Eskom Inquiry: Tshediso Matona & Erica Johnson

Public Enterprises

07 November 2017

Chairperson: Ms L Mganga-Gcabashe (ANC) (Acting)

Eskom Inquiry: Tshediso Matona & Erica Johnson

Transcript of 7 November 2017
Public Protector State of Capture Report
Ms Erica Johnson statement

Meeting Summary

Documents handed out: Mr Tshediso Matona statement [awaited]

The Committee heard evidence from former Eskom executives, Mr Tshediso Matona, former Eskom CEO, and Ms Erica Johnson, former Group Executive for Enterprise Development.

Mr Matona joined Eskom after serving as Director General at Trade and Industry and Department Public Enterprises as a career shift. He was well versed in the challenges happening at Eskom and felt he could contribute towards salvaging the deteriorating parastatal. To his surprise his tenure was very short due to infighting at the board level over procurement processes. Although this was the case, he worked tirelessly to address the challenges facing Eskom, which consequently made it easier for his successor to address prominent challenges such as load shedding. However, he did not stay long enough to see the fruits of his labour. His suspension occurred when the new board came in towards the end of 2014. The new board clearly did not see him fitting into its plans and furnished him with an unjustified suspension. He challenged the suspension but the labour court referred the matter to the CCMA. Eskom board members made it clear that the outcome of the arbitration was predetermined not to reinstate him. Upon this realization, he decided to accept the offer and leave Eskom as his finances would dry up if he continued fighting the unfair suspension. The suspension came as a complete shock because he was never implicated in any wrong-doing or corruption. The suspension letter came after the a meeting with the then Minister from which he was asked to excuse himself from along with other executives who were later suspended. He explained the database system which was to be followed in the appointment of executives and board members. He was uncertain if the new board was appointed using this.

The evidence leader and the Committee members asked Mr Matona about:
• The process followed for the appointment of executive directors and board members;
• Whether conflict of interest was picked up in probity checks of potential board members;
• Ensuring people with questionable characters did not serve on the of Eskom board;
• How the Minister exercised shareholder oversight over Eskom;
• Plans to deal with the challenges at Eskom;
• About his suspension and subsequent departure from Eskom;
• Bugging device in board meetings;
• How Gupta-corrupted people got on the of Eskom board;
• Causes of load shedding and deferment of maintenance;
• Why the diesel suppliers were unknown;
• The New Age R43 million sponsorship by Eskom;
• Continuation of T-Systems IT contract;
• Being pressured to make decisions that he was uncomfortable with;
• His interaction with the Gupta family;
• Causes of board in-fighting;
• Whether Brian Molefe was the one who ended load shedding;
• Eskom offered settlement to have him leave;
• Observations about injustices at Eskom;
• Tough choices put before him during his tenure as the CEO;
• Awareness of the approach by the Gupta family to supply coal.

Ms Erica Johnson decided to leave the company due matters that made it difficult to continue working for Eskom such as procurement processes, the TNA breakfast sponsorship that was pushed by the interim CEO, Mr Collin Matjila, while Eskom was financially constrained. The sponsorship cost Eskom R1.2 million per month and this was a big portion of the communications budget. It was initially for one year, but the interim CEO insisted that the contract be extended for three years. The former Financial Director refused to sign the three-year contract. However, the interim CEO went on to sign the contract without the Financial Director as second signatory although contracts of more than one year require two signatories. This was later indicated in the audit as wasteful expenditure as internal controls were not followed. Ms Johnson said that procurement processes were grossly flawed, particularly the manner in which the IT system contract was handled as well as coal supply. She highlighted the continual deferment of maintenance of power station plants and how her concerns were deliberately ignored. The new IT system would have saved Eskom R1 billion, this was confirmed by an audit done to verify whether this was true. Accusations were then made about the Chief Information Officer who had devised the system, and he later resigned because the environment was becoming more and more difficult to work in.

Ms Johnson was asked about:
• The R43 million contract that Mr Collin Matjila signed off irregularly with The New Age
• How the board dealt with the SNG investigation report on the matter;
• The CIO’s IT system strategy purported to save Eskom R1 billion;
• The disqualification of T-Systems in the procurement process;
• Why the CIO was suspended;
• Board attitude to maintenance rollout deferment / Koeberg steam generator delay;
• Extension of TNA sponsorship for three years and why TNA was chosen;
• The judgement on the integrity of interim CEO Matjila and if he was captured;
• What she thought executives were too fearful to raise their concerns; 
• The implications of this mismanagement and corruption on the cost of electricity for ordinary citizens in the country.

Meeting report

The Acting Chairperson read out the oath which Mr Matona opted to take.

Advocate Ntuthuzelo Vanara led the evidence collection.

Witness: Mr Tshediso Matona 

Adv Vanara: Can you please state your full names?

Mr: Matona: Tshediso Matona

Adv Vanara: Can you provide the Committee with your experience in the public sector as the Director General in the two departments you led before joining Eskom as GCEO.
Mr Matona: I joined the public sector right from the onset of democracy; firstly as DDG in the Department of Trade and Industry responsible for international trade negotiations and later I became the trade representative at the WTO for South Africa. In 2005, I was appointed DG of the DTI. I served in the position for five years until about the end of 2010. I then moved to the Department of Public Enterprises after Minister Malusi Gigaba was appointed to head up the department because at that stage DPE did not have a DG. I was with DPE from 2011 until 2014.
Adv Vanara: During your tenure as DG of DPE,one of your responsibilities was to provide support to the Office of the Minister, is that correct?

Mr Matona: Yes, that is correct.
Adv Vanara: Let’s zoom into the appointment of SOE board members, particularly non-executive members, within that portfolio. Can you share the process of appointing non-executive directors?

Mr Matona: The DPE is probably a unique department relative to other departments because it has an exclusive mandate which is the exercise of shareholder oversight on behalf of the State of SOEs. At the time there were nine SOEs, it was a fairly new department at the time. It started at the time when the intention was to privatise some of the SOEs such as Eskom, SAA, Denel, Safcol, etc.

The mandate then changed, so this meant that DPE needed to develop a system through which the shareholder would exercise oversight. When I arrived in 2011 I found DPE had established systems for many of the requirements of shareholder oversight and to provide strategic direction to those companies. That system at its foundation took its cue from the Companies Act, but SOEs are of course a special category and they are also governed by the PFMA (Public Finance Management Act). Beyond that, DPE had developed tools through which companies could be assisted with their MOIs (Memoranda of Incorporation), which set out the procedures and the rules for how the companies would be managed, and for the regulation of operations and governance. The MOIs needed to be consistent with relevant laws, and through the PFMA these companies are required to report on a quarterly basis through AMGs and other meetings. There was a database of possible candidates for appointment to the boards based on various skills required across the different SOE sectors. This database was updated from time to time as warranted by circumstances – this was the system that governed it at the time.

Adv Vanara: We will get back to the shareholder oversight, but now we need to focus on the appointment of non-executives board members. You referred to a database - how was it developed and compiled?

Mr Matona: During the time I was there, there was an opportunity to develop the database, an advert was issued to the media to call for people qualified to serve as directors under the portfolios of the department. At the time they did a broad call indicating the sectors in which they required skills. People did respond to the call, and those names were added to the database.

Adv Vanara: The integrity of individuals serving on the various boards is critical, correct?

Mr Matona: Yes, that is correct.

Adv Vanara: In compiling the database of candidates to serve on the boards, what was the safety net to ensure that people with questionable characters do not serve on the board?

Mr Matona: DPE had to conduct a probity check to confirm the person’s qualifications, criminal record, judgements for tax purposes. That test was conducted for individuals who could potentially be appointed to a board.

Adv Vanara: Would potential conflict of interest be applied in the probity of these individuals?

Mr Matona: Most of the conflicts of interest were not picked up at that level, but the person would be required to disclose which other boards they sat on. This was to ensure that people who were appointed were not over-extended. At that stage it was not possible to pick up conflict of interest.

Adv Vanara: I accept your response to a certain extent, but Eskom as we know had long term coal supply agreements with service providers. Therefore, someone who is applying to serve on the board and who owns a mine supplying Eskom would certainly be a red flag. So the probity check should be able to pick up on those individuals, right?

Mr Matona: Yes, it should.

Adv Vanara: What was the process for appointment of executive directors including yourself?

Mr Matona: The process to appoint the CEO and prescribed officers is conducted by the Board. One of its responsibilities is that whenever there is a need to appoint the CEO or the Chief Operating Officer, the process would include the shareholder. The board is required to notify the shareholder on filling those vacancies and the shareholder would then give the board the go ahead to undertake the process. The board would issue an advert, and it is required to identify three names from the pool of applications with an indication of a preferred candidate to the shareholder and the shareholder would then look into that individual. The process concludes when the chosen name is submitted to Cabinet, and then Cabinet decides. The appointment of those executive directors is approved by Cabinet.

Adv Vanara: So if the Minister appoints No 3 instead of No 1 that would be within the right of the Minister to do so, correct?

Mr Matona: Yes, theoretically, any one of those names would have to meet the requirements and the Minister is required to advise the board and motivate why the Minister does not agree on the preferred candidate of the board. Usually, the shareholder would go along with the recommendation of the board.

Adv Vanara: What happens if the Minister turns down all the recommended names?

Mr Matona: That would be an extreme circumstance that I did not encounter while I was at DPE. In that event, the Minister must motivate why. By the time the names get to the Minister, all the boxes are already ticked.

Adv Vanara: I am probing the competency of the Minister, is he/she the appointing authority for the Finance Director and the Group Executive?

Mr Matona: That is an interesting legal question that they struggled with, particularly up to the point where the board has completed the process and made a decision. In the case of SOEs, there is a requirement that the shareholder must approve the preferred name chosen by the board, but this is not the case in the private sector. The prerogative is solely with the board.

Adv Vanara: In 2016 you had already left Eskom and there is an amendment to the MOI, but I don’t want to assume why but it would seem that this issue was clarified. Have you had sight of this MOI?

Mr Matona: No.

Adv Vanara: Whilst you were at DPE, how did the then Minister of Public Enterprises, whom you served, exercise this shareholder oversight over these SOEs and please zoom on the issues at Eskom.

Mr Motana: Sorry I do not understand what you mean by “issues at Eskom”.

Adv Vanara: The Minister exercised oversight on SOEs that were in his portfolio, so how did the Minister discharge that responsibility for Eskom. Please highlight the pertinent issues at Eskom that you had to deal with during your tenure.

Mr Matona: The first exercise that the Minister had to carry out was the appointment of the board and to ensure that the board was doing well and if not, how he would intervene in that instance. So the establishment of the appropriate governance system was critical. Beyond that, there were a number of instruments through which the Minister had to apply which included the shareholder compact. Typically, that is where the DPE supported the Minister in scrutinising the shareholder compact and ensuring that the provisions were enduring, and then on a quarterly basis the company would report on the updates made on the compact and elaborate the contents on the corporate plan. So on a quarterly basis, the company reports to the department and its officials, and those officials would scrutinise those documents and advise the Minister accordingly. When the officials are satisfied with the documents, those documents would then be submitted to the Minister.

Adv Vanara: Zooming to Eskom, there is evidence before the Committee that the finances of Eskom around 2014 were not in the best position; there was load shedding. Can you share what was Eskom’s plan to deal with those challenges while you were the DG?

Mr Matona: The main thing that confronted Eskom, and therefore the shareholder, in the course of 2014 was the financial performance of the company, the books were not balancing and there are a number of factors involved. The revenues were under pressure due to early signs of economic slowdown at the time - it was starting to become apparent in the course of that year. There was an issue around the tariffs as well - whether it was sufficient to sustain Eskom’s balance sheet.

In addition, there was the challenge of the collection of municipal debt which confronted Eskom with a serious financial situation. The shareholder got involved to try and ascertain the problem. I interacted a lot with Treasury to deal with the problem; I also interacted with NERSA which provided valuable information about Eskom to us. In the course of that year there was a decision to provide Eskom with a financial injection of R23 billion to assist in dealing with the financial situation. The injection was a package that came with other things including the conversion of Treasury’s loan into equity. Suffice to say that seemed to deal with the financial challenges in Eskom at the time. What then emerged were operational challenges to provide electricity. In 2014 incidents of load shedding were starting to occur and they were actually isolated. This was happening towards the end of the year when I had just arrived at Eskom. The load shedding was the responsibility of the company and it needed to sort it out. We embarked on a number of strategies to solve the problem.

Adv Vanara: On 1 October 2014 you joined Eskom as the group executive. So what did you find when you joined Eskom and how did you deal with these problems?

Mr Matona: On the financials, through the R23 billion package, we had a handle on it. The main issue was going to be what the tariff trajectory for Eskom was going to be to ensure that the company had sound financial stability going forward. This was an issue with governing the organisation. In the past a decision was taken on the policy to re-look at the tariffs to increase the revenue of the company. The policy had not been bedded down yet.

Operationally, the problem was supply interruptions and load shedding and that was the burning platform at which I arrived at Eskom and I worked on this day and night. Load shedding eventually started to impact on the financials of the company, for instance at the time, to generate power Eskom relied on diesel to supply electricity – as well as in the Western Cape plants and that created a massive pressure on the finances because diesel costs were fairly large. That was a stop gap and it was clear that that performance could not sustain the company, so maintenance was critical to ensure that load shedding was taken care of – the units were breaking down because maintenance was not done.

In 2010, for purposes of the World Cup, a decision was taken to defer the maintenance of the plants, and again when the local elections were looming. So there was a culture of deferring maintenance because Eskom executives feared maintenance. At the time I arrived it was difficult to defer maintenance any further. So troubleshooting was done but the main thing was reinstating the culture of maintenance, and soon after I left there was recovery.

Adv Vanara: In December 2014, the board was overhauled and only two members remained. You indicated the series of events which seems to be in line with the shareholder’s compact, corporate plan, and the board. Are you aware of any reasons why the board was changed in December during a relatively quiet period as opposed to a period that is after the AGM?

Mr Matona: At the time the board was being changed, I could not align it with the governance cycle. That was not really an issue that I focused on, but what I recall at the time was that the then chairperson of the board was going to be removed. So there was that, so it was not really a big issue for me that it was not part of the calendar.

Adv Vanara: The chairperson of the board at the time was Zola Tsotsi, correct?

Mr Matona: Yes,

Adv Vanara: When you said he was going to be removed, what exactly do you mean?

Mr Matona: He was going to be rotated, but when I spoke to him he said he was going to be removed as the Chairperson and there was no indication as to when that would happen. I do not think that at the time the shareholder felt the CEO needed to know and I learned about it just like everyone else.

Adv Vanara: You had been working with the board for at least two full months before the new board was elected, you had now worked with board members, non-executive members. Were you exposed to any tensions in the board, if so can you expose what those tensions related to?

Mr Matona: By the time I arrived at Eskom there was significant tension or turmoil within the board over a range of issues, largely around procurement. There were fights about various procurements, and there was an issue about the R43 million that the then acting CEO had signed off to The New Age. There were many issues that divided the board and almost rendered the board dysfunctional and that could have been one of the reasons why the shareholders decided to overhaul the board.

Adv Vanara: Lastly, you only had been five months into the job when you were suspended and you never returned. Can you share matters surrounding your suspension and departure from Eskom?

Mr Matona: The suspension came as a complete shock to me, particularly suspension by the board that had just taken office which still had to familiarise itself with the organisation. My suspension stemmed from what was called a pre investigation into the state of affairs of the company, as I was told. I did not buy that because we knew the root causes of the problems and we were working on those problems - I could not understand why any new investigation could have had anything to do with my suspension. And for this investigation to commence, it required my removal without any basis as to why I needed to be removed. At the time I did not know that the same thing was being proposed about the other executives. I was handed a letter of suspension. I believed that action was wrong and I challenged it in the Labour Court. I sought a relief to find the suspension unfair and be reinstated at Eskom, but the judge did not reinstate me, instead the matter was referred to CCMA. Suffice to say that when things got to CCMA, I found that the board excluded any possibility of my return as the outcome of that arbitration; instead, I was made an offer to leave the company. I could have fought further, but I realised I would have bankrupted myself as I would have had to pay legal fees out of my pocket, so I chose to move on.

Adv Vanara: You parted ways with Eskom without having been found guilty of any wrong doing and you were paid whatever was due to you and told that you are not coming back to Eskom, is that correct?

Mr Matona: Yes, it was made clear that if I were to go back it would not work and it came down to an issue of trust between the board and me. I was pleased that out of principle I challenged that suspension because it was very wrong.

Mr P Gordhan (ANC) asked about a bugging device in the board meeting dated 11 March 2015, who was bugging whom?

Mr Matona responded that at a certain stage it became clear that developments in the board deliberations were leaking from the meeting so there was a decision that periodically the boardroom would be swept of devices. In the time he was there, he instituted a sweeping of the boardroom. On that day it was not clear where the Minister was coming from because he raised the issue of bugs in the boardroom in an accusatory manner. He informed the board members that he had just done a sweeping, however there was still speculation.

Mr Gordhan asked him to share the speculations with the committee.

Mr Matona replied that unfortunately he could not share any speculations with the Committee or provide more light on the matter.

Mr Gordhan asked when Mr Matona was the DG at DPE, Minister Gigaba was given this job, and it was during this time that challenges started coming out at Eskom. So how did the Gupta corrupted people get onto the board?

Mr Matona replied that he cannot be sure, because one of the board members was already appointed when he got there. At the time some of these board members had been appointed. So as for the Gupta connected probity checks - the checks probably would not have picked up those interests. He didn’t think they were designed to pick that up at that time. He added that the Minister has the prerogative of the final list that would be taken to Cabinet but the department would make its own recommendations. He reiterated that the prerogative was with the minister to decide whom he wanted on the board.

Mr Gordhan asked how one establishes that the list provided was not followed. Which documents would the committee need to obtain in order to ascertain that information?

Mr Matona replied that it is in the submission to Cabinet.

Mr Gordhan asked him to confirm in his view what led to the load shedding and whether it was the deferment of maintenance.

Mr Matona replied that certainly it was due to the deferment of maintenance of the power plants. He reported on the maintenance issue because it was resolved that transparency about informing the public on how they were planning to resolve load shedding was critical and important to help restore the public’s confidence.

Mr Gordhan asked him to confirm whether by the time he had to leave, the discipline around maintenance was put in place.

Mr Matona replied that certainly, yes, that was the case.

Mr Gordhan said Mr Matona recalled that in war room period the issue of diesel supply was enormous and large amounts of money were being paid to suppliers. However, it was very interesting that the suppliers of the diesel were unknown.

Mr Matona replied emphatically that is correct.
Mr Gordhan asked why this was so.

Mr Matona replied that this that created the division in the board, as it related to procurement. It created a major risk – the fact that it was unknown who was given these contracts, it was a big problem.
Mr Gordhan asked if it is possible that during that period the board members themselves or people related to the board members received the procurement awards.

Mr Matona replied that he was not certain, but that was in the public domain at the time. He came across that information in the public domain.

Mr Gordhan asked whether when Mr Matona was forced to leave, Mr Brian Molefe came on as the acting CEO, and whether he is aware of the process followed for the appointment of Mr Molefe.

Mr Matona replied that he did not recall that position being advertised as per the requirement by law. However, he is not certain whether the shareholder has the prerogative to not advertise the position. He was not familiar with what went to Cabinet about that position because he was not around at the time and he jokingly said he was not looking for that job anyway.

Mr Gordhan stated that in Mr Matona’s affidavit about his suspension, on page 13, he indicated that his suspension would lead to a downgrade of the company and indeed that occurred. In addition, at the time Standard & Poor (S&P) indicated that the downgrade was linked to his downgrade.

Mr Matona stated that he was not aware of any other incident in the past where poor governance triggered a downgrade in the manner it occurred at Eskom. This was at the time when we were talking to investors and assuring the investors that there is a legitimate plan to improve the company. Perhaps, it is only natural that when an event like that happened, it frightened the investors. There are important lessons that can be learnt from that.

Mr Gordhan said on page 11 the affidavit, Mr Matona made reference to a particular board member who made the whole suspension thing Mr Matona’s problem – what did this tell him about the board member’s approach?

Mr Matona replied that in retrospect, he understood the situation to be a charade carefully managed in a manner that would create a defence for the board to say that it had given him an opportunity to state why he should not be suspended. That was merely a fuss, because the suspension was a pre-determined outcome. He was confused by that and all kinds of things were happening, some information started to surface. One would recall that Mr Zola Tsotsi made pronouncements in an article that Mr Matona refused to be subordinate along with other allegations circulating in the public domain. In the final analysis he concluded that the in-coming board did not see him fitting into its plans. Typically when a new Minister joined the department, he always asked whether the Minister saw him as part of the plans going forward. However, it did not seem as if that was the case with the new board.

Ms N Mazzone (DA) said when Mr Matona was appointed as CEO, he indicated that he had been a good DG and hoped that he would carry that on into the CEO position at Eskom. It seems that there was a lack of favourability towards him. She asked if he thinks it was coincidental that some executives left Eskom around the time he arrived.

Mr Matona replied that he had not created that link between his arrival and the events that led to his departure as well as the circumstances in which those executives left. When he arrived at Eskom, it was precisely due to the fact that governance was strained, and some of the executives chose to leave as a result.

Ms Mazzone stated that it surfaced that a variety of governance issues made it difficult for some of the executives to continue working at Eskom.

Mr Matona replied he already indicated that the procurement division at Eskom really made it difficult; he had gathered that the moral and ethical code of the company needed attention. He had engagements with the head of internal audit and there were several officials that were suspended for various reasons. This brought about the decision of instituting a forensic audit and recommendation for intervention, and external auditors were then brought in.

Ms Mazzone asked if he was referring to the PWC audit, and if he was aware of any audit outcomes.

Mr Matona replied that there were a couple of audits that were happening at the time. There was the issue of the R43 million tender award. It was Ernst & Young that was targeted to assist with governance and how the executives can respond to those issues.

Mr Mazonne asked if he had any concerns about the R1.2 million per month paid for the Business Breakfasts and whether he was put in a position where he had to agree to certain things even though he essentially disagreed with them.

Mr Matona replied that the decisions about sponsorships were the prerogative of the company, so in the case of Eskom providing a sponsorship when the financial situation was dire was discretion to be exercised “otherwise”.
Ms Mazzone asked him to explain his involvement with T-Systems, and whether there were any people in the company that showed significant concerns about T-Systems. She asked him to share his thoughts on this matter.

Mr Matona replied that some of the things need to be judged on the facts. That issue was already looked at by the out-going board so he didn’t really need to involve himself in it considering that the board was dealing with it. He did however meet with T-Systems when they requested a meeting with him. T-Systems wanted to express its concerns about how the procurement process was being dealt with, but he advised the company to exercise its legal rights if it felt the process was not dealt with justly.

Ms Mazzone asked Mr Matona to respond very straightforward whether he was ever requested by anybody to meet with Salim Essa, Duduzane Zuma or anybody that wanted to influence his decisions as the CEO.

Mr S Swart (ACDP) asked about the meeting dated 11 March 2015 where he indicated that there was a prior meeting that was postponed. Upon the Minister’s arrival at that meeting, Mr Matona were asked to be excused – why do he think that was the case?

Mr Matona replied that he was excused from that meeting as well as the Financial Director, which was certainly alarming for both of them. However, it is not unusual for a director to be excused from meetings. He was aware that the Minister was coming for that meeting but he and the financial director had no clue that they would be requested to excuse themselves.

Mr Swart asked if it was after that meeting that he was issued a letter of suspension.

Mr Matona replied that he was told that he was going to be interviewed but that did not come to fruition, but the board later issued a statement that there was no wrongdoing that was found against him.

Mr Swart said the report outlines a dire situation in Eskom at the time, and significant breaches of the PFMA which Mr Matona had raised on earlier occasions. It mentioned the diesel costs which did not make financial sense, although it mitigated load shedding. That was done with the Dentons report under the subsequent board, and perhaps it would be good for the Eskom chairperson to indicate why he had to sit on that report. Mr Swart asked about Mr Matona’s knowledge of and involvement with Glencore, and when Mr Molefe refused to sign the agreement which forced Glencore to go into business rescue.

Mr Matona replied that he dealt with the matter. To a large extent he was only just familiarising himself with the issues at the time. It was a complex matter and Glencore executives were lobbying. The Eskom negotiators were willing to consider a different price but it was just a matter of where the threshold would be to deliver a win-win for both parties. He was eager for a solution to come to the fore and it was in Eskom’s interest that a solution be found. He left when the matter was in that space, and there was no conclusion.

Mr Swart asked if Mr Matona was surprised when Mr Molefe cut off all negotiations with Glencore. Had he ascertained what he thought the motivation was?

Mr Matona replied that he could not speculate on the motivations except for what was in the public domain, because he was not informed nor involved in any negotiations that had to do with the appointment of Mr Molefe.

Mr Swart asked him if he has been following in the media the matter around Tegeta.

Mr Matona replied that he followed the story as it related to the Public Protector’s report as the story was widely publicised. Where he left the matter as Eskom CEO and what subsequently transpired was a significant shift. Needless to say, he was not aware what information was before Mr Molefe which led to that decision.

Mr Swart asked if he read the Public Protector’s report which outlined that the board benefited Tegeta mines - would Mr Matona have any reason to disagree with that finding?

Mr Matona replied no, but it is what it is unless somebody else came forward with different information.

Mr Swart said criminal actions should have been instituted on this matter when the Public Protector’s report was released. He asked if it was a concern for him that this was not done.

Mr Matona replied that it is certainly a concern; allegations of that nature should have consequence.

Mr Swart asked if Mr Matona finds it extraordinary for a Minister to go and negotiate deals overseas.

Mr Matona replied that Ministers interacted with all kinds of stakeholders, but the issue is around the merits and the content of the meeting that should be brought under scrutiny, not necessarily the trip itself.

Mr E Marais (DA) asked if Mr Matona as the GCEO was at any stage put under pressure to make a decision he was uncomfortable with.

Mr Matona replied that there was an instance where a suggestion was made for him to retain Collin Matjila and he refused.

Mr Marais asked if at any stage as CEO, he took any instructions from a third party.

Mr Matona replied no.

Mr Marais asked about the substance of the relationship between Mr Matona and the Minister at the time.

Mr Matona replied that he overlapped with the Minister at the time, and Zola Tsotsi as board chairman.

Mr Marais asked if during his tenure as the CEO, he felt he was pressurised for tenders.

Mr Matona replied that fortunately at the time he was at Eskom he did not have to deal with any procurement. He already referred to what he saw as contestations or fights around procurement at the time.

Mr T Rawula (EFF) asked Mr Matona to indicate the nature of his interaction with the Gupta family during his tenure as DG of Public Enterprises.

Mr Matona replied that he had no interaction with the Gupta family that had to do with his position as the DG.

Mr Rawula asked what informed the interest to be Eskom GCEO, considering that the DG position was far more senior than positions in the SOEs.

Mr Matona replied that the interest was borne by a consideration of possible career prospects and growth, he had spent majority of his career in the public sector. Going to Eskom was part of that career trajectory because he understood the company, He believed he could make a difference in the company.

Mr Rawula said it seems there is inconsistency about the calling of board meetings. He wanted to check who was legitimately charged with convening meetings. Secondly, the meeting was to deal with the resolution that led to the inquiry. At what stage did Mr Matona find out about the terms of reference of the inquiry.

Mr Matona replied that the meeting that took place on Sunday evening was convened by the company secretary. He picked up the notice on the day leading to the meeting and there was a notice attached to it about the inquiry. So in the meeting that took place the next morning, Chairman Zola Tsotsi had a hard time explaining the rationale for that inquiry and he made reference to the Minister supporting the inquiry and if members had any issues with that, the Minister would be called to answer to those questions.

Mr Rawula said that considering that the board had difficulty with the meeting, it could only take the decision in the presence of the Minister. So would Mr Matona consider those actions appropriate by the Minister, considering that she pushed for the meeting to be held and for the inquiry to be passed? Does he think she abused her powers around this?

Mr Matona replied that there is certainly nothing unusual about the Minister calling or attending a board meeting. He is not privy to what was discussed in the meeting, and he was not aware of what was discussed because he had excused himself as requested.

Mr Rawula said Mr Matona had indicated that there was no wrongdoing proven on his side which essentially means that his legal rights were infringed. To what would he attribute the pressure that emanated from the board wanting him out to a point where even his legal rights were infringed? It appears that Mr Matona was obstructing whatever project or situation was being planned, which certainly did not include him. What is his view on this?

Mr Matona replied that he would not without any factual information blame the Guptas, but the name of the Guptas has been coming up and it is possible that it is the source of all those things that occurred. He can only point to matters of inconsistency or curious events about the new board resolving to suspend him along with three other executives. Mr Tsotsi made pronouncements in the media. Why he did that – he would not make any speculation about the motives.

Mr F Shivambu (EFF) suggested that the Committee should resolve to communicate to the people whose names have been mentioned during the inquiry. He saw in media that Brian Molefe and others state that this inquiry is not fair because their names have been mentioned, yet they have not been given an opportunity to account. He asked Mr Matona if he was aware if the individuals appointed to the new board subsequent to his appointment as the CEO were in the database that he mentioned earlier.

Mr Matona replied that he was not aware of that at the time.
Mr Shivambu suggested that the Committee must get hold of that database to ascertain if the names of the people subsequently appointed to the board were in the database. He then asked what the letter of suspension stated was the reason for the suspension.

Mr Matona replied that the suspension letter referred to the need to conduct the inquiry and the fact that the inquiry was underway. It advised him on the nature of the inquiry, and advised to make representations to justify any contestation of his suspension.

Mr Shivambu noted that there were fights in board meetings. In which board meetings did these fights occur and what were the issues raised in the process of The New Age (TNA) procurement?

Mr Matona replied that there is a board tender committee which the CEO is not a part of. There are senior executives that are part of it who deal with the technical matters of procurement, and any information emanating from that committee is then fed to the board. The issues that were in contestation were on the merits of who should be awarded the tenders. In the case of T-Systems, it was whether it should be T-Systems or another company. Typically, these were the issues dealt with by that committee. He could not comment precisely on issues around procurement because he was not part of the discussions.

Mr Shivambu asked if it was Mr Brian Molefe who was the one who ended load shedding.

Mr Matona replied that if he ever thought that he would fail in ending the load shedding at Eskom, he would have left the job. It was a challenging job, but the solutions were there and they could see the light. They were making steady gains. By the time he left, they had commissioned the first unit at Medupi because they applied pressure on contractors, saying they would not entertain any more delays.

Mr Shivambu asked Mr Matona to confirm that the statement ‘Brian Molefe ended load shedding’ was nonsense.

Mr Matona replied that he was confident that he would have ended the mess. When Brian arrived, he found a team with plans that were already being implemented prior to Matona’s departure. He did not think Brian would himself claim these exceptional capabilities. In fact, through the grapevine, he had come to learn that he acknowledged the work that had been done before he was there. This was not a competition between Brian and himself.

Mr Shivambu asked if he was at liberty to disclose the settlement he received from Eskom.

Mr Matona replied that it was never a secret; it was the equivalent of 12 months of his salary and certainly not a golden hand-shake. It was a handshake, but there was not gold in it.

Mr Shivambu recalled a time when he came across something in the public domain that indicated that the President had issued an apology to Mr Matona. He asked if this was the case.

Mr Matona replied that is not correct. That is what the newspaper wrote. That is not quite factual. He did not call to say sorry about what happened. It is difficult to disclose the contents of the meeting that subsequently happened with the President. It was about career options for him. Having served in this government for a long time, it was difficult to fight against his own government even though it was painful to be treated that way. He decided to stick to his allegiance to government.

Mr Shivambu asked if he does not think it would have been noble to fight against poor governance. As it stands now, Eskom has over R350 billion in guaranteed debt. If that guarantee were to be pulled out, it would collapse the entire fiscus. Seeing what has occurred now, did he not think that fighting was actually going to be a noble thing?

Mr Matona replied that for as long as he lives in this country, he will continue to be a public servant and work for the good of this country. There is always an opportunity that will present itself to fight against injustices.

Mr Gungubele (ANC) said when Eskom was degenerating, at what point did Mr Matona observe injustices if he did so?

Mr Matona replied that it was when he was a DG, and occasionally in that position he dealt with the executives of companies that were engaging in practices that one would not be proud in terms of responsibility and the extent to which they exercised due care of assets.

Mr Gungubele asked him to be specific about what made him think that way.

Mr Matona replied that it was a few isolated things, one day a big Sunday Times story came out about monies that had been spent lavishly on a Christmas party.

Mr Gungubele said that was a report from newspapers, but internally from a technical position as a DG, what did he observe?

Mr Matona replied that it was the irregular expenditure, over the years, and that number fluctuated. It was because of poor governance in the procurement of the companies. From the shareholder’s point of view, that was the one thing that was worrisome. When he moved to Eskom, the TNA procurement matter was very problematic.

Mr Gungubele asked what tough choices were put before him during his tenure as CEO.

Mr Matona could not understand the question and therefore did not answer.

Mr Gungubele asked if he was ever approved by the Minister to say that former Eskom finance director, Tsholofelo Molefe, was refusing to give business to the Gupta family.

Mr Matona replied no.

Mr Gungubele asked if he was aware of the approach by the Guptas to supply coal which threatened the nature of coal contracts at that time.

Mr Matona replied that he was aware of the contract, but not necessarily the nature of the contract and how it would impact other suppliers.

Mr Gungubele asked about his date of resignation in March.

Mr Matona replied that it was on 11 March 2015.

Mr Gungubele said that there is a record of the signing of contracts by the Guptas to supply coal to Eskom. Surely if this contract was concluded in March, the negotiations would have started prior to Mr Matona’s departure?

Mr Matona replied that the executive that was handling those negotiations was reporting to him and kept him in the loop on the matter. There were a range of issues that were coming up about prices, tariffs, and compliance. He said if those things cannot be fixed, the contract is null and void.

Witness: Ms Erica Johnson 

Ms Johnson took the oath.

Adv Vanara led the evidence collection.

Adv Vanara: You have made a statement and it has been distributed to members, it outlines some of the issues that will be discussed later. So can you identify yourself and the position you occupied at Eskom at the time you resigned. I know you have a lot of experience.

Ms Johnson: My position at the time was Group Executive for Enterprise Development; I was responsible for the corporate affairs of the company, matters of strategy and risk, communication, and reputation internal to the Group.

Adv Vanara: Zooming into communications, particularly the Breakfast shows, the Chief Information Officer at the time reported directly to you, is that correct?

Ms Johnson: Yes, and definitely the communications stakeholder management department.

Adv Vanara: When the Breakfast show was being implemented, can you share your knowledge about the R43 million contract that Mr Collin Matjila entered into with the owners of TNA Breakfast and how the board dealt with the report from SizweNtsalubaGobodo (SNG) on the matter.

Ms Johnson: In April 2014, Collin Matjila became the interim CEO of Eskom, he was moved from the board to the executive and he requested an Eskom sponsorship for The New Age. Initially he asked for one year – which at the time was R1.2 million per breakfast show – from the head of corporate affairs and head of legal to deal with the contract. I became involved around this time. I raised the rationale of the financial constraints, but we tried to accommodate this request and decided that if the new CEO backed this in trying to highlight the direction of the company and communicating its strategic challenges to the public, then they would support it. As matters went on, within that month of April, the request shifted from a one year to a three year contract. At the time the head of legal was involved because there was request to have the exit clause removed. At the time we were expecting the permanent CEO to come in October and we would have like to give the permanent CEO an opportunity to decide how he would like to manage strategic communications about the challenges facing Eskom instead of being bound to a three year contract. The three year contract needed two signatories and the Financial Director refused to sign the contact but the CEO signed it regardless. This surfaced after the half yearly audit in November 2014 as an irregular activity. The board auditing committee was where the matter was discussed, and it was then reported as irregular expenditure.

Adv Vanara: Let’s move to the procurement of IT systems, what was this about?

Ms Johnson: It was a contract for IT application and maintenance support, basically the IT service provider that maintains all IT systems functioning. The contract is renewed periodically. In 2011 when the new board tender committee was established, one of the things they are asked for was commodity sourcing strategy for all commodities in the company and one of those strategies was IT. That is when the IT strategy was reviewed. We had a new CIO so there was a new vision and a new way about managing the IT contracts. There were two changes – there was a clear view on internal controls for cyber management and managing the laptop peripherals by outside parties. As the contract progressed, it was approved by EXCO and the board as a strategy. It went out to tender in December 2013. What was concerning to me as we were about to go to adjudication were that elements of the contracts were being challenged – whether the clauses should include certain standards for the contractors to deliver. So the question was always raised around this IT application and maintenance of this contract.

Adv Vanara: The CIO who developed this strategy would have saved Eskom R1 billion, This strategy was subjected to numerous reviews by the board tender committee, yet all these reports came back to confirm and verify that indeed if properly implemented, it could save Eskom R1 billion.

Ms Johnson: Yes, that is correct. That element was audited at least twice (once just on its own, and second time on the CIO’s integrity and what he was putting on the table). In both cases it was confirmed that the nature in which the IT system was going to be changed would have saved the company a lot of money.

Adv Vanara: Was the contract of the service provider at that time coming to an end and the procurement was to replace that service provider, is it that correct?

Ms Johnson: Yes, that is correct.

Adv Vanara: Is it correct that during the procurement process, T-Systems was disqualified from the process?

Ms Johnson: Yes, that is correct. At the time we went to adjudication, they had not made the cut.

Adv Vanara: What happened then at the end of the contract?

Ms Johnson: At the end of the contract, which was December 2014, a number of events occurred leading up to that point. At the end of October, three bidders were chosen out of the short list to engage in the final negotiations, and T-Systems was not part of the short listing. That was end of October after the board tender committee approved the team to go on with negations. In November, Eskom had a huge incident where it lost the silo at the Majuba power station and the output of the power station leading to even more load shedding. In that time period, there were a lot concerns about the relevance of changing the IT system in the following year, as around that time the T-Systems contract was due to end. They decided to cancel the procurement process and extend the contract with T-Systems for a period of at least two years.

Adv Vanara: As for the load shedding, it appeared that there was an emergency that prompted it. In your view, was it enough reason not to proceed with the appointment of the new service provider?

Ms Johnson: There are parts of the key nature of the applications that are critical to daily operations, so I can understand the decision that was taken and the financial strain the company was under, but the question is when one would expect the load shedding to normalize versus renewing a long term contract. That was the decision. I can understand that the company was in distress. Load shedding was very stressful in trying to bring it to a halt, and the IT system added a bit of further distance to daily operations. However, the critical question was how long load shedding was expected to last.

Adv Vanara: Your statement says that pressure was exerted to suspend the CIO, who had come up with a strategy to save Eskom a R1 billion. When you left, he was eventually suspended and left the company. Can you comment on that?

Ms Johnson: In June 2014, I was requested by the interim CEO, Collin Matjila, to consider suspending the CIO around allegations. I reviewed the matter and looked at the precedent in the company and I said in terms of reputation, that this was not a sensible thing to do. I had asked to liaise for support and he assured me that he would. I had chosen not to suspend and I initiated the audit that the CEO had requested of me. I left end of October 2014, and I handed my close-out report with the audit report to the permanent CEO, Mr Matona. The reports outlined that all matters were satisfactorily dealt with. As far as I was concerned I thought the matter was completed. However, in November Eskom merged two departments – the IT technology and Engineering technology, and by the beginning of December apparently similar allegations arose and so the CIO was suspended at that point and he never came back to the company.

Adv Vanara: Thank you, Chair.

Ms Mazzone asked what caused the anxiety about the maintenance roll out, when plans were put in place properly to address the challenges relating to the Koeberg steam generator.
Ms Johnson replied that the way the Koeberg nuclear power was operated was that an equipment alignment is maintained with other nuclear operators globally. The key anxiety was to maintain the equipment alignment when other people had changed the pieces of alignment. In terms of the licensing, nuclear power stations maintain similar operating equipment alignments with other nuclear operators globally.

Ms Mazzone asked that when she reported to the board audit and the risk committee the implications of the delay as she had learned, did she think its actions were in line with the seriousness of the matter.

Ms Johnson replied that when this was raised in July 2014 with the board, certainly there was a faster movement to conclude, but prior to that, there was at least a year where the team could not conclude the procurement process.

Ms Mazzone said that within a month of the interim CEO taking office, he requested the TNA sponsorship for one year which amounted to R1.2 million for each breakfast event. Ms Johnson was involved in terms of the rationale for the contract. Could she unpack this?

Ms Johnson replied that R1.2 million is a lot of money for a corporate media event. This would have been a R14.4 million contract per year and it was a huge portion of the communications budget. The team was requested by the interim CEO and he indicated that was how he wanted to run the business about communications. We were trying to accommodate and walk with him on how the contract could be justified. She recalled saying that if Eskom could have a platform on a monthly basis where it communicated its challenges to the public that would be money well spent because it was difficult to explain all the challenges the company faced in trying to build full mega projects at the time. So that would be valuable, and that is how we tried to make sense out of the request.

Ms Mazzone said The New Age is generally accepted as being owned by the Gupta family. It is not considered to be a top quality news agency. What was the reason for TNA being awarded the contract against another media house that is qualified with a better reputation?

Ms Johnson replied that this was a request from the CEO; it was something they initiated as a good strategic choice in terms of driving the agenda. It was a direct request.

Ms Mazzone asked if any reason was given about why specifically the TNA.

Ms Johnson replied not that she was aware of. They were only requested to try to ensure that it is effective and justified.

Ms Mazzone referred to the first bullet point on the last page of her statement, which is indeed worrisome and concerning. There were many issues around the Kusile power station that remained unanswered while development was going on. Did she find that her concerns fell on deaf ears? Upon bringing these concerns forward, was action taken?

Ms Johnson responded this was particularly why she felt ineffective because she raised this issue in a quarterly report and no action was taken whatsoever about the financial risks that were involved and there were a number of engagements happening at the time. We were busy with Kusile since 2007 and at that point in 2014 we could not establish and conclude a long term coal contract.

Mr Swart said there were a lot of allegations involving the Gupta family around Eskom, and its links. When we look at the role of Mr Matjila in the evidence presented as well as the emails of the Gupta family – looking back to all the events that took place at Eskom, from the procurement process, to the appointment of the interim CEO, and everything else that occurred, can she connect the dots on how those events took place at Eskom?

Ms Johnson replied that at the time she would not have seen or known about the underlying issues and emails that are mentioned, but the tone of the company was changing and the way things would normally be driven was different. That could well be due to the fact that there was a new leader who felt the executive was not effective and preferred things to be done a certain way. The way things occurred with the TNA deal, the IT contract and the steam generator – this was not a process she understood anymore. So she decided to leave. “We can connect the dots now in 2017”.

Mr Swart referred to the TNA deal which was changed from one to three years, and the removal of the exit clause, surely this must have raised red flags? Clearly this was a shift and a question of governance?

Ms Johnson replied that the Finance Director refused to sign the contract, and it was discussed at the board audit and risk committee, but it was signed and it was implemented. The contract came up at the audit and it was reported as an irregularity that the CEO exceeded his mandate.

Mr Swart asked if any disciplinary action was instituted. It was raised as an audit query, the contract went through and the money was paid. This was in contravention of the PFMA.

Ms Johnson replied that that was correct.

Mr Swart said, as for the IT contract, is it possible that it could have led to savings of R1 billion? Since the old contract was then extended, was she aware if it caused substantial loss to Eskom?

Ms Johnson replied that she had already left Eskom at the time, but it was “banked” as part of the savings and it did not materialise so it is something that they still need to make up for. The financial outcome would have been post her departure.

Mr Swart noted that replacement of the boilers at the Koeberg power station still has not happened due to litigation. Surely as an engineer that is a concern for the people of Cape Town?

Ms Johnson replied that the steam generators were on a path to be replaced and they have managed the operations around the steam generator but it has been said that beyond 2025, they would have to shut down the power station. This information has been made available to the public.

Mr Rawula said his questions on TNA have been partly covered. Eskom engages on a sponsorship worth R1.2 million and Ms Johnson said that the company was not in a financial position to endorse that sponsorship. Secondly, she said in her statement that she was instructed to come up with a rationale to support the breakfast show. Basically she was put in a position to cook the books because of the pressure. There was no rationale but somehow that rationale needed to be established. The interim CEO, knowing that the financial position of the company was not sound, went further to instruct that the contract be extended to a three year period. What is her judgement of the integrity of the interim CEO and his leadership style?

Ms Johnson replied she was disturbed by it. In terms of leadership, he was a little distant. As for cooking the books, we wanted to have a chance to try and work with the new CEO and we were working with him to meet his needs and give him the benefit of the doubt. So the exit clause and the Finance Director refusing to sign the contract go to show that the team was not really supportive of his requests.

Mr Rawula asked Ms Johnson if she would consider the interim CEO captured by the Gupta family at the time. The refusal of the Financial Director to sign the R43 million contract – what was her view on this?

Ms Johnson replied that at the time we did not understand why, and “he certainly wanted that contract”. However, it was difficult to ascertain back then that he was captured because the term “captured” is a new thing.

Mr Rawula asked about the allegations against the CIO about the IT system.

Ms Johnson replied that the allegations were about taking the entire team to an overseas conference, and questioning a relationship with one of the previous consultants that provided IT support, and people challenging him on his attempt to modernise the IT system.

Mr Rawula asked if she would attribute the lack of long term contracts to the conflicts that existed about procurement and what were the preferred risks for the country, given the fact that there was no long term supplier of coal to Eskom.

Ms Johnson replied the preferred view was to break down the long term contract costs for Kusile. One of the units was declared commercial which means that it could only operate at a certain output and every day we were tracking the coal to generate power there – which was clearly inefficient. There were a number of discussions happening in parallel to try and look at the transformation agenda around the Kusile long term supply. That discussion was not concluded and it still has not been concluded and it needed to be concluded in order to reduce the costs of electricity.

Mr Rawula asked if that was a manifestation of the conflict within the procurement policy.

Ms Johnson replied it was not the case. One could procure if one wished. The conflict was always about determining the terms of reference for the contract.

Mr Gungubele asked when she was dealing with these issues, particularly the Koeberg power station, who was the CEO at the time?

Ms Johnson replied her observations would be around the time of the interim CEO, Mr Matjila. Actually, when she first became aware of the issues, Brian Dames was the interim CEO.

Mr Gungubele asked when Brian Dames was the CEO.

Ms Johnson replied Brian Dames left in March 2014; Mr Collin Matjila became the interim CEO in April 2014.

Mr Gungubele noted that she spoke about the possible implications if those generators are not replaced in time and you listed them nicely. Were any of those consequences happening or have they happened?

Ms Johnson replied that in 2014 that was the concern, today in 2017 towards 2018 she believes that the Koeberg steam generators are run differently which is why it has been able to run for that long – the ageing process has been managed. The other big event was that the new transmission line to Cape Town has been commissioned. So if you have an unexpected outage of the Koeberg unit outside, you will now have a stronger transmission network that can help with grid power.

Mr Gungebele asked in a broader context if the station has been fully replenished now.

Ms Johnson replied not that she is aware of.

Mr Gungubele asked how many years has it been since the procurement process.

Ms Johnson replied that they started the process in 2008, it was not stopped, but the technical work. We started the process but the issue is still there and it has not been replaced, and the alignment of the equipment needs to be considered.

Mr Gungubele asked if the need for this replacement started in 2008 and if the attempts to deal with it started then and continued up to now.

Ms Johnson replied that people track each other’s operational processes so they knew they would have to replace the steam generators to extend the life of the plant. The technical work had started in 2008 but the procurement process started in 2010, the one that she knows.

Mr Gungubele said if diesel intervention investigations have not occurred?

Ms Johnson replied no, they have not occurred yet.

Mr Gungubele said that she spoke about two divergent questions, can she share that with the committee.

Ms Johnson gave the example of finalising a 40 year coal contract to minimise operation costs and to ensure you operate the power system efficiently versus trying to achieve a different conversation - a procurement conversation – by raising huge operational risks in a transformation process. One needed to say: when do we decide the costs are too high?

Mr Gungebele asked who is now tracking this.

Ms Johnson replied we are tracking it.

Mr Gungebele asked who is tracking, which company?

Ms Johnson replied she does not know which companies, as she left three years ago. As the country, we are now tracking the coal.

Mr Gungebele asked about the relevance of the sponsorship of the R1.2 million events for Eskom. He asked how it is enhancing the interests or purpose of Eskom.

Ms Johnson replied that the CEO felt that this was the way in which one could engage and try to promote an understanding of the challenges Eskom was facing at the time.

Mr Gordhan referred to her statement about the IT procurement process. She outlined that the board committee had an expectation that the suppliers would be changed. How did you come to this conclusion?
Ms Johnson replied this came from the team as feedback when it presented to the board. The opportunity to enhance the supplier base was always welcomed.

Mr Gordhan referred to bullet point 2, where she said a number of audits were requested, what was the outcome of the audits – were there going to be savings on IT?

Ms Johnson replied, yes, one of the audits actually confirmed this. There was a 90% chance that it would provide those savings.

Mr Gordhan asked if the changes to the IT system would have resulted in the savings.

Ms Johnson replied, yes, for the maintenance and managing of the entire application system, not the hardware of the IT system.

Mr Gordhan asked why it was necessary to persecute the CIO. Clearly you found him not to be guilty of anything.

Ms Johnson replied she does not know why the CIO was persecuted because he was a good CIO; there was nothing he had done that made people want him gone. He was happy to manage the changes and supported it, and it was in line with his IT vision for the company.

Mr Gordhan said that she mentioned that her main despair during the time she was at Eskom was that the conversation was more frequently about procurement, and not about operational issues, power supply, and the other main issues at Eskom.

Ms Johnson agreed that that is correct.

Mr Gordhan asked her if the core business was relatively neglected.

Ms Johnson replied, yes, it is a multifaceted business, but you cannot not take the operational decisions.

Mr Gordhan said that she mentioned that the executives were scared to raise their concerns, so what do you think struck fear into them?

Ms Johnson replied that what struck fear into people was when the head of primary energy was suspended. He was a very hardworking person and there was a dispute around a particular conversation – that was a shock. Then the challenge rose to suspend the CIO, there was another incident that concerned me which I became aware of in my last month at Eskom – some of the general managers were not willing to talk or provide information, the silence in the company was very concerning. There were very definite methods in which people were asked to keep quiet.

Mr Gordhan asked if that climate still existed.

Ms Johnson replied, definitely, from what she hears from people who speak.

Mr Gordhan said that all of this has implications on operational costs. He asked how do we compute all of those things as a cost to electricity in the country for ordinary citizens and the cost of doing business in South Africa.

Ms Johnson replied that the big expenditure is the coal costs, certainly labour costs, asset creation – but the smaller contracts contribute significant savings and we need to drive efficiency in other places first.

The Chairperson thanked Ms Johnson for her willingness as well as her cooperation to interact with the committee. Her evidence provided the committee with an understanding of what occurred at Eskom at the time.

The Chairperson referred to the former Eskom members in different capacities that are complaining that they are not being called to speak for themselves, and stated that everyone who has been mentioned will be given an opportunity to come and account and speak for themselves at the inquiry.
The meeting was adjourned.