BLSA suspends 'corrupt' Eskom and Transnet

CEO wants to make sure the 'snake's head is chopped off', says two more companies will be suspended

BLSA suspends 'corrupt' Eskom and Transnet

28 September 2017

Cape Town - Business Leadership South Africa on Thursday booted out state-owned entities Eskom and Transnet for their involvement in corruption and state capture with immediate effect.

The announcement comes as BLSA launched its #BusinessBelieves campaign in Cape Town, where it signed a “contract” with South Africa, pledging to do even more to create jobs and grow and transform the economy.

The latest suspensions follow auditing firm KPMG SA's suspension for the role it played in facilitating state capture and the misleading SARS "rogue unit" report.

BLSA said in a statement the suspension of Eskom and Transnet comes after engagement with the two state-owned enterprises (SOEs) in connection with extensive allegations of corrupt behaviour over a long period.

BLSA CEO Bonang Mohale said South Africans have been rightly disturbed in recent times over the numerous allegations of corrupt behaviour and colossal failures of corporate governance and accountability at both Eskom and Transnet.

"This behaviour is entirely at odds with the values of BLSA, captured in our integrity pledge. Neither of the SOEs were able to give BLSA comfort that they appreciated the seriousness of the issues at hand, or that they had the requisite will and purpose to put their houses in order," Mohale said.

"This left BLSA with no choice but to suspend their memberships from the organisation. We have to live by our values and will take a zero-tolerance approach to any organisation found in breach."

Eskom in particular - as the country's national electricity provider - is a strategic asset and due to multiple governance and operational failures, and a stretched balance sheet, now represents systemic risk to the economy as a whole.

Eskom looms large as threat to stability and growth

"Until and unless a non-conflicted, experienced and permanent chairman and board are appointed - who in turn appoint an experienced and honest executive team - Eskom will loom large over the economy as a threat to stability and economic growth."

Mohale emphasised that there are thousands of honest Eskom employees doing honest and brave work, in the face of a seemingly endless pattern of corruption at the top.

BLSA also repeated its earlier appeal that government should proceed expeditiously to set up the judicial investigation into state capture recommended nearly a year ago by the then Public Protector, Thuli Madonsela.

"Any employees found to have been in breach of the law should be prosecuted," Mohale said.

Earlier on Thursday, when Mohale was addressing a grouping of business people, civil society and labour in Cape Town ahead of the signing of the "contract with South Africa", he said state capture is the single biggest threat to South Africa's 23-year-old democracy.

"State capture by this immigrant Indian family, the Guptas, for the benefit of another family, the Zumas. That’s the single most biggest threat."

He called President Jacob Zuma a "thief" and said BLSA wants to make sure the "snake's head is chopped off".


BLSA CEO calls Zuma a 'thief'

Cape Town – In a scathing attack on state looters, the Guptas and the Zumas, Business Leadership South Africa CEO Bonang Mohale called President Jacob Zuma a 'thief' and said two more companies will be suspended.

Speaking at a launch event in Cape Town where BLSA signed a “contract” with South Africa, pledging to do even more to create jobs and grow and transform the economy, Mohale said BLSA wants to make sure the "snake's head is chopped off".

He said government's organs of accountability have been captured and Zuma is doing everything to stay out of prison.

Mohale said corruption and state capture are the cancers that are eating away at South Africa. "They must be rooted out, crushed and punished where we find them in the public or private sector.  This is our contract with South Africa."

Without naming them, he also said two more companies will be suspended from BLSA, similarly to KPMG’s recent membership suspension.

BLSA has taken a robust position on KPMG which engaged in unethical and unprofessional conduct completely at odds with the values of the organisation, according to Mohale.

“The firm became party to the project of state capture, which has harmed our country, victimised individuals and damaged the reputation of business.”

Mohale said KPMG should have raised alarm bells when it was paid R23m to produce a report for the South African Revenue Service (SARS), but it looked the other way.

“This (the payment) was disproportionate and SARS used this to chase the finest among us, such as Pravin Gordhan (former finance minister). But they kept quiet,” Mohale said.

Similarly, KPMG kept quiet when the Vrede dairy farm was bought and when R30m found its way out of the country and came back to pay for a lavish wedding hosted by the Gupta family.

Mohale said BLSA asked KPMG to “come clean”, but when it was not convinced that the auditing firm was genuine it decided to suspend its membership of BLSA.

“That is why we have called for an independent investigation and full disclosure on the part of KPMG.”

He also said an estimated R100bn has been siphoned off over the past decade to the benefit of two families in South Africa – the Guptas and the Zumas.

Mohale said business confidence in South Africa is at a 30-year low because of the behaviour of the government and its poor leadership.

“And while business must of course play its part, it is not enough. The government must start to govern in the interests of the many and not just the few. In too many sectors of the economy and public life, policies have either been poorly conceived or poorly executed.

“We are well aware that business is not blameless and we are cleaning our house first and foremost. But, as we acknowledge our own failings – we must also highlight that these problems are much, much greater and more serious in the government sector than in business.”

In business there is a culture of accountability, Mohale said, but this is not so in government where the organs of accountability have been captured.

“Too often Government contracts and jobs go to the connected rather than the deserving. That is why we supported the Cosatu protests yesterday and reiterate our call for the urgent implementation of the Public Protector's recommendation of a judicial investigation into state capture.”