McKinsey contract. We don’t have to wait for a Commission. Whilst I appreciate there will be further evidence, there is already now evidence that indicates state capture of various SOEs and Eskom. Would you still say you would rather wait for a Commission of Inquiry?
Dr Ngubane: I would prefer a situation where people don’t just come and say what they believe or want to say. If there was a situation here where someone came and said something the evidence leader cross examines them, my lawyer cross examines them that would be the fair process. Remember we never had a chance to go and present ourselves to the Public Protector.
Mr Swart: I appreciate that but you also indicated that you decided as a Board not to take the Public Protector on review. But there was input from the executives. Mr Molefe and Mr Koko made substantial input to the Public Protector. Let’s look at the run up to November – December 2015. We haven’t done an inquiry into the turnabout of Eskom at that stage when it came to the power and blackouts. Would you say that situation continued towards the end of November – December 2015?
Dr Ngubane: At that stage we were having a number of improvements in the construction of new power stations. That alleviated the risk of poor electricity reserves. We were always hovering around the 1500. Not the 4000-5000 that had been there before which necessitated load shedding. The situation had improved.
Mr Swart: And when one considers the round robin meeting that took place in December for the R1.8 billion guarantee, what was so urgent then if it was a situation of a turnaround?
Dr Ngubane: Optimum Coal Mine (OCM) had decided not to supply Hendrina. And Hendrina produces 2000MW of power, and it was clear that we were going to run into trouble. On top of that they had run into business rescue. There were a number of factors that were creating a crisis. When management came to us saying there would be a crisis, we had to act.
Mr Swart: Was the situation not that Optimum had asked for an imposition of the hardship clause, and that had been negotiated, and you might not be aware of that, prior to Mr Molefe’s arrival which would have resolved that problem. But when he arrived, he refused to accept the increased price that Optimum had offered before being placed under business rescue and which had gone through certain board committees, but when it got to Mr Molefe he refused to continue with that contract.
Dr Ngubane: I am not aware of the details. But what Mr Molefe told me was that Mr Glasenberg, the head of Optimum Holdings, had wanted export parity prices and wanted to change from R150 to something over R300, and that is what he rejected.
Mr Swart: I understand. But if you see the totality of the picture that we are now sitting with, and you can say it has not been subject to proper cross examination, but you have got a company that provides to Hendrina and they are under a hardship clause and are entitled to increase that price in negotiations. Those negotiations according to evidence was accepted by Eskom. It was referred to the CEO. Mr Molefe then at the last straw for his sign off, rejected the clause. Then we start to see the pressure put on Optimum to sell to Tegeta. Are you aware of the meeting of 24 November that took place with Mr Matshela Koko and the business rescue practitioner where certain conditions were imposed on Optimum for the sale, and where they were saying they were prepared to sell but it had to be the whole of Optimum Holdings including the terminal, Koornfontein, and those types of conditions. Are you aware of that?
Dr Ngubane: No. I am actually surprised you say Mr Koko was part of that.
Mr Swart: His evidence before us was that he sat in a meeting with the business rescue practitioner. It is on record, and maybe you haven’t seen it. There was an involvement of Eskom in this whole process.
Dr Ngubane: Eskom’s involvement was in terms of securing its interests in coal. Not in the sale.
Mr Swart: I understand your version. At the same time a R2 billion penalty was imposed on Optimum. Do you not agree that it adds pressure to sell?
Dr Ngubane: Again this is what I heard from as early as 2012 Optimum was washing its coal for export - the ERB1 quality grade - for export and giving the middlings (what remains out of the washing) to Eskom.
Mr Swart: I understand. Forgive me for interrupting. I do understand that process and background but we know that that was reduced to a fine of R500 million after the Tegeta sale was concluded. I am just illustrating additional pressure to sell. We also know that Minister Zwane was in Switzerland putting pressure on Optimum to sell. Are you aware of that at all?
Dr Ngubane: From the reports, yes.
Mr Swart: And then you have got a meeting in December where there is R1.8 billion guarantee. Have you ever as a Board Chairman of SOEs experienced a guarantee by a SOE for a company to buy another company?
Dr Ngubane: That issue never came to the Board about a guarantee. What came to the Board was the amount that was required to secure coal.
Mr Swart: I do understand, but it was in excess of the Board’s mandate as well. It should have gone to the Minister. Do you agree?
Dr Ngubane: No. Let’s put it this way, if the budget in the corporate plan is accepted by the Minister, the IFC can authorise spending to the amount of the budget. That does not require fresh authorisation. The purchase of coal is part of the corporate plan.
Mr Swart: I understand. But the Minister indicated that she had to give that approval for that specific guarantee but it wasn’t obtained. Can I just ask you because it is very clear, and I put it to the former acting Eskom Board Chair, Mr Khoza, and he also said that Eskom played no role in the purchase, and after a few questions, he conceded that Eskom played a significant role and in fact the finding of the Public Protector that the Eskom Board acted in benefit of Tegeta was in fact true. Do you still hold that it is not so?
Dr Ngubane: In terms of what came to us at that round robin resolution it was expressly to pay for coal.
Mr Swart: I understand. In hindsight?
Dr Ngubane: In hindsight the things I have read in the press and heard in some of the evidence convinces me that it is urgent that the Commission sits, goes through all the documentation you are alleging to, and finds out exactly what happened.
Mr Swart: I understand. The Public Protector came out with serious allegations in November 2016, and billions of rands have left the country. We cannot wait for another Commission of Inquiry. We are in a serious situation. Eskom is in a serious situation.
Dr Ngubane: I agree. I am saying we wanted to raise the review exclusively to cover those issues.
Mr Swart: Weren’t you concerned about the funds leaving the country. The meeting on 12 April where the R659 million prepayment was agreed to, was it not coincidental that it was the same day that Tegeta needed R600 million to buy Optimum?
Dr Ngubane: I can assure you that never came to the Board’s attention.
Mr Swart: But the Public Protector said it should have. And people of your knowledge should have been aware of that. Can I just read to you, on 22 November Eskom Board member, Mr Mark Pamensky, writes an email found in the Gupta Leaks; “In terms of the Investment Committee I am available to start right away” He writes it to Atul Gupta. “I am at the tail end of securing Optimum Coal”. That is a Board member saying they are involved in the acquisition of Optimum Coal. Now you obviously were not aware of that, I would presume?
Dr Ngubane: It came out of the Gupta Leaks. It never came out of him or anyone on the Board.
Mr Swart: We will establish the veracity of that, but it seems to fit into the narrative because again he writes another startling email on 10 December to Atul Gupta which fits to the state capture allegations “Congratulations on a brilliant and well thought planned strategy acquisition of Optimum group of companies. Well done. I am proud of you. This is the beginning. I am sure you and the team will make a huge success. Let me know when you and the team are ready to discuss the operational implementation”. He is speaking as an Eskom Board member. Don’t you think that is outrageous if it is proved to be true?
Dr Ngubane: It is.
Mr Swart: Are you aware that Mr Molefe refused to meet with one of the most black empowered companies, Exxaro, but he was continually in contact with the Gupta companies. Don’t you think if that came to your attention as Eskom Board Chairman, it would be outrageous?
Dr Ngubane: Certainly. But what I know is that the Exxaro contract expired in 2015.
Mr Swart: But they requested to extend the contract. They wrote letters to the Minster. The Minister refused to speak to them and that resulted in the closure of the Arnot colliery in which 1500 people were kicked out of their jobs. But the Minister intervened to ensure that the Gupta related companies got this deal. Don’t you think that this is outrageous?
Dr Ngubane: Well, that is outrageous. However, Exxaro was getting R51 per gigajoule, and all the other people were getting around R18 or R19.
Mr Swart: The Mafube contract was supplying coal at R132 per ton. Yes, it might not have been the best quality but it was a million tons per year on a conveyer belt and that was stopped. No, reason was given. We have got the evidence. And then what happened is that the OCM coal that was supposed to go to Hendrina was sent to Arnot at R450 per ton as opposed to the R150 that Hendrina was getting. But then Hendrina’s output was reduced. If you look into that I am sure you would share our concern as that information is there.
Dr Ngubane: I certainly do.
Mr Swart: Thank you.
Mr E Marais (DA): Being the Board Chairperson you worked closely with the CEO and Minister Lynne Brown. How would you describe your relationship with Minister Lynne Brown?
Dr Ngubane: It was a good working relationship. We tried to steer the ship as close as possible.
Mr Marais: Would you say you had an open communication with each other?
Dr Ngubane: I would say so.
Mr Marais: How would you describe the governance overall of the executive of Eskom after taking over as Board Chairperson?
Dr Ngubane: I would say it was good. Right from the time we were inducted Exco gave us good information. The trouble of course happened that the information was not believed by the War room. The Minister was under pressure because they wanted to be sure that what information Eskom was giving was correct. As far as I am concerned, particularly under Brian Molefe the whole mood changed and there was real synergy in terms of how the Eskom Board and how Exco worked.
Mr Marais: It would appear that when Brian was transferred from Transnet to Eskom it seems that is when the trouble started as far as clarity on whether his appointment was fixed term or permanent. Mr Minnaar filled in a form that went to the pension fund where he indicated on a code he filled in that Mr Molefe was a permanent employee when it should not have been. On page 20 para 2.5.7 [read out]. This situation seems it could have happened previously with other public entities as well, except with Transnet because there was a transfer of pension funds of R4.2 million or so to the Eskom pension fund. I just want to make the point that when there is a salary of R7.65 million on an annual basis, then you actually make up with that type of salary when there is no pension fund involved. How do you see it?
Dr Ngubane: As I said, the Eskom Group Chief Executives were benchmarked on market surveys, and this is what Mr Minnaar was quoting, and this to him was a fair level of payment.
Mr Marais: You have stated that you have an open line of communication with the Minister, and it seems there was no clarity on the five year fixed term contract or permanent basis. As Chairperson, and I ask you in all honesty, did you bother to pick up the phone and seek clarity from the Minister whether it was a permanent or fixed term five year contract because you have an open communication line to the Minister?
Dr Ngubane: We wrote a letter which is contained in the submission. The people around the Minister said she had been given the letter. It later turned out that she had not been. We were not really asking for her permission. We were informing her that we have made these arrangements to suit the concerns raised by Mr Molefe, and based on the advice that we had received. The Memorandum of Incorporation (MOI) at Eskom at that time gave the Board a lot of discretion in terms of appointment, so we were asking for support, and not necessarily that we were asking her to approve it.
Mr Marais: I just want to make a point that the CEO is the number one employee in any company, and Minister Lynne Brown represented the main shareholder that is the state so there should be follow up either by you or someone from the executive to get clarity about this appointment, on which status it should be done.
Dr Ngubane: I agree. We should have done that. However we relied very much on the expertise of Mr Minnaar.
Mr Marais: Page 21, para 2.5.10 where there is now clarity about the signing of the second contract on 7 March 2016 for a fixed term of five years effective from 1 October 2015. Who initiated that short term and long incentives should be reviewed?
Dr Ngubane: It was not just specific to him. Across the board, short term and long term incentives were being reviewed.
Mr Marias: But part of governance would be that if I sign a contract and as a contract worker I have agreed this would be my payment on a monthly basis for a period of five years. For governance purposes why would this then be reviewed because it was done and dusted?
Dr Ngubane: Because his salary package was never reviewed in terms of the fixed term contract. It remained one for a permanent employee and that’s what went to the pension fund to which he was contributing.
Mr Marais: This was initiated after he signed the second contract of employment that was a fixed one. Let’s put it on record as 2.5.10 that it was agreed.
Dr Ngubane: You are quite right. That’s a mistake we made. We should have insisted that one go and calculate the whole package on a fixed term package. That never happened.
Mr Marais: Thank you for that. Just a matter of interest, you resigned as Board Chairman on 12 June 2017. Was there any specific reason why you resigned from Eskom?
Dr Ngubane: It was just personal.
Mr Marais: How would you regard the state of Eskom after you left?
Dr Ngubane: Problems started when Molefe left. I think that is when the dissonance started to appear.
Mr Marais: Wouldn’t you say the problem started when Brian Dames left?
Dr Ngubane: I take Brian as a friend of mine. He did an excellent job at Eskom, but he also made some mistakes. When he took away procurement from the power stations and centralised it at Megawatt Park I think that is when the trouble started. The station manager would want an outage to be able to maintain the turbines and boilers, but all that would have to first come to Megawatt Park. That disempowered the station managers, and I would say the problem of load shedding worsened from changing that model. But obviously he meant well. The keeping the lights on strategy that he advocated especially for 2010 so that there was no disruption all contributed to the lowered levels of maintenance of our coal fleet. He was a brilliant man, but there were mistakes.
Mr Marais: With the appointment of the current CEO and the new Board, what is your view of them, will they pull through?
Dr Ngubane: I have a lot of confidence in Phakamani. I worked with him at Land Bank. It was in huge debt. We initiated some arrests. We brought confidence back to the farmers to take up our bonds and loans. Phakamani is a good operator. He created what was called fit for purpose. Fit for the future of the Land Bank. I think he is doing very well. I have no doubt that he will do very well at Eskom. However you cannot have financial sustainability when your tariff part is continually going down.
Mr Marais: What is your view of the previous CFO, Mr Singh?
Dr Ngubane: Mr Singh was very good with figures. However, what has come out about the Trillian payments and all those things is worrying. However I don’t think he can be judged as guilty or not guilty until the facts are on the table.
Dr Z Luyenge (ANC): Did you have any connections, or did you ever greet Tata Mandela, the struggle icon, yourself?
Dr Ngubane: Yes.
Dr Luyenge: What do you think Madiba would say if today you are sitting here talking about people who are very clearly hell bent to loot state resources and therefore kill the gains of 1994? I am asking that Dr Ngubane because you are a doctor, and as a doctor you had a responsibility to correct things that went wrong. I don’t expect a doctor to say “I only came across this patient today. I cannot say anything about his or her past illnesses”. That is irresponsible. Why do we as intellectuals in South Africa after 24 years not accept and take responsibility and say “I erred”. An error is created in the human being. No one is perfect. But it is ethically and morally correct for a human being to accept a mistake. The expertise and experience that we have in young intellectuals like your Kokos and Brian Molefes, but because of greed and that people want billions, they are used to billions, we are in this quagmire. Since you came to Eskom it is said you had a meeting with Brian Molefe where you actually motivated to then Minister Ramatlhodi to suspend all Glencore mining licences.
I go further to identify that on 13 April in a meeting of the Eskom Board late in the night, that solely sat to approve the prepayment of R659 million to Tegeta in order for Tegeta to finalise the Optimum purchase. The following day on 14 April, Tegeta pays Glencore R2.1 billion, and Optimum, Koornfontein, and Richards Bay allocation are transferred to Tegeta. Optimum was given a further contract for Arnot. With this additional contract Eskom pays Tegeta R500 million between 29 January and 13 April. I wonder where the masses of South Africans are when people are doing this overnight. Eskom in February sold Brakfontein to another Gupta company – Shiva coal – which this Shiva is not 51% black owned. It means this Gupta related company did not qualify to be a service provider because it does not have the points required in terms of transformation. In November Eskom Board discusses mothballing Komati, meaning that Eskom might have to settle the R7 billion Koornfontein contract. What is this thing about Eskom playing around with money? There is nothing here talking about electrification, just billions going to individuals, and these individuals are mesmerised by the Guptas. Dr Ngubane, with due respect, can you breathe on this? Where is the ethical conduct? How do you justify actions of this nature?
Dr Ngubane: Well, it is difficult to respond to such condemnatory language and statements. Let us wait for the Commission. I keep saying that. All documents will be on the table and we will know who did exactly what. If I get the motivation from management, and it is well structured and follows all the policies and processes of procurement, how do I then go and say you are wrong unless I have the information and proof of that. BTC sits, takes a decision, and then I must go and say they are wrong? As far as I know, the negotiation for the sale of Optimum involved other companies. It was a commercial issue. The creditors of Optimum I am told agreed to the sale, and the banks were involved in that. The Competition Commission agreed to the sale. Where does Eskom come in on that? If we buy coal for a certain amount, and the person from whom we purchased used the money for other things, how can we be blamed to say we gave him the coal to do x, y, and z.
Dr Luyenge: I think it is so pathetic that you are still hell bent to stand on one leg and say what is being done. The questions you are asking are time-wasting. What actually prompted Parliament to say there is a need for the Commission of Inquiry, and what actually made Thuli Madonsela to say there be such an investigation when there is actually nothing wrong? Can you put South Africans into the right context, ‘Mkhuluwa’?
Dr Ngubane: Adv Madonsela mentioned a lot of observations depending on the information she had. She said these things must be investigated further and there must be an appointment of a Judicial Commission. I cannot sit here and condemn people without evidence. I know there is public opinion, but that public opinion depends on what comes out on social media, formal media. I agree things sound terrible but I can’t sit here and say x, y, z put out the fake tender and gave procurement in a fake way unless I have evidence.
Dr Luyenge: What is good about Anoj Singh when he is a ‘skelm’ in looting state resources? Is that fair, you may not say that to us, you may not say that to the Chairperson, you may not say that to anyone in front of you, but the poor see and hear what you are saying.
Dr Ngubane: I have worked many years with the poor, my friend. I used to treat people who had no money, so don’t tell me about the poor. I am from there.
Dr Luyenge: Listen, you must answer me.
Chairperson: Members, and Dr Ngubane, do not forget that I am chairing the meeting. You should be giving each other time to listen to each other. Don’t get inside each other’s mouths. There are people out there sending smses saying “They are watching the proceedings and they want to hear what Dr Ngubane is saying, and they want to hear your questions”. So please give each other time. Don’t panic. We have time.
Dr Ngubane: I am saying…
Dr Luyenge: What are you saying, Dr Ngubane. I am the one who must ask questions. I am not going to respond to you. I was never Eskom Chairperson. You are the one who was Chairperson. I want you to respond.
Dr Ngubane: But I am responding.
Dr Luyenge: No, you are not responding.
Dr Ngubane: You want me to say that Anoj Singh was a crook, and that is for the courts to prove that. How do I become judgmental about people when there are processes that will examine what was paid to McKinsey, what was paid to Trillian. I don’t have evidence to say x, y, z …
Dr Luyenge: The Asset Forfeiture Unit (AFU) is not right to do their work and make sure that they put together all those who are claiming to be a champion of the poor when people are hungry out there and the resources have degenerated at Eskom?
Dr Ngubane: Chairperson I am not sitting here to take this type of rubbish.
The Committee was outraged at the statement made by Dr Ngubane.
Chairperson: Dr Ngubane, you cannot use that type of language in a Committee meeting. I have just recently asked you to be patient and listen to “that rubbish” that is been said by Honourable Luyenge and respond to it because he is also responding to what you are saying. I am not taking sides here. Don’t say Luyenge is talking rubbish and that you are not going to sit here and listen to the rubbish that he is saying. We are a Committee of Parliament. It is not for the first time you are saying that. In fact in the media you said this Committee was asking you questions which were nonsensical. So you are repeating your statement made in June 2017. We cannot accept that!
We cannot allow you to insult us. You are not insulted by Honourable Luyenge. Honourable Luyenge is asking you about activities that happened at Eskom. Mr Singh was here, and according to information we have received, Mr Singh lied to us. You cannot come here and say we are talking rubbish. That is not acceptable. We are a Committee of Parliament and we need to get to the bottom of the truth of what is happening. Whoever has done wrong must be interrogated by the court of law or whoever has the power to do so.
Mr Dlamini: Chairperson, before that man responds we cannot sit here and be insulted by that man. We are not your friends.
Chairperson: No, Honourable Dlamini. I cannot say to Dr Ngubane “Your language is wrong” and then accept yours when yours is wrong.
Mr Dlamini: He can’t come here and insult a Member of Parliament. Who is he?
Chairperson: I have dealt with that. Please let us respect each other.
Mr Dlamini: That man must not come here and insult us. That we will never accept. That thing of saying when a Member is asking questions about the work he was doing at Eskom, that he is talking rubbish. He must withdraw it now. We are not his friends or his kids.
Mr Tseli: I agree with Honourable Dlamini, Chairperson. We cannot proceed with this process until he has apologised to this Committee. If he is not ready to apologise, let him say so. There is nothing wrong in you leaving here now. We will relieve you and conclude on the value of what was presented so far. You owe us an apology. Do it now or else we will relieve you.
Dr Ngubane: Chairperson, I withdraw that. However, Parliamentarians have got an equal responsibility to respect the citizens of this country. I came here to an Inquiry that is factual, that is seeking information. To insinuate that I am a crook and all sorts of things is unfair. It is totally unfair.
Chairperson: Honourable Luyenge, have you said that Dr Ngubane is a crook?
Dr Luyenge: How can I say that? I am not new in this Parliament. I may not have your billions that you think I am a rubbish. I don’t need his billions. I am fine with my two hundreds. And it is enough for me and my integrity.
Chairperson: Can you continue.
Dr Luyenge: The AFU has obtained a preservation order against Trillian and McKinsey. McKinsey was here and it is McKinsey who said we are paying back the money that got into our coffers illegally. Was that wrong on the part of McKinsey to say that?
Dr Ngubane: First of all, Chairperson, I do not have billion. You are making South Africans believe that by saying it in Parliament. I do not. You can check my bank account, you can go anywhere. However the AFU used law, and they were sanctioned by law. That is absolutely fine. It is part of the legal system of this country. But to sit and say I am colluding with x, y, z – insinuations – that is just denigrating. And I can’t accept that. I was a Member of Parliament for many years and we never did such things. If it is a question of Inquiry let it be factual, let it be proper facts.
Dr Luyenge: Chairperson, I am not going to allow a situation where we are lectured by Dr Ngubane here. That is wrong. I cannot accept that. I am a Member of Parliament. I am elected by the poor masses. But I think let me not continue with this.
Chairperson: I just want to put it on record that we have all the documents with us. I am not sure when you say you are waiting for the Commission of Inquiry because you have all the documents. Are you going to give the Commission of Inquiry different documents from the ones that we have? We are guided by the evidence we got by people we invited in this inquiry. Those people were carrying documents, and Eskom sent us documents from meetings and all the activities happening at Eskom.
Dr Ngubane: I was not aware that you have all the documents at Eskom.
Chairperson: When you were Eskom Chairperson and you were been chartered around Africa on Gade Oil business, were you paying for these chartered services out of your own pocket or from Eskom?
Dr Ngubane: Gade Holdings ceased to exist in 2013/14. I am not sure of the precise date but the company did not function. It failed to get the oil resources from West Africa.
Chairperson: Can you explain why Eskom and the Department of Mineral Resources (DMR) suddenly changed their attitude to coal suppliers when Tegeta entered in the picture in late 2015?
Dr Ngubane: Well, I am not aware that DMR changed its policy. We always had coal policy which rested on cost plus mines which Eskom funded. We had short and medium term coal supply contracts. I am not aware there was a change.
Chairperson: So all the prepayments that were done by Eskom was something that Eskom has done before with other companies?
Dr Ngubane: Exactly.
Chairperson: In your response to Honourable Dlamini you said you read only the Internal Audit report, and that you had not read the BTC report. I thought with my little knowledge of how you work at Eskom, in the BTC, the Board, especially the Board Chairperson was part of BTC, so the report made is developed by BTC. The Chairperson is the person that the report has to go to, and you say you don’t know of any report that came from BTC, specifically what Honourable Dlamini asked.
Dr Ngubane: No, Chairperson. I think that is miscommunication. All the Eskom boards have a delegation of authority to take final decisions on business that comes to them, and then quarterly they send a report to the Board which report is then included in the report to the shareholder. No, Chairperson or CEO can be part of BTC. That is by rule.
Chairperson: Okay. Another contradictory statement to the information we received last week. What would be your response to allegations that your family – your wife – had a project working at either Kusile or Medupi, those are power stations that I think are under Eskom, and you were Eskom Board Chairperson?
Dr Ngubane: My wife became a shareholder in Southey, which is an engineering company in 1998. She later resigned as a Director. Her participation in that company remains as a shareholder, not as a Director. She has never been part of any decision or application by Southey to do Eskom business.
Chairperson: You are saying to us you are not party to the work of the executive especially when it comes to giving work to certain companies – like the Trillian matter – the implementation of the Trillian–McKinsey contract. But do you get reports from the executive in their implementation of work or dealings with the companies on contract with Eskom? When you get that report, do you interact with that report as a board, or do you interact with the report with the Eskom legal team?
Dr Ngubane: Depending on the delegation of the level of authority, certain things end up with management. But when it comes to R500 million it escalates to Exco. When it exceeds R750 million it comes to the BTC. That is the nature of the delegation of authority. Quarterly, all the committees have to send reports to the Board which are then included in the shareholder report. In my case, Ms Daniels was a constant adviser in terms of what was coming to the Board.
Chairperson: “Mr Molefe brought joy in Eskom”. Those are your direct words. There was a CEO before Mr Molefe that was working on the load shedding. Can you put it on record by saying the Eskom CEO before Brian Molefe was unable to manage load shedding? The CEO before Molefe was the one that would have taken the country to a total blackout if Mr Molefe had not come?
Dr Ngubane: I had very little exposure to Matona. Remember when we came to Eskom, there was this suspension of executives. Mr Matona opted not to come back, but to take a settlement and go. So my interaction with him was very limited. Probably not more than three months and then he left. The problems of course were there. The person I worked with was Molefe and we saw the difference. I cannot comment on the abilities of Mr Matona.
Chairperson: I have never worked at Eskom, but I am putting it to you now that Mr Brian Molefe has taken a reward that was not for him because the work had already started in fighting load shedding. I am not going to talk about the attitudes of people who were not going to the boilers, who had their cliques in Eskom. But he took the reward of other people, and Mr Matona was not given a chance to prove to the country that he was able to deal with load shedding.
The Chairperson thanked Dr Ngubane for honoring his invitation to appear before the Committee.