Cape Town - Serving as board members of state-owned companies in the present contested political and business environment is not for "softies", Minister of Public Enterprises Lynne Brown said at a special general meeting of Eskom on Friday. She added that she is a bit of a "softie" sometimes.
"Unlike those who serve on the boards of private companies, such as Steinhoff, [you] will be regarded with suspicion and mistrust. They make 'accounting mistakes', while you are susceptible to corruption, capture, greed and malice," Brown told the Eskom board.
"Who they associate with is inconsequential, they call it lobbying - you must be careful who you play golf with because it will be used as evidence against you."
Brown said "many have bent over backwards, performed cartwheels and somersaults" to declare that private sector corruption is fundamentally different to public sector corruption. However, she believes the truth is they are equally repulsive and fundamentally inseparable.
"The companies currently in the news, massively influence both the business and political sectors, lending their muscle to certain politicians and political parties – ultimately to achieve economic objectives that not only benefit themselves but also influence the whole country," said Brown.
'Board must be thick-skinned'
"Eskom’s board must be thick-skinned and steadfast. Eskom is one of the country’s economic powerhouses, if you’ll excuse the pun. You must not only maintain and observe the highest standards of integrity and probity in the execution of your responsibilities, but also contribute to the transformation of the supply chain to benefit more black South Africans."
Brown is satisfied that, with the addition of business expertise in the first quarter of the new year, the board will meet the appropriate criteria.
She called the special general meeting to introduce Eskom’s new board of directors and "communicate a concise set of short- to medium-term marching orders".
"By the time we convene Eskom’s regular annual general meeting in June 2018, the board will have ensured that investigative and disciplinary processes into alleged malfeasance involving some of Eskom’s senior executives have been completed and the company will be fully equipped to execute its mandate under a new chairperson," said Brown.
Professor Malegapuru Makgoba and Professor Tshepo Mongalo are the two new board appointees. In Brown's view, they will together "add invaluable ethics", corporate government and corporate law expertise to the mix.
Makgoba is South Africa’s Health Ombudsman and deputy chair of the National Planning Commission. Mongalo is a legal practitioner and academic.
"I am also satisfied at the sensibility of the arrangements that provide continuity at a difficult time for Eskom. Not continuity for continuity’s sake, but to complete processes under way to deal with the past and lay strong foundations for the future," said Brown.
One of her first instructions to the board was to engage the process of appointing a new group chief executive as a priority.
Brown sees the finalisation of the investigation into all suspended executives as of paramount importance to rebuild board reputation and restore investor confidence. Furthermore, she urged the board to deal with all issues that led to a qualified audit opinion as the company cannot afford a repeat in the current financial year.
"You must focus on rebuilding systems of governance and ethics to decisively address, among others, internal control deficiencies and the audit qualification, to avoid a repeat. Investigations and suspensions at exco level must be prioritised and finalised expeditiously," Brown told the board.
She believes these issues are critical to improving the Eskom brand, investor confidence and performance of the company at all levels.