Koko in firing line as Eskom cans results presentation
Johannesburg - Former acting CEO Matshela Koko is likely to face strict action from Eskom's board, after the power utility suddenly postponed Tuesday's financial results presentation late on Monday night.
Eskom will on Tuesday brief stakeholders and investors on a possible course of action and disciplinary measures against Koko, after discussing why external auditors, SizweNtsalubaGobodo, reported the state utility to the Independent Regulatory Board of Auditors over the weekend.
Public Enterprises Minister Lynne Brown’s intervention will also be critical and Fin24 understands she is likely to recommend that strict action be taken against Koko.
Eskom spokesperson Khulu Phasiwe confirmed that one issue related to Koko and the other to former CEO Brian Molefe.
He said Tuesday's postponement was due to unforeseen circumstances, and not linked to any ongoing investigations. The results briefing will now take place on Wednesday next week.
But energy expert Chris Yelland believes the delay came after external auditors SizweNtsalubaGobodo reported two irregularities to the Independent Regulatory Board of Auditors over the weekend.
“And then they cancelled the financial results announcement at the last moment, without supplying a reason,” he said. “It is safe to say there must be a connection.”
He said a serious matter was now playing out before South Africa’s eyes. “It's a Greek tragedy. The cancellation of a financial results postponement signifies deep problems,” Yelland said.
Board's strong action
SizweNtsalubaGobodo's actions in reporting Eskom is no small matter and Fin24 understands that the new board is itching to make a strong stand against corruption at the utility.
The Molefe matter is still pending in both the Labour and High Court, effectively kicking any action by the board against him into touch.
Koko is a different kettle of fish. In dealing with Koko, Eskom’s new board wants to show that they will not tolerate corrupt behaviour by officials. But the board is adamant that all the right processes must be followed to prevent a repeat of Molefe's court action.
Koko was placed on special leave in May pending an investigation by Cliffe Dekker Hofmeyr after concerns were raised about an apparent conflict of interest. Eskom awarded tenders worth R1bn to the company Impulse International, but it emerged that Koko’s stepdaughter, Koketso Choma, was a director in Impulse. That report has not been made public yet, but Fin24 understands Eskom has met with investigators in preparation for steps against Koko.
“Eskom’s board has taken adequate steps to the satisfaction of the auditors that the irregularities were no longer continuing,” the power utility said. “In Molefe’s matter, it was noted that the irregularity could only be closed out when the court proceeding had been concluded.”
Yelland said the damage that has been done under Molefe, Koko and also current chief financial officer (CFO) Anoj Singh will have huge cost implications, both in righting questionable actions when it came to awarding contracts, as well as dealing with the higher cost of debt.
“Eskom’s failure of governance has led to credit downgrades, making it much more expensive to raise the R200bn of debt that they will still have to raise in the next few years,” he said.
Anoj Singh on chopping block
Singh’s head is also on the chopping block as Eskom is likely to initiate an investigation into a number of questionable deals and tenders that he managed. As CFO, Singh would have led the financial results presentation on Tuesday.
Last week, Eskom interim chairperson Zethembe Khoza said the new board had already asked Singh to explain his connection to the deals, many of which involved the notorious Gupta family.
Transnet CEO Siyabonga Gama also announced last week that Transnet has appointed a legal firm to investigate questionable deals, which Singh was connected with. Singh is intrinsically linked to Molefe, and served as CFO at Transnet along with Brian Molefe, who was CEO.
After Molefe was seconded to Eskom in April 2015, Singh moved to the state power utility two months later.
Khoza told journalists that the board would discuss the allegations against Singh and make a ruling.
Yelland said the best thing for Singh to do would be to resign. “As long as he remains in Eskom, there will be a big cloud hanging over the utility,” Yelland said.