Former Eskom board chair Zola Tsotsi testifies at Zondo commission on The New Age contract

Former Eskom board chairman Zola Tsotsi on Thursday took the witness stand at the commission of inquiry into state capture to give testimony relating to the state-owned enterprise’s (SOE) contract with the now-defunct Gupta-owned The New Age (TNA) newspaper.

Evidence leader at the commission senior counsel Kate Hofmeyr said previously the commission heard testimony focusing on SOEs, including Eskom, and the contracts these entities entered into with TNA between 2011 to 2017.

Three witnesses have given testimony at the commission on the three contracts Eskom entered into with TNA from 2012 until 2014. These witnesses are Eskom’s acting general manager: strategic marketing and branding, Peter Pretorius, Eskom’s former divisional executive of corporate affairs, Chose Choeu and former Eskom board member Mark Pamensky.

Hofmeyr said the evidence on Eskom and the contracts it entered into with TNA was expected to be concluded at the end of Tsotsi’s testimony and witnesses thereafter will give testimony on the contracts the defunct media house entered into with Transnet.

Hofmeyr said Tsotsi’s statement to the parliamentary portfolio committee which conducted an inquiry into the SOE in 2017/2018 has been submitted to the commission.

Tsotsi‘s submission to parliament on TNA contract reads as follows:

1.1 On my arrival at Eskom in 2011, there was an existing TNA contract which was in progress. It was due to expire in about June 2014. At the time of its expiry, Collin Matjila was acting chief executive.

1.2 Mr Matjila acceded to the request that the contract be renewed. In so doing, he failed to apply a provision in the delegation of authority that enjoined him to deal with sponsorship through a committee that was put in place to deal with such matters thus by-passing the process and acting outside of his delegation of authority. The finance director among others in his management team raised objections to his actions, contending that he used the wrong delegation of authority and that the correct one would require him to make the decision on sponsorship as part of a committee.

1.3 Mr Matjila disputed this position and proceeded to sign the contract. A whistleblower reported this action to the chairperson of the Audit and Risk Committee, stating that the acting CE had flouted procurement regulations. The ARC chairperson then brought the matter to the attention of the board which duly delegated the ARC to institute an audit inquiry into the matter.

1.4 The ARC appointed Sizwe Ntsaluba Goboda who produced a report with a finding that Mr Matjila had interpreted his delegation of authority incorrectly by using a wrong process to award the TNA contract, thereby infringing the provisions of the PFMA in that his authorised expenditure would then be irregular.

1.5 Mr Matjila then requested the board to seek a legal opinion in this matter, to which the board agreed.

1.6 The legal opinion was provided by the firm of Ledwaba Mazwai Attorneys who upheld the SNG findings that Mr Matjila had acted outside of his delegated authority and recommended that the board discipline the acting CE at this point. Mr Matjila was no longer with the company as the substantive CE Mr Matona was then in office, so the board could not institute disciplinary action after the fact. Further, the lawyers advised that cancellation of the contract would result in expensive litigation and serious losses to the company. They also afforded the board advice that meant accepting the contract, i.e, ratifying it meant accepting responsibility for Mr Matjila’s breach. After deliberations, the board accepted this advice as an irregular expenditure finding was too ghastly to contemplate. The board then resolved to let the contract run the remaining few months of the extension.