The Standing Committee on Public Accounts was briefed by the Minister of Public Enterprises on allegations of corruption, theft, maladministration, sabotage, lack of consequence management, cartels, and other financial irregularities at Eskom by the former Group Chief Executive Officer (GCEO) of Eskom, Mr Andre De Ruyter, Mr De Ruyter made several references to engagements that he had with the Minister of Public Enterprises, where he shared information about the alleged corruption and criminal activity at the power utility. The meeting was to allow the Minister to exercise his right to respond and react to issues that had been raised.
The Minister of Public Enterprises said that as a result of these interviews, the impression had been created that South Africans had newly discovered that corruption was rife in institutions like Eskom. The Minister had compiled a number of documents and files for the Committee to remind South Africans that corruption had been rife in Eskom for a long time. He indicated that corruption was not going to be eliminated or minimised by engaging in politicking. The Minister responded to a number of the issues that had been raised by Mr De Ruyter. Eskom was not just a feeding trough for the ANC, as the former GCEO alleged. There were many actors, both outside of Eskom and within Eskom, who had collaborated to undermine procurement and other processes in Eskom. All of that was done to ensure that they could get more work and make more money. There was relentless greed that drove people in this direction on an unmitigated basis. He emphasised that there was no interference or micromanaging with the work of the GCEO or any senior manager at Eskom. He discussed the ‘De Ruyter Project’. Mr De Ruyter did not discuss the project with him at any length. Mr De Ruyter had told him in passing that he was doing this because the law enforcement agencies were not coming to the party. Mr De Ruyter had told the Minister that he was not using Eskom money, and that he was raising the money privately. The business sector provided some or all of R50 million. The Minister had no knowledge that Business Leadership South Africa (BLSA) was funding the project until it became publicly disclosed in recent days and weeks. He was not aware that there were reports to the Eskom board, either the previous one or the current one. Nothing was placed before the risk committee, audit committee, or any other structure of the Eskom board. There also was no correspondence that the Department received. The Minister noted that he could not mention the names of people as the investigation was not complete. He had been told that it was preliminary information and not evidence. This investigation should be approached skeptically and discredited as some of the allegations or information could not be verified. The allegations and information were currently untested.
The Members raised concerns that the Minister had indicated that he did not have the report and had never influenced that report. The Minister had the role of a shareholder, of an executive authority, who would at times interact with the GCEO on matters of Eskom. The direction of the investigation indicated that there was no trust in law enforcement. There was no trust in SSA. There was no trust in the police. There was no trust in anyone who had a responsibility to deal with all aspects that related to the functionality of Eskom. Did the fact that the Minister did not know about the report or not have the report reflect that the former GCEO did not have trust in him?
A Member of the DA highlighted that the current situation was a result of poor policy choices, of an inability to control corruption, state capture, and theft. The currency was in freefall. The country was sitting in a very serious situation. On the other hand, there was a very curious South African disease, which was to always shoot the messenger. It was seen again and again. The issue of the board was serious. This was supposed to be a board that was engaged. The chairperson of the board had told the Committee quite boldly that the fact that the allegations of serious corruption from political players in Eskom were not Eskom’s problem because it was SAPS that investigated. The chairperson of the board did not seem the slightest bit interested in pursuing any of these allegations.
A Member of the ANC noted that they were surprised at the content of Mr De Ruyter’s interview, especially to hear his distrust in the State when he was still an official. It was asked, after that interview if the Minister had tried to engage with Mr De Ruyter on the allegations made. Could Government take action against Mr De Ruyter, because at the time of the interview, he was still the GCEO of Eskom?
The Chairperson of the Committee asked why Mr De Ruyter’s allegations were not acted on. At the time he made them, he was still in an official position of authority. The issue of Mr De Ruyter not being vetted was raised. Did it ever concern the Minister that there was a critical SOE, such as Eskom, with an unvetted CEO? The matter had been raised on numerous occasions. The point was persistently made that the CEO was not vetted. It was highlighted that unless Cabinet took a concrete decision to firm up the efficiency and effectiveness of the SSA, in its vetting processes and protocols, it was going to be a major contributory factor to the collapse of the State. The Committee was concerned that the report had been privately funded and yet, remained elusive. The existence of this report was a threat and risk to national security. The fact that R50 million was given to the investigation meant that those involved were very deliberate about what they wanted. The matter needed to be investigated further. This was State information in the hands of unvetted people and in the hands of private interest. The Committee instructed the Minister and Eskom that this matter should be prioritised.
The Chairperson welcomed the Members, the Minister, the Deputy Minister, the Head of the SIU, the Department, and the team from the SIU. The Committee was scheduled to meet with the Minister of Public Enterprises on matters that the Committee had been dealing with.
The Chairperson provided the background. On 26 April, the Committee met with the former CEO of Eskom, Mr De Ruyter, following the television interview he had with ENCA, which aired on 23 February. The Committee had noted the allegations. Some of which were new, some of which were things that were already in the public domain. The allegations were largely related to corruption, criminal activity, and maladministration at Eskom. Mr De Ruyter spoke about breaches of the PFMA. The Committee had met with Eskom more than any other entity. It had conducted two oversight visits to Eskom. The Committee was meeting this morning because Mr De Ruyter made several references to engagements that he had, or alleges to have had, with the Minister of Public Enterprises where he shared information about the alleged corruption and criminal activity at the power utility, including but not limited to the naming of a senior politician. In so far as the activities of corruption were concerned at Eskom. This meeting was to allow the Minister to exercise his right to respond and react to issues that had been raised. It was an exercise of ‘audi alteram partem’, and then for colleagues to engage with the Minister on the issues that were raised. The Chairperson noted that there were other things happening in the public domain about these issues, but that the Committee would not go there. The issues were around what Mr De Ruyter had said. The Committee had met with the National Commissioner of Police, the Hawks, the board of Eskom, and the former chairperson of the board. In due course, the Committee would be meeting with the Advisor to the President, Dr Mufamadi. The Chairperson handed over to the Minister to address the Committee and raise his issues, and then the Members would ask questions.
Briefing by the Minister of Public Enterprises
Mr Pravin Gordhan, Minister of Public Enterprises, greeted the Chairperson and the Members of SCOPA. He thanked the Committee for the opportunity to make responses, under the ‘audi alteram partem’ rule, to assertions that had been made by various people. The Minister acknowledged that the Committee was undertaking this inquiry in a context where load shedding was harming the economy, investment in the economy, and disrupting the lives of millions of citizens. Very understandably, lots of people were very upset with Eskom and its performances at this point in time. State capture had damaged SOEs very significantly. It could be crystalised, as experts had done, as the plant, the people, and the process issues. Each of them had a multiplicity of subtopics that could be looked at. Some of these topics the Committee, and other Committees of Parliament, had looked at in the past. There was no doubt that there was a link between corruption, sabotage, and load shedding. Although one could not say that these factors were entirely responsible, there were a variety of other factors that contribute as well. Corruption played a big part in what was seen today, both corruption in the past, and corruption that is taking place at present. It was also a time when South Africa is a year or so away from the next general election. As the Chairperson had pointed out, there was a lot going out in the public domain where fake political narratives, character assassinations, and all sorts of things were being said about individuals or a collection of individuals or organisations. That context or elements of the context should not be forgotten as well. From what he had heard while he had been away about some of the proceedings, it was clear that the governing party was also under attack. It suited the purposes of electioneering to be in that mode. The Minister noted that what was required was to set aside the politics from making Eskom work. As he had said on many occasions before, the issue of electricity and energy, and the consequences of load shedding should be a mobilising factor for all political parties, all organisations, and citizens as well. The government’s expectations and the expectations of South Africans of Eskom were fairly clear. They wanted the electricity that they had been so used to, as citizens elsewhere in the world demand the same of the utilities, whether they were state-run and owned, or whether they were privately run and owned. They wanted efficient operations within the current generation fleet. When it was clear that these efficient operations were not taking place, something must be done about them by those that were in positions of responsibility. At the same time, the Government had become acutely aware, both as the world and as South Africans, that it was undertaking a very serious energy transition, and that that transition must be undertaken soberly and within the context of the conditions in South Africa. This was as South Africa was making its contribution to minimising the negative impacts of climate change. It was expected of Eskom, over the past years subsequent to the state capture period, to rebuild the expertise and professionalism of management and the operational staff. That should have been the focus of those in charge. As part of the process element of the three Ps, there was a need to re-inculcate engineering disciplines in the processes at the plant. What was needed, as many had said including Treasury, was to ensure that the organisation once again reached a point of financial stability and sustainability. And in doing so, the State made its contribution by reducing the debt of Eskom and taking over some of that debt. It was also expected for Eskom to seriously look at its expense structure and to cut costs in a way that would not harm the operations of the organisation but at the same time contribute to financial stability. It was also expected of Eskom that on a daily basis, systems, processes, and the appropriate technologies would be put in place, which was well within the capability of any management of any institution of this type. To ensure that corruption in the procurement processes, in particular, which would be a particular concern to the Committee, must be dealt with, analysed, and traced to its origins to the extent possible. It was quite clear that whilst what he called ‘State Capture One’ had been concluded. Although many were still to face the consequences of that. ‘State Capture Two’ in different forms, and on a smaller scale, but perhaps even with significant amount of monies being lost, is very much at play. He had referred publicly to Mpumalanga being a crime scene on many occasions, so there was nothing new that had been added to this discourse or any insights into exactly what was going on at this point in time. The responsibility of both management and the board and indeed the Department and the Committee, was to ensure that good governance was in place. To the extent possible, every member of staff needed to have the appropriate level of ethics and integrity in their conduct, and that proper risk management systems were in place. The Committee had a responsibility in terms of its terms of reference and mandate by Parliament, to look at these and other factors and ensure that there was accountability, but more importantly delivery on these aspects as well. The Minister reiterated his commitment and the Department’s commitment to parliamentary accountability and to be helpful in executing the mandate of the Committee. As the terms of reference of the Committee indicates, he looked forward to recommendations from the Committee that would assist in strengthening the financial and risk management systems and improve the governance systems within institutions like Eskom. In the recent past, as a result of these interviews, the impression had been created that South Africans have discovered that corruption is rife in institutions like Eskom. So, to remind all South Africans, with the assistance of the Department, he compiled a number of documents for the Committee. Some of them had been emailed to the Committee. There were two lever arch files that he would hand to the Committee to remind South Africans that corruption had been around for a long time. Some elements of corruption had been dealt with; other elements of corruption still needed to be dealt with. However, it needed to be recognised that as far back as 2017, the same Parliamentary Committee on Public Enterprises, of which he was a part of at the time, held an inquiry into Eskom. The Committee’s report was adopted by the National Assembly late in 2018. In 2019, everyone was familiar with both the processes and the outcomes of the Zondo Commission and its inquiry into institutions like Eskom and the extent to which state capture damaged the institution. There had been a number of SIU proclamations and investigations. The Head of the SIU, Adv Mothibi was present. The SIU had some materials here that would give the Committee an indication of work that had been concluded and work that was still to be concluded. Institutions like Eskom had also undertaken forensic investigations of their own. There were many reports that were available, both in relation to the past and in relation to the current period. The Minister provided an example of the supply of fuel oil to Eskom. All the presentations and reports were in the files that the Department would hand to the Committee. He indicated that corruption was not going to be eliminated or minimised by engaging in politicking at this particular point in time. Eliminating corruption required boldness and courage. It required a principled approach in terms of opposition to corruption. Whatever the origins of corruption or the corruptors might be, in terms of any affiliation institutionally or political party, those who were found to be corrupt, against whom there was sufficient evidence to ensure the law enforcement agencies would act in an appropriate way, must be dealt with by the law. The word corruption embraced a number of different types of activities. For example, the sabotage that takes place as a result of mixing coal with stones at power stations, like my Majuba, the consequent destruction or damage to mills so that contractors that are required to repair the mills have a constant stream of work, the trucking industry that sometimes lines up a couple of 100 trucks outside of a power station to deliver coal, rather than have conveyor belts conveying that coal, the contractors who were involved in one or other capacity, particularly in respect of maintenance of units of power stations. There were many different aspects like that. Each of those has good people in those positions and services, but there were also those who wanted to make ‘a quick buck’ in the process as well. Some of them had been identified. Some of them had been dealt with. There were a number of other assertions that had been made in that interview that the Chairperson referred to and elsewhere. The Minister was going to respond to some of them. Eskom was not just a feeding trough for the ANC, as the former CEO alleged. There had been instances where there had been a link. That could not be denied. There had been links between institutions like Chancellor House and some of the projects that had been undertaken. However, it was important to recognise that multinational institutions like ABB, SAP, local companies like Trillian, and the construction companies with whom some litigations and some negotiations are still continuing between Eskom and themselves, and a plethora of others, have been feeding off the Eskom situation. There needed to be a separation between the State and the party. He hoped South Africa would move more in that direction in the coming years. Ascribing everything and every problem to a political organisation, rather than having the sense of responsibility that accompanies the CEO’s position, which was to ensure that corruption on the scale that was found would not be allowed to continue to the extent within the resources and capabilities of the CEO. He did not know if corruption was costing Eskom a billion rands a month. He had not done the accounting. But this was not a new revelation, as he had previously indicated that Mpumalanga was a crime scene. There were lots of actors, both outside of Eskom and within Eskom, who were collaborating to undermine procurement and other processes, supply counterfeit parts, and do a poor job in terms of maintenance of units when they had outages. All of that was done to ensure that they could get more work at the end of the day and make more money. There was relentless greed that drove people in this direction on an unmitigated basis. And this is what the Department had been trying to deal with since 2019. There was no one action that was going to stop these things from happening. It required a huge collective effort in order to counter the forces of corruption in the situation Eskom was in. He discussed the matter of the old board and the new board and why it took so long to appoint a new board. It was regrettable that skilled professionals and experienced businesspeople, whose skills are collectively required on boards of SOEs so that they are run properly and actually understood the business that they were supposed to be governing, did not want to be associated with these SOEs. They believed that their reputations would be tarnished. They did not want to be part of the casualties that other honest professionals had been part of in the past, particularly in the state capture period. Finding people of the right calibre, with the right integrity, and with the right public orientation, in terms of national interest, was not an easy task. This was found in recent times as well. Many of the financially skilled people balanced out their own reputational risk against what corruption and state capture had done to a particular institution. This had been a factor in the availability of people. There have also been delays within government processes. It was easy to say, that so and so was not doing their job. However, there are complex processes that go into identifying, scrutinising, engaging with, and finally appointing a board. He wished that the Department had taken a shorter time to arrive at the point Eskom was today. He believed that the board that the Department had appointed since about October last year, had all the capabilities required. The Department had ensured that there were four engineers on that board who understand the engineering business, who understand the energy situation. Together with accounting and other professionals, they made a good combination who would make a valuable contribution to finally turning Eskom’s fortunes around. He discussed the issue of micromanaging. He was not an engineer. He was trained as a pharmacist. How could he give engineering instructions to workers in a power station? He categorised that as absolute nonsense. There was no micromanaging. Here was a situation where the CEO thought he was a know-all. The CEO certainly had not worked in a power station situation before. The Minister refuted any assertion and allegations about giving instructions. For example, he was told that he had instructed a middle manager at Koeberg. He did not know anybody at Koeberg to give instructions to. Why go and perpetrate a particular lie in order to undertake whatever character assassination this individual thinks he was engaged in? As the shareholder, he had not been shy to ask tough questions about how things worked, why they did not work, and what were the problems in a particular power station when units collapsed. Or why the EAF (Energy Availability Factor) had been declining over the three-year period during the stint of this particular CEO. There was nothing wrong with that. The Minister was required to give explanations, whether it was to Parliament or to the public, about what goes on in this situation. If tough questions could not be answered, then it said something about the capability of individuals. Eskom had really good professionals who understand their business, and who - if given an opportunity - can actually rise to the occasion. He found his interactions with them and the Department's interactions with them extremely valuable in understanding the constraints they worked with, but also the possibilities that they have. Many of them are lateral thinkers who think outside the box and who have solutions. It would appear that nobody lends an ear to them in a way in which there was a collection of ideas of different individuals and their wisdom and experience to benefit Eskom and South Africa as a whole. Elevated levels of load shedding necessitated that the shareholder weight was appropriate, in terms of the memorandum of incorporation, and had to intervene to find out what was going on. In December last year, it became fairly public that Eskom had difficulty acquiring diesel. The Minister, the Acting Director-General, and another colleague got directly involved in trying to find diesel, check its availability, check its pricing, check the Eskom accounts to see if there was R1.3 billion or R1.4 billion rands available, make sure that that money went into spending on the diesel, and look at the logistics of the delivery of that diesel. Was that micromanaging and intervening? Yes, but the Department did not manage the power station. It managed the procurement. It facilitated the procurement of diesel. The Department was arguing with PetroSA, and the argument continued to this day, that the premium PetroSA adds to the cost price of diesel means that if they remove that premium more diesel can be used, and more power can be generated from the OCGTs. Therefore, possibly, the level of load shedding could be avoided as well. It was in the public interest to do whatever was done. It was done with the full knowledge of some people that the Acting Director-General was interacting with Eskom and similarly with PetroSA as well. Similarly, the Acting Director-General in February 2023 had to ‘push Eskom to sign off on what is called the standard offer’. The Committee would remember the announcement by the President that wherever possible if megawatts were available, for example in the Southern African power pool, Eskom should acquire those megawatts as quickly as possible. There was a long bureaucratic process, both outside of Eskom and within Eskom, that was delaying the acquisition of megawatts from Botswana and Zambia. It was only 364 megawatts at that stage. 360 megawatts were better than what some of the units in the power stations and some of the plants delivered, so the Department assisted in that regard as well. The Minister noted that he was an engaged and vigilant shareholder representative, and certainly not a passive one. His responsibility was to the public of South Africa and must operate within the codes of corporate governance. It was important that what had to be done to mitigate load shedding must be done without micromanaging, but rather acting as an active facilitator to get these things done. He emphasised that there was no micromanaging. Eskom did not operate as an island in the South African situation. It was a key element in a complex ecosystem that involved regulators, private producers, and its own plant and involved law enforcement and other agencies as well. Facilitation of the right kind of cooperation amongst all parts of that ecosystem was absolutely important. He emphasised that there was no interference with the work of the CEO or any senior manager at Eskom. If that was the excuse that was being used in books or interviews for the lack of performance then that was a pitiful excuse to be utilised. He then discussed the statement made by the previous interim chair of the previous board, Professor Makgoba, that he had approved intelligence gathering. Professor Makgoba, implicitly or otherwise, suggested that the Minister gave approval for what was turning out to be a problematic R50 million project initiated by the CEO. The Minister refuted what Professor Makgoba was saying. Professor Makgoba had it absolutely wrong. Secondly, when someone told him a thick cable was cut and sent a photograph of it, he would ask for more information about it and who was responsible for that area. How could a thick cable like that be cut to sabotage a particular part of the power station and cause a unit or two to fail? That was information about a specific incident that took place. It was not about going around and doing the job of the South African Intelligence Services. In that sense, Professor Makgoba was misleading and misinforming the Committee and the public as well. He discussed the ‘De Ruyter Project’. Mr De Ruyter did not discuss the project with him at any length. The Minister would provide a chronology of events. Mr De Ruyter had told him in passing that he was doing this because the law enforcement agencies were not coming to the party. Mr De Ruyter noted that he was not using Eskom money, that he was raising the money privately, and that he told the chair about it. What Mr De Ruyter told the chair the Minister did not know. It was discovered that the project actually started in January 2022. The interaction he was talking about happened sometime late in June or July 2020, six months later. Mr Ruyter was operating of his own free will on this project. At the same time, it seemed he was writing a book rather than focusing on his job of keeping the power stations going and providing electricity to South Africa. For six months, he did not know anything about this project. Nor did he know anything about the details of what Mr De Ruyter was up to. It was just mentioned in passing. There was not a request for approval, because he was neither asked nor did he give it. It was an initiative of Mr De Ruyter. Today it was clear that the business sector provided some or all of R50 million, although there were some differences about who provided what number and at what stage. The Minister had no knowledge that BLSA was funding the project until it became publicly disclosed in recent days and weeks. He was not aware that there were reports to the Eskom board, either the previous one or the current one. Nothing was placed before the risk committee, audit committee, or any other structure of the Eskom board as well. There was no correspondence that the Department received either. He discussed what he knew about. He had been shown a diagram with a lot of names on it. He was being asked, and would be asked by Members, who were these people? He referred to a news article published by News24 on 5 March 2023. News24 had published a number of articles about what was going on at Eskom. It had some privileged information provided to them. It said the following in an editorial, ‘the recent leak of intelligence files from a private investigation initiated by De Ruyter has piqued renewed interest in the gangs looting Eskom. Many of the allegations about the sabotage of power stations have been investigated and published on News24 over the past two years. Allegations of the involvement of politicians as overloads in this grand scheme have been swirling around for years. Without tangible evidence that will withstand judicial scrutiny, there is no point speculating who these politicians may be. We all have our suspicions but without solid proof, they will remain just that’. The Minister said that he was not going to implicate or smear the reputations of others without credible evidence and verifiable facts being provided. Intelligence dossiers, as some Members might remember, have done a great deal of harm and immeasurable damage to South Africa, to its institutions, and to individuals, like Johan Booysen, in the past. The Minister had been the target of a so-called intelligence report in early 2017, after which he was fired as Minister of Finance. He knew personally what he was talking about. He had not been given any copy of any report of the investigation. He could not mention the names of people as the investigation was not complete. He had been told that this was preliminary information, but not evidence. Furthermore, it seemed that there were weekly reports that Mr De Ruyter received from this project. He asked the Committee to request My De Ruyter or the people who conducted the investigation or those who might have had subsequent access to these reports to provide details or names of individuals. The basis for him knowing names was discredited. This investigation should be approached skeptically and discredited as some of the allegations or information cannot be verified and were untested at this point in time. The Minister noted that one of the questions that was being raised is what he knew about corruption, and what did he do about it. Part of the two files sent to the Committee indicated some of the actions taken by the Minister and the Department. He went through a few examples. Firstly, as soon as he settled into the Department, after the appointment in March 2018, he asked for some staff to be set aside and for them to collect all the forensic investigation reports from all the SOEs and assemble them in a special room set aside for these reports. The SIU was then requested to review the forensic reports and take appropriate actions. Adv Makobe, who was present, could verify that. The SIU conducted a review of 22 forensic reports covering the period 1 April 2015 to 31 March 2018, subsequently, there were many more, to assess, monitor and follow up on the implementation of the recommendations that were made arising from those investigations. The Department's evaluation of the reports confirmed that some were not fully implemented. A service provider was appointed to verify an additional 245 forensic reports covering the period 1 April 2010 to 31 March 2019 to assess whether the reports predating the coverage period of the verifications were implemented. Subsequently, there had been several SIU proclamations with respect to various SOEs, and that led to a lot of actions. He provided examples of a few. The SIU had launched investigations into 14 coal transportation service providers concerning payments from 2010 to 31 January 2021. As a consequence, five employees were suspended one resigned during the interview with the investigating team and one resigned prior to the commencement of the investigation. There were several other examples. The SIU had referred 5620 matters to Eskom for institutional disciplinary proceedings for failure to submit financial declarations, which were integral to the process of preventing and detecting conflicts of interest, 135 for failing to declare or get approval for doing work outside of Eskom, 10 official red flagged through lifestyle audits, 10 officials referred through whistleblower reports, and so on. Eskom itself had taken its own initiatives. Contracts were cancelled as a result. Through SIU investigations, a contract of R6.9 billion, with a particular company, building contracts to the value of R4.1 billion rands, and this totalled approximately R11 billion. Contracts declared invalid by the courts against R3.7 billion, savings or losses prevented. There was a setting aside of a contract for R2.6 billion. There was a cancellation of another contract R5.5 billion. There was a building contract dispute that was settled for R400 million. The Committee was familiar with the ABB situation and the money was paid both here and in the US as fines. The evidence referred to assist Eskom in defending contractor claims before the dispute arbitration board. This resulted in a total of about R3.4 billion being saved. Next, the Department implemented the State Capture Report. It required all boards to develop action plans, which they themselves had to implement. A team within the Department was monitoring the implementation of these reports. The Department also appointed a legal team, led by senior counsel, to assist the Department in taking action and implementing recommendations where contracts amounting to R14.7 billion were subject to state capture would be dealt with. Approximately R4.8 billion had been claimed against SAP, which is a technology company, PwC, the auditors, and former directors of Eskom. Eskom and SIU successfully recovered R2 billion unlawfully paid. The Committee had covered that in some of its work. The Department was currently finalising consultations with the Companies Registration Office, with a view to imminently launch director delinquency proceedings against 13 former directors of Eskom. 25 names of former senior executives of Eskom had been identified for inclusion into a centralised database of individuals dismissed for their involvement in state capture or who resigned from Eskom to avoid accountability for state capture. That was some of the evidence of what the Department did. The Minister had also played an active part in addressing the sense of frustration being expressed by the CEO at the lack of movement from law enforcement entities. The Minister had consulted with Professor Mufamadi and asked for his advice and assistance in trying to address some of the concerns that had been arising from incidents at Eskom, which only the CEO knew about. And in particular, this would involve investigations of criminality and vandalism that had occurred at Eskom as far back as 2019. State capture and corruption had rendered the institution dysfunctional, and Mpumalanga province was a crime scene. The consultation with Professor Mufamadi was based on his ability to convene the relevant authorities, or concerned, with the backing of the authority of the Presidency, so that priority investigations could get the necessary attention and the law enforcement workstream of NECOM had now taken much of this work. It was providing an integrated basis upon which corrupt individuals or instances of corruption or sabotage or any other form of damage to a plant, was being pursued. The Professor would be able to mobilise support for these investigations, and that should lead to some fruition or conclusion once that mobilisation actually occurred. The Professor would be addressing the Committee and he could speak for himself. The Minister emphasised that he was totally opposed to corruption. Where it was within his scope or ability to play a role in assisting Eskom to combat corruption, he had done so. Where it was within the powers of the Department to assist Eskom in relation to one or other regulatory concerns constraints being removed, it had tried to do so as well. Where it was possible after much dialogue with the Treasury, but also the intervention of the President, to enable the country to take the Eskom debt or part of the debt onto its own books, which had been done to assist Eskom as well. The CEO had done two things that should be noteworthy. First, the contract that he signed as a self-proclaimed champion of corporate governance, and as the only person in town who understands the role of various institutions and people within a corporate governance context. There is a clause 15 in his contract that he signed when he was employed as CEO, which required confidentiality in terms of the affairs of the institution that he served. In no big institution like Eskom and the private sector, would there be a CEO who has left, for whatever reason, going and writing a book about events that have been taking place within the company itself. Secondly, the Minister believed that Mr De Ruyter was taking the country back to ‘swart gevaar’ tactics by labelling people as communists, as people who are mindless, as people for whom the hammer and sickle must be drawn in parking bays. This was the worst insult that anyone could cast on South Africans who wanted this country to work, who want Eskom to work, who want load shedding to end, and who want to mobilise capacity within Eskom, within government, and within society as a whole to make sure that the right things are done.
Mr S Somyo (ANC) thanked the Minister for the detailed briefing given to the Committee. The Minister had provided a compounded response to the issues that had been raised by Mr De Ruyter. Mr De Ruyter was the former GCEO. The Minister had certain expectations for the former GCEO. He asked the Minister to outline the expectations and the intended goals of Mr De Ruyter. The Minister had indicated that he did not have that report and had never influenced that report. The Minister had the role of a shareholder, of an executive authority, who would at times interact with the GCEO on matters of Eskom serving the country. Mr De Ruyter had said that he had done nothing outside of the authority of the executive. Mr De Ruyter said that the investigation had been known by the executive authority. The Minister had indicated that the report was not known to him. The Minister did not have the report. However, the funders said that they knew the report and had received the report. How would the Minister respond to such instances? The Minister was the executive authority of Eskom and the GCEO. The Minister’s own account was an indication of a series of events, which came before the start of the investigation. When the Minister joined the office, he had to attend to a number of investigative reports and worked with the SIU to deal with those matters. The brief to the President must have been a brief from the executive authority, the Minister. How could anyone claim that such a report would have given rise to the reference by the President on the report that was not known to the executive authority? The outcomes were not known by the Minister. He wanted the Minister to comment on those matters. The Minister had said that he went to the President and said that there needed to be intervention in Eskom, specifically the Eskom debt. How was it possible that a report being made that was not known to the Minister, or any other senior accounting officer, had found itself in the President’s State of the Nation Address? People celebrated the amount invested in the report. He discussed the question that went to the former chairperson of the board. It was prefaced on the fact that the primary responsibility of any board was to ensure that there was accountability of those who were performing executive functions in an institution. That board needed to provide guidance on whatever happened in the institution. The former chairperson would proudly say that the board was kept away from the information related to the outcomes of such an investigation. The chairperson alone would know what was actually happening. The direction of the investigation indicated that there was no trust in anyone. There was no trust in SSA. There was no trust in the police. There was no trust in anyone who had a responsibility to deal with all aspects that related to the functionality of Eskom. Did the fact that the Minister did not know about the report or have the report reflect that the former GCEO, whom the Minister had brought into the company, means he did not have trust in him? The Department and Members were now aware that that report had been funded outside of Eskom and outside of Government. Only a portion of the amount was known where it came from. The bigger portion was not known. Eskom had been categorised as a protected institution in terms of its own information, infrastructure. Those who worked at Eskom worked within a high level of security. Mr De Ruyter had never been vetted. He discussed the ‘De Ruyter Project’. Mr De Ruyter had been appointed as the GCEO to keep the lights on. The lights were not on. That was not happening. Now Mr De Ruyter had produced a thick book. Had Mr De Ruyter produced an exit report when he left the institution?
Minister Gordhan responded to the question on the expectations of the GCEO. The expectations were to deliver electricity to all South Africans and ensure that there were efficient operations of the current generation fleet, whilst understanding that there will be an energy transition and that renewables amongst others will play a role in generating power. Currently, more than 80 to 90% of South Africa’s megawatts were generated by the existing fleet, including what it got from Cahora Bassa, which was about 1300 megawatts. When Eskom used diesel then it could get up to 2000 megawatts from the open gas turbine operations, and that is what uses diesel. The expectations of the GCEO were to build up expertise and professionalism, both at a management level and at an operational level, because the state capture process seriously damaged those two levels of staff. While there were good people at Eskom, they needed to be reinforced. They needed to be constantly upgraded in terms of their skills and training and mentored so that they could perform their huge responsibilities. With that came the professionalism and integrity that was required and the ethical conduct which was required as well. Anybody who runs an organisation needed to check, ‘do I have the people to deliver upon my mandate or not? And if I do not, how do I find them?’. Many good people and highly skilled people left during the four or five years of state capture. Many of them have been approached several times to return to Eskom, but they would not do so. The GCEO was responsible for re-inculcating the engineering discipline. In the analyses and reports that the Department had been provided with by experts, it was clear that the engineering discipline has been seriously weakened. If an organisation did not have a disciplined set of operators who are familiar with the way in which an engineering organisation operates, both they and the organisation would find themselves in difficulty. It was correctly pointed out that the non-payment by municipalities was a growing element of debt to Eskom. Included in that debt were also large businesses that were cooking up the metres, so they underpaid compared to what they were supposed to be paying. It needed to be ensured that the State funds were used wisely. The expectation was that with modern technology and big data analysis that is developed now in many firms, and with artificial intelligence tools that are appropriately designed, it was not as difficult to track down malfeasance in procurement processes. He thought that a lot of money could have been saved. Was that happening adequately, is a question that had to be raised. It needed to be ensured that there was an appropriate level of abidance by good governance codes and the promotion of integrity amongst the staff. Mr De Ruyter frequently pointed out that there were individuals around him that he did not trust, but some of them are still in their positions. They should have been dealt with if there was sufficient courage to do so. It seemed to appear only when something was written, or a video clip was provided. He discussed the report. He did not know whether there was one report or multiple reports. However, there appeared to be reports. It appears that they were shopped at four media houses from about December last year. Not all media houses bought into it, and some did. To believe that all of that is the truth about what is happening at Eskom is something that needed to be approached with a high level of skepticism. It appeared that the business organisation that provided some of the funding had received a report. He did not know what that report was. He had not seen it. It was something that the Committee could pursue. He responded to the question about the link with SONA and the report. Whatever allusions were made in that regard were misplaced. He was not aware of any linkages in that direction. He discussed the previous chair of the board. He had high regard for Professor Makgoba as a scientist and for his own personal integrity. The Minister was not sure whether Professor Makgoba gave too much leeway to the CEO during the period that they were on the board. It would appear so. It would appear to be the case that Mr De Ruyter had no trust in State agencies. However, it needed to be granted that there was impatience amongst Parliament, the Department, and the South African public who wanted to see more people in prison. That could not be denied. Law enforcement agencies need to take some product or the other which would create a greater sense of urgency and speed in their processes. The law enforcement agencies needed to demonstrate that South Africa was serious about tackling corruption. He discussed the issue of Mr De Ruyter not being vetted. The Department left that to the board. At one stage the CEO did indicate that the SSA had been there to vet him, but he was not going to provide his personal financial information to the SSA. This was because he doubted what would happen to it. That was his choice. It appeared that there had been several interactions, but he chose not to abide by that process. He responded to the question of whether Mr De Ruyter had prepared and presented an exit report. The intention was that he would stay on after he tendered his formal resignation to the board in order to provide the board with some space to conclude the headhunting process for a new CEO. That time would be utilised to provide continuity and to prepare a handover report. Many of the observations by Mr Somyo were correct. The Minister had a lot of other work to do, so he was not going to spend his time just on this thing when he and the Deputy Minister had many other projects they needed to get off the ground.
Ms B Van Minnen (DA) said that the Minister had warned about the dangers of politicising this process. However, it needed to be understood that there were some facts that are very much common causes that led to where Eskom was today. The ANC has been the ruling party since 1994. Decisions that went back to 1998 affected how Eskom’s maintenance performed, and how there was capital investment or no capital investment. There was a record of decisions going back 25 years that lead to the situation the country was currently in. The country had been experiencing load shedding since about 2008. That was a 15-year period. The Minister was correct in saying that the country was in a serious crisis situation that affects the economy. It affects people's ability to get work. It affects people's everyday life. This was probably the biggest crisis currently facing South Africans. The vast majority of South Africans simply wanted this to be solved. They want Eskom to work. Or if not Eskom, they want to know that they have a secure power supply. Everyone wanted to work towards that goal. However, it could not be avoided that the current situation was a result of poor policy choices, of an inability for various reasons to control corruption, state capture, and theft. The currency was in freefall, not in small part due to the rather dubious decisions regarding the situation with Russia and the Ukraine. This threatened all kinds of things, including the citrus industry, the motor vehicle industry, and half a million jobs. The country was sitting in a very serious situation. On the other hand, there was a very curious South African disease, which was to always shoot the messenger. It was seen again and again. Now the Committee was hearing that the former CEO should have done this and not done that, that he had a confidentiality agreement, and that he should have done things differently. To a certain extent, that was irrelevant. The point is, and even before the book came out, the Committee had seen over the last few years, and certainly, in the last three weeks, some very serious statements and allegations being made. This was not just by Mr De Ruyter, but also by other players that had appeared before the Committee. Last week, the Committee met with SAPS, the Hawks, the SIU, and the aboard. As the shareholder, the Minister, it must be very concerning when it was seen what was coming from some of the sectors. The Hawks did not seem particularly interested in investing allegations. There were kinds of reasons why they were not investigating allegations. They brought up all kinds of excuses, including that they did not know, or it was not new. The SIU was putting their shoulder to the wheel, but their hands were tied by what it is they could investigate. The issue of the board was very serious. This was supposed to be a board that was engaged. She had never seen a board that was less engaged. The chairperson of the board had told the Committee quite boldly that the fact that there are allegations of serious corruption from political players in Eskom was not Eskom’s problem, because it was SAPS that investigated. The chairperson of the board did not seem the slightest bit interested in pursuing any of these allegations. This was the board that was supposed to have oversight over Eskom. The Committee had been hearing serious allegations for some time. There had been many investigations and inquiries into Eskom over the years. At the same time, there was a board and law enforcement that genuinely was disengaged and did not seem interested. The country was in a situation now where the very organs and bodies that are supposed to have oversight and investigate the very serious allegations that are happening, did not appear to be doing that. As the shareholder and the Minister, what was being done to ensure that these bodies were actually going to perform? How was the Minister going to ensure that the board is engaged and that SAPS and the Hawks take seriously allegations that are made and have been made at several different levels? It was important for Eskom to actually move forward. It was good and well to say that the country had corruption for a long time. That did not normalise it. The country needed to see movement going forward. The Minister spoke about the report and what he did or did not know. The Minister said that he did not have a copy of the report. The Minister said that there were two names of political players have been raised, but that these were preliminary investigations. She was not going to ask the Minister for the names. Was the Minister informed, even if it was at a preliminary level, of the names of people alleged to be involved with this? And if so, was there a political will to pursue this to see if there was anything to it, and to see where this is going? The Minister spoke about Mpumalanga being a crime scene. What was being done by the law enforcement agencies? Last week law enforcement agencies were genuinely mystified by evidence raised about the cabals. What had been done about that? This is connected to all kinds of issues related to state capture. She noted that there was an apparent love, or even addiction, that certain State players seemed to have to coal-based energy rather than moving forward to alternatives, that could also assist with the reconstruction of Eskom and power supplies. State capture continues to be deeply embedded in Eskom. It was the case now of scavengers just feeding off a carcass if nothing is done. She discussed the current Acting CEO, Mr Cassim. Mr Cassim said that he was not worried about a grid collapse. What did he know that the rest of the country did not know? Have there been shifts that the Members were not aware of? Blackouts and power cuts were being seen on a regular basis. The country was now in a worse situation at this time of the year than during the whole of last year. So obviously, the situation was getting worse. Why was Mr Cassim not concerned? Did it have anything to do with his trips abroad? The Committee really needed to know what was happening. She discussed the Eskom debt. A large part of the issue of Eskom’s debt had been the mismanagement and corruption at a lot of municipal levels in collecting arrears, in collecting monies that are owed. The Committee had investigated this with COGTA. It was yet to be seen if there was going to be movement and assistance at that level to ensure that these municipalities were actually capacitated to be able to do their job, to ensure that debt is reduced. People who could afford to migrate to alternatives such as solar were doing so. That meant an enormous amount of people who do pay accounts and have financial wherewithal are exiting the system. This was going to make the debt trap worse because what it is going to do is leave the people on the grid, who for various reasons are either paying their accounts and corruption is eating them up, or they're not paying their accounts, which means that Eskom was getting to a situation where it is continuing to decay, because of the internal problems. However, there also would not be money coming into the system. She asked if the Committee could have some information and reassurance on that.
Minister Gordhan said that he surprisingly agreed with a lot of what Ms Van Minnen had said. They agreed that the process should not be politicised. They agreed that load shedding had been around. There had been mishaps and delays. Firstly, in the decision of building Medupi and Kusile. Secondly, the delays in the construction and development of those projects themselves. There had also been a lacuna as far as what was requested before Mr De Ruyter’s time and after his time for 4000 to 6000 megawatts to be provided, in whatever period in order for there to be space to undertake the maintenance that was required. Ms Van Minnen was absolutely right that the situation in Europe, certainly for the northern hemisphere, and elsewhere, as well, has created volatility as far as energy markets were concerned. He hoped that there would be peace in that area and that negotiations commenced soon. He disagreed with Ms Van Minnen in one area. This was not a mission to ‘shoot the messenger’. Mr De Ruyter was not a messenger. He was in charge of an institution. He was responsible in terms of his contractual obligations, by virtue also of his position as CEO for whatever Eskom did or did not do. His expressions about corruption were nothing new. it was said before his time, during his time and it would be said after his time. This was the point that the Minister had tried to illustrate earlier on. It was nothing new there. Was Mr De Ruyter recording every conversation that he had with everybody? Was he more interested in writing a book that would mask his legacy, as far as performance at Eskom was concerned? If the message is that there was corruption at Eskom, it had been heard before. That was not the issue. The issue was, what is being done about it? What are the law enforcement agencies doing about it? What was being done to minimise the possibilities of corruption? This was not about ‘shooting the messenger’. This was not about this poor little guy that was being attacked. Mr De Ruyter went into personal descriptions of all sorts. Was that necessary to give an account of what you did or did not do, at an institution like Eskom in order to explain to people why Eskom is where it is today? If a person was in charge then the buck stopped with that person. If a person was in charge and they had not accomplished their mission, then they needed to show a sense of remorse. One should not then go around making allegations about individuals. That was character assassination that needed to be defended. Some would say that was narcissistic behaviour. He responded to the question on the Hawks. In the presentation to the Committee, on slide 15 last week. There was another slide as well, but in this particular slide, it stated that there were currently three known investigations linked to Mr De Ruyter. This included the alleged poisoning case, in which Mr De Ruyter was a complainant. There was the alleged failure to launch a section 34, which the Minister believed Mr De Ruyter did before he appeared before the Committee. There was a slide seven, where the Hawks said they made a number of attempts to approach him, and they couldn't find him. He would not respond. The Minister was aware that Mr De Ruyter had met with the Head of the NPA, the Head of SIU, and the Head of SAPS. Those were all of Mr De Ruyter’s own initiative. South Africans were impatient. They wanted to see the people who are messing up their lives in prison. He did not care where they came from. If they were orange guilty of engaging in this kind of conduct, then the law must take its course. He responded to Ms Van Minnen’s comments that the board was not engaged. The board was quite engaged. The board was still finding its feet in a complex environment. He would make the chairperson aware of the issue Ms Van Minnen raised and make the board aware of its responsibility. He did not think it would be fair to say that the board was not engaged. One should not have expectations of a board about work that a law enforcement agency should be doing. That might be a bit of an unfair burden that was being placed on the board itself. Ms Van Minnen said that as the shareholder, it was his responsibility to ensure that these bodies worked. That was why he had set up a number of discussions, and interactions, and ensured that action was taken. He provided an example outside of Eskom. Cable theft was a big issue as far as Transnet was concerned. With the assistance of Mr Mufamadi, a senior police officer, the Transnet security, and others, were brought together at the Minister’s instruction. They discussed how the police in particular, but also other law enforcement agencies, could mitigate the issue of cable theft. It had some impacts in some areas, but it was hard to monitor all of it. At a particular point in time, they also had the industry working with them. Drones were made available. People on the ground were made available. It had an impact in those places where the monitoring was taking place to minimise cable theft or any other kinds of interference on the line. So, these matters had been raised in various forums. He acknowledged the concerns raised by Ms Van Minnen. It was also a matter that could be raised with Mr Mufamadi, who was better placed to intervene in these regards. He responded to the question of whether there was political will to pursue the two names. Everyone was aware by now that there was a Brigadier Berger involved in this project. That indicated that SAPS was aware. If the gap between information and evidence was narrowed, the law enforcement agencies must do what they have to do. The Minister could not instruct them to do anything. That had been an important precedent that the President had set as well. That there should be no interference with the work that law enforcement has to do. On the issue of debt, Ms Van Minnen made a valid point. If too many people go off the grid, Eskom’s revenue would decline over time and its capabilities would therefore decline as well. He noted that work on modelling had begun regarding the new transmission company. The new transmission company would generate funding of its own. He had interactions with the China Grid Company, which is the largest transmission company in the world, on how it operated. This included 60% control in the Portuguese grid and similar control in the Philippines grid. This showed that this was an area where a new business model would begin to emerge. He discussed grid collapse. Mr Cassim was speaking the truth. In South Africa, through the expertise deployed in Eskom, what the levels of load shedding does is to manage the supply-demand equilibrium. This was to ensure that the transmission grid worked at 50 megahertz. What they did at the control centre was to watch the number 50. If it fell below 50, they release a pump storage station or the operator OCGT to get the supply right. The 50 megahertz was targeted. Secondly, the purpose of levels of load shedding was to ensure that the grid does not collapse. Everyone needed to make a contribution, actively or passively, in order to make sure that the appropriate level of demand is operating at the right time, in order to manage the supply that is available at that particular point in time. A grid collapse was where there was a total mismatch between demand and supply, where there is no buffering and safety factor built in. When Mr Cassim said he does not think that there would be a grid collapse, he is indicating that Eskom has built in enough buffers through levels of load shedding to manage the equilibrium between supply and demand. That was why it was important for everyone to support the demand side management. This meant that people should manage the use of geezers, kettles, and lights. This could save up to 1000 megawatts per day. That could make an important contribution to managing this balance between supply and demand. He assured Members that Eskom had good professionals operating in the systems operator area. The Department would make sure that Eskom was frank with the public about what to expect. Dr Ramokgopa would be doing whatever was possible to ensure that as many units stayed online as possible during this particular period. He would also ensure that the operator-level expertise is reinforced where required. It needed to be recognised that Eskom was in a particularly bad situation, because of the three units at Kusile not being available and the one unit at Koeberg undergoing refurbishment. This was a loss of approximately 3000 megawatts, which the country would normally have in winter. This was an extraordinary set of circumstances that Eskom found itself in. However, if there was anything new, the Department would make sure that the Members were aware of it.
The Chairperson said that he knew there was a plethora of issues that Members would want to look at. He implored the Members to focus on the primary reason for the meeting.
Mr B Hadebe (ANC) thanked the Minister for availing himself to answer very sensitive and damning allegations. The Committee always endeavoured to uphold the principles of natural justice, the ‘audi alteram partem’ rule that no one should be condemned unheard. The exercise today was precisely for that reason, to ensure that the Committee did not unfairly condemn others without giving them an opportunity to be heard. The responses by the Minister indicated that the information given was unverified and unsubstantiated in relation to the names given. One would not want to go into character assassination and deformation of character based on information that was not verified and unsubstantiated. The Committee now knew that Mr De Ruyter refused to be vetted, yet he went on to institute an intelligence investigation. Furthermore, the Committee now knew that the report was not submitted to Eskom, yet the BLSA was in possession of such a report. The Committee needed to question and understand Mr De Ruyter’s actions. Mr De Ruyter’s actions were not irrelevant. The Committee needed to understand Mr De Ruyter’s intentions. The Minister had detailed what he had done. The Minister had also furnished the Committee with volumes of documentation containing what it is the Department had done. Did the former GCEO provide evidence to the Minister when he shared his concern about corruption? Did he make any submission that reflected that he had reported this issue, as required by section 34 subsection 1 of PRECCA? Mr De Ruyter was not just an ordinary whistleblower. He had a responsibility and duty to act in a certain manner. What did the Minister think of Mr De Ruyter’s tenure at Eskom? He was not sure whether to call Mr De Ruyter a former GCEO or an aspiring author. In the Minister’s understanding, was it an utter failure where KPIs were hardly achieved? Or was it a challenging time, when Mr De Ruyter and his executive did not have the capacity to deal with the complex and difficult problems of Eskom? Did the Minister think that Mr De Ruyter was just trying to attempt to cover up his failure? The Minister alluded to the fact that Mr De Ruyter was operating of his own free will and that for six months the Minister did not know anything about the project. Good corporate governance demand that the director must use the position of director, or any information obtained while acting in the capacity of a director to not knowingly cause harm to a company and its subsidiaries. Given these duties, did the Minister think that Mr De Ruyter used the information he obtained while GCEO of Eskom to his advantage and to disadvantage Eskom? Mr Hadebe raised this because first there was a press conference and now there was a book. Did the Minister think that Mr De Ruyter compromised Eskom and used the information obtained as GCEO to disadvantage Eskom and to further his interest? He discussed the fiduciary duties of a director. There were certain duties that one needed to meet. It was to raise the standard of good corporate governance behaviour. This included the duty to act in good faith, to be loyal, as well as the duty to act in the best interest of the company. In light of these fiduciary responsibilities, did the Minister think that Mr De Ruyter executed his fiduciary responsibility well? Or had he failed in his responsibility? He raised this question because Mr De Ruyter failed to alert the institutions that are responsive and are obliged to ensure accountability. Institutions such as Parliamentary Portfolio Committees. There was certain information the Committee heard for the first time in the interview, and he had appeared before the Committee on several occasions. Would the Minister say that Mr De Ruyter failed in his duties in terms of ensuring that Parliamentary Committees were informed and kept abreast of all these allegations? Mr De Ruyter in his interview said that one Minister uttered the following, ‘in order to pursue the greater good, you have to enable some people to eat a little bit’. Mr De Ruyter further alleged that there was one particular high-level politician involved in these allegations of corruption. When he informed a Minister, the Minister looked at the senior official and said, ‘I guess it was inevitable that it will come out anyway’. Mr Hadebe wanted to confirm or deny whether these allegations made by Mr De Ruyter were true. He raised this based on the Member’s duty and responsibility as enshrined in section 92 of the Constitution. That Members had a duty and a responsibility to ensure that Cabinet Members collectively and individually are accountable both for the execution of their powers and their functions to Parliament.
Minister Gordhan said that ‘audi alteram partem’ was a useful concept and legally appropriate. However, the Minister emphasised that he was not on trial. The Members could ask him to help clarify certain things. He was emphatic that he had done nothing wrong. The culprits who had done something wrong could come to the Committee and account for themselves. While he might be pilloried in certain quarters, his record speaks for itself in serving the public of South Africa for five decades. Mr Hadebe was correct that unverified information should not and cannot be used in any legitimate way. Nor should character assassination be allowed to be perpetrated in this forum or in any other forum. If somebody has done something wrong, then it was necessary for them to account for it in an appropriate manner. The Minister did not know if Mr De Ruyter reported the evidence from the report. Mr De Ruyter had met many law enforcement agencies himself. There is a section 34 report that he launched prior to meeting with the Committee. He did now know what Mr De Ruyter reported and did not report. He found the slide he was referring to earlier, which was slide 17 from the Hawks. It said that the DPCI, through Major General Gerber, reached out to Mr De Ruyter immediately after his media interview to ascertain the information first-hand. Mr De Ruyter declined to meet Major General Gerber, but referred him to his lawyer, Willem Janse van Rensburg, who promised to talk to Mr De Ruyter and revert to the DPCI. Unfortunately, the promise was not fulfilled. That was the level of cooperation. On the one hand, there were claims that for a couple of years, law enforcement was not doing enough. On the other hand, there was a situation where law enforcement was trying to find out what he was saying, and he refuses to cooperate with them. That was what Melodrama is about. He responded to the questions asking him to assess Mr De Ruyter’s tenure and whether his KPIs were met. He noted that he was not present to evaluate performance. Mr De Ruyter arrived at the beginning of 2020, soon after which there was the Covid pandemic shutdown. Certain things that needed to be done could not be done or were delayed, because of travel issues across the border. So, the situation was a tough one. He inherited an organisation that was still being rebuilt, and there were financial constraints as well. But Mr De Ruyter had applied for the GCEO’s job. He had been interviewed by four Ministers. Before that, he had been interviewed by the board. He had accepted the job. He said as he accepted the job, that he was willing to take a salary cut in the national interest, quite contrary to what is happening now in terms of the approach to the national interest question. He needed to take responsibility for what was inherited. Secondly, he needed to change what he inherited. And thirdly, he should have asked for help where it was appropriate. As of 21 July 2022, there was now a National Energy Crisis Committee. The whole of the government was involved in trying to assist Eskom to recover from what it is that affects it. He discussed whether Mr De Ruyter was covering up his failure. Regrettably, it appeared that some human beings found it hard for their egos to take a knock. There was something in the book about Nampak as well. And I believe there's something in the book about named as well. Mr De Ruyter was explaining why he found himself in a particular position reputationally. He noted that Mr De Ruyter did not fail entirely. The work Mr De Ruyter did in relation to just energy transition was good, although he showed very poor accountability. That was another example of a lone ranger operating. Going to overseas meetings, meeting people that should be met at a political level, for example. The Minister discussed the performance of the plant. The former GCEO needed to ensure better maintenance of the current plant and higher quality of operators. What was singularly lacking was humility, and everyone required it from time to time. If one did not have humility, then one would not have the ability to listen, reflect, and take on other people's ideas. He responded to the question of whether he thought Mr De Ruyter used information obtained from Eskom to the disadvantage of Eskom. The Minister thought so. Because what was found in all the comments emerging, was what happened in Eskom. No serious CEO of a serious institution, private or public, would break the contract signed. There were certain obligations that came with the fiduciary responsibilities and responsibilities of a CEO of an institution. Everything now was about enhancing one individual's reputation and making sure that anyone who stands in the way is described as stupid, inadequate, or idiotic. The Minister discussed the interview. The interview could have been a technical interview where Mr De Ruyter described what he was able to do and was unable to do. Mr De Ruyter could have described the constraints faced during his three years at Eskom. That would have been a measured approach. But no, the interview maligned individuals. Mr De Ruyter used ‘swart gevaar’ tactics, which everybody conveniently forgets when they write what they write. It reminded the Minister of what the Apartheid State, in particular, PW Botha and company, utilised to mobilise white voters at the time, and how they were able to characterise everyone as terrorists of one kind or another. Did that mean all of this was about politics in addition to being about some personal issues? That was a question Members needed to ask. He responded to the comment about one Minister saying that some needed to be enabled to eat. He had not said that anyone must eat public funds. Nor would he say anything like that. Nor would he tolerate anything like that. He did not care where anyone came from. If there was evidence against you, in respect of corrupt activity, then that person needed to pay the price. He would not tolerate corruption.
Ms A Beukes (ANC) thanked the Minister for providing clarity on some of the issues. This engagement was part of a list of engagements, not necessarily to show how important the interview was, but to clarify to South Africans what had happened, what is still happening, and also the view of the different stakeholders. The Minister had undertaken certain interventions. The Committee would appreciate the progress on those interventions as it unfolds. Mr De Ruyter took the initiative to engage with some of the institutions, but none of those institutions had a report or hard evidence about what was happening. Who was fooling whom? Was Mr De Ruyter playing to the gallery or what was happening? The Committee must do its oversight without fear or favour, and it was for that reason that she wanted to stay, she was surprised when she heard the content of Mr De Ruyter’s interview. She was especially surprised to hear his distrust in the State when he was still an official. After that interview, had the Minister tried to engage with Mr De Ruyter on the allegations made? One of the allegations from Mr De Ruyter is that many of the new appointments were the confidants of the Minister. What he was saying by implication was that the appointees did not necessarily have the qualifications. He did not say in which field. Eskom was collapsing based on officials who did not know what to do, and this caused the crisis of load shedding. It was also embarrassing for the current Government. Could Government take action against Mr De Ruyter, because at the time of the interview, he was still the accounting officer of Eskom? Did Mr De Ruyter ever present a report to the Minister on where corruption is taking place and how he planned to deal with it? During his tenure as GCEO, did Mr De Ruyter and his executive have the capacity to deal with the problems of Eskom? Or did he ever table a progressive turnaround strategy to the Minister? She discussed the intelligence report and the R50 million. There was an R18 million contribution from BLSA. R32 million was a lot of money. She could not understand how Mr De Ruyter was the only one who received weekly reports on the intelligence report. Where did that R32 million come from? If it came from Eskom, why was it that Mr De Ruyter never accounted to Eskom about that report?
Minister Gordhan said that he wanted to get as much clarity in the public mind as possible and ensure that South Africans understood what was really at play. The Minister noted the political climate that South Africa found itself in. He discussed whether this was an instance of playing to the gallery. The people who had gone through the book, or various articles, had indicated that the only hero in South Africa was Mr De Ruyter. The rest were all fools, and only Mr De Ruyter knew what was best. There was certainly a case to be made to suggest that Mr De Ruyter was playing to the gallery. He responded to whether he engaged with Mr De Ruyter after the interview. The Minister noted that he had been shocked by the interview and its content. Somebody had sent him a clip. He forwarded the clip to Mr De Ruyter, expecting a response. No response came. It was the board that interacted with Mr De Ruyter. It was the board that met and asked, what should it do in this environment? Having said the kinds of things he said, should he still remain at Eskom? Or should he exit, as he had indicated last year? The board made the decisions. The board informed Mr De Ruyter of their position. The Minister was informed by the board, but he did not engage with Mr De Ruyter. He discussed people being appointed without qualifications. He did not quite understand the question. However, if there was any hint that he wanted Mr De Ruyter to appoint people without qualifications; that was absolute nonsense. He had built many institutions and appreciated the value of professionals and experts. He acknowledged the importance of retaining them within an organisation. Eskom did not only require so-called experts on paper. What one learned in the Eskom situation was that experience counts. Experience needed to be combined with expertise or qualifications, then people needed to grow in that environment. The Minister noted that the really experienced power station managers who stuck around for 10, 15, or 20 years at a particular power station did not have to look at the dials on the operating equipment. All they do was listen to the sound of the mill, or they listen to the sound of the turbine, or they listen to what was happening in the boiler, and they could tell whether something was wrong or not. That came with experience. It was important to retain experience, and at the same time grow new talent within an organisation. He was not sure whether that happened in an appropriate way. Eskom used to be a phenomenal organisation and a phenomenal academy to train engineers. In recent interactions around the form that holding companies take in different parts of the world, the Minister had come across an example from Malaysia. Where the transport sector would have its own college. It will have its own academic courses and training courses for people that will eventually end up in the transport sector. In the energy sector, they would have an energy college. That was how they grow, teach, educate and prepare people to join the energy sector. There were examples in other parts of the world that South Africa could learn from. Some of the institutions in South Africa, particularly the training capacity, had not been revived as it should have been, regrettably. He discussed taking action against Mr De Ruyter. He would bring that to the attention of the board. The board might be discussing it; he did not know. The Minister would make them aware of this possibility, but ultimately it was for the board to decide. He responded to the question of whether Mr De Ruyter had indicted where corruption took place. There had always been examples available, like Majuba example that he had given earlier. He provided the example of when he and the President visited the Tutuka Power Station. As one walked around the power planet, one saw this big yellow equipment. They were called compressors. The managers were forced to hire those compressors and renew the contract for hiring on a regular basis with the same people. If that equipment was bought, lots of money would be saved. The question asked, ‘what have you done about it?’, was a fair one. It was important to note that in power stations in far-flung areas, people were living in fear. Local staff were scared because if they spoke about certain things then they would be threatened. It was not an easy life for people who operated in power stations. To some extent the GCEO’s concerns around law enforcement taking a stronger stance are valid. An environment needed to be created in South Africa where communities did not hide things or support people who were engaged in corrupt activities because, at the end of the day, load shedding affects everybody. He discussed the plans for turning Eskom around. There had been many plans. Parts of some plans would have worked to some extent. There were huge possibilities to take Eskom in a new direction given the restructuring and unbundling exercise. Significant parts would be completed by the end of this year. That provided an opportunity to change the culture, change mindsets, and use new systems of control. He responded to the question of whether the R32 million had come from Eskom. None of the money had come from Eskom itself. There was no evidence that indicated that R32 million out of the R50 million came from Eskom. It might have come from other private individuals.
Mr A Lees (DA) noted the Minister said he was shown a diagram with names on it. The Minister held the view that he needed concrete evidence. The SIU, Hawks, and SAPS indicated last week that they did not investigate unless they were given evidence. Had the Minister at least approached the two senior politicians who had been implicated in the diagram detailing cartels and heads of cartels? Had the Minister done that?
Minister Gordhan said that the Hawks were saying the right thing. Certain news outlets had taken a similar stance that they were not going to publish material purely based on assertions. If he saw the name of someone somewhere and he did not know the validity of the information, how could he approach that person?
Mr Lees said that the Minister did not go. That was fine.
Minister Gordhan said that Mr Lees had asked a question and that he should be allowed to give his answers.
Mr Lees responded that was fine as long as the Minister did not use up his questioning time.
Minister Gordhan said that Mr Lees was up to his usual tricks. He had the freedom to speak in this forum. Mr Lees’ question did not have any validity, and it would not be the basis on which anyone would be operating.
Mr Lees said that was unfortunate. He thought he would have received a collegial response if nothing else. The Minister had just returned from China and had been accompanied by the Acting GCEO of Eskom. That trip apparently involved Transnet. What was the purpose of taking the Acting GCEO out of the country at a crisis time of load shedding? Did this have something to do with the Minister’s earlier comments about the China grid? Was this something that the Department was looking at? He discussed Transnet. Was the Department successful in getting a deal negotiated on the supply of parts or whatever it was that that required attention?
Minister Gordhan responded that the Transnet work was still a work in progress. When he was ready, he would inform the public and the Government accordingly. He responded to the question of the Acting GCEO. There was an offer of assistance in the current environment that the country found itself in from various entities in China. The Minister was not qualified to assess what was needed or what was offered. The Acting GCEO and two others interacted with various entities there and established for themselves what could be done. Similarly, South Africa had offers from other countries as well, where similar interactions took place. Sometimes they resulted in positive outcomes, sometimes the fit was not actually right. All of that was a work in progress. All of that was intended to ensure that the kind of crises or challenges that were faced in the sectors that these SOEs were involved with, were resolved as quickly as possible and in a constructive way. He was optimistic that there would be a good outcome. Some issues were work in progress. When the Department was ready, it would make a public announcement.
Mr Lees said that the Eskom board chairperson did not give him a great deal of confidence about the fixing of Eskom. The board chairperson informed the Committee last week that the board had a shortlist of new GCEOs and that they were to be interviewed last Friday. The Minister earlier said that Mr De Ruyter had been interviewed by four Ministers. Had the interviews for the GCEO by the board taken place on Friday? Would there be further interviews involving the Minister and other Ministers? When could the Committee expect an announcement?
Minister Gordhan responded that he was not aware of the interviews on Friday. He had not had time to catch up with the latest developments, which he would do within the next day or two. The Department wanted a new GCEO in place soon. He was aware that there were longlists and shortlists that the board had been engaged with. He waited on a report from the chairperson and the board on the progress that had been made and what process would be followed. The first process was what the board needed to conduct.
Mr Lees said that last week he suggested the process should be public so that everyone could see who was getting interviewed. Would the shortlisted candidates come to the Minister and a panel of Ministers, as it did with Mr De Ruyter, for further interviews?
Minister Gordhan responded that he would await the outcome of the board and then determine the process. He was not aware of Mr Lees’ suggestion about a public process. He did not think that the wrong precedents should be set in this environment. When a bank board, or a commercial institution, held interviews it was not a public process. These were very senior people who were coming in with lots of experience and background in business. He was not sure how comfortable the candidates would be with that process. The Minister would apply his mind and then he would inform the Committee of the process.
Mr Lees said that the Minister had spoken about the other ways of mitigating the load shedding. He raised the topical issue of Karpowership and the contracts that appeared to be fairly one-sided. What was the Minister’s view on the use of Karpowership in the agreement that had apparently been entered into and had been blocked for environmental reasons rather than commercial reasons?
Minister Gordhan responded that he had not followed the details in this particular area. He was aware that sometime last year there was some litigation going on between another entity and either Government or Karpowership itself. Generally, there would be a view that any 20-year commitment to a project like this, which is supposed to be short-term, would be stretching it too far. Beyond that, he was unable to provide any update on the matter. If Mr Lees was particularly interested, there were other people who could help him with the details.
Mr Lees said that the Minister had suggested earlier that the board appearing to be not invested might be a case of them finding their feet. It had been six months now since they were appointed. The Minister made the point that they were highly skilled and experienced people there. Was it reasonable for them to still be finding their feet after six months? When did the Minister expect them to be fully settled and going flat out?
Minister Gordhan responded that they were going flat out on many issues. There were certain areas of complexity that they had to deal with. Whilst focusing on the crisis, they also had to ensure that Eskom moved in the right direction, notwithstanding the constraints, and minimised load shedding. That is what South Africans want. The Minister would raise the matters pertaining to following up on corruption with the board. The Minister had not been aware of the work that might have happened. What Mr Less found was inadequate responses could be attributed to finding their feet on that matter. He did not think that one could say that the board was not concerned about corruption, because it interferes with the work of Eskom all the time. There was a fairly active audit and risk committee that would be very concerned, particularly from an internal controls and systems point of view. A lot could be done in that space, in terms of preventing or disrupting the processes that have facilitated or could facilitate corrupt activity in the procurement area, which is largely where this activity occurred.
Mr Lees said that earlier on the Minister had spoken about Chancellor House and the separation of State and party. The interesting comment was that the Minister thought there was a need for that separation to be improved. That was concerning, because it seemed to indicate that the Minister thought there was still too close a relationship between the State and the party. Was that really what the Minister felt?
Minister Gordhan responded that Mr Lees might be putting words into his mouth. As a matter of principle, there should be a distinction between party and State. He referred to Chancellor House in the context where the assertion was made that Eskom is a feeding trough for the ANC. He then added that it was not just the ANC that had benefited. There was a whole plethora of organisations, both multinational and South African, that were stealing from Eskom. Some of which had been caught and had been accounted for. Others the SIU and other institutions were still pursuing, including Eskom itself. There were two issues. First, the ANC could not be blamed for everything. Within the ANC there were honest, dedicated activists who wanted the public interest to be primary and wanted the country to work. There were a few who had been engaged in naughty activity. Whatever the law required must be done in that particular regard, whether it was a consequence of the Zondo Report or any other report that has emerged with sufficient evidence. Second, was the issue of politicisation. People forget about the billions that were taken out by multinational companies. Some of which had been held to account, some of which had not been held to account yet. Third, the South African entities who were also involved in malfeasance must be dealt with as well.
Mr Lees said that there was no difference of opinion between the extent of the corruption, not just at Eskom but throughout the country, in many spheres. He did not think he was putting words into the Minister’s mouth. The Minister was saying that the ANC was involved, not all members of the ANC. The ANC was involved in some form or another because of too close a relationship with the State. He agreed with the Minister on that. What concerned him was that those two spheres needed to be pushed further apart because the corruption had not dissipated to any great degree. It was great that some companies had repaid lots of money, thanks to the work of the SIU. The separation was not as clear as it should be. He thanked the Minister for his honesty in this regard. He did not think he had ever heard an ANC Minister say that the ANC was culpable in the matters of Chancellor House. Mr Lees said that all political parties, except his, were imperfect. Was Minister Gordhan one of the Ministers who enjoyed the privilege of living in a ministerial house that did not get exposed to load shedding?
Minister Gordhan responded no. He lived in his own house in Pretoria, in which he had lived for the past 25 years. He believed that it was described in the book in some way or the other. In Cape Town, he lived in a flat. There were no particular privileges there. The Minister responded that he received load shedding in a DA-led municipality. There was no question about honesty or dishonesty. The ANC had made it clear in its last conference that it was going to eradicate corruption to the best of its ability. It had taken a clear stance on the corruption issue, wherever it might operate and however it might operate. It supported the outcomes of the Zondo Commission. It had recognised and embodied in a resolution that it needed to renew itself to better project itself as the majority political representative of South Africans. That was the resolution taken by the ANC. The Minister noted that the attempts by Mr Lees to save his organisation were questionable as well. The DA had entered into all sorts of funny alliances over the last five or so years at the local government level. Nobody had actually held the organisation to account as to what happened during its terms of office in those municipalities. Who got what tender? How did they get that tender? Who had oversight of that matter? Who reported on it? He noted how the spoils were split under the organisation’s guardianship. It would be inappropriate to take a holier-than-thou approach. It was important for everyone to admit their faults, and to committee to curing those faults.
The Chairperson asked the Members to stick to Mr De Ruyter’s allegations and related matters.
Ms V Mente (EFF) said that earlier on the Minister indicated that four Ministers were part of the panel that interviewed Mr De Ruyter. Was Minister Gordhan one of those Ministers?
Minister Gordhan responded yes. The four Ministers were Minister Mantashe, Minister Patel, Minister Didiza and himself.
Ms Mente asked what distinguished Mr De Ruyter from the rest of the candidates that indicated he would be a capable GCEO. Given his history at Nampak, that would have been the best benchmark of his ability in terms of working in such an entity.
Minister Gordhan responded that the process first went through the board. The board had a longlist. Then it developed a shortlist, and then it developed a shorter list. Then the board sent two names to choose from, Mr Calitz and Mr De Ruyter. He could not remember exactly how those interviews went. At that stage, Mr De Ruyter was the Chair of the Manufacturing Circle. He did not think that Nampak featured at that time in the same way that it seemed to be featuring now, even to the extent where Mr De Ruyter had to justify some of the things that had happened. He remembered Mr De Ruyter’s role in business, his role in the Manufacturing Circle, and that he had managed engineers in various situations helped the Ministers to make a choice in that direction.
Ms Mente said that she did not think that Mr De Ruyter’s experience in any of the other establishments mentioned was more than his tenure at Nampak, where he served from 2014 to 2019. When Mr De Ruyter arrived at Nampak a share was R37. When he left a share was R7. That should have been the best highlight which should have directed the panel at the time. That should have been a red flag regarding Mr De Ruyter’s capacity to lead such a problematic utility. Knowing what the Minister knew now, would he agree that everyone who had been part of that process had committed a horrible mistake for this country?
Minister Gordhan responded that Mr De Ruyter had served in Sasol for about 20 years. He discussed the interviews. Interviews reflected what the individual presented at that particular point in time, together with the other information the board made available to the panel. It could have been a very good choice. It could have been a very bad choice. No one knew how human beings were going to behave. What appeared good in one stage might turn out to be horrible. So, was it a mistake? As the panel understood it then, it was not a mistake. Looking at it today, Mr De Ruyter had let himself down very badly. Mr De Ruyter had let the institution down very badly. Mr De Ruyter had let the country down very badly. That was a fact that everybody could see. Any attempt by smearing people on the outside in order that Mr De Ruyter could justify himself would come across very poorly. The Minister would use a more polite word. Mr De Ruyter had done good things within the organisation. However, the way Mr De Ruyter ended his term would not do him any favours in terms of his reputation. Mr De Ruyter was not a whistleblower. He was the head of an institution. Nor was he a messenger. Who was he sending the message to? Human beings had fragilities. Everyone had them. The best thing to do was keep an element of humility in mind, so that one had the ability to reflect on mistakes, correct mistakes, and do better the next time.
Ms Mente said that it did not matter how polite the Minister was, Mr De Ruyter was a horrible mistake. He turned out to be the type of person to gossip about the entire country. When Mr De Ruyter came in he promised that in 18 months the country would see results. He also said that he would account to Parliament and deal with the issues of corruption. How was Mr De Ruyter assessed? Mr De Ruyter was busy writing a book instead of running a utility. The red flags were there. After 18 months, the country was on a downward spiral. Later on, the Committee went there and came up with 23 recommendations. That was in 2019. In 2020, when Mr De Ruyter arrived he found 23 recommendations. In 2021, the Committee went back, and nothing was done. In 2022, the Committee went back and found that only seven recommendations were done. Those were just administrative issues. The technical and procurement issues were not being dealt with. That was another red flag that Mr De Ruyter was not going to deliver anything. How was Mr De Ruyter being assessed to ensure that he was a CEO that was fit for purpose?
Minister Gordhan responded that in terms of the PFMA, the accounting authority was the board. Secondly, the way in which governance operates within the environment is one where the Department has a shareholder compact. That compact reflects what was expected of the board, and what the board must ensure that the management actually implements. That compact would have reflected some of the things that Ms Mente was talking about. It needed to be acknowledged that more or less three months after Mr De Ruyter’s appointment there was the pandemic. It interfered both positively and negatively. Positively in the sense that the shutdown meant less energy was being utilised. Negatively in the sense that some of the maintenance work could only be done minimally and that affected the extent to which the EAF was not improving. It was something the Department observed. It was something that the Department, the board, and management interacted about. That was what probably was being referred to as so-called micromanaging. That was when the tough questions were being asked. That was what he had been referring to earlier. If plan A was not working, then what was plan B? Things needed to be done differently so that Eskom could get better results than the ones it currently had. Ms Mente’s question was valid. Mr De Ruyter was writing a book when his focus should have been on running a big organisation. This raised some questions about what Mr De Ruyter’s focus was. Clearly, other people were running the organisation. Mr De Ruyter was busy collecting gossip during this period of time. Mr De Ruyter was also busy trying to add, either by himself or through his ghost writer, descriptive labels for all the things that he wanted to comment on and all the people he wanted to comment on. He discussed the comments that there had been 23 recommendations and only seven had been completed. The Department would check that. There had been some follow-ups from the Department, together with other follow-ups that need to be made. The Minister noted a meeting of the Committee which ended in conflict amongst the Members relating to the 23 recommendations. The Department would pursue that matter. The Department would provide a written response to that.
Ms Mente discussed the meetings the Department had with the boards under the Ministry. Were the performances of the boards satisfactory to the Minister? Whatever assessments that had been given to the Department regarding the performance of Mr De Ruyter, had it been satisfactory?
Minister Gordhan said that a declining EAF could not be satisfactory. An increasing level of load shedding could not be satisfactory. Then one got involved in crisis management. Questions needed to be asked. Which unit of which plant is in what status? If there was an outage, how long was that outage? When was it going to return? How is it possible to alleviate the load shedding situation in the country? If Ms Mente was asking, ‘why did you not fire Mr De Ruyter?’ it was not part of his job. Eventually it would come to the Department well. The Department needed to attend to what it saw and try and alleviate the situation as much as possible. It was important to mobilise the collective will of Eskom, engineers, power station managers, and power station operators so that it could be ensured that the right things were done at the various power stations. Some of it happened. Some of it didn't happen.
Ms Mente raised another red flag. Mr De Ruyter refused to be vetted. He had refused to submit his financials. This was part of this contract. It was non-negotiable. Yet, the Minister did not do anything about it. Mr De Ruyter refused to submit his financials. How was it possible to become a CEO of such a big utility, where procurement processes were actually problematic and were central to what was draining Eskom’s fiscus and what was destroying Eskom? Was the Minister comfortable with that? Why did the Minister not call him out or give him an ultimatum? If he refused to be vetted then he must leave the office, or he submit his financials to be scrutinised.
Minister Gordhan responded that the relevant authorities, which included both the board and SSA, had not submitted anything to the Department which indicated that they had been trying to vet Mr De Ruyter and that they were not getting his cooperation. It appeared that there were several interactions. Only Mr De Ruyter or SSA could tell how many interactions there were. The Minister noted that there was a long queue on the vetting process in Government. Not all of it happened as fast as one would. The Minister had mentioned the financials issue because that was what Mr De Ruyter told him. Any silence in that regard did not mean approval of how Mr De Ruyter was conducting himself. Perhaps the Minister should have pursued it with the board. He had left it to the board to manage the situation. It might have fallen between the cracks. He provided an example of Mr De Ruyter’s state of mind. Mr De Ruyter was part of a Government institution, but he would not comply with everything that the Government required of him.
Ms Mente said that the Minister had spoken of international companies, multinational companies, and even local companies that embezzled funds out of Eskom. One of those companies which was overpaid was ABB. This particular ABB was defended by Mr De Ruyter. At the very same time, Mr De Ruyter refused to disclose and submit his financials to the authorities. That was another red flag. She discussed the disclosure of the donations made by BLSA. BLSA paid for this covert intelligence report. They had been on record saying that had they paid R18 million to the whole amount for the covert intelligence report. This report had taken place in Eskom. There was intelligence being gathered in Eskom. The Minister was disowning it. The police were here and were “wishy-washy” about it, and what was going to happen. How was this item disclosed? Did the Department pick up that item in the annual financial statements? If they did pick up that item, why was it not questioned? What was it paying for? Even if it was not paid from the Department, the donations according to the Treasury regulations emanating from the PFMA were clear that any donations made to the State must be disclosed in the annual financial statements. Did the Department see that? Or if that was not the case, would the Department now take action in identifying these donations to Eskom and see that all of them were disclosed? The Minister had also mentioned a very concerning matter. The Minister had acknowledged that the board was in a complex environment, which begs a question. Board members were hired that had no knowledge or experience of the environment they were going into. If that was the case, there were going to be many Mr De Ruyters to come. Eventually, the board would see that that person was not fit for purpose. Could the Department change the way it hired the board members who would be the authority of Eskom? The Minister had discussed Mpumalanga as a crime scene, Tutuka in particular. A forensic investigation had been paid for, costing almost R1 million. That same investigation was not implemented. It had not been used. That investigation had identified that Rotek, which fronted with black women, was actually behind the sabotage. Finally, would the Minister support Karpowership?
Minister Gordhan responded to the comments about ABB being overpaid and being defended by the CEO. He was not sure about being overpaid. ABB had overcharged and there were beneficiaries, in South Africa and in the firm itself. The GCEO had not defended that. He had pursued it. Initially, ABB offered a couple of R100 million. The final settlement went into millions, both here and in the United States. He discussed the BLSA donations and other donations. In a sense, this was privately raised funding. It would not be reflected in the financials unless it was a donation to Eskom as an institution. The Department would check the law on that and then see whether what Ms Mente said applied in this particular instance. If person A had donated and made money available to person B to pursue a particular project, then there was a bilateral relationship between them. It would not be part of the company accounts. The Department would first have to check the validity of the application of the PFMA in this instance. Several Members had asked, where did the R32 million come from? Whoever contributed to the R32 million was under no obligation to tell the Department that they did. The Department would apply its mind. If there were any outcomes, it would come back to the Committee. He discussed the Tutuka forensic investigation. He was not aware of it. The Department would have to find out about it and check who was involved and whether sufficient work had been done in implementing the recommendations and the outcomes of the findings of that forensic report. He responded to the question of the board and the way boards were chosen. The Department had had quite a rigorous process in choosing the newest Eskom board. However, human beings are human beings. The board had been working extremely hard to look at financial issues and close up the accounts. Last year, the annual financials of the previous year were concluded shortly before Christmas because a lot of corrections needed to be made. It was the new audit committee members who worked extremely hard to get Eskom into that position. He noted the issues that the board might not be on top of, like the ones he had indicated earlier on in his interaction with Mr Lees, in those instances the Department would try to support the board in making sure that they get on top of that. He discussed the Karpowership issue. He was familiar with the old details. He was not sure where the status was now. If somebody can supply 500 to 1000 megawatts, at the right price, in the current environment where the country was short of megawatts, then the country needed to take it. That was the role that these power ships played in many different parts of the country. Where there was a shortage of megawatts, they were hired for a year, two years, three years, but certainly not 20. Then the country involved, or the agency supporting the country, has the benefit of access to 1000 megawatts, which in some countries makes a big difference to whether they have some supply of electricity or not. However, he currently did not know what the latest developments were.
Mr Somyo said that he was pursuing the following point because it was a worrisome area. Eskom assets were public assets. They were declared as a national key point. The GCEO had conducted the intelligence report on his own terms. The report had been funded somewhere and the Minister, who was the shareholder, had not been given information about it. The sanctioning of it was not by the accounting authority. The reports and the outcome of the reports found themselves in the hands of private individuals. The State owned this asset and had not been given the outcome of the report. R18 million had come from a particular direction. It was not confirmed where the remaining amount came from. The report cost about R50 million. Now it was known that the SIU has committed to following certain critical questions. The SIU was investigating. Did the shareholder have any intention to follow this kind of occurrence? The Minister represented the public in a number of entities that ought to be protected in terms of security standards. These sorts of events should not reoccur. A reprisal of some sort ought to be observed. What would be the Minister’s undertaking in protecting this asset?
Minister Gordhan said that Mr Somyo raised a fair point. There were some lessons that could be learned from this incident. It provided an opportunity to think about what was included in the memorandum of incorporation, to help the entity defend itself against these sorts of incidents in the future. The board should give consideration to the violation of the contract of employment, where confidentiality was required. If there was an Eskom-related matter either in utterances or in the book or in any other publication that Mr De Ruyter was responsible for, which violated his employment contract, then the board should consider pursuing that.
Ms B Zibula (ANC) discussed the Eskom project. Did the Minister think that it would end soon? This was the project that Mr De Ruyter and his friends endorsed. Vetting was crucial. It indicated that Mr De Ruyter did not care about his superiors. He did what whatever he wanted to do.
Minister Gordhan responded that on the question of vetting, there needed to be some interaction with the SSA. Several Members had raised this concern. Some kind of interactive mechanism needed to be set up so that SAA informed the Committee about the progress it was making. The government needed to rethink when the vetting was done. Ideally, it should be done before the appointment was taken up and not after. It would be necessary for the Department to reflect on some of those lessons, see what changes can be made, and what kind of oversight mechanisms needed to be put in place, to ensure that this kind of slippage did not occur in the future. He responded to the question of how soon would the project end. Everyone was going to learn some serious lessons from the behaviour of Mr De Ruyter. Whether it was the businesspeople that supported him. Whether it was the media that writes about him or refuses to write about him, and some of the things he was talking about, and the Committee as well. The Minister thought that the project was probably dead now. However, law enforcement authorities must pursue what they have to do. If there was any evidence that is available, it must be provided to them. Law enforcement must evaluate that evidence and investigate whatever needed to be investigated. He could not say when it was going to end, because he was not controlling it. The key was the consequence. Was there material there that law enforcement agencies can act on or not? Will they act on it or not? Everyone would know the results in the next few months as to where this project actually went.
The Chairperson discussed the statement that the Minister had started off with. That there was state capture one and now there was state capture two, with state capture two taking a different form. He agreed with the Minister. He had previously said on various platforms that South Africans should not be deluded into thinking that state capture was a reality of the past. Listening to the responses by the Minister, there was quite clearly a trust deficit and trust erosion between the Minister and Mr De Ruyter. The Chairperson assumed that this was not an event but a process, because Mr De Ruyter had the Minister’s support and confidence at the outset of his tenure. What had changed? There was state capture that was continuing. A trusted CEO came to the shareholder representative with the information that there were two Ministers, or two senior politicians, involved in the corruption taking place at Eskom. This would raise red flags, and therefore set into motion a process that would say his allegations must be tested. This needed to be done so that the Department did not find itself at ground zero. Why were the allegations not tested when Mr De Ruyter made them? No one would have been aware that he was writing a book, so there would have been no need for any suspicion. No one would have known that he would have a bombshell public interview. When he made the allegations he was still firmly a CEO of the public entity. Therefore, the State had all the jurisdiction to hold him to account and he had to make the necessary information available. The book must be probed. However, it was secondary to the moments in which Mr De Ruyter made those allegations that he made. Mr De Ruyter had made the allegations formally and officially because he was talking to either the board, the chairperson, or the shareholder representative. Why were Mr De Ruyter’s allegations not acted on? At the time he made them, he was in an official position of authority. The Chairperson raised the point of vetting. Cabinet took a decision in 2014 that all persons in the SCM space must be vetted. The Chairperson acknowledged the point about the timing of when that must happen. Did it ever concern the Minister that there was a critical SOE such as Eskom with an unvetted CEO? It was not as if the matter was never raised. The matter was raised on numerous occasions, including but not limited to reports that Eskom itself submitted to Parliament. The point was persistently made that the CEO was not vetted. The consequence of that was Mr De Ruyter then embarks on an intelligence operation, unvetted as he is. The Committee was now saddled with a situation of an elusive report, which has got material bearing because it has not been tested. It had a material bearing on what was happening or what had happened at Eskom. That was the dilemma. It baffled the mind. How did those doing the investigation access information at Eskom? This meant that there was a security breach of Eskom information, as they were investigating Eskom in all material respects at the behest of its CEO. The CEO was unvetted. There was a breach of security information and an intelligence operation. Should the Committee not be told right now that concrete actions were being taken to pursue the matter, to protect Eskom? The Chairperson was concerned. Noting the seriousness of the issues that had been raised, the events that had occurred, arising out of the leak that there was an intelligence report, and the interview that Mr De Ruyter had and the utterances that he had made. However, none of those issues were being pursued. Unless they were being pursued and the Committee had not been told. If they were being pursued, how were they being pursued? Unless Cabinet took a concrete decision to firm up the efficiency and effectiveness of the SSA, in its vetting processes and protocols, it was going to be a major contributory factor to the collapse of the State. The Eskom board, for the longest time after its interviews, was not vetted. The current National Commissioner of Police was not vetted. The CEO of Eskom was not vetted. Over 300 persons at Eskom, who were supposed to be vetted, had not been vetted. This would continue to form part of the Department’s headaches. As the Department appointed a new CEO at Eskom, there had to be decisiveness from Cabinet. After Mr De Ruyter had made the allegation about the two senior politicians, in light of the Minister’s own account and observation of state capture continuing, did the Minister inform the President of this serious allegation? The Chairperson would put the same question next week to Dr Mufamadi as well. It would be expected that an individual in a position of authority, like the CEO, making an allegation to the Minister would be investigated. He had raised it while he was still in office.
Minister Gordhan responded that there needed to be some proof first to test the allegations. Proof needed to be provided to him. Was there sufficient evidence which would indicate that there was more than just information? As he had indicated earlier, some parts of the media were not printing anything about this because it was unsubstantiated. He discussed whether these matters were being pursued and whether anything was being done about what Mr De Ruyter was saying. Corruption had been on the radar screen since 2017. There were hints of it before that as well. In Eskom’s case, the Minister referred the Committee to the files that the Department had provided. It detailed the manner in which corruption was facilitated during the state capture period. The Department had also provided indications of all the things that had been done. Mr Mothibi could indicate to the Committee how many matters the SIU had taken forward out of all the files the Department had sent to the SIU. This was certainly being pursued. The more valid question that should be asked is whether law enforcement agencies were making a dent. Was corruption being stopped in its tracks? Were the lines of communication or collaboration between insiders and outsiders being disrupted? He did not have any detailed knowledge. He believed that there was sufficient happening, which would become a discouraging factor. The government needed to increase the possibility of corrupt individuals being detected. The more easily detectable they are, the more likely they would face consequences. One of the technologies being developed by ports elsewhere was blockchain technology. So that the interaction between the port, the transporter, the customs authority, and the shipping line, was part of this blockchain technology. In that technology, if one touched the wrong button their name would appear there. An individual could then be pursued in that particular regard. Some of these things can be done in institutions as well. For example, in Transnet, there was a digitisation process. It would take a little while to make some headway, but it would provide better risk assurance and signal a warning to those involved in nefarious activities that there was a greater possibility of being detected. He asked the Committee to think back to 1999/2000, when the SARS technology people talked about the development of a new income tax system. They had said that income tax system will be connected to a whole lot of third-party databases. For example, in certain countries, if one had a gym membership, it was recorded with the tax authority. If one bought a new car, it was recorded. If it was paid in cash, it will be picked up. South Africa was behind the curve. However, that created fear amongst taxpayers and partly contributed to the change in tax culture in the 2000s. These matters were being pursued. He noted that more weight could be given to what the State was doing. There needed to be community mobilisation. Greed and self-interest were of such a nature that individuals wanted to fill their own pockets at the expense of everyone else. The Minister shared the Members’ concerns on the vetting issue. The whole process needed to change. He would initiate some dialogue around setting it up in a different way. Retrospective vetting was possibly not the right way to go. The question needed to be asked, what was being vetted? If the State was just going to certain data databases to see how many houses were in the deeds register in someone’s name or how many cars were in someone’s name. Was that enough in today's environment? It had been picked up that people did not put things under their names. Many cases indicated that people put it in somebody else's name if they wanted to duck the system. He responded to why the Department did not pick up on the allegations. He had already indicated the reasons. Things cannot be spread around without necessarily having the evidence, but also those who had the evidence must do that which was necessary. It was interesting that a section 34 declaration was made the day before there was an appearance before the Committee. Legal advice had probably been given to Mr De Ruyter to instruct him to do this. If there was evidence it must go to the right law enforcement authorities. He discussed trust erosion as a process versus an event. The Chairperson was probably right. On the one hand, there was a process that indicates a decline in performance, but then an event takes place which sharpens the contradictions. In this case, that was the interview and the assertions made. All of the assertions made in that interview can be countered. The interview indicated a messiah complex. It indicated an attitude that only Mr De Ruyter knew how to do anything in respect of corporate governance or running an organisation. That was the arrogance that should be picked up on. He noted that human beings could appear to be excellent people for years on end and then there could be an event that turns them in the wrong kind of direction.
Ms C Mkhonto (EFF) said that the Minister was part of the hiring process. Was Mr De Ruyter ever exposed to any competency testing? If yes, could South Africans be given the results of that test? The Members understood that the issue of misconduct that had been committed by Mr De Ruyter was for the law enforcement agencies to take up. However, what was the Minister going to do to enable that process? The law enforcement agencies needed some assistance from the shareholder and Eskom itself.
Mr Hadebe said that he was not sure if the Minister was aware that one of the former board members, who were part of the BLSA, had confirmed being responsible for the R18 million. The intel report, which unfortunately her colleagues were not aware of such a report. He was asking this based on the persons responsible for interviews and also to a large extent choosing the board members. What did the Minister make of the conduct of this former board member? Could it be that her actions were really intended to influence how the Government conducted its business? Did the Minister think that her actions constitute a conflict of interest, reckless behaviour and dangerous tone? This was a board member sitting in meetings with her colleagues, without even having confidence to inform her colleagues about what she had in her possession, in the form of this intel report. As early as June or July 2022, this report was available to the private sector. What lesson did the Minister think the business should learn from this transaction? Could the Minister point the Committee in the right direction of who were the real role players involved in corruption at Eskom? The Committee could then pursue some of the real role players in terms of ensuring that it delved into Eskom’s corruption.
Ms Mente asked if board members were allowed to make donations for the interests of Eskom. If that was allowed it was a conflict of interest. That was how the state gets captured. So how was this particular board member allowed to make donations to Eskom? She wanted clarity in terms of ABB. ABB was pursued. However, the instruction and the recommendations made by Parliament were that all those companies must move out of Eskom. The State could not have companies that were masquerading as service providers to procurement processes, yet they were stealing money with officials. ABB defended that it had some work happening in Eskom, but that was some fictitious explanation that the Committee was given. The Committee did not know why ABB was still continuing to operate in the spaces of Eskom after it had confirmed itself that it colluded with officials of Eskom in inflating prices. The Minister made an interesting statement. She did not know if she heard it correctly. It was on the system that collected the financial activities of people. It had been during his tenure in SARS. Or was the Minister making an example of another country that had financial intelligence in terms of the activities of taxpayers?
The Chairperson said that he heard the Minister’s responses, but he felt that there was still an area of concern. It seemed as if the country was being placed in a ping-pong match. The CEO said that he sent information to certain people and certain entities. The Minister said that Mr De Ruyter must bring the proof. As things stood now, there was nothing on the table that indicated that the allegations made by the CEO were pursued. That was the concern. The April 2022 outburst along the lines that Mr De Ruyter would not be the fall guy. Having reflected on this over the last few days, the Minister said that this started in January 2022. By April there was some sort of information that was available in certain quarters of those who were in positions of leadership and authority at Eskom. Hence, that phrasing that Mr De Ruyter would not be the fall guy and then the outburst. It was of particular importance on the part of the Department, as the shareholder representative, and Eskom to investigate the circumstances of this forensic intelligence investigation, whatever it was. It could not be that an SOE was investigated, intelligence gathering around it with private funding, and up to now, the report was elusive. There was no understanding of where it started, where it ended, what it touched, what it did not touch, whom it implicated, and whom it did not implicate. The report touched on a key strategic space that was Eskom. What did they do with that information? Did it concretise state capture version two? Did it fall into the hands of private donors, private interests, who now had an insight into Eskom? He believed that the existence of this report was a threat and a risk to national security. The fact that R50 million was pumped into it meant that those involved were very deliberate about what they wanted. They were focused. The matter had to be investigated. It needed to be looked into. This was State information in the hands of unvetted people and in the hands of private interest. It would be a dereliction of duty. The Committee instructed the Minister and Eskom that this needed to take priority. The report must be found. It must be handed over. Its modus operandi must be pursued. How did it happen? The Committee would take further decisions about who would appear. Board members running a private operation were in breach of fiduciary responsibility when they must be investigated about their own competence of being directors. The bottom line was that that risk was there.
The Minister responded that there were two parts to this. The Members kept on referring to a report. The Department did not know whether it was a report or several reports or whatever form the information collected took. Only those that were involved in the project would know that. He agreed with the Chairperson’s concerns. The issues needed to be disentangled. For example, previous board members, current CEO, donation, report, outburst. What were the implications for any conflict of interest? What were the implications for fiduciary responsibility? The Department was going to need a bit of time. He gave the Committee the assurance that it will be pursued. That matter needed to be disentangled and the implications needed to be seen. He discussed ABB. The Committee needed to get one of the engineers to come so that it did not get mixed up with just one individual. Some of the equipment in power stations were provided by original equipment manufacturers. In some instances, Eskom could veer away and go to another supplier because the part was approximately the same. However, he had been told that counterfeit parts had entered the scene for some time. One senior person, who had been working for 20-odd years with a unit, could not say when it would break down because they did not know which parts were put in when and whether some of the parts were counterfeit or not. He noted that ABB provided control instrumentation. Operators sat in a power station, in an operating room, and it was that instrumentation that they monitored to make decisions about how a unit would be run. He suggested that an engineer from Eskom be brought in to explain how the system worked. It appeared that ABB was indispensable. However, there might be developments there that he was not aware of. He would check up on that matter. He discussed the tax financial information. That was a system that many countries had. Private information was not applicable here when it comes to finances. A registered taxpayer, in a particular country or jurisdiction, must declare any receipt of income. That include became the taxable income. One of the schemes that every tax authority had to deal with was where an individual or a company did not declare everything. The disclosure of information needed to be managed to reduce tax liability. Collecting third-party data was a crucial part of verification. The PAYE system was largely automated. If one did not receive any interest income, the assessment could be done within minutes. This was not some naughty activity. This was a legitimate tax practice, but also the legitimate obligation of citizens to pay their taxes in a fair way, like everybody else. He responded to the question of who the real role players were. If the Committee took all the presentations made to it, it would not provide names. It provided sectors. For example, somebody in the coal mining industry mixed coal with rubbish and deliberately supplies it to Eskom. If the Committee look at it sector by sector, meaning the different role players in the entire value chain, it would be able to detect them. The Committee had all the reports before it, which showed where the malfeasance actually occurred. The Committee must follow that track. The Committee’s researchers can help as well. He discussed the lesson for business. They needed to do their due diligence properly. They needed to ensure that there was no conflict of interest involved. He was willing to sit with them to develop a code of practice, which ensured that the wrong lines were not crossed. He responded that there had been competency testing. However, that might be confidential information. The Department would have to check the law. It would then revert back to the Committee on the matter. He discussed assisting law enforcement agencies properly. The Hawks had told the Committee that once the interview was broadcast, it had approached the former GCEO. The Hawks were referred to the lawyer. When they approached the lawyer, nobody came back to them. So, the law enforcement fraternity still had the right to go back to them and to anybody else. If there was substantive information, if there was evidence, then they wanted to see it. The Hawks would have to apply their minds to what they do with that information.
The Chairperson asked Adv Mothibi if there was anything he wanted to add.
Adv Andy Mothibi, Head and Chief Executive, SIU, assured the Committee that the investigations conducted by SIU would proceed as authorised by the proclamations. He noted the recent proclamations that would cover most or all of the power stations at Eskom. He discussed the issue of the report and the intelligence report that was produced. It had raised certain questions in the presentation to the Committee the last time the SIU presented. He confirmed that the investigating team would pursue that in the context of its investigation. While it focused on corruption, it would have to focus on maladministration and malpractice as authorised by the proclamation. The SIU would need to look into the applicable law and policies around how is it that the former GCEO handled this matter. The team was looking at that, which would include approaching the company that investigated. That was if the report could not be found anywhere so that the SIU could subpoena the report. It believed that the report would assist in its investigations.
Minister Gordhan discussed the vetting issues. It had been brought to his attention by his office that in November 2019, the then Minister of State Security wrote to him raising concerns about resistance to and non-compliance with vetting processes among some Eskom officials. The then Minister provided a list of those officials, which he then referred to the board. That had been attended to, but no similar letter was received in relation to the CEO.
The Chairperson noted that in a meeting with the former Deputy Minister of State Security, it was indicated on the record that Mr De Ruyter was not cooperating. When the Committee met with the State Security Ministry, that was categorically put.
Minister Gordhan said that he was not aware of that. He believed that the majority of people working for Eskom were honest, hardworking people who wanted the country to succeed, and wanted Eskom to regain its brand as an efficient utility. There was a small group of corrupt individuals who must be dealt with. Any endeavour, like the Committee wanted and the Department wanted as well, to identify those corrupt individuals and deal with them, would raise the morale of people working within Eskom itself. He emphasised that his position was an uncompromising one. He did not care where an individual came from. If an individual had messy hands, and if there was evidence to that effect, then that person would have to face the consequences. His organisation had taken very firm resolutions in that particular regard. There was a necessity for renewal, both within and outside of the organisation as well. He appealed to those who were doing business with Eskom that they charged a fair price for whatever service or product delivered. He appealed that businesses should not overcharge Eskom. The Department wanted honest businesspeople in the private sector. He addressed Mr De Ruyter. Mr De Ruyter had informed him fairly late about the poisoning incident that he was subjected to. When he found out, about the 10th of January this year, he visited Mr De Ruyter and his family at their holiday home. That was a mark of his human solidarity with Mr De Ruyter to show his support for his family. However, this egotistical chip that Mr De Ruyter was on at the moment was not serving him or the country in any positive way. Any notion that he had of being a heroic figure that was going condemn everyone, but also take an old-fashioned ideological position in relation to both his organisation and others, was a misplaced area of focus. He discussed the breaking of Mr De Ruyter’s signed contract of employment. This was not something that other private sector CEOs did, and the private sector was where he comes from. That was a point that the public and the business sector should actually take note of. The Minister reiterated that he did not approve any so-called intelligence project in any form whatsoever, notwithstanding what Professor Makgoba said. He thought that what Professor Makgoba said was misconstrued and misrepresented. It was only months later that Mr De Ruyter mentioned the investigation to him in passing. He had been minimally exposed to some information, but there was no evidence. He discussed the business sector. The leadership in the business sector played a very positive role in supporting many of the endeavours of the Government. That was the positive path that he wanted to continue. It indicated the Government’s ability to work together in the interest of the country as a whole. The Department wanted a situation where both Parliament and the people of South Africa took a positive and firm stance on issues of corruption, particularly those corrupt activities that impacted Eskom and its performance that was harming the country and the country's reputation. This was harming the country's ability to attract investment into the country to create jobs. Everyone needed to do much more to tackle the scourge of corruption. He thanked the Committee for the opportunity for him to interact. The Department would still respond to some of the concerns raised. The Committee needed to give it time. The Chairperson thanked the Minister for his responses. He thanked the SIU for being present. The Committee would be meeting virtually next Friday with Dr Mufamadi. The Committee would meet on Wednesday to deliberate on the hearings that had occurred so far. The Committee wanted to arrive at a point to make a decision as to whether it should proceed with an enquiry or not. The Committee would make those reflections next week, and on all the meetings that it had had on this matter. The Chairperson noted that the Committee was not at inquiry stage yet. It had been trying to piece together all the information and would then take a decision.
The meeting was adjourned.
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