Eskom Inquiry: Zethembe Khoza (continued)
06 December 2017
Chairperson: Ms D Rantho (ANC) and Ms L Mngungi-Gcabashe (ANC)
Before the Acting Eskom board chairperson, Mr Zethembe Khoza, gave evidence, the Committee said that Deputy Minister Ben Martins should be issued a subpoena after he wrote declining to appear before the Eskom Inquiry despite initially requesting to appear before the Committee. He provided a written statement instead.
Members noted that this is a constitutionally mandated Committee and one did not have the privilege to choose whether or not to appear before it. The Deputy Minister is constitutionally obligated to appear before the Committee and the Deputy Minister should know and respect this. They resolved that the Committee should issue a subpoena to the Deputy Minister for him to appear before the Committee in early 2018.
In response to emails from two lawyers representing Mr Ajay Gupta and the Gupta family, Members indicated that the Committee was providing the Gupta family an opportunity to present their case and answer the questions the Committee puts to them. They would be treated as all other witnesses before the Committee.
Confusion erupted in the meeting at the presence of Hawks members and this resulted in the temporary adjournment of the meeting. It was later clarified that the Hawks members had been attending and assisting the Standing Committee on Public Accounts (SCOPA) hearing and promised to assist this Committee as well.
In the cross-examination of Mr Zethembe Khoza, Members wanted more information on the R30 million pension payment to Mr Brian Molefe and whether it was a retirement that was then misconstrued as a resignation; whether any senior Eskom manager has been found to be collaborating with Gupta-related companies; had McKinsey made contact with Eskom to work out a way to pay back the "tainted" R1 billion. There were also questions about the R586 million pre-payment to Tegeta. Some Members suggested that Eskom was deeply involved in the Tegeta purchase of Optimum Coal Holdings right from the word go. Mr Koko had refused to allow the sale to go through unless the whole of Optimum Holdings was sold and not only the Optimum mine so Eskom played an intrinsic role. Mr Khoza was asked about the instability in Eskom leadership with three boards and six acting CEOs since 2014; who had approached Mr Molefe and Mr Anoj Singh to move from Transnet to Eskom; about the pattern of corruption linked to Gupta companies never being investigated or subjected to investigations that never reach a conclusion. Questions were asked about R43 million The New Age media contract that was irregularly authorised and the wastefulness of so many executives being suspended on full pay that cumulatively total 500 days.
The Committee will resume the Inquiry on 23 January 2018.
Letter from Deputy Minister
Ms D Rantho: Yesterday, the evidence leader questioned the Eskom Board led by Mr Zethembe Khoza. Today Members will be interacting with the Board. This week was set aside to meet with the Eskom Board and it was unfortunate that the current suspended Eskom Chief Financial Officer did not provide the Committee with the necessary documents and he was thus unable to have evidence led at the Inquiry. The Committee was also supposed to meet Matshela Koko and the Deputy Minister but that is unfortunately not going to happen. The Committee has given the two individuals time to prepare. Mr Koko said that he was not yet prepared for the Committee but he was going to come and present his side of the story. The Committee does not want to appear as unfair to witnesses and putting pressure on them. The Committee requested Mr Koko to be adequately prepared so as to be ready when called again.
The Deputy Minister was live on the media accusing the Committee of not giving him a chance to come and put his side of the story on the allegations made in the Committee by Mr Suzanne Daniels. After we heard that, the Committee wrote to the Deputy Minister saying we are going to give him a chance. The Deputy Minister then wrote back to the Committee saying he wanted to be given time to prepare and collect all relevant information. We were waiting and then to our surprise we received emails from the Ministry Parliamentary Liaison Officer (PLO) saying that the Deputy Minister did not receive anything. However, when we looked on our side, the emails had gone through and we do not know what happened and did not want to assume that there was foul play.
The Committee has received a letter from the Deputy Minister. [Ms Rantho read out the letter to the Committee]. Members can comment on the letter.
Dr Z Luyenge (ANC): It is so unfortunate that the Committee is finding itself in this quagmire caused unfortunately by the Deputy Minister. It is unfair on the part of the Deputy Minister to behave in this manner as the Deputy Minister is also a Member of Parliament and he understands fully the role Members are playing. It was difficult to understand where he gets the authority to underestimate the Members. The Deputy Minister clearly undermines Parliament of which he is part. We are governed by laws as to how we should execute our duties and there are sanctions and other methods that can be used to force the Deputy Minister to respect Parliament. I think we will have to exhaust another method and subpoena the Deputy Minister and then if he fails to respond, we will have to do something else. I do not think we must just end there and say there is nothing we can do as the Deputy Minister is unable to come - when he is the very first person who cried foul wanting to put his side of the story. There was a possibility that the Deputy Minister was not even going to be called but it is he who attacked this process unnecessarily. The Committee was responding to a call that was made by the Deputy Minister.
Ms N Mazzone (DA): It is clear that the Deputy Minister has made a very unfortunate blunder here and he should seek other legal advice and not from the state attorney who gave very poor advice to the Deputy Minister. This is a constitutionally mandated Committee and one does not have the privilege to choose whether to appear before the Committee or not. The Deputy Minister is constitutionally obligated to appear before the Committee and the Deputy Minister should know and respect this. I think, Chairperson, the time for niceties is over and we have exhausted all the niceties we could with the Deputy Minister. The Deputy Minister is the one who jumped up and down screaming foul and saying that he must appear before the Committee. Dr Luyenge is absolutely right that the Deputy Minister was not on the radar for questioning in the Committee but he insisted on coming here. The Committee should through Adv Vanara issue a subpoena to the Deputy Minister so that the Deputy Minister can learn the hard way what happens when you undermine a constitutionally mandated Committee of Parliament.
Mr S Swart (ACDP): It must be made clear that it is this Committee that will decide what questions to be asked and whether someone will attest before the Committee. It is not for the Executive to decide whether they are going to account to Parliament or not and in what manner. It is totally unacceptable for the Deputy Minister to be the one deciding on the manner in which to account to Parliament. He is the one who jumped up and down when we had evidence before us as to his involvement in issues that were being flagged. I am fully in support that we invite the Deputy Minister to appear before the Committee but he has failed to do so. Then we should make use of the subpoena provisions to compel him to appear before the Committee to answer his statements and for questioning about the allegations against him.
Mr N Singh (IFP): The actions of the Deputy Minister are really disappointing as I had the highest respect and regard for him since we have been colleagues here in Parliament. The Deputy Minister needs to know that we are not receiving written submissions only but also want oral evidence in order to give people opportunities to further explain the submitted written submission. I fully support that the Deputy Minister should be subpoenaed and reminded of the roles and obligations of this Committee. The Deputy Minister will need to appear before this Committee in the first sitting in January 2018. This is to give the Deputy Minister an opportunity to explain himself and how he is involved in this matter.
Mr M Dlamini (EFF): The Deputy Minister is the one who wrote the letter to the Committee challenging us that we are not giving him an opportunity to appear before the Committee. The Deputy Minister is not afraid of speaking as he has been calling media briefings and therefore he must come before this Committee. The Deputy Minister was behaving like a “drama queen” calling media briefings. The Committee must subpoena that “drama queen” to come before the Committee and answer questions. Let us subpoena the Deputy Minister very quickly and ask him questions as this is how we deal with thugs and liars.
Ms Rantho: It is clear that there is a motion in this House that say the Deputy Minister must be subpoenaed. The Committee agreed that the Deputy Minister should be subpoenaed and Adv Vanara should deal with the issue legally and do whatever needs to be done.
Emails from the Guptas
Ms Rantho: The Committee has also received two letters from different lawyers on behalf of the Guptas about the testimony by Suzanne Daniels. [Ms Rantho read through the two Gupta emails].
Dr Luyenge: Let me indicate that what is taking place now is actually the gist of the matter. In May we had the Minister at the Townhouse Hotel, where presentations were made about the reappointment of Mr Molefe. In that meeting it was made clear that there is a perception in this country about this Gupta family. That is why in that meeting I requested the Committee afford an opportunity to this family to make their case. I am failing to understand now, when we want to do justice, and then people decide to respond negatively. I want to call upon the Committee and make it clear that we never undermined the importance of calling this family to appear before the Committee. Ajay Gupta will definitely come before the Committee and we will talk to him. We want him to justify or prove wrong whatever has been said here. The Committee was providing the Gupta family an opportunity to present their case fair and square. We want them to be here but we cannot be naive and weak to call upon Ajay Gupta on his own terms, no matter how many billions the family have. Even if they can buy us all including this Parliament, they cannot buy the law. We cannot operate in a manner that is dictated by any individual in the world. We will do our work according to our plan as guided by the law.
Mr Swart: Firstly, I am not sure who is acting for Ajay Gupta as we have a letter from 15 November from one lawyer firm and the other letter from another firm of lawyers on 30 November 2017. The presumption is that the latter letter is the one who is representing Mr Ajay Gupta. The first letter contains important information especially paragraph 4 where it was already highlighted that those implicated will be given an opportunity to clear their name by the Committee. The second letter, which is the most recent one, indicates that the Committee did not afford the Gupta family enough time to clear their name. This is untrue as the Committee clearly took the decision to invite the three Gupta brothers to come to Parliament to answer to the allegations against them. It is not correct that there was no invitation that was forthcoming to the Gupta family to appear before Parliament. We clearly stated that we will invite those implicated to come to Parliament. It is not for Mr Ajay Gupta and his lawyer to decide on what basis they will give evidence to the Committee. Why should they be treated differently to any other witness including the Acting Eskom Chairman? The letters should be referred to our legal department to respond that the Committee will provide the three Gupta brothers with an opportunity to appear before Parliament at an opportune time to respond to what is alleged in these letters and we will ask them questions. This is a parliamentary oversight committee and it is not for the witnesses to decide on what questions will be asked.
Mr Dlamini: We must not take these Guptas very seriously as these are the very same people that have denied the emails that are all over. If you look at both of these letters, there is no manual signature and chances are that they might even deny having written these letters. We have asked them to come to Parliament physically so that we can ask them questions as they are known for denying the things that they are doing. The Gupta family does not deserve any special treatment at all and the Committee should proceed in the normal schedule and call all the witnesses in the manner it has been doing in this Inquiry. I am interested in that YouTube video where Mr Ajay Gupta is dancing at that festival. He steals our money and then he goes on to dance. We want to see that video where he is dancing.
Mr N Singh: It is very rich of the lawyers of Mr Ajay Gupta and the Gupta family to suggest that “they have been wrongly implicated in false wrongdoing directly or indirectly either individually or through a family association”. We have not reached any conclusions on the matter and it would be unfair for the Committee to reach any conclusion as yet but the writing is on the wall. Just to clarify for Mr Swart, the first letter is from Mr Ajay Gupta and the second letter is from the Gupta family and therefore it is two different lawyers with similar content. I agree that we have already agreed as a Committee that the Gupta family will be invited but I want to make this plea that we must decide today who is to be invited to appear before the Committee to respond to any allegations against such person. I believe that the President should also appear before this Committee and the reason why I repeat this call is because the testimony given by Mr Khoza shows that the Presidency is directly involved in the issue being dealt with. The Presidency will simply write a letter denying those allegations so I think in fairness to the President, we should invite the President to appear before the Committee.
Ms Mazzone: I do not have time to go through these letters coming to the Committee as they are just trying to halt the work of the Committee and try to negate the work that this Committee is doing. The sheer arrogance that the Gupta family clearly has with regard to the kind of power they perceive to wield in this country is evident by the fact that they will dare to write this kind of letter to this constitutionally mandated Committee. We are delighted to hear that Mr Gupta is available from 16 January 2018, because, so am I. The Committee should write him a notice to appear before the Committee. Mr Ajay Gupta was not more powerful than this government and certainly not more powerful than this Parliament. We have to stop this illusion that these people are able to dictate to us what we do, as it is simply not the case. Let us be frank about this, why is this Inquiry taking place? This Inquiry is taking place because there is a perceived and real thing call state capture and the family that is at the heart of this is the family called the Gupta family. Every piece of evidence that has come before this Committee, and every document that we have, points to this Gupta family. Enough with the niceties now, and I agree that we want the Gupta brothers, Eric Wood, Salim Essa, Duduzane Zuma, Dudu Myeni and the President to all appear before the Committee. We must make it clear that we are in charge of this Committee. We are the first line of defence for 54 million South Africans who are waiting for us to ensure that this country is not captured any further than it already has been. We must stop messing around now and we must stop flexing our muscles.
Mr M Gungubele (ANC): I propose that we deal with the Guptas and other suggestions should be tabled differently. The most critical thing to me is the success of this whole process and not any other drama. The other challenge we have is that we sometimes discuss sensitive matters. The letters from the Gupta family can be viewed as an attempt to disrupt the work of the Committee. We must not be surprised when we get a number of letters from all the people implicated here. We will end up reading letters the whole day from some people sitting somewhere and drinking coffee. I propose that the legal people should just respond to these letters without reading these kinds of letters in the Committee. I can tell you that there is an attempt to disrupt us with these letters and people are monitoring how we react to these letters. Let us deal with these disruptions in a meaningful manner and the responses should be forwarded in writing. We have spent so much time now dealing with the tantrums of the Guptas.
Ms Rantho: We will need as a Committee to find a way of dealing with these two letters as they are not legally signed and Parliament is a legally established institution. I have lost my focus now as I am told that there are Hawks inside the meeting who want all my details so I am already disturbed and I am not sure if I will be able to continue with the meeting. The Hawks know everyone’s details including addresses and they need my details. I do not know what kind of Hawks come to the Committee during the meeting.
Mr Swart: We want to know now in front of the camera about the kind of intimidation brought against you Chairperson. What are the Hawks doing here? What information do they want from you? Your family has already been threatened and we find this outrageous. We should call the Minister to explain what they are doing here. This is another act of intimidation and you have already indicated to everyone, Chairperson, that you are not focused because of the presence of the Hawks at the meeting. This is Parliament and it is time for us to stamp our authority and say this is unacceptable.
Mr Gungubele: We need a 10 to 15 minute suspension of the session so as to deal with the matter raised by the Chairperson as this is not a matter that you can just recklessly respond to. We must know exactly what the Chairperson is referring to so that we do not end up responding to everything.
Mr Dlamini: This is a serious issue and you have already indicated Chairperson that you are losing focus. People are dying every day in this country due to issues linked to politics and business. Mr Gungubele must not tell us not to respond recklessly and he must speak for himself as he is not our spokesperson. So, this is serious and it must be attended to. If there are Hawks here we must be able to deal with that immediately.
Mr N Singh: We are far from being reckless because if our Chairperson is being intimidated, then we are all intimidated as “an injury to one is an injury to all”. I think we need to get to the bottom of this and there is no harm in requesting everybody here to introduce themselves so that we know everyone who is here.
Dr Luyenge: We made it clear that we will not allow outside elements to disrupt this Inquiry and now we are beginning to disrupt our own programme. Who else do you think will be intimidated other than the Chairperson to disrupt this process? Let us not behave like we do not expect conduct of this nature. It will be appropriate to adjourn for 10 minutes to deal with the matter arising. There are also other methods that have been used to disrupt this process as some Members are referred to as “Zuptas”.
Members' question to Mr Zethembe Khoza
Ms Mngungi-Gcabashe: I am going to continue with the session of the Committee until we adjourn around 1pm or 2pm. We need to explain to our guests here that the members of the Hawks that entered our meeting meant no harm or to disrupt the Committee. It was just unfortunate that the message was not communicated to the Committee before the start of the meeting because the Hawks arrived while we were working. The members of the Hawks are working with the Standing Committee on Public Accounts (SCOPA) and they are assisting in that Committee and promised to assist this Committee as well. We want to apologise in the manner in which the matter was conveyed to the Chairperson as it was during the meeting. We now want to put the matter behind us.
Mr Singh: We need to clear about the letters that were not signed by the legal people as my knowledge is that emails and text messages do not have to be signed.
Ms Mngungi-Gcabashe: The decision was that the letters must be dealt with administratively including the support of the legal desk. Each Member will be given 15 minutes for cross-examination including responses.
Dr Luyenge: How long have you been at Eskom as a Board member?
Mr Khoza: Since 11 December 2014.
Dr Luyenge: Do you understand clearly the role of the Board as it relates to the operations at Eskom?
Mr Khoza: Yes, I do.
Dr Luyenge: Can you indicate the role of the Board as it relates to the management and operations at Eskom?
Mr Khoza: The Board provides strategic direction to the company and the implementation arms are the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO). There are board subcommittees and they deal with different matters and the subcommittees deal with whatever issues arise from the Executive Committee (EXCO).
Dr Luyenge: What have you done as a Board member about corrupt practices in the Eskom supply chain unit?
Mr Khoza: Whenever we identify or hear of any corrupt practices via various sources like whistleblowers and some people submit issues via email. There are issues that get investigated internally in the audit environment and there are proper disciplinary measures taken if any investigated matters are confirmed to be true. Corrective measures are put in place whenever a loophole has been identified. There is a legal firm to investigate matters in the media and provide a report and we take corrective action based on the recommendations of the report.
Dr Luyenge: Can you agree with the notion that the Gupta-related companies at Eskom are a thorn in the flesh?
Mr Khoza: As it is now, it is correct that most of the investigations are on Gupta-related companies.
Dr Luyenge: Is there any senior manager at Eskom who has been found to be in collaboration with the Gupta-related companies and other companies that might be operating illegally?
Mr Khoza: Yes, definitely. As it is now there is an investigation that has identified senior officials including the CFO, Mr Anoj Singh. It also includes other people in the commercial chain and those people at the moment are suspended. There are five people that have been put on suspension on the basis of investigation findings.
Dr Luyenge: Has Eskom lost money due to contracts that are not appropriate or do not exist? If that is the case, how much Eskom has lost as Eskom represents the poor citizens of this country?
Mr Khoza: The findings do not specifically identify the amount lost at the company but it does indicate a quantum amount that has been involved in suspicious contracts and this is being investigated.
Dr Luyenge: Did you ever take a decision to approve or reconsider any application from Mr Brian Molefe in order for him to leave?
Mr Khoza: I am not with you on the question.
Dr Luyenge: Did you ever consider any application from Mr Brian Molefe that would allow him to leave in any other manner?
Mr Khoza: Yes, I think Molefe submitted a retirement letter to Human Resource (HR) and the Board Chairperson.
Dr Luyenge: Did Mr Molefe resign or retire early? Is that what you approved as a Board?
Mr Khoza: What we know is that he submitted a retirement letter even though whatever he said in the media sounded like a resignation. Also, in our meetings around November 2016, Dr Ngubane addressed us as if Mr Molefe resigned.
Dr Luyenge: Are you aware of the R30 million surrounding the departure of Mr Molefe from Eskom?
Mr Khoza: Yes, I am aware of it.
Dr Luyenge: Is it justifiable?
Mr Khoza: No.
Dr Luyenge: What is the stance that you took on the matter? What is that you think Mr Molefe wanted to achieve when you employed him as a permanent employee when you knew for a fact that he was not supposed to be employed in that manner?
Mr Khoza: I think there was a concern from Mr Molefe that he could not accumulate the pension because of the five year contract that was taking place in the previous jobs. Initially, he was given a permanent job in which he assumed it had no limits in terms of the five year span. From then there was a discussion on finding mechanisms to deal with the matter.
Dr Luyenge: Lastly, at Eskom there are over 40 construction companies that are doing work and in those construction companies there is no indication as to whether any of them benefited in the manner that the Tegeta company did in accessing a prepayment of plus minus R600 million. Is that so?
Mr Khoza: No, that is not correct. The prepayment has been done in the previous era. It was not the first time that we prepaid.
Dr Luyenge: Are those companies locally based.
Mr Khoza: They are locally based.
Dr Luyenge: Let me stop there Chairperson in the interest of time.
Ms Mazzone: Mr Khoza, before you started at Eskom you were at Telkom, is that correct?
Mr Khoza: Yes, that is correct.
Ms Mazzone: Tell me, when you joined Eskom, did you submit a CV before you were employed?
Mr Khoza: Yes, I did submit a CV.
Ms Mazzone: Who employed you at Eskom?
Mr Khoza: The Minister.
Ms Mazonne: So Minister Brown or Minister Gigaba?
Mr Khoza: Minister Brown.
Ms Mazzone: At Telkom, when you worked there, did you work with Mr Mulder
Mr Khoza: Yes, I did.
Ms Mazzone: Were you and Mr Mulder business partners?
Mr Khoza: No, we were not business partners.
Ms Mazzone: Do you know of Mark Pamensky of Blue Label?
Mr Khoza: Yes, I do.
Ms Mazzone: Did you ever provide him an airtime distribution contract when you worked at Telkom?
Mr Khoza: Yes, he had an airtime contract.
Ms Mazzone: Did you know of Salim Essa before you joined Eskom?
Mr Khoza: No.
Ms Mazzone: So you have never met Mr Salim Essa?
Mr Khoza: Before, no.
Ms Mazzone: When you arrived at Eskom, were you surprised to find Viroshini Naidoo, Mark Pamensky and Mr Khumalo on the Board; because you know they come from Blue Label, Vodacom and are all connected? Were you surprised to find everyone there?
Mr Khoza: Not really.
Ms Mazzone: Not really? Like just the game moves together?
Mr Khoza: Because they were also my colleagues at the time.
Ms Mazzone: Ok. Did you know these Board members like Mr Viroshini Naidoo and Mr Khumalo before?
Mr Khoza: I did not know Mr Khumalo.
Ms Mazzone: Once you joined Eskom, were you ever in the meeting with the Board that was chaired by Mr Salim Essa? Were you addressed by him?
Mr Khoza: No.
Ms Mazzone: So Mr Salim Essa has never addressed any meetings of Board members be it formally or informally?
Mr Khoza: No.
Ms Mazzone: Let us talk about the Dentons Report, Eskom famously refuses to give us a copy of the original Dentons Report. So, could you tell us today as Acting Chairperson what pieces of the Dentons Report suggestions you have implemented so far?
Mr Khoza: All the elements of the actions that were expected to be done within the Report have been implemented by the management.
Ms Mazzone: Can you give us three examples of actions that have been implemented?
Mr Khoza: There were actions that were supposed to be taken within the coal, because at the time, I think the coal contracts were not coming through the Board Tender Committee (BTC) because of the arrangement made on the contract signed in 2008 and approved by the BTC. There were also issues in terms of the Build Programme that needed to be expedited and this was done. We managed to put an action plan in place so as to be able to control that. The third one was to address liquidity. We put in a programme to save costs and to deal with issues related to liquidity.
Ms Mazzone: Clearly, from the three examples that you have given me the Dentons Report had identified serious problems within Eskom and obviously certain people have to take responsibility for that. Can you tell if any disciplinary actions have been taken against anyone in accordance to the Dentons Report?
Mr Khoza: Not specifically to the Dentons Report, but the management did take disciplinary action against certain officials because of the failure to adhere to procedural actions.
Ms Mazzone: Can you name two individuals that actions were taken against?
Mr Khoza: I cannot specifically indicate because it was happening within management and there was nothing happening at the executive level that could have been brought to our attention.
Ms Mazzone: Let us talk about this Board that had been appointed at Eskom. There was a very new Board at Eskom and people were dropping like flies, there are massive controversies, and the Gupta Leak emails come out. Do you feel that your Board was appointed correctly or was it appointed for convenience?
Mr Khoza: I cannot express my feelings, but when the Gupta-leaked emails came out some people chose to resign.
Ms Mazzone: Do you not think that perhaps there should have been disciplinary action taken or at least investigations against those who were linked in the Gupta Leak emails.
Mr Khoza: Yes, we do.
Ms Mazzone: You do?
Mr Khoza: Yes.
Ms Mazzone: So, you agree with that statement?
Mr Khoza: Yes.
Ms Mazzone: I am glad we are finding each other on this. We know that Eskom lied to Minster Brown as she has produced evidence that the Board lied to her about what was happening with Trillian Management Consulting, and then in her turn lied to me in her answer to my parliamentary question about this. Do you think that the truth about Trillian would have ever come out had I not asked those specific questions that forced the circle of lies?
Mr Khoza: The issue was going to come out because it was already raised by the external auditors during their audit when they picked it up that the payment was made outside of a contract.
Ms Mazzone: How did the Board justify lying to Minster Brown?
Mr Khoza: At the time the information received was collated from the financial department and it was passed through to the spokesperson of the company as such.
Ms Mazzone: So, when you say the financial department, do you mean Mr Anoj Singh?
Mr Khoza: Yes, he is the one who signed the letter.
Ms Mazzone: Can you tell me of the meetings that you’ve had since your appointment as acting Board Chairman, was it with any of the Zumas, Gupta brothers or Salim Essa?
Mr Khoza: No, no meetings.
Ms Mazzone: So, there is no telephone conversation with them and you have never received any instructions?
Mr Khoza: That is correct.
Ms Mazzone: Let us talk about Mr Molefe’s pension; we are still trying to establish whether it was a retirement that was then misconstrued as a resignation. It is clear that someone is lying to someone here and I think we need to give South Africans a straight answer. I want you Mr Khoza to tell us who is lying. Who lied? Did the Eskom Board lie to South Africans in saying he retired when in fact he resigned?
Mr Khoza: What he submitted as a document was a retirement letter and that is what we received as a Board.
Ms Mazzone: So you are 100% sure about this? You can furnish us with a retirement letter?
Mr Khoza: Yes, definitely.
Ms Mazzone: Then why was the Minister furnished with the information that Mr Molefe had resigned?
Mr Khoza: I think the Minister made a statement after she had spoken to Mr Molefe at her house.
Ms Mazzone: So Mr Molefe went to the Minister’s house and they had a discussion and the Minister failed to realise that he had retired and she assumed that he had resigned?
Mr Khoza: I think they might have a different opinion because I was not there. But the perception that the Minister had at the time was that he had resigned, hence she issued the statement.
Ms Mazzone: Now, let us talk about Mr Dladla and how he instructed the Chief Executive to take action against the members who had been implicated in all sorts of stories. Can you elaborate on Mr Dladla’s involvement in the suspension of Eskom executives?
Mr Khoza: The Eskom executives were suspended based on the report that was coming from an investigation company. The Report emanated from a whistleblower which identified the three executives implicated. Those executives were suspended on the basis of that particular investigation.
Ms Mazzone: Tell me, about the investigation on the destruction of documents, what did that investigation show you?
Mr Khoza: The investigation indicated there were some administrative issues that happened in the Company Secretary office and there were issues that needed to be answered in the HR office.
Ms Mazzone: So it found that there was cause for being concerned about the destruction of documents.
Mr Khoza: Even though the report did indicate there was no destruction of documents, the problem might be about the lack of proper recording of the information.
Ms Mazzone: As the Acting Chairperson of the Board, you do realise that gross incompetence in our country is not a defence and certainly not in a company size like Eskom that can hold our country’s economy to ransom. Would you agree with me that there is clear indication that there is gross incompetence at Eskom when it comes to financial management and certainly in HR management, given the Molefe scandal, Trillian scandal and scandal that is developing with Tegeta Exploration and Resources?
Mr Khoza: Overall, I can say that Eskom does have good and loyal employees that do their jobs on a daily basis. However, I cannot deny that there might be individuals that are also doing the wrong things and when we pick these up we do take corrective action.
Ms Mazzone: You see, Mr Khoza, I agree with you, Eskom has fantastic employees but they are managed badly. Would you agree with me that the Eskom management has let us down? What are the actions that are currently being taken against members of the Executive Management?
Mr Khoza: If you recall we have a CFO, Mr Koko, Edwin Mabelane, Krish Govender, Abram Masango who was Group Executive, all on suspension.
Ms Mazzone: Are you providing any information to the law enforcement agencies about the conduct of these individuals?
Mr Khoza: Yes, definitely, the matter is handed to the police when there is a criminal element.
Ms Mazzone: Now, Mr Khoza, as South Africans we look at Eskom and we cannot help but notice that there is a very intrinsic web that is being spun and it is undeniable that there are many companies owned by the Gupta family, many companies owned by Duduzane Zuma and many companies owned by Salim Essa that have been given tenders and awarded coal projects. As South Africans, do we have a right to be concerned that perhaps certain favours have been done for certain families by our power utility?
Mr Khoza: Yes, there can be reason for concern even though when they come for tender processes the proper processes get followed for everyone and they are awarded accordingly. It is a concern if that comes from the same family.
Ms Mazzone: Mr Khoza, let us finish it off like this, you say that there is proper governance in awarding of tenders, but we have proof that the Public Finance Management Act (PFMA) was violated in regard to the Tegeta prepayment. Now, what actions are you taking against these infringements of law?
Mr Khoza: Whenever we pick up infringements we do take corrective action against the relevant people.
Ms Mazzone: Chair, that is not an answer; we need to know what action is taking place but you not going to have time to answer that. McKinsey has offered to pay R1 billion back and in this very chamber the gentleman from McKinsey said “he did not want tainted money”. Has McKinsey in any way made contact with Eskom in working out a way to pay back the money they owe us?
Mr Khoza: No, they have not made any contact with us.
Ms Mazzone: So, you had zero contact with McKinsey?
Mr Khoza: The CEO did engage them on their letter and they said they will pay back the money when they get the court order.
Ms Mazzone: When they get a court order they will pay the money back?
Mr Khoza: Yes.
Ms Mazzone: And this was even though the gentlemen from McKinsey promised in this House that they will pay back the money regardless of the court order.
Mr Khoza: That is why sometimes I say it is easier said than done.
Ms Mazzone: Right, thank you, Chairperson.
Mr N Singh: Mr Khoza, I am trying to understand and maybe you can help here, how the Board functioned firstly as board members with the Chairperson there and the Board in relation to the Minister and then in relation to the Presidency. From your submission, there was a lot of objection particularly when it came to the suspension of the four executive members. You were unhappy [Mr Singh then read the submission that was made by Mr Khoza]. Mr Tsotsi when he testified before the Committee said he got a call from the President that he try to get hold of the Minister and Director-General (DG) to try and cancel a particular meeting. Can you tell us what kind of a relationship the Chairman and board members had? Was it one where there was collective responsibility? Did you raise your objections and have your objections noted about any actions that you wanted to take? Did the Minister interfere in any way? Is it the President or Presidency that intervened in certain matters?
Mr Khoza: I think the relationship between the board members is always of an independent nature where each and every board member is supposed to raise his own opinion based on his own strength and experience which then creates a robust debate amongst the board members. The board members are allowed to question each other on issues that are being raised if they feel that they might need more clarity. The relationship between the Board and the Minister is controlled via the MOI and the Board Charter and also the Performance Compact. For clarity of certain issues, the Board will always use the Chairperson to clarify with the Minister if the issue needs shareholder guidance. However, the Board has no direct relationship with the Presidency.
Mr Singh: But in your document here you say that board members raised a number of objections to the request that was made by the Presidency. How did Chairperson Tsotsi put it to the Board about the request that was being made? Did he say the President or the Presidency asked him to do this? What did he say?
Mr Khoza: The Chairperson indicated that he had a meeting where the President was present, as he indicated in this House, that he had a meeting with Dudu and he took up as if it was an instruction from Presidency which brought concern to the board members. Hence members tried to clarify the issue and also tried to find a way to deal with the shareholder representative, which was Minister Brown, on whether there was any instruction that could come as this particular sort and what the concerns are.
Mr Singh: Did you not, Mr Khoza, think there was something really wrong here if that kind of instruction was to come from the President? Did you have your objection noted formally in the minutes of that meeting?
Mr Khoza: The objection is noted and the concern of the board members is alluded to in the minutes of that particular day.
Mr Singh: So if we asked for the minutes of the meeting we will know exactly which members of the Board objected? So despite your objection, the then Chairperson went ahead on the direction of the President?
Mr Khoza: That is correct.
Mr Singh: With regard to the TNA media contract, the contract was for the amount of R43 odd million. We note that Mr Matjila was said to have authorised an amount of R3.6 million without consulting the EXCO. How do you reconcile these two amounts? Was the Board not concerned that here is a contract for R43 million and how can we enter into this kind of contract? Was there value for money in this contract?
Mr Khoza: When it was brought to our attention it was motivated that the TNA contract was still required as it was giving the company exposure and Eskom individuals were standing up at the breakfasts and able to address the people, which was giving them enough exposure at the time. So the stakeholder management was comfortable in saying they need the contract to continue. The issue was that it did not get consent from EXCO as per the delegation of authority, which the Board then condoned.
Mr Singh: Yet Mr Matjila left in 2015 and no action that was taken against him for the R3.6 million. Why was this so?
Mr Khoza: He was gone before 11 December 2014, when we arrived.
Mr Singh: But still action could have been taken against him in other forms not internally but taking the route of criminal charges. Was any action or move taken against Mr Matjila for misusing R3.6 million of taxpayers’ money?
Mr Khoza: Since management at the time said they needed the contract, it was seen as an oversight in terms of the delegation of authority, which was procedural misconduct rather than a crime.
Mr Singh: Mr Khoza, you were there at the time of the R586 million prepayment to Tegeta, is that correct?
Mr Khoza: Yes.
Mr Singh: Why was this payment with the proposed owners and not the actual owners, Glencore, at the time?
Mr Khoza: At the time, the suppliers supplying to that particular mine was Umsimbithi and Tegeta that they were willing to extend the contract. In terms of the details of who owned the mines, it was not discussed at the time in the meeting as it was only dealing with the suppliers that were on the database.
Mr Singh: Could you not anticipate the crisis that was looming but you waited until the crisis took place and then you were forced to pay this amount.
Mr Khoza: The crisis was there three months before in terms of the coal levels in those particular areas. The strike was taking place at the Umsimbithi mine and it was becoming critical that we had to buy the coal – that was the motivation in the supply chain.
Mr Singh: Is there any move to lay off people currently?
Mr Khoza: Not at this stage.
Mr Singh: How would you rate governance at Eskom in the last three years from 1-10 with 10 being the best and 1 being hopeless?
Mr Khoza: I would say 3/10 taking into account the turnover of the board chairpersons and the turnover at the executive level.
Mr Swart: I think it is proper for us to firstly thank all those committed staff at Eskom as we alluded to yesterday. We know Eskom is a very critical state owned entity (SOE) especially for our economic growth. The rating of 3/10, is it not too much? There are a lot of “rotten apples” within Eskom and the circumstantial evidence is overwhelming that the credibility of Eskom has been damaged. [Mr Swart read from Mr Khosa’s submission]. We know for a fact that Eskom was deeply involved in the purchase of Optimum Coal Holdings right from the word go. The critical involvement of Eskom was Mr Koko saying he refused to allow the sale to go through unless the whole of Optimum Holdings was sold and not only the mine. So Eskom played an intrinsic role in that, would you agree? Would you agree that your statement was not correct?
Mr Khoza: No, I think the statement is correct if you take into account the involvement of Eskom as a company. I think the issue raised by Mr Koko was based on coal security and the arrangement that was already made with the previous owner. Governance in terms of the processes and policies that exist within the organisation, whether on procurement or delegations within the organisation, is very good and operating by most of the people. The issue of people lying publicly has nothing to do with the operations of the organisation. However, it does dent the image of the organisation.
Mr Swart: It is difficult to understand how you can say that Eskom played no role in the purchase of Optimum when Mr Koko contacted the Minister shortly after he had been to Zurich. You also indicated that you were not aware of the issues surrounding the sale of Optimum Holdings and this was once again another serious governance issue. Do you understand where I am coming from in saying that Eskom played an intrinsic role in that purchase?
Mr Khoza: Yes, I do understand as you explained. But a fundamental issue on our side was the security of coal and all the discussions were based on the securing of coal.
Mr Swart: The Public Protector indicated that “it appeared that the Board was bending over backwards to accommodate Tegeta in the purchase of Optimum”, again indicating that Eskom played an intrinsic role in facilitating that sale.
Mr Khoza: I cannot comment about the business rescue because I was not involved in that particular detail. But when the issue came to the finance investment board committee, it was about the pre-purchase of the coal from the Optimum or any company that might be willing to buy Optimum at the time. It was not clear whether this was going to be Tegeta or any other company at the time.
Mr Swart: Is it proper for Mr Koko to have contacted the Minister about his involvement in such a situation because his letter was addressed to the Minister in December 2015 shortly after he had been to Switzerland? Is that normal practice?
Mr Khoza: It was not a normal practice if it is going to go to the Minister and I am not sure if he went to the Minister but he can liaise with the DG in the Department.
Mr Swart: There is a very important meeting that took place in December and it was the Board Tender Committee where there was a discussion about primary energy and it related to the recommendations to enter the cession and assignment of the coal supply agreement between Optimum and Eskom. That obviously had to go through your governance structures.
Mr Khoza: That is correct.
Mr Swart: You were in that meeting and you chaired the meeting. Mr Koko and various other people were present in that meeting. The cession of the coal contract was a precondition for the sale and you again see Eskom playing a key role, understandably so, you need that precondition because without that, that sale would not have taken place.
Mr Khoza: Correct.
Mr Swart: Therefore, Eskom played an intrinsic role in the sale of Optimum to Tegeta, you must concede that obviously.
Mr Khoza: What it indicates there is that if you have to pay the amount, you can only pay the amount if the sale has gone through and that was the precondition.
Mr Swart: So without that precondition from Eskom, the sale would not have gone through, is that correct?
Mr Khoza: It cannot go through because you cannot pay somebody if he does not have coal.
Mr Swart: You have to concede this point Mr Khoza, I am not trying to catch you up but it is there in the minutes of the meeting that there was a precondition.
Mr Khoza: Yes, it is a precondition.
Mr Swart: According to the minutes of the meeting, Eskom obtained financial advice about the guarantee, is that correct?
Mr Khoza: Yes, that is correct.
Mr Swart: The financial advice you got was from Regiments Capital, is that so?
Mr Khoza: That is correct.
Mr Swart: We know that Eric Wood was involved in Regiments Capital, right?
Mr Khoza: That is correct.
Mr Swart: So, do you understand how you can see the dots being linked together now? For me, it is unheard for a company to grant another company a R1.6 billion guarantee to buy a third company. Have you ever experienced that in your limited experience as a board member and now as board chairman?
Mr Khoza: No, but what I was informed at the time is that the investment board committee approved the pre-purchase of coal.
Mr Swart: Mr Khoza, it is a concern to me that you seem to review the recommendations that have been forwarded to you by various companies that you have appointed. You should act on those recommendations instantly to restore the credibility of Eskom. Would you not agree with that?
Mr Khoza: I agree that in future I should take immediate action.
Mr Swart: McKinsey came into this Committee and said it would pay back Eskom the R1 billion and Eskom needs that money. Bring an urgent court application to have that contract reviewed, they will not oppose it. You need the money and do that now, thank you.
Mr Khoza: Thank you. Definitely, we will consider that.
Mr Dlamini: Mr Khoza, you are leading an organisation with 41 000 employees, do you consider yourself as a leader of society?
Mr Khoza: Yes, correct.
Mr Dlamini: Do you agree that as a country we should never allow fools, thieves, liars and clowns to be the leaders of society because they are simply decorated by titles of ministers, chairpersons and DGs and bodyguards?
Mr Khoza: I do not get your question.
Mr Dlamini: Is Anoj Singh a liar?
Mr Khoza: I said he misrepresented the facts.
Mr Dlamini: No, you said he lied.
Mr Khoza: Yes, he lied.
Mr Dlamini: Do you accept people like Anoj Singh as upright leaders of society because they are decorated as CFOs? Do you accept him?
Mr Khoza: We do not accept people lying.
Mr Dlamini: Do you believe in BEE and transformation?
Mr Khoza: Yes, definitely.
Mr Dlamini: Do you accept that we should never use BEE and transformation as a cover up for uselessness and incompetence? If you are useless whether you are black or white, we must tell you that you are incompetent and useless.
Mr Khoza: Definitely.
Mr Dlamini: The Auditor General (AG) came here and said irregular expenditure moved from R100 million to R4 billion. What were the two items that were purchased from the first R100 million to R1 billion?
Mr Khoza: I cannot recall that.
Mr Dlamini: What were the two major items spent irregularly that were purchased from R1 billion to R2 billion?
Mr Khoza: We can provide the information as it is in the Annual Report.
Mr Dlamini: Your Board is useless. Next question, who had the authority to say how much Mr Molefe must get for a pension?
Mr Khoza: The Pension Fund is the one to authorise the amount.
Mr Dlamini: Then what gives you the authority to say that the amount of R30 million was unjustifiable?
Mr Khoza: It was not justifiable in the process that led to the payment of R30 million.
Mr Dlamini: What made the Board wake up at night to sign the Tegeta contract when 95% of the supply of coal was secured?
Mr Khoza: The meeting happened to be at night because we were able to be quorate.
Mr Dlamini: Were you convinced that it was an urgent issue that was going to shut down the country?
Mr Khoza: It was an urgent issue because the supply was specific to a specific park station, which needed the coal at the time.
Mr Dlamini: How much is the rate per tonne for the Guptas, Tegeta and Exxaro?
Mr Khoza: The contract for Optimum was R150 per tonne of coal.
Mr Dlamini: Are you sure about the amount you are giving me?
Mr Khoza: The contract for Optimum was indeed R150 per tonne.
Mr Dlamini: Have you ever met the Guptas?
Mr Khoza: No.
Mr Dlamini: Do you know anyone by the name of William Mabaso who drives Ben Ngubane?
Mr Khoza: Yes, I do.
Mr Dlamini: Has he ever driven you?
Mr Khoza: Yes.
Mr Dlamini: Where were you going?
Mr Khoza: He used to drive Dr Ngubane but he now drives me.
Mr Dlamini: Where were you going?
Mr Khoza: Into different meetings.
Mr Dlamini: You do not come across as someone who is arrogant, self-centred and someone who suffers from self-exaggerated importance.
Mr Khoza: But you do not indicate the exact dates when I was driven by Mr Mabaso.
Mr Dlamini: But he has driven you more than once?
Mr Khoza: Yes.
Mr Dlamini: When was the last time you went to Mr Koko’s house?
Mr Khoza: I never went to his house.
Mr Dlamini: Is Mr Singh good or bad for Eskom?
Mr Khoza: At the moment he is going to go through the disciplinary process and that will test that.
Mr Dlamini: Is Mr Koko good or bad for Eskom?
Mr Khoza: The process is going to test that?
Mr Dlamini: Was Ngubane good or bad for Eskom?
Mr Khoza: He was the Chairperson of Eskom.
Mr Dlamini: Was Molefe good or bad for Eskom?
Mr Khoza: Yes, he delivered a lot of good things for Eskom.
Mr Dlamini: Are you Mr Khoza good for Eskom?
Mr Khoza: Yes, I am.
Mr Dlamini: The Minister of State Security, Mr Bongo, said that you asked him to speak to Advocate Vanara to offer a bribe. Is that true?
Mr Khoza: That is not correct.
Mr Dlamini: So Minister Bongo is lying.
Mr Khoza: I never said so. He can answer that question himself.
Mr Dlamini: Thank you, Chairperson
Mr E Marais (DA): It is interesting to note that we have had three boards at Eskom since the 2014 elections and six acting CEOs. Do you think it is optimal to have that instability in leadership in an institution like Eskom? There is no consistency in leadership. What is your view on this?
Mr Khoza: We raised this as a concern in the governance as it had the potential to erase the institutional memory and this does not allow CEOs to execute their strategies.
Mr Marais: Who approached Mr Molefe and Mr Anoj Singh to move from Transnet to Eskom?
Mr Khoza: The Board at the time requested the Minister to deploy anyone from the parastatals to come and assist Eskom and the name of Brian Molefe was raised.
Mr Marais: So why were they moved, both the CEO and the CFO, from Transnet to Eskom?
Mr Khoza: At the time when Mr Molefe was seconded, Mr Singh was also being seconded for the position of CFO at Eskom.
Mr Marais: Who made the request?
Mr Khoza: The Board made that request.
Mr Marais: Something that disturbs me was this R30 million pension for Mr Molefe. The main question is how to differentiate this pension payment if the other previous CEOs were also to request this pension.
Mr Khoza: As I said, we did not support the request for R30 million. There was an administrative error in that pension payment.
Mr Marais: Mr Collin Matjila could not sign a R43 million contract because that was not his specific delegation to sign that amount, do you agree with that?
Mr Khoza: That is correct.
Mr Marais: Did Mr Matjila subvert regular procurement processes? Do you have any knowledge of this because that is where the problem starts?
Mr Khoza: No, but I agreed that he did not have the specific delegation to sign the R43 million at the time.
Mr Marias: Why did the new Board condone the irregular expenditure and go forward with the contract that should not have been signed or approved by him?
Mr Khoza: The justification from the management at the time was that it was a requirement to use the contract and the only thing that was wrong was that the contract was signed without consultation of EXCO at the time. The contract had no exit clause and therefore it was going to cost Eskom to go to court.
Mr Marias: All board members agreed that this was an investment for advertisement of the company, correct?
Mr Khoza: The majority agreed.
Mr Marias: The majority agreed but not everybody, correct?
Mr Khoza: Correct.
Mr Marias: Did you agree to the contract personally?
Mr Khoza: Yes, I did.
Mr Marias: Is there any interaction between the board members and the DG?
Mr Khoza: Yes, we do.
Mr Marias: Is it the board members or you alone?
Mr Khoza: I do engage him alone on a personal level.
Mr Marias: Including the Minister?
Mr Khoza: Yes, I do engage with the Minister.
Mr Marias: And Deputy Minister, do you also engage with him?
Mr Khoza; Yes, I do engage with him.
Mr Marias: On what matters do you engage with the Deputy Minister as it looks like he is not certainly involved in most of the activities within Eskom.
Mr Khoza: He does most of the social responsibility programme.
Mr Marias: Only that?
Mr Khoza: Yes.
Mr Marias: Ok, let us make a note of that. Did you have any engagement with the President since you assumed the acting board chairperson position?
Mr Khoza: No.
Mr Marias: Not at all?
Mr Khoza: Not at all.
Mr Marias: Mr Matona was the DG at the Department of Public Enterprises so it is difficult to understand how it was possible that this gentleman could not do the CEO job at Eskom.
Mr Khoza: Maybe there were issues between Mr Matona and the Chairperson and this was alluded to in the meeting that we had.
Mr Gungubele: There is a pattern at Eskom, where those that are not wanted at Eskom get suspended. Is that true?
Mr Khoza: That is not true, anyone that gets suspended is because of an investigation taking place or they are suspected of wrongdoing. You cannot suspend someone who has not done anything wrong.
Mr Gungubele: The Oliver Wyman Report indicated that there was an error in the calculation of the amount that was paid to McKinsey. Do you agree with that statement?
Mr Khoza: No, that is not what the Oliver Wyman Report said.
Mr Gungubele: Do you agree that the number of days of suspension for Koko, Govender and Singh cumulatively amount to more than 500 days? Do you acknowledge the amount of money they are paid per month?
Mr Khoza: Yes.
Mr Gungubele: In other words, these days are wasted, do you agree?
Mr Khoza: I cannot say they are wasted as there are investigations underway and there are proper procedures to be followed.
Mr Gungubele: An endless process? When did these processes start? When did you start suspending Mr Edwin Mabelane?
Mr Khoza: About three months ago. Koko was firstly on leave for 60 days then he was suspended when the case was about to start.
Mr Gungubele: It is clear that there is a pattern where if corruption is linked to Gupta project then it is not investigated or investigations drag for too long. A bad person who supports the Guptas is suspended, while a good person who opposed the Guptas immediately gets fired. Thank you Chairperson.
Ms Rantho thanked everyone including the witnesses that came to the Committee for cross-examination since 17 October 2017. The Committee will request Parliament to start as early as possible next year before the start of parliamentary committees as there was still work that needed to be done at Committee level.
The meeting was adjourned.