The Portfolio Committee on Public Enterprises held a fact-finding mission that preceded its full scale inquiry into Eskom’s financial mismanagement and allegations of corruption. Three organisations, the South African Council of Churches (SACC), Organisation Undoing Tax Abuse (Outa) and the Public Affairs Research Institute (PARI), presented their findings on the level of corruption at Eskom and state-owned entities (SOEs) in general.
The Portfolio Committee on Public Enterprises received briefings on Tuesday as part of its preparations for the inquiry into the affairs of the power utility, Eskom, at Parliament from the South African Council of Churches, among other organisations, on their findings of their respective investigations into allegations of state capture.
The Committee is one of the Committees of Parliament that were authorised by the House Chairperson in the National Assembly for Committees, Oversight and ICT, Mr Cedric Frolick, to probe accusations of state capture linked to alleged emails involving a number of Cabinet Ministers in June 2017.
In her opening remarks, the Acting Chairperson of the Portfolio Committee on Public Enterprises, Ms Zukiswa Rantho, stated that the Eskom inquiry is quite extensive than was previously expected. “Looking at the document before us, we have seen this inquiry is not a straightforward process. As such, it is important to engage with expects who have done investigations on state capture to assess its extent. That is why we have these three organisations that will present their findings to us today.
“Looking at the extensiveness and sensitivity of issues involved here, we have requested for the assistance of more researchers and legal personnel to prepare for this inquiry. And I must state that the inquiry won’t start on 1 August as previously proposed,” she said.
Briefing the Committee on the extent of corruption in the public sector, the General Secretary of the South African Council of Churches, Bishop Malusi Mpumlwana, took a swipe at those continue to ask why the SACC has the temerity to involve itself in political issues. “We should make it clear that those who make such a call are genuinely disingenuous or ignorant of the Christian faith. The Preamble to our Constitution ends with the phrase: “May God Protect Our People. As the Council of Churches, we rise to protect this constitutional principle and the people of South Africa.”
The confinement of the Church to religious matters was the chorus of the apartheid regime. But we refuted it and we unapologetically supported the liberation struggle, he said. “We never dreamt that there will come a time, in a democracy, when political leaders use the apartheid chorus against the Church,” he also said.
The findings of the SACC contained in its report titled: “The Unburdening and the Betrayal of the Promise” relied on former public servants and ordinary people who have experienced or know those who perpetuate the acts of corruption in the public sector, said the Bishop.
Through it, he stated, we have established that the corruption which runs deep in our government departments and entities perpetuated by those charged with the task of running them has weakened corporate governance in these entities through the weeding out of skilled personnel, the manipulation of regulations and shaking of our currency’s sovereignty and the securing of intelligence apparatus to benefit their corrupt intents that have eroded our public ethics. Eskom is one of the lucrative cash cows for these acts because of its tantalising procurements deals, he said.
Presenting its report titled: “No Room to Hide”, Outa’s Portfolio Director of Energy, Mr Ted Blom, said: “Not long ago Eskom was ranked among the top five utilities in the world. But how the cost and status of Eskom has dwindled can be discerned from its financial statements. Eskom never mentioned that its irregular financial activities amounted to R3bn. Its audit firm Sizwe Ntsaluba has raised concern about the R3bn that has no source documents for payments.
“Eskom uses an advanced tracking system, which could have tracked that. The fact that it has not attests to the fact that maybe there is an old cheque book to ensure payment can be made without proper procurement procedures. If R3bn can go missing, that on its own warrants a serious inquiry.
“Besides that, from 2005 to 2010 Eskom claimed that it needed R93bn for its capital expenditure. This number included Medupi and Kusile. At first Medupi was estimated at R32bn. I saw later that the Eskom board has approved Medupi’s capital expenditure of R91bn. Where did the additional R60bn come from? I need to mention that I am privy to this because I was a consultant at Eskom, charged with the task of resuscitating the coal procurement plan, as such it was easy to compile this document,” he said.
Presenting its report titled: “Betrayal of the Promise: How South Africa is Being Stolen”, the State Capacity Research Institute’s representative, Prof Ivor Chipkin, stated that their observation of this phenomenon emanated from their collation of court documents and newspaper articles to try to bring new concepts to make sense of the current situation.
“As such, we found that underpinning this criminality and illegality is the political project that prevailed after Polokwane. Part of this revolved around the massive economic exclusion caused by the Growth, Employment and Redistribution (Gear) policy. There was a search for inclusive growth to undo the historical fundamentals of the South African economy. This was underpinned by public procurement for economic transformation.”
“The story of Eskom is not only a story of criminality, but a story of a political conviction that our Constitution is an obstacle to change and economic transformation. Subsequent to that, there was a turn away from the Constitution as it was perceived to be an obstacle to change. This created a growing illegality in the way state enterprises are currently behaving. This went further to weaken the Intelligence and the Justice cluster’s investigative capacity. This led to a shadow state comprised of a kitchen Cabinet,” said Prof Chipkin.
“It would be useful to have the economic impact of this matter so that we have a greater picture of the impact of financial maladministration at Eskom,” said Mr Mondli Gungubele.
Mr Blom responded that the negative impact of the Eskom rot is far-reaching. “The stealing of 3% to 5% of growth at Eskom a year has led to the loss of millions of jobs and has led to excessive borrowing and hike in tariffs.”
“I thank you for the strong stance you have taken,” said Mr Steve Swart in praise of the South African Council of Churches’ initiative. “This is process of accountability and justice. I commit myself to this process. It is key for us to hold people accountable. You are a key part of this process. We need that information and encourage these people to come forward and lay charges.”
Bishop Mpumlwana responded that those who confided in them about wrongdoing in public service have asked them not to, at any stage, reveal their identities for fear of reprisals.
“As much as we cannot forget the past, but we cannot blame the legacy of the past when we fail the people of this country in favour of our own personal interests,” said Dr Zukile Luyenge.
“At the centre of the rot is a political project and power elite which emerged after the Polokwane moment as you have stated Prof, but how then do you explain the Chancellor House’s involvement at Eskom, which is involved in what appears to be a corrupt contract with Hitachi? To me, Chancellor House is one entity that seems not to be included in your investigation?” asked a member of the Committee, Mr David Maynier.
The fact that we are currently involved in this process shows that we have a vibrant democracy. And it is the confirmation that we have a Parliament embedded in the Constitution and the more Parliament conducts itself in this manner, the more it will get credibility in the public’s eye,” said Mr Pravin Gordhan, another member of the Committee.
But a pertinent question persists: “What do we need to ensure that we can guide South Africa to ensure our ethics are not declining. And we need to ask ourselves: have we reached the point of impunity?”
The Secretary of the South African Council of Churches, Bishop Mpumlwana, responded that “looking at the depth of the rot in the public service we feared that perhaps we have reached a point of no return. But this process may perhaps be what is needed to restore public confidence in the work of Parliament”.
“There are also agencies such as accounting agencies and multinational companies that are involved in Eskom’s rot,” said Mr Floyd Shivambu. “But also there are political protagonists involved at Eskom. The President is at the centre of this looting. The criminal justice system has also been compromised. There is nothing that is done by these prosecutorial agencies to pursue these cases. But of great concern is that Eskom’s personnel who are accused of maladministration and corruption are still in office. These people are still in the system. The ministry must be appraised with this recommendation. And there has to be a decision on that,” he said.
By Abel Mputing
25 July 2017