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Eskom board faces axing on Friday

Jun 19 2017 15:59
Yolandi Groenewald, Fin24

Johannesburg - Some members of Eskom’s embattled board is likely to get the chop on Friday at its annual general meeting, after Public Enterprises Minister Lynne Brown signalled her displeasure with the board’s conduct in court papers last week.

In her answering affidavit filed in the Labour Court last week, Brown said she had lost confidence in the board.  

17:00 UPDATE: On Monday afternoon Brown's spokesperson Colin Cruywagen confirmed to Fin24 that a number of the board's members will be "rotated" out. But he emphasised that some members had to remain to retain continuity and institutional knowledge.

He said it was premature to say who will get the chop at this stage.

Brown's statement in the affidavit comes amid an open legal battle with the board over former CEO Brian Molefe's reappointment, after interim board chairperson Zethembe Khoza sided with Molefe in his Labour Court application. Brown said Molefe’s reinstatement agreement was not legally valid, a significant shift from her earlier positions.

The minister said in her affidavit that the only reason she hasn’t so far dissolved the Eskom board is because it may have significant implications for the state utility's financial guarantees.

Eskom’s annual general meeting, scheduled for this Friday, will also present her with an opportunity to rotate the board. Brown said she would consider whether to reappoint the board’s directors for a further term.

“Given the proximity of that date, little purpose can be served in going through a potentially protracted and dangerous process of dissolution.”

Cruywagen confirmed the AGM will go ahead on Friday.

The Labour Court’s papers also revealed that the Eskom board would not oppose Molefe’s challenge to his dismissal, and that Brown would have to defend it alone. Khoza’s affadavit supports Molefe’s story of how he mistakenly went on early retirement, and the approval of a R30m pension payout.

Last week Brown appointed Khoza, one of the current board members, as interim chairperson, and he filed the affidavit two days after his appointment

By then the writing was on the wall for the board, even before Khoza and Brown's warring affidavits were filed last week.

Brown previously said she would take the new board to Cabinet this week, because new board appointments require Cabinet approval. She hoped to finalise approval for her list before the Eskom AGM on Friday. She has also on numerous occasions stated that she will officially “rotate” the board at the AGM.

Brown wrote in her affidavit that it was the board's conduct within an inter-ministerial committee investigating the Molefe axing “which, among others, made me lose confidence in the board”. 

In a meeting on May 31, the committee requested the Eskom board to provide it with the opinion of counsel that stated Brown did not need to approve Molefe’s reinstatement. The board refused.

Instead, it told her that she was welcome to read the opinion at Eskom’s offices.

Brown said the committee was “highly dissatisfied” with the board's refusal to share information with the minister, “its shareholder”.

The minister said the relationship deteriorated further when the board filed a detailed affidavit in the Democratic Alliance and Economic Freedom Fighters' high court applications to prevent Molefe’s reinstatement. The board “however, provided no explanation for failing to correct me when I issued the press statement and referred to Molefe's departure as a resignation”, she said.

It appeared that the board and Molefe agreed on the facts and circumstances surrounding the conclusion of both Molefe’s early retirement and the reinstatement agreements, she stated.

“I had previously accepted their version,” she said.

But by May 31, she said she was highly suspicious of their version of events. The next day, after considering the various affidavits in the high court applications, Brown met with staff and legal advisers.

“We analysed all the facts and the board's role in this saga. It became apparent to us that the circumstances surrounding that agreement and the subsequent reinstatement agreements were highly irregular.”

The current board was appointed by Cabinet in 2014 and its tumultuous term, which saw a number of scandals haunt Eskom, formally comes to an end later this year.

Brown is also likely to announce Molefe’s replacement this week, before the AGM.

eskom  |  brian molefe  |  lynne brown  |  board


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