• Eskom has issued a summons to recover R3.8 billion from former executives, board members and others.
• The summons revealed how executives and board members neglected their fiduciary duties to the power utility.
• An analyst says much of the corruption at Eskom can be attributed to the culture of the entity, which enabled people to act with a sense of impunity.

Questionable trips to Dubai, the leaking of confidential documents and conflicted dealings with Gupta-related entities – these are just some of the ways former Eskom executives and board members breached their fiduciary duty to the power utility.

According to a summons filed by Eskom and the Special Investigating Unit (SIU) on 2 August, the power utility is seeking to recover about R3.8 billion from former chief executive Brian Molefe, former chief financial officer Anoj Singh, former Group Executive for Generation Matshela Koko and former head of legal Suzanne Daniels, among others.

There are 12 defendants in the matter, including former board chairperson Ben Ngubane and board members Chwayita Mabude and Mark Pamensky as well as the Gupta brothers and their business associate Salim Essa. Others named include former minister of mineral resources Mosebenzi Zwane.

The 73-page document stated that, between 2012 and 2018, the defendants "conspired", together with 13 others, which includes Gupta-linked firms Regiments Capital and Trillian Capital Partners.

"The object of the conspiracy was the corrupt, alternatively irregular, diversion of resources from organs of state in South Africa, and, in particular, South African state-owned enterprises, improperly to benefit the Gupta brothers, their family, and entities controlled by the Gupta brothers and/or Essa," it said.

The defendants have 10 days, upon being served the summons, to indicate their intention to defend it.

The document lists seven trips to Dubai by Singh between 2014 and 2015, as well as a trip by Koko and his family in 2016, all allegedly organised and paid either wholly or partially by Gupta entities.

Furthermore, Koko, Daniel and Ngubane are accused of leaking confidential information to Gupta business associate Essa.

"Over the period between July 2015 and June 2016, Ngubane, Daniels and Koko leaked confidential Eskom documents to Essa and allowed Essa secretly to influence Eskom board decisions," the summons read.

The summons details the 10 documents Koko allegedly leaked to Essa, including an internal directive of how Eskom intended to implement an instruction from National Treasury regarding cost containment in engagement with consultants.

It also indicates how Pamensky was involved in getting the Guptas to "do a deal with Eskom coal plus mines". It subsequently goes on to list how billions were lost in a coal contract with Optimum Coal Mine, owned by Gupta-linked firm Tegeta.

Eskom had incurred over R2.4 billion in additional costs to procure coal from other sources, when Optimum Coal Mine eventually failed to deliver the quantity and quality of coal required for its Hendrina station.

While Eskom has lodged claims of recovery from Optimum and Tegeta, the firms are in business rescue and, in all likelihood, might not be able to recover the amounts.

It also lists how Gupta-linked firm Trillian Capital was engaged to work with consultancy McKinsey for Eskom's Top Engineer's Programme, and how Trillian was paid nearly R600 million for no work done.

Cosatu parliamentary coordinator Matthew Parks said that recovering R3.8 billion is a positive, first step.

When asked about whether Eskom's complex structure can be blamed for corruption at the entity, Parks noted that the system is "archaic" and needs to be "streamlined and made transparent", but what it boils down to is the people. 

"Eskom's mess is a result of years of corruption and mismanagement," he said.

Solving its problems starts with rooting out corruption and getting those involved to be prosecuted, he added.

The cost overruns on contracts showed the complete "collapse" of management systems and almost everyone engaged in individual-scale looting, he explained.

Parks said that Eskom should review all its contracts – coal and independent power producers - to make sure that the rates are market-related.

The SIU has been reviewing a number contracts, the entity said in a statement earlier this week.

"Where any evidence of corruption or other irregularities have been discovered, Eskom has a moral and legal duty to cancel those contracts, and to recoup any losses it may have suffered as a result of any illegal or irregular activity," it said at the time.

Parks said that while Eskom is undergoing a restructuring, it is even more important to "stop the bleeding", otherwise efforts to restructure the entity will go to waste.

"It will just be like moving chairs on the [sinking] Titanic."

Massively complex

Recently, while speaking to Fin24 on the power crisis at the entity, Lauren Hermanus - a sustainable development practitioner who has also researched state capture at Eskom on behalf of Parliament's inquiry - said one of the issues is that it is hard to know what is going on inside of Eskom, because of its design.

"Eskom's development has been the extension of the state and a highly securitised state, under apartheid - and so its mandate to provide cheap electricity for white industrial development and to serve the racist project of apartheid was not about transparency, democracy and accountability," she said.

There have been attempts to transform Eskom into an entity which is more transparent, and compatible with democracy, but they have not been successful, she noted. A lot of it has to do with the way the institution is structured, the culture that plays out and the scope of the organisation.

"Eskom is massive and massively complex."

Its complexity makes it difficult to pinpoint an issue, she explained.

Professor Zwelinzima Ndevu, of Stellenbosch University's School of Public Leadership, said it is accepted that the apartheid structure of Eskom – meant to create employment and drive the economy for the benefit of white Afrikaners – was inherited, and no adjustments were made to fit the new discourse.

The issue of corruption is nothing new at Eskom, it's just that the scale has changed a lot, Ndevu said.

"People loot with impunity, without caring. They do as they please and know nothing will happen to them."

He noted that Eskom has been lacking in having an institutional culture that promotes accountability, as well as having proper leadership.

Ndevu said it seemed that you had to be in the "right clique" at Eskom to be able to get away with anything.

"If you have a weak institution and weak people - that combination is toxic. The institution is likely to collapse," he said.

It appeared that people at Eskom weakened the institution, so they could loot and do the wrong things.

Ndevu also expressed concerns that the unbundling of Eskom into three entities could add even more complexity to the structure, making it difficult to monitor.

"We want a lean structure, clear to have checks and balances, to track early on when things go wrong."

He added that the summons of R3.8 billion sent a strong message of accountability, but realistically there is no way of knowing if Eskom could recover the funds in this lifetime.