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New Transnet CEO, Portia Derby outlines her plans for the state-owned entity with CNBC Africa&#8217;s Chris Bishop at Mining Indaba Cape Town.

#MiningIndaba2020: New Transnet CEO vows to clean up the state-owned entity

#MiningIndaba2020: New Transnet CEO vows to clean up the state-owned entity, opens up on former boss Brian Molefe

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Former CEO of Eskom, Brian Molefe, was denied his appeal for re-appointment. It was also ruled by the North Gauteng High Court that Molefe would not be granted the R30 million pension pay-out.

Molefe must pay-back the money within 24 hours, says Solidarity

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Former CEO of Eskom, Brian Molefe, was denied his appeal for re-appointment. It was also ruled by the North Gauteng High Court that Molefe would not be granted the R30 million pension pay-out.

High court dismisses Brian Molefe’s bid to get his job back

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South Africa&#8217;s power utility, Eskom, felt the brunt of the media today in a heated Q&#038;A session after the announcement of the company&#8217;s 2016/17 financial year results. Corruption was at the core of the questions at Eskom&#8217;s Mega Watt Park.

Eskom vows to take action against former acting CEO

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While Eskom maintains that it&#8217;s not cash strapped and will be able to continue operations and paying salaries in the coming months, The Sunday Times has revealed that the power utility is sitting on its last R20 billion.

Is Eskom broke?

JOHANNESBURG (Reuters) &#8211; South Africa&#8217;s Public Protector has launched a new investigation into allegations of influence-peddling and unlawful enrichment by certain officials within three state-owned firms after thousands of emails relating to alleged fraud were leaked.
The Public Protector&#8217;s office said in a statement on Wednesday it was investigating these allegations within Eskom, Transnet and The Passenger Rail Agency of South Africa (PRASA).
Allegations of government corruption have escalated this month after local media began reporting on more than 100,000 leaked emails they say show inappropriate interference by the wealthy Gupta family and ministers in the issuing of lucrative tenders.
&#8220;The Public Protector South Africa, Advocate Busisiwe Mkhwebane, has decided to conduct a preliminary investigation for the purpose of determining the merits of the several allegations published in the media,&#8221; the protector&#8217;s office said.
The latest allegations of influence-peddling are deepening a divide in the ANC as factions jostle for control before a conference in December where President Jacob Zuma&#8217;s successor as party leader will be chosen.
The investigation by the anti-corruption watchdog will focus on allegations of &#8220;improper or dishonest act&#8221; with respect to the public funds at Eskom, PRASA and Transnet and &#8220;unlawful enrichment&#8221; by certain public officials at the firms, it said.
The investigation will also look at the re-appointment of Brian Molefe as chief executive of Eskom, the state power company, amid graft allegations. He was reinstated last month, but ministers then reversed his reinstatement.
Molefe has denied wrongdoing and the Gupta family, who are friends of Zuma, and its companies have also denied all allegations of influence-peddling or improper dealings.
Most of the allegations form part of &#8220;The State Capture&#8221; report by the Public Protector, released last year on Nov. 2, focusing on allegations that businessmen brothers Ajay, Atul and Rajesh Gupta had influenced the appointment of ministers.
The report has been taken on judicial review by Zuma, mines minister Mosebenzi Zwane and Minister of Cooperative Governance and Traditional Affairs Desmond van Rooyen, the public protector said.
(Reporting by Nqobile Dludla; Editing by Chris Reese and Leslie Adler)

S.Africa’s Public Protector launches probe of influence-peddling in state-owned firms

Statement by SA Department of Public Enterprises
Dr Ben Ngubane has resigned with immediate effect as Non-Executive Director and Chairperson of the Board of Eskom.
“Dr Ngubane formally tendered his resignation, which I accepted,” Minister of Public Enterprises, Lynne Brown, said.
<blockquote>“I would like to thank Dr Ngubane for his contribution to turning Eskom around since the load shedding days of 2014/15, and wish him well in the future.
“To ensure continuity at Eskom, I have decided to appoint Mr Zethembe Khoza as interim Chairperson until I am able to take new Board appointments to Cabinet for approval,” Minister Brown said.</blockquote>
Eskom’s AGM is scheduled to take place later this month.
http://cnbc.africa/zdnl-mc/2017/06/02/eskom-rescinds-molefe-appointment/
Responses to Ngubane&#8217;s resignation 
Statement by  the Democratic Alliance’s Natasha Mazzone MP &#8211; Shadow Minister of Public Enterprises
The Democratic Alliance has noted the late-night resignation of Eskom Board Chair, Ben Ngubane, hot on the heels of damning revelations of the capture of Eskom leadership by the Guptas, and the breakdown of corporate governance at Eskom.
Mr Ngubane, who presided over the retrenchment/retirement/rehire of Brian Molefe as Eskom CEO has much to answer for, not least of which includes Molefe’s R30 million ‘golden handshake’ deal and an avalanche of accusations that the Guptas have milked Eskom over many years.
Ngubane’s resignation will not exonerate him from liability for the breakdown of governance at the Power Utility, and the DA will use the Parliamentary Inquiry into Eskom, set to commence on 21 June, to hold Ngubane to account.
Allegations by former Mineral Resources Minister, Ngoako Ramatlhodi, that Brian Molefe and Ben Ngubane tried to strong-arm him to withdraw Glencore’s Optimum mining licences in order to guarantee that the Guptas takeover Glencore’s coal mines is yet to be probed, and may still find Nguabne guilty.
Additionally, the Matshela Koko R1 billion nepotism scandal, which occurred on Ngubane’s watch, is yet to be fully probed too.
Ngubane has also recently been implicated in falsifying documents in a liquidation case.
We find the clandestine hour of Ngubane’s resignation announcement to be highly suspicious.

Eskom Chairman Ben Ngubane resigns

Africa’s largest power utility Eskom&#8217;s former CEO Brian Molefe has approached the courts to <a href="http://cnbc.africa/news/political/2017/06/05/eskom-former-ceo-challenge-sacking/">overturn his sacking</a> after the parastatal was told to <a href="http://cnbc.africa/zdnl-mc/2017/06/02/eskom-rescinds-molefe-appointment/">rescind his appointment last week</a> following outrage at his reinstatement just two weeks ago.
Should the case be heard what will be crucial is whether Molefe, who first left the organisation in November 2016, resigned or took early retirement. Below is the statement issued by Eskom the day he stepped down&#8230; <a href="http://cnbc.africa/wp-content/uploads/2017/06/Media-Statement-2.pdf">Media-Statement-2</a>
<img loading="lazy" decoding="async" class="size-large wp-image-127218 aligncenter" src="http://cnbc.africa/wp-content/uploads/2017/06/Eskom-1-e1496682883870.jpg" alt="" width="640" height="904" />
<img loading="lazy" decoding="async" class="size-large wp-image-127219 aligncenter" src="http://cnbc.africa/wp-content/uploads/2017/06/Eskom-2-725x1024.jpg" alt="" width="640" height="904" />

What Brian Molefe really said when he left Eskom

TJ Strydom | JOHANNESBURG
The former head of South Africa&#8217;s power utility Eskom has approached the courts to overturn his sacking, local media reported on Sunday.
Eskom was told to remove chief executive Brian Molefe last week after members of the ruling African National Congress criticised his reinstatement just two weeks ago, given he resigned last year amid allegations of graft.
Molefe has launched an urgent application in the Labour Court in Johannesburg to have the decision to remove him declared invalid, the Timeslive website reported.
Eskom and Public Enterprises Minister Lynne Brown were listed as respondents, the report said. Neither Eskom nor Brown&#8217;s spokesman could immediately be reached for comment by Reuters.
Molefe resigned in November after a report by the Public Protector, a constitutionally mandated corruption watchdog, raised questions over Eskom coal contracts awarded to a company owned by the Gupta family, wealthy friends of President Jacob Zuma.
Zuma&#8217;s opponents said Molefe&#8217;s return was a new attempt to access contracts worth hundreds of millions of dollars. Government ministers have said the Guptas have offered to secure them promotions in return for tenders.
Zuma and the Gupta family deny wrongdoing. Molefe also denies any wrongdoing and said he resigned in the first place in the interest of good governance and stability.
(Reporting by TJ Strydom)

South Africa power utility’s former CEO to challenge sacking in court

Eskom&#8217;s board this morning, gave effect to the Minister of Public Enterprises Lynne Brown&#8217;s directive to rescind the power utility&#8217;s decision to re-instate Brian Molefe as Group Chief Executive (GCE) of Eskom.
In a statement it said: 
&#8220;In giving effect to and on the basis of the Minister’s directive contained in the letter dated 31 May 2017, it was resolved that the resolution of the Board of Directors taken on 2 May 2017 is rescinded. Furthermore, that the reinstatement agreement concluded between Mr. Molefe and Eskom on 11 May 2017 be rescinded.
&#8220;In consequence, Mr. Molefe is no longer GCE of Eskom and will no longer serve as a director on the Board of Eskom&#8221;.
Minister of Public Enterprises spokesperson Colin Cruywagen told CNBC Africa that Brown is applying her mind to who will be the next CEO of Eskom after being supplied with two names.
http://cnbc.africa/news/southern-africa/2017/05/12/south-africas-brian-molefe-return-ceo-eskom/

Eskom board rescinds Brian Molefe’s appointment

Wendell Roelf | CAPE TOWN
A South African government task team has rescinded the reinstatement of Brian Molefe as chief executive of state power utility Eskom and a new CEO will be appointed within 48 hours, Public Enterprises Minister Lynne Brown said on Wednesday.
Molefe resigned in November last year after a report by the Public Protector, a constitutionally mandated corruption watchdog, raised questions over Eskom coal deals.
Molefe&#8217;s surprise return two weeks ago highlighted divisions in the ANC and drew allegations from opponents that the ruling party and President Jacob Zuma weren&#8217;t tackling graft.
(Reporting by Wendell Roelf; Writing by Ed Stoddard; Editing by Joe Brock)

South Africa government removes Molefe as Eskom CEO

<div class="storify"><iframe loading="lazy" src="//storify.com/cnbcafrica/live-592ea3990d2b79b83a32ae36/embed?border=false" width="100%" height="750" frameborder="no"></iframe><script src="//storify.com/cnbcafrica/live-592ea3990d2b79b83a32ae36.js?border=false"></script><noscript>[<a href="//storify.com/cnbcafrica/live-592ea3990d2b79b83a32ae36" target="_blank">View the story &#8220;LIVE: The IMC on Eskom&#8221; on Storify</a>]</noscript></div>

LIVE: Reactions to the IMC decision to rescind Brian Molefe’s appointment

South Africa has, in the past, been credited with taking on innovative corporate governance <a href="https://www.ft.com/content/bb4557d2-5b75-11e4-b68a-00144feab7de">standards</a> and integrated reporting. So it’s particularly depressing to see the spectacle around the country’s largest state-owned enterprise, its power utility Eskom.
The <a href="http://www.timeslive.co.za/politics/2017/05/12/Molefe-didnt-resign%E2%80%9A-says-Eskom.-He-retired">drama</a> has revolved around Eskom’s CEO Brian Molefe, who has returned to the job just months after quitting. The contradictory explanations of his return point to huge flaws in the accountability systems of the country’s state owned enterprises. It’s clear that Eskom flouted many basic <a href="https://www.icaew.com/en/technical/corporate-governance/overview/does-corporate-governance-matter">principles</a> of sound corporate governance.
This poses enormous risks as these systems are imperative for ensuring an ethical public service and society.
When Molefe announced his <a href="https://www.businesslive.co.za/bd/national/2017-05-12-brian-molefe-did-not-resign-that-is-why-we-can-reinstate-him-eskoms-board-says/">departure</a> from Eskom, he specifically connected his leaving to “corporate governance”; he was certainly accurate in that. On top of the issue of his claimed connections to the <a href="http://www.bbc.com/news/world-africa-22513410">Gupta family</a>, the <a href="https://www.ujuh.co.za/state-of-capture-public-protectors-report/">allegations</a> that spurred his exit spoke to breakdowns in information sharing and decision making that were made to benefit only a few.
The National Executive Committee of the ruling party, the ANC, has since ordered that Molefe’s return to Eskom should be reversed, a decision seen to be going against the wishes of its President Jacob Zuma.
There are many flaws that need to be examined in this saga, but let me flag three foundational faults in corporate governance. Firstly, there were serious lapses around Eskom’s senior executive remuneration processes. Secondly, it looks like the basic rules of consultation around critical decision making were flouted. And thirdly, creating a <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">false dilemma</a> between handing Molefe a R30 million payout or allowing him to return to his Eskom job points to a simple disregard of the rules.
<h2>Process failures</h2>
The compensation question: the question of fair and justified compensation for senior executives looms large in the Eskom saga. There’s still no clarity over why Molefe left Eskom in December last year: whether he “retired” or “resigned” remains a contested point. More recently, South Africans were informed that he was, in fact, on <a href="https://mg.co.za/article/2017-05-22-now-eskoms-molefe-was-on-unpaid-leave">unpaid leave</a> in the months between his departure in December and his return in early May.
Whatever the reason for his departure, Eskom’s board chose to award Molefe <a href="http://www.iol.co.za/news/politics/why-did-brian-molefe-get-a-r30m-golden-handshake-8690587">R30 million</a>. This raises the first potential failure in the accountability system: the responsibility of board members to decide fair and justified compensation for senior executives.
This is true regardless of whether they retire or resign or go on unpaid leave. Each is governed by sets of rules to guide a board’s decision-making. Leaving aside the obvious contradiction that anyone would be paid R30 million for being on unpaid leave, none of the normal remuneration rules seem to have been followed. But without a basic understanding of the terms of his departure, a proper analysis is almost impossible. This failure of transparency in the process makes justifying the award on the grounds that it was in the interests of Eskom’s stakeholders even less likely.
Flouting consultation processes: The second failure in the governance system is a lack of clarity around the <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">role</a> of the Public Enterprises Minister, Lynne Brown. Her decision to contradict the board and deny the R30 million pay-out triggered an evaluation of what to do about Molefe’s connection to Eskom. In her statement, Brown highlighted the fact that she hadn’t been consulted and referred to decisions that appeared to have been made without the required approvals.
An effective corporate governance system has clearly delineated processes for both consultation and decision making.
In this case, it seems that steps in that process were skipped over, and key people weren’t consulted, leading to an unsupported outcome.
Creating a false dilemma: Brown claimed that there were only two options open to her – to pay Molefe R30 million or reinstate him. But by doing so she created a false dilemma that stood to benefit the person who stepped down, rather than the company and its stakeholders. In the process, the board and the minister ignored multiple options that would have likely been better.
For example, if neither the board nor Brown could agree on severance compensation, Molefe could be paid his old salary in the interim, while final negotiations took place (there is a paid leave option in his contract). This type of bridging arrangement would create fairness for him while avoiding disruption to Eskom’s operations.
<h2>A question of ethics</h2>
A fundamental principle of good governance, laid out in <a href="http://www.iodsa.co.za/?page=KingIV">King IV</a> (a set of guidelines for strong corporate governance which companies/directors should comply with and explain their choices), that applies here is that:
<blockquote>governing bod[ies] should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.</blockquote>
Regardless of political ideology, it is difficult to see that Molefe’s return to Eskom can be said to be in the best interests of creating an ethical culture.
Strong accountability systems create ethical cultures because everyone knows the rules, and believes the rules are being followed. As a result, people trust that when things don’t go their way, there’s a clear explanation. While they may not agree with choices, they are confident that a decision was made after a known process was followed.
Strong accountability systems can certainly privilege some people over others in different circumstances, but they clarify what gets rewarded and what gets punished. This leads to an ethical culture because there’s a common understanding and, crucially, some levels of shared purpose.
<h2>Not just about following the rules</h2>
Good accountability systems are about more than creating and following rules; while compliance is an aspect of these systems, it is really the bare minimum. They create and support a sense of shared destination, bolstered by agreed processes.
Recently, leaders have too often relied on their legal “right” to do something, ignoring their ethical obligation to the greater good: the good of their company, their portfolio, their electorate, their country.
While the legal grounds for better governance are worth debating and enforcing, South Africans must never neglect the profound ethical impact of failed accountability systems. Eskom’s current situation is about more than fulfilling its legal obligations. It’s a warning that South Africa’s ethical culture might slip through our hands. Let’s hold on tight.

Eskom CEO saga highlights massive systems failure in South Africa

South Africa has, in the past, been credited with taking on innovative corporate governance <a href="https://www.ft.com/content/bb4557d2-5b75-11e4-b68a-00144feab7de">standards</a> and integrated reporting. So it’s particularly depressing to see the spectacle around the country’s largest state-owned enterprise, its power utility Eskom. <img loading="lazy" decoding="async" src="https://counter.theconversation.edu.au/content/78432/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />
The <a href="http://www.timeslive.co.za/politics/2017/05/12/Molefe-didnt-resign%E2%80%9A-says-Eskom.-He-retired">drama</a> has revolved around Eskom’s CEO Brian Molefe, who has returned to the job just months after quitting. The contradictory explanations of his return point to huge flaws in the accountability systems of the country’s state owned enterprises. It’s clear that Eskom flouted many basic <a href="https://www.icaew.com/en/technical/corporate-governance/overview/does-corporate-governance-matter">principles</a> of sound corporate governance.
This poses enormous risks as these systems are imperative for ensuring an ethical public service and society.
When Molefe announced his <a href="https://www.businesslive.co.za/bd/national/2017-05-12-brian-molefe-did-not-resign-that-is-why-we-can-reinstate-him-eskoms-board-says/">departure</a> from Eskom, he specifically connected his leaving to “corporate governance”; he was certainly accurate in that. On top of the issue of his claimed connections to the <a href="http://www.bbc.com/news/world-africa-22513410">Gupta family</a>, the <a href="https://www.ujuh.co.za/state-of-capture-public-protectors-report/">allegations</a> that spurred his exit spoke to breakdowns in information sharing and decision making that were made to benefit only a few.
The National Executive Committee of the ruling party, the ANC, has since ordered that Molefe’s return to Eskom should be reversed, a decision seen to be going against the wishes of its President Jacob Zuma.
There are many flaws that need to be examined in this saga, but let me flag three foundational faults in corporate governance. Firstly, there were serious lapses around Eskom’s senior executive remuneration processes. Secondly, it looks like the basic rules of consultation around critical decision making were flouted. And thirdly, creating a <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">false dilemma</a> between handing Molefe a R30 million payout or allowing him to return to his Eskom job points to a simple disregard of the rules.
<h2>Process failures</h2>
The compensation question: the question of fair and justified compensation for senior executives looms large in the Eskom saga. There’s still no clarity over why Molefe left Eskom in December last year: whether he “retired” or “resigned” remains a contested point. More recently, South Africans were informed that he was, in fact, on <a href="https://mg.co.za/article/2017-05-22-now-eskoms-molefe-was-on-unpaid-leave">unpaid leave</a> in the months between his departure in December and his return in early May.
Whatever the reason for his departure, Eskom’s board chose to award Molefe <a href="http://www.iol.co.za/news/politics/why-did-brian-molefe-get-a-r30m-golden-handshake-8690587">R30 million</a>. This raises the first potential failure in the accountability system: the responsibility of board members to decide fair and justified compensation for senior executives.
This is true regardless of whether they retire or resign or go on unpaid leave. Each is governed by sets of rules to guide a board’s decision-making. Leaving aside the obvious contradiction that anyone would be paid R30 million for being on unpaid leave, none of the normal remuneration rules seem to have been followed. But without a basic understanding of the terms of his departure, a proper analysis is almost impossible. This failure of transparency in the process makes justifying the award on the grounds that it was in the interests of Eskom’s stakeholders even less likely.
Flouting consultation processes: The second failure in the governance system is a lack of clarity around the <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">role</a> of the Public Enterprises Minister, Lynne Brown. Her decision to contradict the board and deny the R30 million pay-out triggered an evaluation of what to do about Molefe’s connection to Eskom. In her statement, Brown highlighted the fact that she hadn’t been consulted and referred to decisions that appeared to have been made without the required approvals.
An effective corporate governance system has clearly delineated processes for both consultation and decision making.
In this case, it seems that steps in that process were skipped over, and key people weren’t consulted, leading to an unsupported outcome.
Creating a false dilemma: Brown claimed that there were only two options open to her – to pay Molefe R30 million or reinstate him. But by doing so she created a false dilemma that stood to benefit the person who stepped down, rather than the company and its stakeholders. In the process, the board and the minister ignored multiple options that would have likely been better.
For example, if neither the board nor Brown could agree on severance compensation, Molefe could be paid his old salary in the interim, while final negotiations took place (there is a paid leave option in his contract). This type of bridging arrangement would create fairness for him while avoiding disruption to Eskom’s operations.
<h2>A question of ethics</h2>
A fundamental principle of good governance, laid out in <a href="http://www.iodsa.co.za/?page=KingIV">King IV</a> (a set of guidelines for strong corporate governance which companies/directors should comply with and explain their choices), that applies here is that:
<blockquote>governing bod[ies] should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.</blockquote>
Regardless of political ideology, it is difficult to see that Molefe’s return to Eskom can be said to be in the best interests of creating an ethical culture.
Strong accountability systems create ethical cultures because everyone knows the rules, and believes the rules are being followed. As a result, people trust that when things don’t go their way, there’s a clear explanation. While they may not agree with choices, they are confident that a decision was made after a known process was followed.
Strong accountability systems can certainly privilege some people over others in different circumstances, but they clarify what gets rewarded and what gets punished. This leads to an ethical culture because there’s a common understanding and, crucially, some levels of shared purpose.
<h2>Not just about following the rules</h2>
Good accountability systems are about more than creating and following rules; while compliance is an aspect of these systems, it is really the bare minimum. They create and support a sense of shared destination, bolstered by agreed processes.
Recently, leaders have too often relied on their legal “right” to do something, ignoring their ethical obligation to the greater good: the good of their company, their portfolio, their electorate, their country.
While the legal grounds for better governance are worth debating and enforcing, South Africans must never neglect the profound ethical impact of failed accountability systems. Eskom’s current situation is about more than fulfilling its legal obligations. It’s a warning that South Africa’s ethical culture might slip through our hands. Let’s hold on tight.
<a href="https://theconversation.com/profiles/timothy-london-329823">Timothy London</a>, Senior Lecturer, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="http://theconversation.com/eskom-ceo-saga-highlights-massive-systems-failure-in-south-africa-78432">original article</a>.

This is what Brian Molefe’s return as CEO at Africa’s power utility, Eskom signifies

Introduction
Much attention has been paid recently in the public debate to reports of corruption in the South African Government and state-owned enterprises and to the so-called phenomenon of “state capture”. A new phase in the public debate has, in particular, been fueled by a report of the South African Council of Churches, by hearings of the Parliamentary Committee on Public Enterprises and by the publication of a study by the State Capacity Research Project. Each of these events is dealt with below, together with an analysis of their content and impact on the national debate on corruption and state capture. 
 
The SACC report
The South African Council of Churches announced the findings of its “Unburdening Panel Process” on 18 May 2017. It had created this process in April 2016, describing it as a safe space and a “facility” offered by the churches to persons who wish to relieve themselves of a burden, caused by the experience of being pressured to perform a corrupt act or where they had witnessed such an act. The SACC emphasized that this was intended as a pastoral process for the people involved, and not as an investigation. It stated that it had created this “listening facility” as a result of the ANC’s unwillingness to deal with recent revelations on the subject of state corruption. In its statement introducing the report on 18 May 2017, the SACC said that 
Today we are therefore seized with Anchoring Democracy, as we have come to recognize that South Africa may just be a few inches from the throes of a Mafia State, from which there may be no return – a recipe for a Failed State….
It now seems that the problem is far greater than corruption, but organized chaos. We have now come to learn that what appears to be chaos and instability in government may well be a systemic design of the madness that ills our governmental environment – a chaotic design. A careful analysis makes the case for the following observable trends of inappropriate control of State systems through a power-elite that is pivoted around the President of the Republic that is systematically siphoning the assets of the State. They do this by:
Securing control over state wealth, through the capture of state-owned companies by chronically weakening their governance and operational structures. 
Securing control over the public service by weeding out skilled professionals. 
Securing access to rent-seeking opportunities by shaking down regulations to their advantage, and to the disadvantage of South Africans. 
Securing control over the country’s fiscal sovereignty. 
Securing control over strategic procurement opportunities by intentionally weakening key technical institutions and formal executive processes. 
Securing a loyal intelligence and security apparatus. 
Securing parallel governance and decision-making structures that undermine the executive. 
What we see persuades us that the present government has lost moral legitimacy. The question that this has raised is in the constitutional dimension. Does the conduct of the government render it to have violated its constitutional mandate? That is a matter for the lawyers to explore further
We urge the African National Congress as the governing party to examine itself and mend the ways of government before we reach the point of no return – for this has implications for the ANC in government, for its leadership and members. We appeal to the civil servants in government, to note and remember that whereas governments come and go with elections, they as civil servants are part of the permanent State system of the citizenry, and the instrumentation of the public good envisioned in our constitutional dispensation. 
 
The Parliamentary Committee on Public Enterprises 
 
The members of the Parliamentary Portfolio Committee on Public Enterprises unanimously called a meeting on an urgent basis, in an attempt to obtain clarity on recent events at Eskom, especially regarding the re-appointment of its CEO, Brian Molefe, and specifically whether he “retired, was retrenched, resigned or did he step down” (as the Committee’s Chairperson put it). During the Committee’s proceedings on 23 May 2017, questions and comments were put to the Minister of Public Enterprises and the Chairman of the Board of Eskom, mainly on the question of the status and nature of Brian Molefe’s employment contract.
The former Minister of Finance, Pravin Gordhan, now an MP and member of this Committee, put it as follows: 
The public is connecting the dots… The public is increasingly aware that you are abusing state property and state resources in the name of yourselves and not in the name of the South African public, that you are part of, wittingly or unwittingly (and in some cases there is enough evidence to say wittingly), a conspiracy to capture Eskom for the benefit of the few. That’s the reality, let’s not play around with technical questions… 
What the South African public is worried about is that we are reaching a stage in managing governance in South African where there are a significant number of people in the bureaucracy and elsewhere, and on the boards, that are taking the view that ‘I don’t care, I don’t care if you know what I do, I don’t care if you know that public resources are going elsewhere, I don’t care how many reports the Public Protector or anybody else provides, because I am protected.’
The Chairperson stated at the end of the hearing that the Committee is concerned at the state of governance in Eskom and views the reappointment of Brian Molefe as illegal. It is interesting to note that the Minister and Eskom’s Chairperson received no support whatever from any of the ANC MPs who are on the Committee. 
Study by the State Capacity Research Project
The State Capacity Research Project published its study entitled <a href="http://cnbc.africa/trending/cabinet-reshuffle-17/2017/05/26/inside-the-capture-of-africas-most-advanced-economy/">Betrayal of the Promise: How South Africa is being Stolen</a> on 25 May 2017. This has been widely reported on in the media. The State Capacity Research project describes itself as an interdisciplinary, inter-university research partnership that aims to contribute to the public debate about ‘state capture’ in South Africa.
The study makes the following findings: 
Until recently, the decomposition of South African state institutions has been blamed on corruption, but we must now recognise that the problem goes well beyond this. Corruption normally refers to a condition where public officials pursue private ends using public means. While corruption is widespread at all levels and is undermining development, state capture is a far greater, systemic threat. It is akin to a silent coup and must, therefore, be understood as a political project that is given a cover of legitimacy by the vision of radical economic transformation. The March 2017 Cabinet reshuffle was confirmation of this silent coup; it was the first Cabinet reshuffle that took place without the full prior support of the governing party. This moves the symbiotic relationship between the constitutional state and the shadow state that emerged after the African National Conference (ANC) Polokwane conference in 2007 into a new phase. The reappointment of Brian Molefe as Eskom’s chief executive officer (CEO) a few weeks later in defiance of the ANC confirms this trend”
This raises the question about whether there is, in fact, a strategic centre of sorts. In general, the answer is no. Nor is there one single powerful network that overrides all others. The clearest and most disturbing indicator that the South African rent-seeking system tends towards the chaotic end of the spectrum is the collapse of the cabinet system as the core of the executive branch of the state. There is evidence that Zuma tends to govern via a set of ‘kitchen cabinets’ comprising selected groups from different networks. Kitchen cabinets are small informal reference groups that are convened on an as-needed basis. They can also be shell structures that are activated when needed. As will be demonstrated, they have been known to be drawn from the state security establishment, Gupta networks, SOE sector, sub-groups of cabinet ministers and deputy ministers, family networks, international networks (e.g., Angola, Russian intelligence), key black business groups, the ANC (in particular the Premier League and Magashule), and selected loyalists in the public service (usually loyal director generals).
The evolution in recent decades of rent management systems within neo-patrimonial regimes around the world has taken many forms. In summary, though, they can be characterised within a spectrum that ranges from centralised/coordinated to chaotic. The South African rent-seeking system is a kind of hybrid, partly because of Zuma’s personally vulnerable position due to outstanding and unresolved charges against him, the Constitutional Court finding on Nkandla and his embeddedness within a well-structured constitutional order. He aspires to be like Putin or Angola’s Dos Santos, but is entangled by constitutional state requirements he cannot dispense with (like reporting to Parliament and subordination – at least for now – to the Constitutional Court) and competitive dynamics within the shadow state that the Gupta networks do not always control (witness the PRASA debacle).
The report also highlights the effect of this perverted management system on the poorest sections of society: 
The politicisation of procurement as a means to achieve radical economic transformation frequently results in the subversion of service delivery mandates. Therefore, in recent years there have been purges of professional public servants and the repurposing of administrations away from their constitutional and legislative mandates. It has also opened departments and especially SOEs to massive competition and rivalry, not so much about policy, but about who gets what tenders. This weakens and often breaks administrations, which are then unable to deliver services. A vacuum is created that can be filled by transactions that occur within the shadow state. This is especially devastating for working families and for the poor, who are more dependent on government services than the middle class and the rich. Failures in health and education, for example, reproduce historical, racialised patterns of inequality. It distracts attention from the economy itself and the inclusive structural transformation that is needed to make the economy more productive and labour-absorptive.
Comment
These events demonstrate that the intensity of the public debate on corruption and state capture has been ratcheted up a couple of levels. In this process, certain aspects which were not a regular part of the public debate have now come to the fore and the manner in which they are expressed, show that they are accepted as fact and not mere conjecture:
&#8211; the connection is increasingly being made between certain events and the acts of representatives of Government and state-owned enterprises, i.e. the dots are being connected, showing systemic corruption; 
&#8211; that chaos and incompetence have become part and parcel of the whole system. It is therefore not corruption on its own that needs to be confronted, but the fact that a corrupt system has been facilitated by the removal of adequately experienced professionals/bureaucrats from Government and state-owned enterprises; and
&#8211; the concept of a “mafia state’’ is now firmly entrenched as part of the public debate. The Deputy President, Cyril Ramaphosa, has also referred to this threat in his speeches immediately after the SACC report was made public.
The reports by the SACC and the<a href="http://cnbc.africa/trending/cabinet-reshuffle-17/2017/05/26/inside-the-capture-of-africas-most-advanced-economy/"> State Capacity Research Project</a> and the proceedings at the Parliamentary Committee on Public Enterprises, have provided important additions to the public understanding of how major functions of Government and state-owned enterprises have been subverted for the benefit of a select few. The reports rely on information which is already in the public domain and therefore do not provide much new evidence, but they do make a valuable contribution in helping the public to make sense of the damaging and pervasive effects of state capture and corruption.
Unravelling is well under way, and more of it can be expected in the coming months.
*Anton van Dalsen is from the Helen Suzman Foundation

South Africa's Quantum Foods warns of 38% drop in first-half profit

South Africa’s Quantum Foods warns of 38% drop in first-half profit. budget_shutterstock_249974521

The unravelling of SA’s state capture

Speech by Lynne Brown, Minister of Public Enterprises, South Africa
Chairperson Zukie Rantho 
Members of the Portfolio Committee 
Officials of my Department 
Parliamentary Officials, journalists 
South Africans…
Let me start by reporting that I have submitted my affidavit to court with regard to the matter.
I have instructed my legal team to withdraw my opposition to Part A of the relief sought – that I set aside my appointment of Mr Molefe.
I have nonetheless deposed an affidavit as I believe the information I have will assist the court in determining its decision.
My initial advice was to oppose Part A on the basis that I neither appointed nor reinstated Mr Molefe, as well as on the basis of advice from Eskom’s Board that it had obtained an opinion from a Senior Council advocate on its handling of the matter.
But having had the opportunity to properly appraise the issues I have decided that I will abide by the court’s decision on the legality of Mr Molefe’s return to Eskom.
When Eskom’s Board approached me to inform me of its decision to bring Mr Molefe back, I said I would support it on the proviso that it was legal. I also made this point repeatedly when addressing media on the matter, though – curiously – none of them thought it worthy of reporting…
With regard to Part B of the motion, which seeks to stop Mr Molefe from conducting any work at Eskom, I have reserved my rights.
Madam chairperson…
One of the issues that the court will have to decide is a technical one relating to Eskom’s Memoranda of Incorporation.
Eskom is governed by various pieces of legislation, including the Eskom Conversion Act 13 of 2001. Section 6 (2) of the Act requires me, from time to time, to publish memoranda and articles of association. Two different Memoranda of Incorporation are relevant to Mr Molefe’s situation: One passed and adopted before his arrival at Eskom, and the other during his tenure.
Material differences between the two documents included that the 2014 version did not require the Minister to be noted as a party to the employment agreement of the Group Chief Executive (noting the Minister was required in the 2016 version); and the 2014 document did not provide the Minister with the power to remove the Chief Executive (as the 2016 version does).
The executive employment contract concluded by Mr Molefe and Dr Ngubane in March 2016 was concluded in terms of the 2014 agreement. It didn&#8217;t have to be shown to me.
When Mr Molefe quit Eskom in November 2016 I was under the impression that he had resigned. I was not aware that he had applied for early retirement. This I only learned in April 2017, after reading in the media that Mr Molefe was receiving a R30m pay-out from Eskom, and asking Eskom’s Board to make a more prudent deal.
Again, on Eskom’s legal argument that Mr Molefe was appointed under the terms of the 2014 MOI, the early retirement agreement didn&#8217;t have to be shown to me.
On 11 May 2017, after taking advice from a senior council, the Eskom Board reverted to me with options on the proposed R30m pay-out to Mr Molefe. As a courtesy, the Board indicated to me its preference was for the consensual recission of Mr Molefe’s early retirement, and that it was willing to accept Mr Molefe back as Group Chief Executive.
I said I would support the Board’s decision providing it was legal. As I told the media, I believed that Eskom would obtain more value from having Mr Molefe at work than simply paying out R30m.
Colleagues…
I didn&#8217;t expect that society would universally welcome news of Mr Molefe’s return to Eskom following the allegations levelled against him in the Public Protector’s State of Capture report. But nor did I anticipate the level of vitriol.
I expected that his achievements as a technocrat, the fact that he would be under enormous scrutiny, and the presumption of innocence until proven guilty would bring some balance to the debate.
But there is a presumption of guilt – despite the Public Protector’s report being taken on review. As a society, as politicians, as media, we must beware of criminalisation by association. Particularly in the absence of anyone having been convicted of a crime…
There is almost a climate of hostility presently surrounding our state-owned companies that, incidentally, belies their actual performance. It is an environment complicated by strident voices ahead of the ruling party’s policy and elective conferences later this year, and by members of the opposition who view the State of Capture report as their ticket to Nirvana.
Chairperson…
I am not telling you this to try and make you feel sympathetic towards Brian Molefe, Dr Ngubane or Eskom, but because it is the truth.
Dr Ngubane is here. He will be able to answer whatever operational and technical questions you might have.
Let me say, in your and Dr Ngubane’s presence, that I have noted concerns that have been raised about the Board’s performance, to the extent that some have called for its dissolution. I don’t think it would be fair to jump to any conclusions while there is an important matter before court.
I have, however, taken legal advice on the process to follow to rotate the Board, if appropriate, while a discussion is underway in government.
Madame chairperson…
Our giant state-owned companies, including Eskom, are critical levers of the developmental, transformative state. Where they err we must fix them. But we must be very careful we don&#8217;t allow our discourse to break them.
Later this week, when Deputy Minister Martins and I present the Department’s budget vote, we will provide a progress report on the State Owned Companies Reform Project and development of a shareholder policy.
Suffice to say, now, that the project will directly address some of the governance issues we are here to discuss today, including the appointment of chief executive officers and the creation of remuneration and pension standards.
I thank you for the time you have given me. I will try my best to answer questions you may have, and Dr Ngubane will do the same.

SA’s Minister of Public Enterprises Lynne Brown on Eskom, Brian Molefe

The <a href="http://citizen.co.za/news/news-national/1515927/anc-wants-govt-deal-brian-molefes-return-eskom/">return of Brian Molefe</a> as CEO of South Africa’s largest state owned enterprise, the power utility Eskom, has caused <a href="http://www.timeslive.co.za/politics/2017/05/17/ANC-demands-that-Molefe-be-axed-from-Eskom1">outrage</a> due to the circumstances under which he resigned in December last year.
Molefe left the power utility after a Public Protector’s inquiry alleged that he may have been involved in nefarious activities. The <a href="http://www.ujuh.co.za/state-of-capture-public-protectors-report/">State of Capture</a> report by the then Public Protector, Thuli Madonsela, showed extensive and irregular communication between Molefe and the <a href="http://www.bbc.com/news/world-africa-22513410">Guptas</a>, a family with close ties to President Jacob Zuma.
At the time Molefe’s backers – including board chairperson Ben Ngubane – <a href="http://www.fin24.com/Economy/Eskom/eskom-regrets-molefes-exit-says-its-a-great-loss-20161111">glorified</a> him. They attributed a turnaround in Eskom’s fortunes as a function of the CEO’s 18-month tenure. His supporters branded him as a <a href="http://www.fin24.com/Economy/Eskom/eskom-regrets-molefes-exit-says-its-a-great-loss-20161111">messiah</a> whose departure would have negative consequences for the power utility.
Similar sentiments were expressed more recently by <a href="http://ewn.co.za/2017/05/16/ngubane-s-comes-to-molefe-s-defence">Ngubane</a> and Public Enterprises Minister <a href="http://www.news24.com/SouthAfrica/News/molefe-innocent-until-proven-guilty-lynne-brown-20170512">Lynne Brown</a>. She told a press conference that she supported his return as CEO as he was responsible for the fact that load shedding (organised power cuts) had stopped and the power utility was on sound financial footing.
But was Molefe’s performance as great as his supporters say it was? I suggest not.
It’s true that under Molefe’s reign power cuts across the country were brought to an end. In addition, Eskom reported better financial results last year.
But neither of these two developments had much to do with Molefe’s capabilities as a CEO. The power cuts <a href="http://www.fin24.com/Economy/zuma-we-will-never-have-load-shedding-again-20160506">ended</a> primarily due to a decline in electricity demand – partly the consequence of a weakening economy – and new generation capacity that had been in the pipeline for years. And the improvement in a number of Eskom’s financial ratios was due in large part to massive <a href="http://www.ujuh.co.za/nene-2015-medium-term-budget-policy-statement/">financial support</a> provided by the government in 2015.
<h2>Did Molefe end the power cuts?</h2>
Prior to Molefe’s arrival as CEO in March 2015 the power utility’s finances had been worsening and it was struggling to meet electricity demand. These challenges were largely due to a delay in investment by the government as well as slow increases in tariffs.
The delay in investment was due to government’s <a href="https://mybroadband.co.za/news/energy/122710-here-is-how-government-was-warned-in-1998-about-sas-electricity-crisis.html">indecisiveness</a> over a protracted period of time. And the slow increase in tariffs was the result of a desire to shield consumers from sharp increases and a mistrust of Eskom’s claimed needs.
South Africans lived through a period of extensive <a href="http://www.fin24.com/Economy/EXCLUSIVE-6-reasons-why-Eskom-is-load-shedding-20141124">power cuts</a> in 2007. Electricity generation capacity was unable to keep up with demand. The situation was largely saved by slowing economic growth combined with greater energy efficiency. These factors meant that electricity demand was already well below forecasts prior to Molefe’s appointment and continued this trajectory during his tenure as CEO.
Falling demand created a virtuous cycle in operations: lower demand put an end to the need to impose power cuts. It also opened up the opportunity to do maintenance on infrastructure, leading to greater availability of capacity and an even lower probability of power cuts.
To be sure, Molefe still had to ensure that Eskom continued to get the basics right. There’s little evidence that he did more than that. Instead, it seems that his predecessor, Tshediso Matona, was excessively negative in his outlook. This set up Molefe to appear as though he had pulled-off a dramatic success.
<h2>Molefe’s bailouts</h2>
What of the improvements in Eskom’s financial situation?
The view that Molefe was behind Eskom’s short-term financial turnaround was used to award him a R2.5 million performance bonus for the year ended 31 March 2016. (Molefe appears to have secured a <a href="http://www.news24.com/SouthAfrica/News/molefe-innocent-until-proven-guilty-lynne-brown-20170512">R30 million</a> retirement package when he tendered his resignation. Under the terms of his return to the job this will now no longer be paid.)
But a closer look suggests that Eskom’s financial improvement can’t be attributed to Molefe. In many respects it was the result of extraordinary support afforded to the power utility by the government in 2015.
This support, facilitated by two special appropriation bills passed by Parliament, had two main components. The first was an <a href="http://www.engineeringnews.co.za/article/government-sells-vodacom-stake-to-pic-to-fund-eskom-bail-out-2015-07-01">equity injection</a> through which the National Treasury under which Eskom received R23 billion in exchange for shares. Since government is the sole Eskom shareholder, this translated into a straight cash gift.
The second component was even more significant. This involved government writing-off a <a href="http://www.timeslive.co.za/sundaytimes/stnews/2015/06/21/Eskom-bailout-dressed-up-as-a-loan-turned-into-a-gift1">R60 billion</a> loan which had been approved in 2008 and disbursed in multiple tranches between 2008 and 2010.
If we treat Eskom as a genuinely independent entity, the full cost to national government and therefore the taxpayer of writing off the loan had two parts:
<ul>
<li>the remaining principal amount (around R30 billion), and</li>
<li>an additional R86 billion, the estimated cost of the state foregoing interest payments on the loan. According to the loan conditions, Eskom would have been required to pay this interest in the event that its financial situation improved.</li>
</ul>
Whether this financial support was desirable depends on your view of Eskom’s recent history. Many analysts agree that additional government support was overdue. But in relation to Molefe it raises a simpler question: if many of the improvements in Eskom’s financial ratios were due to massive transfers of cash and assets from taxpayers, did it make sense to pay its CEO a bonus that effectively also came from taxpayers?
Either way, closer analysis of Molefe’s supposed successes reveal that they are not what they have been made out to be. Combined with the <a href="http://www.ujuh.co.za/state-of-capture-public-protectors-report/">failures</a> of corporate governance with which he has been associated, the case for reappointing him as Eskom CEO appears to be paper thin.

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