Eskom Inquiry: Zola Tsotsi
22 November 2017
Chairperson: Ms D Rantho (ANC)
Zola Tsotsi statement
Mr Zola Andile Tsotsi, former Eskom Board Chairperson, appeared as a witness. He read a sworn statement to the Committee. He noted that he had had problems in accessing certain information which would have better prepared him for the inquiry
Mr Tsotsi was questioned about:
• A meeting he attended at the Presidential residence in Durban where he had met with President Jacob Zuma and Ms Dudu Myeni, former SAA board chairperson and Mr Nick Lennell and Ms Myeni’s son.
• His relationship with Minister Lynne Brown.
• The suspensions of four Eskom senior executives.
The Committee was also interested in the relations of Mr Tony Gupta, Mr Salim Essa with Minister Brown. It was concerned that, already in 2011 Eskom had borrowings and debt of about R12.5 billion, and to date there is state guaranteed debt of R365 billion, then Eskom posed a fiscal risk.
There was agreement that Mr Tsotsi had failed in his fiduciary duties, in not protecting the executives who left Eskom after suspension, preventing loss of income and in dealing with the undue pressure.
The Committee was surprised that a SAA board member would have had intimate knowledge of Eskom matters that she would be suggesting processes and procedures on how Eskom had to deal with operational matters.
Witness: Mr Zola Tsotsi, former Eskom Board Chairperson
The Chairperson read the oath for the witness before the Committee.
Mr Zola Tsotsi took the oath and swore to tell the truth.
Adv Ntuthuzelo Vanara, Evidence Leader, Parliament asked the witness to state his names. Thereafter he asked that Mr Tsotsi read his statement.
Mr Tsotsi read out his statement to the Committee (see document).
Mr M Gungubele (ANC) proposed that the Committee force Eskom to provide Mr Tsotsi with all the documents he required.
Dr Z Luyenge (ANC) agreed with Mr Gungubele.
Ms N Mazzone (DA) agreed and asked that the Committee find out the person who had refused Mr Tsotsi the documents he required.
The Chairperson said the Committee was in consensus and she wanted a way forward on whether the proceedings should continue.
Mr S Swart (ACDP) said it was important that the meeting continue and the witness could either be recalled or he could submit in writing what was outstanding as part of his evidence amplification.
Mr F Shivambu (EFF) proposed that Mr Tsotsi give titles of the documents he had required so that the Committee could subpoena those from Eskom. He agreed that the meeting continue.
Mr M Tseli (ANC) said it was important to attach timeframes by when the documentation required from Eskom had to be provided to Mr Tsotsi and the Committee.
Ms Mazzone said she was concerned that it would be unfair if Mr Tsotsi were allowed to continue as he would be giving evidence from his memory alone and could unnecessarily perjure himself. She suggested a multiparty caucus with the Committee to discuss the way forward on the documents.
Dr Luyenge supported Ms Mazzone’s proposal.
Mr Swart supported Mr Shivambu’s proposal that Mr Tsotsi list the documents he required.
The Committee resolved to have a multiparty caucus after which they would continue with the meeting.
Adv Vanara asked the Chairperson to remind Mr Tsotsi that he was still under oath that he could not converse with anyone as the Committee caucused.
The Chairperson acquiesced to Adv Vanara’s request and the witness was reminded he was under oath.
The caucus was held. On resumption of the meeting, the Chairperson said that the Committee had resolved that Eskom had to give him all the required documents by 15:00 before Mr Tsotsi left Parliament.
Mr P Gordhan (ANC) asked that the Chairperson request the current Eskom board chairperson to formally acknowledge that he would follow through with the Committee’s request.
Mr Zethembe Khoza. Interim Board Chairperson, Eskom, acknowledged the request noting that Eskom was complying with the request.
Mr Gungubele said that probably Mr Tsotsi would have to say whether he wanted to proceed with witnessing in the absence of the documents which he had required and that he would have to clarify, emphasize and give certainty about events he recalled clearly.
Mr Tsotsi replied that in respect of matters which he could not substantiate because of lack of documentation he would clearly state that and was comfortable with proceeding on matters he had full recollection of.
The Chairperson asked the evidence leader to proceed with the meeting
Adv Vanara: Mr Tsotsi, in your statement you mention a meeting which took place at the Presidential residence in Durban where the people present were Ms Dudu Myeni, her son Thalente, and a Mr Nick Lennell who was introduced to you as a lawyer?
Mr Tsotsi: Correct.
Adv Vanara: There is a document in front of you which is addressed to the Committee and is a statement by Mr Nicholas Hugh Lennell. Mr Tsotsi, can you read paragraph 3 on page 1 of Mr Lennell’s statement.
Mr Tsotsi read the paragraph.
Adv Vanara: There seems to be a second witness confirming the existence of the meeting, do you agree?
Mr Tsotsi: Yes, I do.
Adv Vanara: In your statement you mention Ms Dudu Myeni being at the meeting or at the Presidents’ residence.
Mr Tsotsi: Yes.
Adv Vanara: Mr Nicholas Hugh Lennell has attached certain documents to his statement and I have heard you complain about the difficulties you had in accessing certain documents from Eskom. I would like us to go to the end of the statement and check the annexures.
The Chairperson asked that the Committee to simply number the pages for comprehension and to save time.
Adv Vanara: Do you agree that the annexures and statement seem to be relevant to what would have happened in Durban?
Mr Tsotsi: Some of them would be indeed.
Adv Vanara: Are these some of the documents which you requested from Eskom?
Mr Tsotsi: Some of them.
Adv Vanara: Can you identify the relevant documents?
Mr Tsotsi: Annexures A and B I would have been interested in because of the board decision of the 9 March 2017 including the minutes thereof. Annexure C I would not have had an interest in because the terms of reference for the enquiry would have been produced after I had left the entity.
Adv Vanara: Annexure D is a press release by yourself and you surely must have had an interest in this?
Mr Tsotsi: Indeed, I was very interested in this document.
Adv Vanara: Now that you have the documents do you require the Committee to give you some time so that you can go through them briefly?
Mr Tsotsi: I am comfortable proceeding.
Adv Vanara: As you have said, you will say when recollection fails you; your statement puts one piece to this puzzle. Yesterday, two former non-executive directors, Ms Venete Klein and Ms Viroshini Naidoo who had just joined the Eskom Board in December 2016, both confirmed that you are the one who introduced to them the idea of an inquiry, which you confirm in your statement. They confirm that you indicated to them that the message came from the Presidency.
It is well and good that you tell us what happened in Durban. I want to deal with issues of ethical leadership though. You’re the chairperson of the board of Eskom, one of the biggest state owned entities (SOEs) and the credit rating of Eskom was higher than when you left the SOE; is that not so?
Mr Tsotsi: That is correct.
Adv Vanara: You put up a fight from what I gather around the suspension of executives during the enquiry; am I correct in that assessment?
Mr Tsotsi: That is correct.
Adv Vanara: You are particularly concerned about the suspension of the finance director (FD) and the implication this would have on Eskom investors, lenders and market perceptions. Is that correct?
Mr Tsotsi: That is correct.
Adv Vanara: You also indicate that your fears became a reality when Eskom’s head of treasury informs you that investors around the world would be calling you for an explanation of the suspension of the executives. Is that correct?
Mr Tsotsi: Correct
Adv Vanara: You say about 52 individuals had indeed called you where you had essentially tried to defend the indefensible. We have heard from the two non-executive directors that the first meeting had rejected the proposal and that had resulted in you being instructed to call the Minister to come and address the board; is that correct?
Mr Tsotsi: Not quite.
Adv Vanara: Is it not correct that when you first introduced the idea of the inquiry and the suspension of the executives at the first meeting around the 9 March, the board had disagreed with your proposal and had suggested that you call in the Minister of Public Enterprises.
Mr Tsotsi: That is correct but let me give you context. The point was that, notwithstanding whatever interests the President and the people around him had in this matter, we as the board had a fiduciary relationship with the Minister. Therefore in the meeting of 9 March, I was one of the people to propose that the matter be addressed with the shareholder representative.
Adv Vanara: You then call in the Minister on 11 March is that correct?
Mr Tsotsi: That is correct.
Adv Vanara: You were then in committee with the Minister, having recused the Financial Director (FD) and the Group Chief Executive (GCE)?
Mr Tsotsi: Correct.
Adv Vanara: What did the Minister say there, after you told her about your visit to Durban and what had transpired there?
Mr Tsotsi: I introduced the matter and since there should be a record of this for corroboration I am going to speak to the best of my recollection. After the recusal and Minister’s entry into the meeting, I then told her that the idea of the inquiry had been raised at the President’s residence and that the board were uncomfortable with dealing with the matter in the way it had come; and that had prompted the need to get the views of the shareholder’s representative.
Adv Vanara: What is the Minister’s response to this; does it show any prior knowledge about the idea or is she perplexed that she does not know that you know about an inquiry.
Mr Tsotsi: The Minister did not show that she did not know about the inquiry proposal. She responded that the Department of Public Enterprises (DPE) supported the inquiry, as well as the suspension of the executives which had been indicated. She did not vacillate.
Adv Vanara: My understanding is that in the Durban meeting the suspensions were for three executives; is that correct?
Mr Tsotsi: Correct.
Adv Vanara: But we know that four eventually were suspended. Whilst at the Durban meeting you had your own reservations about the suspensions; is that correct?
Mr Tsotsi: That is correct.
Adv Vanara: Are you happy after the Minister had addressed the board meeting? Did the meeting continue?
Mr Tsotsi: Yes, the meeting continued.
Adv Vanara: Notwithstanding your concerns you went and suspended four instead of three executives. The fourth, which we understand was later joined, was the Financial Director. Is that so?
Mr Tsotsi: Yes, that is correct.
Adv Vanara: When did the Financial Director come to be included in the list?
Mr Tsotsi: Yes, she was not in the initial list. What had happened was that after the board had mandated the Governance Committee to carry out the suspensions, that Committee had immediately met to deal with the matter. The first order of business had been a statement which was made by Dr Ben Ngubane that the Financial Director had to be added to the list of suspensions. After the shock, I had then protested that that matter had not been raised at the board meeting. Apart from that, the consequences of suspending the Financial Director would be dire in the manner I have described in my statement, as it would attract the attention of our investors and lenders. Dr Ngubane responded by saying that it was the Minister that said the Financial Director’s name had to be included in the suspensions. I found this astonishing and I felt then; that there seems to be some kind of fait accompli in this process, that a freight train was on the go and was not about to stop. I then called the Minister in great consternation raising my objection to the idea of suspending the Financial Director. The Minister would hear none of it and she told me to do what I was required to do.
Adv Vanara: This clearly is an instruction with profound financial, legal and other consequences and you are not happy with the suspensions as well. Why did you as the board decide to proceed, fully aware of all of the consequences?
Mr Tsotsi: That is a vexing question which I have spent a lot of time reflecting upon and I can only think there must have been pressure for these suspensions to go through. Though I could not fathom out what that could be, I had felt there was a way Eskom could still support the executives which was one of the reasons I had decided to not remove myself from the situation as amongst the things I was experiencing at the time was professionally the whole process would impact the career prospects and professional integrity of the executives. Therefore it was difficult and things were happening quite fast and reflection was not easy.
Adv Vanara: You say pressure contributed to you succumbing to this instruction; do you accept that those executives, the company, were looking up to you for protection at that hour of need?
Mr Tsotsi: That is correct.
Adv Vanara: Is it fair to suggest that you failed them?
Mr Tsotsi: Insofar as what ultimately happened, the board had within its power to have prevented what ultimately happened. It is easier of course to get a perspective of these things in hindsight. Certainly one cannot deny the fact that we failed to protect them, where we could have at that time.
Adv Vanara: Not only did you fail the executives but you failed the company because four senior executives were to be sent home to idle when their expertise was required by the company. Is that so?
Mr Tsotsi: Insofar as discharging the company duties, I do not believe this created a gap or inadequacy but more the issue of personal pain insofar as the individuals involved, because the period of absence at that time was short and the impact I do not think would have been that immediate.
Adv Vanara: Mr Tsotsi, you must accept that Eskom today no longer has the expertise of Ms Tsholofelo Molefe, whom you confess had done nothing wrong and we know now that the person who replaced her is currently on suspension as well. Ms Molefe is no longer at Eskom and the company is going through turmoil in that her replacement is suspended as well.
Mr Tsotsi: When I responded to the earlier question I was doing so on the basis of what would have happened. I am saying so because I had a firm belief that once the inquiry had been concluded and because there was nothing that the executives had done wrong, we would bring them back into Eskom. But as we all know they never returned and in that instance I agree that Eskom has lost.
Adv Vanara: That you incurred fruitless and wasteful expenditure in that the four executives sat at home on full pay, you had to appoint people to act in their positions and pay acting allowances to those acting individuals. Is that correct?
Mr Tsotsi: That had to be done by the company; I was no longer there at the time.
Adv Vanara: The company received a ratings downgrade; did you know that?
Mr Tsotsi: Yes, I am aware.
Adv Vanara: Did it come as a surprise in view of your earlier observations?
Mr Tsotsi: No, it was not a surprise
Adv Vanara: So you failed the company in your fiduciary responsibilities towards the company by implementing an instruction that was clearly not in the best interest of the company.
Mr Tsotsi: As we were busy with this work, some of the outcomes, I did not anticipate. And we must take the responsibility for what ultimately transpired in respect of what you are saying, which is correct.
Adv Vanara: Since that incident to date; have you ever extended an apology to the three executives who must have suffered irreparable harm through your board’s conduct?
Mr Tsotsi: I have spoken to all three of them and indicated my regret that things had happened the way they did and that I would not have wished that what happened occurred.
Adv Vanara: In light of the public humiliation that they would have suffered, I understand that Mr Dan Marokane is still struggling to secure decent employment, due to the stigma attached to the suspension. Are you prepared to publicly apologise on behalf of the board that you led, to those individuals for failing them?
Mr Tsotsi: I am more than prepared to apologise to Dan, Tsholo and Tshediso as I have already voiced my sentiments to them before, I will repeat the same here that I feel particularly bad and incidentally have suffered the same.
Adv Vanara: To the people of South Africa whose hopes and aspirations you carried when you led that Eskom board; for the downgrade of the company; are you prepared to apologise to the nation?
Mr Tsotsi: As leaders in these institutions we have a moral duty to accept whatever responsibility and the consequences thereof; I have no difficulty that having been part of those who led the institution and to the extent that the institutional performance resulted in the institution being downgraded, certainly I must be able to take the responsibility, but it is clear to all of us that the matter you refer to is a result of cumulative experiences that go far beyond even my tenure. I would not shy away for taking responsibility of the failure for not getting the requisite recognition in the performance of the business of Eskom.
Adv Vanara: Can you please then apologise to the nation.
Mr Tsotsi: I certainly apologise.
Adv Vanara: Your meeting with the Minister of DPE on the eve of the State of the Nation Address (SoNA); which Minister are you referring to here?
Mr Tsotsi: I am talking about Minister Lynne Brown.
Adv Vanara: Was this a coincidental meeting or was it arranged?
Mr Tsotsi: We were having a meeting with this Committee the day before the SoNA, and along with me was Mr Matona. During the course of that meeting, I received a request from Minister Brown that I should meet her at her office. The meeting had not been scheduled prior to that. I then proceeded to her office for that meeting.
Adv Vanara: Your meeting with Mr Tony Gupta; where did you meet him, as it seems to be the same afternoon as the meeting with the Minister?
Mr Tsotsi: We were here in Cape Town.
Adv Vanara: Why would Mr Tony Gupta, who is not a shareholder or a public representative or even a board member, find courage to approach you in such a confrontational manner and read the riot act to you?
Mr Tsotsi: I do not know.
Adv Vanara: Where does Ms Dudu Myeni feature in the meeting which was in Durban? I understand that she was the chairperson of South African Airways (SAA) and had no involvement with Eskom.
Mr Tsotsi: That is true, she had no connection with Eskom; therefore I do not know where she features.
Adv Vanara: But she introduces the subject to you and though you met her at the President’s residence she is not the President but rather your counterpart in another SOE. Therefore you should be able to collegially engage her and ask difficult questions; do you ask these questions?
Mr Tsotsi: As recorded in my statement, when I attempted to understand what was going on, she simply declined to tell me over the phone why I would be invited by her to the President’s residence. Therefore I was not able to ascertain her involvement.
Adv Vanara: I am talking about when you were at the residence of the President with her and she was giving you information. Did you engage her on that basis as to what is going on?
Mr Tsotsi: No! I did not engage her to ask; what business is it of hers, rather I just listened to what she was telling me.
Adv Vanara: Having reflected on all these things do you later on revert to her to ask what the meeting in Durban had been about?
Mr Tsotsi: I did try to talk to her, probably the following day, to get to understand what was going on but to this day I have not been able to talk to her.
Adv Vanara: Then the President walks in and pleasantries are exchanged. What does the President say?
Mr Tsotsi: To the best of my recollection, the President asked what the meeting was about. Dudu Myeni responded by repeating what she had said to me before the President came in. She recounted what I had explained – mainly that there is a rationale for doing an enquiry at Eskom and there was a concomitant need to suspend three executives in the process.
Adv Vanara: Does the President sound unaware of the issue when it is explained to him what the meeting is about? Does he make any contribution or does he provide any counsel? What is the President’s involvement in all of this?
Mr Tsotsi: I don’t know what the President’s involvement in this is. All he asked was if I was aware which executives are to be suspended.
Adv Vanara: So when you left the President’s residence, you left with a clear instruction that you had to go execute. Is that correct?
Mr Tsotsi: When I left the President’s residence, I left with the intention of testing this particular instruction, i.e. whether the board would have an appetite for doing this. The President is ordinarily not in a position to give instructions to the board. I did not take it that he gave me or the board an instruction. I took it that he has an interest in seeing that this happens and we have a fiduciary duty to examine whether this is something that would be of interest to the organisation. And because the President has expressed himself on this matter, it was pretty much logical for us to establish from the shareholder representative with whom we have a fiduciary relationship, what was the shareholder’s actual interest in this. The President does not, in his capacity, represent the shareholder insofar as the memorandum of incorporation that governs the relationship, shares or stakes. It became clear that it was necessary to test the interest of the shareholder now that this idea has come from the President himself.
Adv Vanara: You need to be very clear on this particular aspect: the President did not invite you personally to his house. You were invited by Ms Myeni. Is that correct?
Mr Tsotsi: Yes, it’s correct.
Adv Vanara: When Ms Myeni invites you to the President’s house – what are your expectations? Is she inviting you to meet with her at the President’s residence?
Mr Tsotsi: Myeni said to me I should please come to the residence for an audience with the President. I understood that the President was aware that I was coming and I expected that I see him.
Adv Vanara: Having met with Ms Myeni and the President, you seem to have left the President’s house with something to consider. Where was this “something to consider” coming from? Is it coming from Dudu Myeni or is it coming from the President?
Mr Tsotsi: That was not very clear. My primary concern was that even though the originator or author on this matter was not explicitly clear, the fact that the President was aware of it and knew of it, says to me that as he is the Head of the State showing an interest in a matter of this nature, it should be put before the board to examine the issue and see how we can then exercise our fiduciary duties.
Adv Vanara: Did you ask the President if he discussed this issue with the shareholder representative? Did you ask anything from the President concerning this message you are taking to the board?
Mr Tsotsi: No, I did not. I did not see the need to interrogate the President on it. That would not have been in line with my fiduciary responsibilities. What would happen and did happen was to engage the Minister. The importance was to take the matter to the realm of responsibility where I was placed as a board member.
Adv Vanara: You are the message carrier from Durban to the board meeting and when you get to the meeting you say this message comes from the President. Is that your testimony?
Mr Tsotsi: Yes.
Adv Vanara: Surely you wouldn’t expect your board members, as they did apparently, just to consume an instruction just because it is said to be coming from the President?
Mr Tsotsi: Correct, and the same applies to me.
Adv Vanara: Clearly you had concerns, because this is not coming from your direct manager, i.e. the shareholder representative, but it is introduced by Ms Myeni who has nothing to do with Eskom. It is relayed in front of the President and the President is asking you whether you knew some of these executives. Where do you get the notion that it is the President that gives the instruction? When you get to the board you are not saying the message is from Dudu Myeni, but it is from the President.
Mr Tsotsi: I did not say to the board the message is from the President. I simply relayed to the board exactly what had happened and that this matter was raised in the presence of the President and I felt it warranted that the board should listen and see whether the board wants to engage with this matter. If the board wants to, the first port of call should be to invite the shareholder representative to test this matter.
Adv Vanara: You left the President’s residence with a message that was introduced to you by Dudu Myeni and this message was conferred in the presence of the President. Is that what I understand your testimony to be?
Mr Tsotsi: Yes, that is correct.
Adv Vanara: Is that the reason why you did not ask the President the questions?
Mr Tsotsi: Like I said before, it would not have served any purpose, because the responsibility for engagement of matters such as this rests with the shareholder representative.
Adv Vanara: You were clearly interested in meeting the shareholder representative. When you meet her either inside or outside of a board meeting, and if she asked you where you got this from, what would have been your answer?
Mr Tsotsi: I told the Minister what happened, i.e. that I was called to attend an audience with the President and that this matter was raised in his presence.
Adv Vanara: No, further questions.
The Chairperson thanked Adv Vanara and she said the Committee had suggested a long time ago that all the entity board chairpersons sit down and share experiences. The same applies to the Executive.
Ms Mazzone asked if Mr Tsotsi ever met, during his time at Eskom, with Minister Lynne Brown at her home and any member of the Gupta family.
Mr Tsotsi: At some point shortly after the new board was formed in the beginning of December, the Minister called me to her home and when I arrived there she was with two individuals: Tony Gupta and Salim Essa.
Ms Mazzone asked why he was called to this meeting.
Mr Tsotsi: There is a process that normally occurs when a new board comes into being, mainly the allocation of board members to different sub-committees. This is something that I in my experience initiated and would agree with the board and the Minister once the allocation is done. It was during the process of doing this that I was called.
Ms Mazzone: Basically, Tony Gupta and Salim Essa were there to advise you on board allocations.
Mr Tsotsi: What actually had been happening prior to me going there was that Salim Essa would draw up his ideas for board allocations, send it to me and ask me to pass it on to the Minister.
Ms Mazzone: It sounds incredibly worrying in light of the relationship Salim Essa has with the Gupta family. It would suggest interference with an executive position and it would infer that Minister Brown took direct instructions from people like Salim Essa and the Gupta family. Is that your understanding?
Mr Tsotsi: I am not in a position to say she took instructions from them, but it seemed to me that I was not able to complete this exercise without the involvement of Mr Essa. I got a list and I changed the list based on what I thought it should be. When I sent the list to her to get concurrence, she sent the list back and it had been changed to what it was when I got it from Essa.
Ms Mazzone: Basically your hands are tied because an unofficial third party was giving instruction to the Minister.
Mr Tsotsi: My hands were tied.
Ms Mazzone referred to paragraph 4.5 of Mr Tsotsi’s statement where he said that when he arrived, he was approached by Tony Gupta who said, "Chairman, you are not helping us with anything. We are the ones who put you in the position you are in. We are the ones who can take you out." Why did Mr Gupta feel he had that kind of power over you?
Mr Tsotsi: I need to indicate that when I have had occasion to discuss something with him and he wanted something specific from me and I was not able to give it to him, he would say ‘I must report you to Ubaba, because you am working with Ubaba’s enemies’. The distinct impression he gave me is that he had a very close relationship with Ubaba and therefore felt he could do anything.
Ms Mazzone: Is it fair to say that you were in fact frightened and intimidated by the Guptas, especially Tony Gupta and the fact that they were answerable to Ubaba (the President)?
Mr Tsotsi: There was certainly an element of intimidation and I operated on the basis that should it be that the President is unhappy with what I’m doing or not doing with regards to these gentlemen, he will come to me and tell me that he was not happy. From that perspective, I felt that if there was need for admonishment, it would happen.
Ms Mazzone: I suppose one of the reasons you did not feel safe or comfortable going to the authorities was because it was difficult if you know that the person ultimately in charge of the country is involved in it.
Mr Tsotsi: I didn’t necessarily feel at anytime that I should go to the President to seek protection. I simply took it that if there was anything that I needed to deal with and I was asked to deal with it, let it happen. That was the only way I felt things will come out.
Ms Mazzone: Can you give us a few examples of where you did do something at the request of Tony Gupta?
Mr Tsotsi: To the best of my recollection, there were maybe three things he directly wanted from me. Unfortunately, on all of it I was not able to assist him.
Ms Mazzone: Did you want to assist him?
Mr Tsotsi: Let me put it to you this way. If a business person comes to me, I would deal with him as I would any other person but when Mr Gupta came to me he said that they were interested in supplying gas to the Open Cycle Gas Turbine (OCGTs) in the Western Cape and hence have access to the Western Cape market where they would be an anchor tenant of the OCGTs; he would like me to assist them facilitate that. What I knew at the time was that there was an existing Memorandum of Understanding (MoU) with a particular company for the same purpose. The MoU had been canvassed with the Department of Energy (DoE) and ultimately signed by the Minister there. When I discovered this, I informed them that the matter was out of the hands of Eskom as there was the MoU. Mr Gupta later returned to me, complaining that we are dealing with Baba’s enemies that are the company which Eskom had a MoU with, which should not have gotten what it had got.
Ms Mazzone: What was this company viewed as Baba’s enemy?
Mr Tsotsi: I think it’s called Prime Stream.
Ms Mazzone: Who was the Acting Director-General (ADG) at DPE at the time the President called you?
Mr Tsotsi: It was Ms Matsietsi Mokholo.
Ms Mazzone: So she gives you an instruction to call a board meeting, is that normal?
Mr Tsotsi: The ADG actually called me and informed me that the Minister said the meeting the board had to sit for, had to be postponed.
Ms Mazzone: But in your statement you say the President called you and said the ADG would contact you.
Mr Tsotsi: That is correct.
Ms Mazzone: So the ADG was acting on the instruction of the President who later probably got hold of the Minister.
Mr Tsotsi: I do not know how the sequence of authority went. All I know was that when the ADG called me on behalf of the Minister she said what I already said.
Ms Mazzone: When Ms Myeni invited you to the President’s residence, were you not worried as to why she would be at the President’s house with her son. Did this not strike you as extraordinary?
Mr Tsotsi: I was less focused on that and more on the fact that I was to have an audience with the President.
Ms Mazzone: Was it not odd that Ms Myeni was instructing you to have an audience with the President; being not his wife, she is also not his personal assistant (PA), therefore why would she be the one instructing you?
Mr Tsotsi: She was not instructing me; she was inviting me to have an audience with the President. As to why it would be her, I have no idea.
Ms Mazzone: It seems that Dr Ngubane and Minister Brown were in some cahoots as to who to fire and hire as evidenced in your statement. I think the board was absolutely correct when they asked you to tender your resignation because I think what you had done then at the board was incorrect. I also do not think you had executed the duties as mandated to you as board chairperson. In hindsight, would you have still taken the instruction and would you still have suspended the executives as you did or would you have logged charges of intimidation, as your statement now shows to have been an incorrect thing to do?
Mr Tsotsi: There was a very significant event in my book that occurred between the time I left the President’s residence and the time when we sat down as one of the board’s subcommittees to carry out the suspensions.
Ms Mazzone: What was that event?
Mr Tsotsi: That event was the fact that, as was the correct thing to do, I had brought the matter to the board. The board had insisted that the matter had to be dealt with in association and consultation with the Minister. Therefore, it was the board that made the decision and not Zola Tsotsi who decided to suspend the executives as I have no authority to suspend anyone. Because I am the person who read out the decision at the press conference, it would appear that this was my initiative, and that is not the case.
Ms Mazzone: Given the fact that you acted on instruction of the Minister and the board said we have to listen to what the Minister tells us, is Minister Brown captured in your opinion?
Mr Tsotsi: I don’t know. Her visit to the board and her support of the suspensions…
Ms Mazzone: And her being at the house with Tony and Salim?
Mr Tsotsi: All I will say is that is clear collusion or association between Minister Brown and the Gupta family.
Ms Mazzone: Thank you.
Dr Z Luyenge (ANC): You recommended or motivated in a board meeting that a suspended official be in an acting position? Are you aware of that and who that executive was?
Mr Tsotsi: I am not aware of that and it would be inconceivable that I could ask somebody who is suspended to come and act.
Mr Luyenge: After Mr Matjila was actually suspended, who replaced him?
Mr Tsotsi: I am not aware that Mr Matjila was suspended.
Mr Luyenge: Mr Matjila acted as the CEO and actually left immediately thereafter. Who replaced him?
Mr Tsotsi: Collin Matjila’s term as acting CEO ended when Mr Matona came on board.
Mr Luyenge: On the R43 million where Mr Matjila exceeded his mandate, what was the view of the board as it pertains to misconduct?
Mr Tsotsi: The action taken by Mr Matjila to approve the sponsorship was viewed as a transgression. When the board received the report from the committee that the board was asked to investigate this matter, the report indicated very clearly that, not only did the audit firm find that Mr Matjila had transgressed his authority, the legal advice that the board also sought subsequently, came to the same conclusion and in fact recommended the sanction of discipline. This was not feasible for the board to carry out, because Mr Matjila had left the company by then.
Mr Luyenge: Your meeting with the Minister ended abruptly and your first meeting of the board thereafter was postponed. What was the general view of the board members, because you were the chairperson, i.e. the convenor of the board, that a meeting is postponed without your consent.
Mr Tsotsi: There was certainly unhappiness, because the board meeting was postponed without any explanation to the extent that members raised this matter at the next opportunity which was the board meeting where the Minister was present. Not only was I anxious to get answers for the postponement, the rest of the board was anxious, but those answers were not forthcoming.
Mr Luyenge: Before you were appointed chairperson of the board, is there anyone who approached you for that position or did you actually get the support of the board members?
Mr Tsotsi: I was approached by someone in the Office of the then Minister, Malusi Gigaba. I was asked to attend an interview for the position where the Minister was present. Subsequent to that interview I was appointed as the chairman.
Mr Luyenge: You indicated that you were forced to resign. Can you attribute that to the relationship between you and the Minister? After the meeting with the President, did you contemplate sharing with board members both formally or informally, before it was formally presented to the board for implementation or confirmation?
Mr Tsotsi: There was no doubt in my mind that I was beginning to experience discomfort with the lack of communication with the Minister. I had been trying to improve the communication and relations with her. This discomfort culminated and was confirmed at the meeting in her office that I referred to. As we were dealing with the company’s business up until the time I left, I virtually had no contact with the Minister. I was aware that there were other board members who had contact with the Minister, in particular Ben Ngubane. At the time of being asked to resign, there was a meeting the board had with the Minister in my absence. I was asked to recuse myself from that meeting and up to today I don’t know what was discussed in that meeting. All I got subsequent to that meeting was this letter for me to answer some charges – one of which was the fact that I’m not fit to be a director. When I actually did resign, I requested some compensation for myself as I was leaving before the end of my term and payment of my legal representation. The board agreed to my requests, subject to approval by the Minister. Consequently the Minister declined to entertain compensation on my part and up to now Eskom has not paid my legal fees. I believe Minister Brown had no interest in my continued stay at Eskom.
The encounter at the President’s residence occurred on a Saturday and the first meeting to address the matter with the board was on the Monday following that Saturday. Therefore there was no time to canvass board members of the matter outside of that meeting. But I felt it was okay for me to raise it at the board before convening with the shareholder representative.
Dr Luyenge: Were there any other instances where you had been instructed or the management of Eskom had been directed and eventually implemented instructions without consulting you, including tenders related to the Gupta family?
Mr Tsotsi: I was not involved with the procurement process; therefore I never saw the processes taking place. There is one particular instance which I recall where the board through its subcommittee on audit and risk had to intercede in a tender. That was at the beginning of our tenure when we were rotating our auditors. I recall Brian Dames mentioning this matter and I do not think he clarified the matter thoroughly. At the time we arrived at Eskom, one of the strongest mandates that the Minister Malusi Gigaba had articulated to the board had been Black Economic Empowerment (BEE) with a focus on the audit profession. The Minister had even convened a discourse of black owned audit firms indicating that he wanted to assist them grow in the audit business through the procurement process in the SOEs. Therefore our marching orders were clear that we had to ensure that in the procurement of audit services, that BEE audit firms were adequately included, right from the request for proposals to the negotiation of the final service providers. What happened was that at the time of the rotation of auditors, the Audit and Risk board committee which had the statutory responsibility for oversight of the audit business at Eskom instructed management to ensure that they make the provisions possible. They specifically looked at whatever prepared documents there were and infused them with what they thought the correct amount of provision for black firms. When the tender documents went out, the subcommittee discovered that they had been altered and it turned out the alterations had been done by someone in management. Therefore the audit and risk subcommittee decided and instructed management to recall the tender. That is the only time I recall where the board and its committee took a very decisive step in intervening in the procurement process.
Mr R Tseli (ANC): Can you confirm you tenure as board chairperson?
Mr Tsotsi: It was from June 2011 to the 23 March 2015.
Mr Tseli: When Mr Matshela Koko was appointed acting Chief Executive, were you chairperson of the board?
Mr Tsotsi: He was appointed after I had left.
Mr Tseli: How did you know that Mr Matjila had acted outside of his delegation of authority?
Mr Tsotsi: As indicated in the statement there was a set procedure regarding the engagement of this particular service. The procedure involved a committee set up to approve sponsorships. What transpired was that Mr Matjila did not use this committee and because of that he was judged to have used the wrong delegation of authority. When this matter was reported to the audit and risk subcommittee it had decided to test the matter with SIzweNtsaluba Gobodo (SNG) auditors. SNG found that indeed Mr Matjila had not applied the correct process in arriving at the awarding of The New Age (TNA) contract.
Mr Tseli: What did the board do regarding the forensic review recommendation that Mr Matjila had to be removed and criminally charged?
Mr Tsotsi: I do not believe there had been mention of criminal charges, insofar as I am aware the company in this event would use its internal disciplinary process to seek redress in such a situation. As I say that did not happen because Mr Matjila had left the company by the time these recommendations were issued.
Mr Tseli: How much money was involved in the Information Technology (IT) systems contract?
Mr Tsotsi: I do not recall the specific amount of money but it was a substantial amount.
Mr Tseli: And what are the provisions of the Public Finance Management Act (PFMA) regarding extensions of contracts by 24 months? Is there anything wrong in a contract being extended by a further two years?
Mr Tsotsi: The extension of the contract has certain processes, if followed, would be permissible and the procedures of the company do allow for extensions should there not be a situation where a renewal of a contract does not occur through a competitive process.
Mr Tseli: From what you are saying, the reason for an extension for a further two years was because negotiations with the preferred bidder were unsuccessful. Do you have an idea what it was that was negotiated?
Mr Tsotsi: I was not privy to those specifics therefore I cannot comment about that but I can say that it is a common practice when you are seeking to contract with someone to have conditions that you feel need to be satisfied where you discuss until you agree on how you shall move forward with your contractor. I think it was at the final stages where there was no meeting of the minds.
Mr Tseli: The problem here is that as the board chairperson, after being informed that negotiations have broken down with the preferred bidder and the recommendation is that the current contract be extended for another 24 months, you have no interest in the negotiations and what is so problematic that it necessitates extension?
Mr Tsotsi: When we talk governance we are talking about these issues or lack thereof. In the organisation there are very strict processes for handling virtually anything within the company and not least of all procurement. So there are very clear guidelines about at what level and who should be involved in procurement and what parameters exist for the decisions to be made. The last person to be involved is the chairman of the company as he had no business in the operations and procurement of services.
Mr Tseli: The meeting of the 26 February 2016 seems to be quite important as you also received a call from the President about the need for the postponement of the meeting. What were the issues to be discussed at said meeting?
Mr Tsotsi: The meeting had a normal agenda and I can recall what the issues were. This was to be the first meeting of the new board and the first board meeting of the year. What normally gets discussed at the beginning of the year would be major issues such as the shareholder compact out of which a corporate plan would be developed and a mid-term report on the audit situation of the company.
Mr Tseli: What was so special about this meeting that it had to be postponed?
Mr Tsotsi: That is the question I have been asking and I hope that the Committee will be favoured with someone that will come here and tell the truth.
Mr Tseli: Can you talk a little about Dudu Myeni who convenes a meeting and talks about people who must be suspended. Instead of you engaging her, you come up with an alternative of how best to deal with the issue.
Mr Tsotsi: I did indicate earlier that I did not feel pressure to interrogate at the time we were at the President’s residence. She obviously had some authority to be able to invite me to a meeting with the President.
Mr Tseli: Is that why you convened an urgent meeting of the board to implement what Dudu Myeni told you?
Mr Tsotsi: I came back to test the significance of carrying out an exercise of this size with the shareholder representative. I would not ignore anything that was mentioned in the presence of the President knowing that he is aware of this. It was important that I should establish from the shareholder representative what their awareness of this is.
Mr Tseli: So after that meeting you did not make attempts to brief the shareholder representative about this meeting, but instead you convened a meeting according to paragraph 4.11 of your statement.
Mr Tsotsi: In my statement I mentioned the fact that I had this meeting with the Minister around 14 February. You would appreciate how dispirited I was after that meeting in terms of the confidence I felt the Minister had in me.
Mr Tseli: I’m on the board meeting you had in March to implement Dudu Myeni’s instructions. You said ‘I convened a board meeting on 9 March where I presented a proposed resolution. The board expressed its discomfort with this approach and in fact proposed that the Minister be invited to engage on this matter with the board’. From what you are saying, if they did not insist, this proposed resolution was without the knowledge of the shareholder representative.
Mr Tsotsi: That is not correct. I was trying to point out that I had no relationship with the Minister at that point. My responsibility was towards the board and the board had to deal with this matter with the Minister. In fact I was the one who insisted that we have to engage the shareholder on this matter. My statement conveyed the decision of the board and that decision was prompted by, amongst other things, what I had to say. Under ordinary circumstances I would have picked up the phone and said ‘Minister, here is the issue and we need to engage with you’. Because my relationship with the Minister had broken down, I decided that my responsibility was to go to the board and say we need to invite and engage the Minister on this matter.
Mr T Rawula (EFF): You will agree with me there was a collaboration of executive authority (EA) and the Guptas which initiated the suspension of the executives. That initiative could not be placed at the board’s feet, as it had embraced the executive directors. This is evinced from the event which the board had approved to welcome the executives and finance their induction. Therefore the board did not fire the executives because even then it had explored a recusal clause for the executives. You tell us that the Minister had reprimanded you for interfering with the operations of Eskom, and following that Tony Gupta reprimanded you as well. The call from the President seemed to be expressing a particular interest. Can you tell us what your relationship with Ms Myeni is or what her relationship with the President is?
Mr Tsotsi: I have no personal relationship with Ms Myeni nor do I know anyone who has a personal relationship with her. If you consider the objective situation and take the facts and actions that led to the suspension of these executives, the role of the board is clearly identifiable. We have discussed this; any role by the executive authority in collusion with Guptas and anyone else is not clearly evident. Therefore I imagine that if I was to speculate on such a situation, I would be opening myself up to having to substantiate that with facts. I am hoping that all of us who come to this inquiry will be candid, open and truthful about what actually transpired. There is no doubt that this picture is incomplete particularly because I was in the engine room of what was going on. There were things I picked up on, as I have already relayed to the Committee, that is: How is it that within an hour of the board suspending these executives that someone could come up with a list of people that are supposed to act in those positions? Having been close to the situation, I have a conviction that there is more to tell than what has been told so far. I hope and pray that the question you are asking about a hidden hand in this process will surface and someone will have the courage to tell South Africa exactly what transpired. I am afraid I cannot answer to your satisfaction.
Mr Rawula: The board meeting of the 9 March; we have heard that in that meeting when you raised the suspensions and the inquiry resolution the board was divided on the matter. You then proposed the inclusion of the Minister regarding the suspensions. At the meeting of the 11 March the inquiry resolution which had divided the board on the 9th in the absence of the Minister, was passed. Her presence seems to have empowered the board which is why I said earlier the suspensions were the decision of the EA, which you also felt compelled to actuate; am I wrong?
Mr Tsotsi: That is a very difficult question to answer because at the time when the Minister was with the board, board members raised questions. The Minster responded to most; and to the best of my recollection she was not fazed by the idea of having the inquiry and suspending the executives. She did not question as the board members had questioned the wisdom of doing this. She did not raise any discomfort. Therefore, it is not beyond comprehension for one to have gained certain impressions on that matter. But the issue is that much as one may have misgivings about the broader picture, one must accept that the facts of the matter are that DPE, through the Minister, supported this process.
Mr Rawula: Mr Tsotsi, you are on record here as having a sour relationship with Minister Brown. You were under pressure as you have said that you had an impression that the Guptas, who were unhappy with you, were close to Baba. The President had expressed his own interests in Eskom. That pressure was extended to board members through your leadership but I want to ask you: Have you ever received a brown envelope or been given bribe money to go against your fiduciary duties?
Mr Tsotsi: No.
Mr Rawula: Because under your leadership, people were suspended and there had to be acting officials, there was gross financial negligence at Eskom. What personal responsibility are you willing to take for this wasteful expenditure at Eskom so that Eskom can recover the money it lost under your leadership?
Mr Tsotsi: I think it is a matter of what the responsibilities of directors are and the circumstances. One would have to examine and make a clear determination of what is attributable at a personal level; which is something which would involve I believe people competent in matters legal. I cannot say what personal responsibility there would be, if any; because as I say, I am not a legal person.
Mr Rawula: Your meeting with Ms Myeni at the Presidential residence was never sanctioned by the Eskom board and you are on record as telling them afterwards about that meeting. Was the intention to name drop the President so that the board would feel unduly pressured - since the idea of the inquiry came from your visit to his residence where the side chick of the President, Ms Myeni, had told you?
The Chairperson: Mr Rawula, how do you know and how can you say that the President of a country has a side chick. That is out of order, please withdraw that statement.
Mr Rawula: I withdraw. The board became irritated with you and asked you to resign as you say that they started to trump up charges against you. What do you have to say to that?
Mr Tsotsi: In respect of the meeting at the President’s residence I returned to Eskom because I felt that there was need for the board to be informed. It was up to the board to decide how to deal with that matter. I am and never was in a position to impose on the board and never did that because board members would have certainly spoken up had I imposed on them. Sure enough many board members including me were in disagreement with the inquiry and suspension process, but my duty was to bring the matter to the board. It therefore is a serious misrepresentation of the facts to say I decided and caused x, y and z. To that degree, when the board was making accusations against me, those had nothing to do with my fiduciary duties. It will be useful for the Committee to interrogate the charges that the board brought against me as they had nothing to do with causing loss of income to the business. The charges were unfounded allegations which were clearly, in my mind, to make me leave Eskom and the board.
There is one of these Gupta emails which speak about a certain Mr Howa referring to a statement which he was preparing for Dr Ben Ngubane. The statement had to do with how to phrase a press release speaking of my resignation. This matter is reported to have occurred about 10 or more days before my resignation. If we are to accept the veracity of these documents, this says my resignation was being discussed way before there was thought of me resigning, where one board member or more who were serving with me on the board were having a conversation with an outsider about how to reflect my resignation from the board. Hence I have every reason to wonder if my situation was not orchestrated from somewhere; because if you ask my counsel, you will be told how spurious the charges against me were. You could not face a court of law with those charges. As I said earlier I hope this Committee will be favoured with people willing to come here and say these things, as a lot more than meets the eye seems to have been going on. Therefore I am sitting here opened to insinuations and suggestions to what might have happened and what I might be seen to be guilty of; because these gaps exist and they need to be closed so the truth comes forward. For now I will say my removal from Eskom, which is not a resignation, as I am now strongly convinced that it had been orchestrated somewhere.
Mr S Swart (ACDP): Thank you for your coming before the Committee and your resilience in coming alone as other witnesses had their counsel with them. You indicated that you had an outstanding legal account which had to be paid.
Mr Tsotsi: I am glad you have raised the matter because I did have legal representation and currently do to date and I was meant to come here with said representation but a misunderstanding occurred yesterday morning. As I was preparing to come here my legal team’s impression in consultation with the Committee support staff and counsel for the Committee was that they would not be permitted to sit-in the proceedings. But that was clarified to me that they would have been allowed to assist the witness rather than speak on behalf of the witness.
Mr Swart: Do you feel any disadvantage for not having your counsel here today?
Mr Tsotsi: To some degree yes! At the time of my dispute with the board at Eskom there had been a commitment, and Mr Khoza was a board member then as well, and agreement by the board that they would pay my legal fees for the issue at hand at the time. But those legal fees were still outstanding.
Mr Swart: Have you felt intimidated by any person? And someone indicated that you are unemployed at the moment because of the stance you have taken?
Mr Tsotsi: I have not felt intimidated as such but I am aware that generally institutions that I would have ordinarily had some relations with seem to be shying away from me. I am aware that it is because of what transpired at Eskom and that no one is certain where I stand.
Mr Swart: You are not the first witness to say that and the message from this Committee to corporate South Africa is to look favourably upon such candidates prepared to take a stand for what is just and right, as we evaluate the evidence you have presented to us.
You indicate that there is a hidden hand here and maybe it is not so hidden and the freight train you analogised about is a coal train which is clear from your evidence to be the Guptas, Mr Salim Essa, aided and abetted by Minister Brown and uBaba President Zuma. Would you agree with that? As it is direct from you evidence.
Mr Tsotsi: I would not say the evidence is direct and you are welcome to connect the dots. My job is to detail my experiences and the deductions I will leave to yourselves.
Mr Swart: Have you read the Eskom Inquiry reference book by Professor Anton Eberhard?
Mr Tsotsi: I have actually had discussions with Professor Eberhard before he wrote the document.
Mr Swart: Does the book not connect the dots to a large extent in your view?
Mr Tsotsi: I think he has done a useful job in that the book gives us an analytical base from which to try and understand what is going on.
Mr Swart: You have just said that your situation was clearly orchestrated and one can see that is clearly a connecting of the dots. A new board is appointed where every member has connections to the Gupta family and Mr Essa. Immediately thereafter you are called to a meeting to discuss the suspension of the executives. You can clearly see a pattern to rid the board of those that could be seen as obstacles. Would you be in agreement with that to a certain degree?
Mr Tsotsi: I would say that the people who were batting for the organisation were having difficulty, because their views and authority were constantly being challenged. The pressure they were put under had to come from somewhere.
Mr Swart: The extension of the TNA contract was clearly to benefit a Gupta-related company. Once the Financial Director refused to sign it and it developed into irregular and wasteful expenditure and it is clearly in breach of the PFMA, i.e. the role Collin Matjila played in that regard. Are you in agreement with that?
Mr Tsotsi: I agree and in my statement I make the point that we accepted the finding as well as the corroboration by the legal firm.
Mr Swart: On the meeting with Dudu Myeni and the President where you are introduced to Mr Lennell, it seems to me that you got direct instructions that this was going to happen. The next day when you go to the board meeting you take Mr Lennell with you. That in itself appears to be a breach of procurement processes, because the board said there has been no procurement process to appoint this person to do the job. Do you agree?
Mr Tsotsi: There is a bit of a missing link. The reason I asked Nick to come was so that he could speak to the resolution document that he had prepared. I said that the board should consider engaging him in this exercise and the board then agreed that Mr Lennell will work with the audit and risk committee. There was however no formal engagement of Mr Lennell through a contract, but the principle to having him assist the board was accepted by the board. This was one of the reasons the board gave that I supposedly breached, as you are suggesting, the requirements and imposed Mr Lennell on the board. That was not the case.
Mr Swart: That was the meeting on 11 March. We have evidence from Ms Daniels that she and Mr Koko went to see Salim Essa on 9 March. They were then advised that there will be suspensions. The list Mr Salim Essa gave to you detailed how everything transpired. This information was in the hands of President Zuma and Minister Brown days before and you can very easily connect the dots. Would you agree with that?
Mr Tsotsi: I was not aware of that aspect of Ms Daniels’ submission, but it does not surprise me. This was the point I was trying to make earlier that in certain situations your gut feeling tells you that there is more than meets the eye.
Mr Swart: You gave an example of doing things for Tony Gupta and you mentioned the gas to the Western Cape and he said to you ‘we are dealing with Ubaba’s enemies’. What on earth could that mean in your understanding?
Mr Tsotsi: I understood him to be saying that we are assisting someone to access this gas business in the Western Cape who in fact is an enemy of Ubaba. In that instance he is effectively saying we are working against Ubaba. That was the intimidation tactic that was at play.
Mr Swart: Surely it also related to a market competitor to Tony Gupta himself, because he was competing in the same space but there was already a memorandum of understanding. Would you agree?
Mr Tsotsi: Correct.
Mr Swart: Therefore an enemy of Tony Gupta would be an enemy of President Zuma. He would spin it that way.
Mr Tsotsi: That is a fair conclusion to reach.
Mr Swart: Have you read the Public Protector’s report?
Mr Tsotsi: I have only seen snippets of the Public Protector’s report.
Mr Swart: The reason I’m asking is that indicated this freight train that is coming and if you read the Public Protector’s report, its observances very clearly articulate a process by which the board cooperated and benefited Tegeta to purchase Optimum. That would seem to be part of the endgame of this whole process, i.e. appoint a board, remove some of its executives, bring in new people such as Mr Molefe who with Mr Anoj Singh facilitate a major coal contract for the Gupta-related Oakbay. Would you agree with that?
Mr Tsotsi: The totality of the picture and what emerges out of that, gives a view that all of these things are related.
Mr Swart: You have given us a clear picture that shows clear collusion between Minister Brown and the Guptas. Thank you, Chairperson.
The Chairperson reminded Members that Mr Tsotsi has to leave at 15h00 to catch his flight.
Mr E Marais (DA): The actions of Mr Matjila on the first page of you statement refers. Why was there never a follow through, because this person earned a big salary when he was in that position and his actions caused a loss for both Eskom and the country? It can’t be because Mr Matjila was no longer with the company. What’s your view on this?
Mr Tsotsi: I’m not sure what the legal provisions are, but perhaps on the basis of natural justice one could argue that the company ought to have recourse to recover its losses. At the time it was happening our thinking was just confined to the internal disciplinary process.
Mr Marais: The suspensions were clearly coming from the Minister’s side. Did you as board chairman clearly ask the Minister on what basis these executives should be suspended and was there a procedure followed? What proof was there that they should be suspended?
Mr Tsotsi: There was no proof of anything. The idea was that there should have been another form of recusal so that they are not seen to be prejudicing the inquiry while being in their offices. There was no specific provision of this nature in the company’s HR rules. There was some sort of special leave and this was actually muted in one of the discussions. I dare say I was the person who raised the idea of the special leave, but the argument against that was it does not prevent people from coming to their offices and have access to machines and information. The Minister did not give reasons for the suspensions when she came to the meeting and it was a serious limitation.
Mr Marais: I want to go back to your statement and the comment by Tony Gupta where he says ‘we are the ones who can take you out’. Who is the ‘we’?
Mr Tsotsi: I was assuming at the time he was talking about the Gupta family.
Mr Marais: Who was in charge of the War Room?
Mr Tsotsi: The War Room was set up so that there was total accountability to the Deputy President and the War Room had different levels, i.e. a policy level chaired by the Deputy Chairperson and the officials level was chaired by a DG in the Presidency. Overall accountability for the War Room rested with the Deputy President.
Mr Marais: You said there were requests made by Tony Gupta to you. One of these was the gas issue – what were the others?
Mr Tsotsi: Tony Gupta said he was aware there was a certain position in the commercial division of Eskom available; I think it was the position of Chief Commercial Officer. He had an individual that he wanted to take that position. It was a gentleman who worked for MTN. He asked me to help him place this guy in this position. The position was not advertised and I said I don’t know anything about it and if it is advertised I presume the person can apply. When I asked about this and learned the position was not being advertised he told me that “you are the boss; you can just do it – what is the problem”. I told him it doesn’t work that way and I don’t have operational responsibility. He said I am just not interested in assisting him.
The other matter was the TNA and Collin Matjila matter. He asked me why I couldn’t just make this problem go away. I told him the organisation has processes and these processes are being followed. That was the first time that he kind of threatened that I’m not delivering for him. This was around October/November and I think by the time after our previous encounter in Cape Town in February he had had enough, because I’m not assisting with anything.
Mr F Shivambu (EFF): Can you please summarise for us the recommendations by Mr Essa for the Eskom subcommittees of the board. Who were recommended for the board tender committee?
Mr Tsotsi: I will have great challenges without the actual documentation before me to recall the names, honourable Chairperson.
Mr Shivambu: Can we request when you can, you submit the names at a later stage or you cannot retrieve it anywhere?
Mr Tsotsi: I do not know whether the Eskom email system still contains those emails as he had sent me an email in that regard.
Mr Shivambu: But were the recommended names approved eventually by Minister Brown?
Mr Tsotsi: Oh, yes, definitely.
Mr Shivambu: Then we simply have to go to Eskom records to see who was appointed after Mr Essa had recommended board appointments. When you met with the Minister, Mr Essa and Mr Tony Gupta at the Minister’s official residence, who did she introduce them as?
Mr Tsotsi: She did not introduce them to me; I take it she assumed I knew who they were.
Mr Shivambu: So you just started discussing internal Eskom affairs without their roles been clarified?
Mr Tsotsi: I actually did not even sit down as my time did not go beyond five minutes. All that transpired was that I only needed to affirm what the Committee selection would be as the Committee selection was made and when it would be sent to the Minister. The Minister then informed me in the presence of the two gentlemen that the list was finalised.
Mr Shivambu: In which month of which year was this meeting?
Mr Tsotsi: This would have been December 2014.
Mr Shivambu: It is strange because on many occasions the EFF has sent letters to Minister Brown asking her if she has ever met any Gupta family member and associates and she was emphatic about her No. Are you sure it was Minister Brown at that meeting because she is going to come here and repeat what she said to us before?
Mr Tsotsi: It was her.
Mr Shivambu: I am interested in the debt and borrowings of Eskom because the figures I have from the Annual Reports of the company are saying that in 2011 Eskom had borrowings and debt of about R12.5 billion, as compared to now where there is a state guaranteed debt of R365 billion. Does that reflect reality, in terms of your time as chairperson of the Eskom board?
Mr Tsotsi: I don’t have the specific figures in my mind but for the duration of my time, Eskom debt was growing quite rapidly and we were borrowing against a guarantee and National Treasury was greatly concerned about that.
Mr Shivambu: I want to confirm that Tony Gupta asked from you to be supplier for OCGTs in the Western Cape, for appointment of a senior executive at Eskom and the TNA contract; is that so?
Mr Tsotsi: That is correct.
Mr Shivambu: The meeting with Ms Myeni at the Presidential residence. Did you not raise questions specifically about the suspension of Mr Matona, a former DPE Director General, who had just arrived at Eskom and she is saying you must suspend him?
Mr Tsotsi: As I have said already, I had expressed my shock and indicated to Ms Myeni that the suspensions had the potential to cause instability and anxiety in the business. She responded that there should be no difficulty with the suspensions as they would reflect that the executives would have not done anything wrong but obviously that was besides the issue in my mind. When the President came in I reiterated this by saying ‘perhaps we should find a modality which would require no suspensions to be served but rather cause a recusal of the executives from their offices, as suspensions had all manner of implications, including on the personal and professional integrity of the executives’.
Mr Shivambu: The dot that has to be joined now is that whenever Ms Myeni appeared before the Standing Committee on Finance she would bring some militia group called Black First Land First (BLF) to come and write letters to disrupt anything raised against SAA in Parliament and the Minister of DPE had written us a letter which was copied by BLF to object to this Committee doing what it is currently doing? And the modus operandi of the Guptas and their associates was to deny the existence of meetings with the President. The evidence of Mr Tsotsi is a clear bridge about when Eskom had been captured to date. The looting of Eskom was elevated recently by the payment by Eskom to Trillian which is owned by Mr Essa.
I think we are becoming clear about what has been happening and I suspect that the remnants of Mr Essa’s instructions and control remain at Eskom. We may need to discuss how we deal with these illegally instructed appointments at Eskom because if the business owes R365 billion state guaranteed debt that is a danger to the fiscus. Already Eskom is shifting the costs to ordinary citizens by asking a 19.9% increase on electricity costs because a syndicate of criminals has run down the business for their selfish benefit and Parliament has to stop that.
Mr M Gungubele (ANC): What haunts me is the fact that no matter how committed our political principals can be to adhering to the principles of good governance; if those who are deployed under them cannot stand the test; whether it is new and future leadership, I suspect the problems we have will continue. Would you agree?
Mr Tsotsi: You are correct.
Mr Gungubele: I keep questioning that you are called by another SOE board chairperson to a special place of the President to discuss the dynamics of your entity and that translates to you acting without question afterwards. By the way, you will find that your version of what happened in the meeting of the 11th is disputed by some of the witnesses who were here, and whether they have an agenda, is another story. Your version says the Minister knew who was going to be suspended but the two other versions I heard simply said that you know what to do. Furthermore, it was said that you fought hard to convince the board. I am interested in your response to “fighting very hard” for something which you say was not your view. You have a right to challenge.
Mr Tsotsi: Indeed, in relation to the notion I was fighting hard; there is a misplacement of what the crux of the matter was that we were trying to get at during that time. I was chairing the meeting and wanted to be certain that everyone participates in this decision; and remember that this was the second meeting of the board therefore the engagement amongst board members was quite new. Therefore it is also possible that someone listening to me could have had the impression that I was being persuasive because I wanted to achieve something specific. That is not the case. What I think probably came across was that because I had more intimate knowledge about was on the table than the rest of the board, it would have seemed that I was being supportive of what should happen to a greater extent than anyone else. All that reflected was that I was more conversant about what was being discussed.
Mr Gungubele: Being a board member and you see the board chairperson is coming from the President’s residence where he met with Ms Myeni and he comes across as fighting passionately about something which the board felt was inappropriate. What would be your view of that chairperson?
Mr Tsotsi: If the chairperson came across to me like that, I would want to say and think that person has a particular prejudice in favour of what should be happening, or is very anxious and keen to carry out some particular mandate that this person received. What is not quite correct in what I heard yesterday was that it is not true that there was wholesale objection to the suspensions of individuals. What board members were objecting to was the approach in which the matter had come across. They did not like the idea that there was a document which purportedly represented a resolution which needed to be taken. The board felt that it was being ambushed into doing something which it felt it needed time to interrogate and have more say about, and they also needed to hear what the shareholder had to say. Not one person raised an objection to the idea that the executives had to be set aside, except to say let us try and find a better modality if it is possible, rather than suspension.
Mr Gungubele: Therefore you would say when Ms Klein says: ‘to my understanding none of the suspended executives were given reasons for their suspensions; instead, they were simply told that they were required to step aside in order for the inquiry to be speedily concluded and that they were not being formally charged.
Mr Tsotsi: Ms Klein was the most vociferous person in this P&G meeting particularly pertaining to how this process must work. I recall that she even pointed out that having been a director for Institute of Directors in Southern Africa (IoDSA) she was quite conversant with governance processes that situations like this demand. So, I said it is fine we have no problem that is maybe why she was on the board. I think it is not correct to suggest that the executives did not get reasons for their suspensions.
Mr Gungubele: Do you know a Mr Malesela Sekhasimbe?
Mr Tsotsi: Yes, I know him. He was a general manager with the commercial division of Eskom. He through some process at the company ended up being suspended and he was in suspension at the time of this process. He would be a level just below the executive.
Mr Gungubele: What would be your comment to Ms Klein saying you once suggested that during that period of suspension, Mr Sekhasimbe should act as a CEO?
Mr Tsotsi: I think that is ridiculous.
Mr Gungubele I think you said the President asked what the meeting was about but Mr Lennell’s documents say the President knew what the meeting was about and actually committed at the end of the meeting that he would speak to the Minister with regard to how the discussions went. There you find two different versions of the same meeting
Mr Tsotsi: I would not say different versions but an issue of recall as Mr Lennell probably recalls more than what I have portrayed; but the essence is that I am saying that without forgetting I found them all there; therefore there could have been a prior conversation between Mr Lennell, Ms Myeni and her son before my arrival. Therefore he might have known more than I do about the President’s involvement. I am reporting what transpired in the meeting with the President in the presence of Mr Lennell.
Mr Gungubele: But he says the President committed to speaking with the Minister at the end of the meeting with you present and what I am saying is that the President’s commitment in that fashion could only be attributed to someone who understood the essence of the meeting.
Mr Tsotsi: Indeed, the President understood the essence of what needed to be done but when he was intervening in what was said, he was asking clarity seeking questions. At the end of the meeting when he committed to engaging the Minister that clarified the fact that he understood what was going on.
Mr Gungubele: There is a view that the appointment of Collin Matjila as acting CEO was against the view of the board. What is your explanation to that?
Mr Tsotsi: To clarify this: This happened around December 2013 and Brian Dames departure was fairly imminent and the board engaged itself on the acting CEO role. It was decided that no board member should act and we agreed to canvass a name of someone to act, and this was Dr Steve Lennon. I was instructed to canvass this name with Minister Gigaba which I duly did and the Minister was comfortable with the acting role of Dr Lennon. I informed the board of the comfort ability of the Minister with the canvassed name in this acting role. Towards the time when Mr Dames was to leave and Dr Lennon was to step in, I received a phone call from Minister Gigaba where he was quite irate. He complained that we are attempting to restructure the business without consulting. All that had been happening then was that we had asked Dr Lennon to see, post-Mr Dames exit, what kind of strategic view the leadership of Eskom should have on the business. How the Minister knew about that I have no idea but he was clearly aware and he subsequently wrote a letter that there would be no restructuring at Eskom until a new CEO is appointed. We then decided, as Dr Lennon withdrew as he felt prejudiced, that we had to look for someone else, which is how Mr Matjila came on board.
The Chairperson thanked Mr Tsotsi for coming before the Committee and apologised for keeping him for such a long time.
Mr Tsotsi: I think the things said here today are very important and I want to reiterate that I am very sorry to the three executives were lost to Eskom and because they have suffered in their careers as a result of this. I would wish that other board members and other persons involved in the process at Eskom at the time would share this with the executives. I do not know to what extent Eskom can formally declare its position in terms of that, but if it is possible I believe that Eskom too should declare its position regarding the consequences they have had to suffer because of us.
The Chairperson said the documents had arrived from Eskom which Mr Tsotsi had asked for.
The meeting was adjourned.