Numsa statement on Eskom CEO’s resignation
16 November 2016
The National Union of Metalworkers of South Africa welcomes the resignations of Eskom CEO Brian Molefe and Board member Mark Pamensky, and calls for the resignation of the entire board and divisional executives who are all implicated in the many serious allegations against Eskom in the former Public Protector’s report, the State of Capture, which include:
1. Irregularities in an Eskom deal with a Gupta-0wned mining company, Tegeta, which won a R2-billion profit from a transaction involving Glencor's sale of Optimum Coal Mine and its holding company to Tegeta.
2. Eskom letting Tegeta sell off part of Optimum Coal Terminal — a deal which Ajay Gupta told the public protector had netted him a profit of R2-billion, which might constitute a contravention of the Public Finance Management Act (PFMA) as Eskom “acted solely for the benefit of one company”.
3. Eskom’s authorisation of a R660-million coal prepayment to Tegeta at a special board meeting, hours after the Gupta company informed Glencor they were R600-million short of the money to buy the mine and that banks had refused to come up with the cash. This could violate the PFMA and amount to fraud as the money was not used to fund the mine but to buy the shares of the holding company — contrary to what Tegeta said publicly.
4. A 10-year contract with Tegeta to supply 1.35 million tons of coal a year to Majuba power station at roughly R284 per ton from their Brakfontein mine, despite evidence that Eskom's technical team were concerned about the coal’s quality. Eskom paid R134-million to Tegeta for substandard coal it knew it could not use in its power stations. Eskom has even victimised two Numsa members whom they are trying to make scapegoats for this Brakfontein deal. One has been dismissed and the other suspended for over a year and Numsa will continuously fight for justice for these members.
5. Molefe’s “cosy” relationship with the Guptas which are substantiated by cell phone records which show that he phoned Ajay Gupta 44 times, and Ajay Gupta called him 14 times, between August last year and March this year. Between August 5 and November 17 2015, he was placed in Saxonwold on 19 occasions. Atul Gupta admitted to Madonsela that Molefe was a “very good friend”, yet Molefe had not declared his relationship with the Gupta family.
All these are allegations which the proposed Commission of Enquiry must investigate, but they are sufficiently serious to make it impossible for Molefe and the Eskom Board to continue with business as usual and they must stand down.
This however raises the question of who should replace them, and also who should be on the boards of other state-owned entities about several of which the State of Capture report also expresses concern, including Transnet, Denel, SAA and the SABC.
Numsa has consistently opposed privatisation of public entities, called for the renationalisation of Arcelor Mittal SA and Sasol and the nationalisation of other strategic industries. But it is now clear that SOEs all need to be run in a far more democratic and socially responsible way.
Public utilities should have an entirely different set of objectives from private companies – to produce commodities and deliver services which people need, as efficiently, safely and economically as possible and to protect the environment and the economic prospects for future generations.
This is impossible however when SOEs are run as they are today, as if they are private businesses, motivated exclusively by the pursuit of maximum short-term profits, regardless of the impact their activities have on local communities, the environment, their workers and the long-term future of the economy, and also as auxiliary service providers to the dominant private capitalist system.
The underlying problem at the heart of all Madonsela’s allegations is that SOEs have become entangled with the corrupt private sector through outsourcing of ancillary activities and thus been infected with the disease of corruption, which is inherent in the capitalist system.
While Eskom itself remains state-owned, it has done huge deals with private companies, in particular those in the coal mining industry, many of which feature in the former Public Protector’s allegations. This leads to a particularly blatant form of corruption arising from the SOE directors’ close relations with the state, corrupt politicians and private companies, which creates the crony capitalism which Madonsela has exposed.
When challenged by Numsa about Eskom’s outsourcing of coal mining, Molefe argued that he was not interested in owning the bakery but only in the delivery of the bread. But coal mining and electricity generation are inextricably linked together. If public ownership is to achieve the social objectives as defined above it will have to embrace all the key sectors of the economy so that they can be integrated into a coherent development plan of production.
This will however be impossible if their boards are full of profit-motivated business men and women. The new Eskom Board must reverse this trend and comprise of democratically elected representatives of the workers, communities and civil society, so that they are run in the interests of South Africa as a whole and not their selfish interests and those of corrupt cronies.
This should then set the pattern for all SOEs and other industries which need to be nationalised so that we can create a socialist South Africa based on the Freedom Charter in which the wealth of the country is really transferred to the people.
Issued by Patrick Craven, NUMSA Acting Spokesperson, 16 November 2016