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Eskom boss blames board for B2B fiasco

Mar 26 2017 06:50
Sizwe sama Yenda

Eskom’s acting CEO, Matshela Koko, says he is not responsible for R310.8 million in irregular expenditure that was incurred by the power utility on an unapproved project.

Koko told City Press this week that it was Paul O’Flaherty, Eskom’s former chief financial officer, and not him, who was responsible for the overall management of the R8.5 billion Back to Basics (B2B) Programme.

O’Flaherty, who also sat on the board, resigned in 2013 and is currently CEO of Al Naboodah Group Enterprises in the United Arab Emirates.

City Press was unable to reach O’Flaherty for comment regarding the irregular expenditure.

The B2B Programme began in 2010 with four aims: to improve Eskom’s service tools, its projects, its operations and its maintenance and engineering.

At the time B2B was first implemented, Koko was divisional executive of group technology. The R310.8 million in question was spent on engineering, which fell under his authority.

Koko was appointed acting CEO in November, after Brian Molefe resigned.

City Press reported last week that Public Enterprises Minister Lynne Brown was demanding answers from Eskom chairperson Ben Ngubane and Koko about what steps were taken to avoid irregular expenditure, in accordance with stipulations in the Public Finance Management Act (PFMA).

The board’s investment subcommittee has since condoned the irregular expenditure.

Brown also wants to know why a total of R2.55 billion was spent on the programme, despite the decision taken by her predecessor, Malusi Gigaba, not to approve it in May 2014.

The board halted the programme in September 2015 because Gigaba was unhappy that Eskom had applied for PFMA approval for the engineering component of the B2B Programme only, and not for the full programme.

“The issue here is that the previous board said we had to make a PFMA application to the minister [Gigaba] when we wanted to spent R1.5 billion on engineering,” said Koko.

“When we went to the board, R310.8 million had already been spent. I submitted a document to the board about the expenditure in 2012, and the board’s message that got to the project manager was that the board had approved that expenditure, so the money was spent.”

As stated above, Gigaba declined the PFMA application in May 2014.

“However, he noted the importance of engineering tools in improving Eskom’s performance, but decried the splitting of the B2B Programme, resulting in only one component applying for PFMA,” said Koko.

“He [Gigaba] then requested Eskom to reapply and answer a number of questions he had raised.”

Koko said the board relied on a previous decision, made when Eskom’s board chairperson was Zola Tsotsi and its CEO was Brian Dames, that the expenditure was above board and that disciplinary measures against the responsible officials were taken.

However, it turns out that the previous board had misled Ngubane and his team regarding its minutes.

Koko said that because of a number of leadership changes at board and executive level, and the fact that a number of B2B key role players had left Eskom’s employment, there had been a delay in responding to Gigaba’s concerns.

Added to this, said Koko, was the fact that Eskom had been undergoing significant financial constraints, which resulted in the utility reviewing its expenditure.

Hence, Ngubane and his board decided on September 3 2015 that the entire B2B programme be stopped.

“In November 2016, Eskom informed Brown of the investment and finance committee’s decision to condone the R311 million in irregular expenditure and of Eskom’s decision to withdraw the PFMA application since the programme had been cancelled,” Koko said.

“This means that the current board condoned the transaction based on the decision of the previous board, which concluded that the necessary governance actions – including disciplinary and/or corrective actions – were implemented.”

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