State capture report: Eskom’s 2014 board largely responsible for power utility’s downfall

In the fourth part of the state capture report, Chief Justice Raymond Zondo recommends criminal prosecution of the 2014 board of directors at Eskom.

Zondo said this should be done to “recover all the financial losses suffered by Eskom as a result of decisions taken by the 2014 board (except Norman Baloyi) against the interests of Eskom”.

Zondo’s state capture findings

Eskom’s 2014 board of directors

The members appointed in December 2014 are:

• Zola Andile Tsotsi (reappointment as Chairperson)
• Chwayita Mabude (reappointment)
• Norman Tinyiko Baloyi
• Pathmanathan Naidoo
• Venete Jarlene Klein
• Nazia Carrim
• Romeo Kumalo
• Mark Vivian Pamensky
• Zethembe Wilfred Khoza
• Baldwin Sipho Ngubane
• Devapushpum Viroshini Naidoo.

Tsotsi and Baloyi were replaced by Giovanni Michele Leonardi and Mariam Cassim on 25 May 2015.

Acted in their own interests

Zondo said the board “failed to exercise their fiduciary duties and prevent financial prejudice to Eskom, and instead allowed irregular, fruitless and wasteful expenditure to persist.

“The 2014 Eskom board and senior executives repeatedly denied wrongdoing and even actively intervened or stopped Eskom from taking the necessary legal steps to have these contracts reviewed […] and recover associated payments”.

“Brian Molefe and Anoj Singh were ex officio members of the board and therefore equally responsible for
the board’s various breaches of its fiduciary duties”.

Anoj Singh’s ‘suspicious funds’

Earlier investigations highlighted how Eskom’s chief financial officer Anoj Singh received ‘suspicious funds’.

A deep dive into Singh’s personal banking records revealed he had not ‘touched’ his salary since 2012, he also transferred R16 million from his personal account to other accounts.

Zondo in his report states: “I conclude that there are reasonable grounds to believe that Mr Anoj Singh may be guilty of the theft of this money from Eskom by false pretences or fraud”.

“[He] led Eskom, through the officials who processed the payments, to believe that the payments were in the nature of pre-payments for coal, when in truth and fact they were needed to enable the Guptas to complete and save the share transaction”.

Trillian Capital corruption

Brian Molefe, Singh and Matshela Koko all benefited from the Guptas in various forms and used their positions of power to, in turn, benefit Trillian.

In June 2019, the High Court in Pretoria ordered Trillian to pay Eskom R600 million, which was irregularly paid out thanks to the actions of Molefe, Singh and Koko.

Eskom previously maintained it never entered into a contract with Trillian, and no services were received; however Trillian kept submitting invoices and receiving payments.

One such invoice – which was paid – amounted to R30.6 million for Funding Plan and Corporate Plan work. As per Singh, the payment “represented 30% of a R100 million contract.

However, the investigation into the matter showed that Regiments, not Trillian, did the Corporate Plan work between October and December 2015 and the Funding Plan in January and February 2016.

Brian Molefe’s pension

Molefe retired from Eskom with a R30 million early retirement package before being reinstated as CEO in May 2017.

A year later, the High Court ruled Molefe’s reinstatement at Eskom was invalid. His early retirement package was therefore unlawful, and he was ordered to pay it back.

However, as of 2022, Molefe has to return the funds he received from the Eskom Pension and Provident Fund (EPPF).

He applied for leave to appeal at the Supreme Court of Appeal and the Constitutional Court, but both cases were dismissed.

Eskom: State Capture report recommendations

Zondo said there are reasonable grounds to believe all Eskom officials [linked to the R659 million and the R1.68 billion Gupta deals] “may be guilty of theft and ought to face criminal charges”.

In addition, Eskom executives mentioned in the report – especially Koko, Singh and
Molefe – acted for their personal interests to secure rewards or benefits from the Guptas.

He said Eskom should consider legal action to “recover from members of the 2014 board (and the former Eskom officials referred to above) all losses that Eskom suffered as a result of their unlawful conduct.”