Eskom points to bigger issues

Johannesburg - The resignation of Eskom chair Bobby Godsell highlights the need for the Public Finance Management Act to be revised, the Institute of Directors (IoD) said on Tuesday.

IoD CEO Lindie Engelbrecht said although the details of the tussle between chief executive Jacob Maroga and Godsell were not clear, what was apparent was the conflict between the PFMA and governance best practice had exacerbated the lack of trust between the government, the board and Maroga.

"The PFMA allows the shareholder (government) to appoint the CEO and be involved in any decisions regarding dismissal.

"This provision has the potential to lead to issues of role clarification where the board may appear to be undermined by government," Engelbrecht added.

Godsell resigned on Monday, giving the reasons as a lack of support from the government in the Maroga saga.

According to the IoD, governance best practice was that shareholders appointed the board and the board appointed and dismissed the CEO, thereby allowing for clear accountability to the board.

"Under the PFMA, government had the legal right to intervene in the situation, but this is not necessarily the right thing to have done as this could now lead to a breakdown of trust between the board and the CEO," Engelbrecht said.

She added that it would have been better for the government as shareholder to have supported the request for mediation to try and restore the relationship.

Godsell said in a statement on Monday evening that government, as Eskom's sole shareholder, had been unable either to support the board's original decision (to accept Maroga's resignation) or its attempts at resolving the dispute.

"The IoD believes that the PFMA needs to be revised on this crucial point of whom the CEO of a state-owned entity should be accountable to, as this is not the first time this issue has arisen concerning a public organisation and will likely not be the last," Engelbrecht said.

- Sapa