South Africa: Guptagate – the Eskom Edition


South Africa’s state-owned enterprises are in crisis. One need only look at failures of corporate governance within South African Airways and the national broadcaster to understand how deep the rot runs.

Telkom has fared marginally better with ‘below the radar’ leadership trying to fix the broken lines, metaphorically speaking. But in general, our state-owned enterprises are graphic examples of just how much damage can be done by the blurring of party, state and nepotism. Indeed, they provide an environment ripe for conflicts of interest and corruption.

Yet it is Eskom that has become the most notorious in terms of underperformance and government interference. Who can explain the removal of former Eskom CEO, Tshediso Matona for instance? The puzzle is complicated further by what seems like a reward by President Jacob Zuma in appointing Matona to the National Planning Commission.

But that aside, Eskom has received the most criticism for the way in which poor management, possible corruption and excessive government interference have damaged and hamstrung our economy. Ordinary citizens reliant on the monopoly power-producer have become increasingly frustrated with matters like load shedding, Eskom’s incompetence and its inability to explain issues such as ‘wet coal’.

So, given citizens’ general lack of trust in Eskom, it’s understandable that eyebrows were raised by recent reports of the Gupta family procuring a contract to supply coal to Eskom for a period of 10 years.

It seems the contract, worth R4 billion, was awarded despite serious concerns regarding the poor quality of the coal being produced by Gupta-owned Tegeta Exploration and Resources. Employees within Eskom who raised the alarm over the quality of the coal were suspended.

This begs several questions about procurement processes, and also regarding those who blow the whistle on corrupt practices. As research by the Open Democracy Advice Centre has shown, the number of whistle-blowers in South Africa has decreased. Increasingly, whistle-blowers are seen as ‘snitches’ who will lose their jobs and lack the protection that is required by law. What is even more worrying is the perception that influence can be bought.

It is a fact that the Guptas are close friends of the president, and rumours of their unrivalled access to him and his family have abounded for many years. In addition, the Guptas are known donors of the African National Congress (ANC) and other political parties, including the Democratic Alliance. As a family they seem able to act with a startling degree of chutzpah. How else would they be able to operate mines without the requisite licences, land a private aeroplane at Waterkloof Airforce Base and summon cabinet ministers to pointless breakfasts to boost their ailing newspaper, The New Age?

Given the latest Eskom debacle, one draws an inevitable conclusion: that the close relationship between Zuma and the Gupta family is influencing procurement processes in a way that undermines the delivery of services to the public. Who allowed the tender process to continue despite the poor quality of coal? And which processes were followed? The public surely has the right to know how this chain of decision-making occurred, and why it seemed to favour the Guptas so obviously.

This story also raises questions about the secret funding of political parties. If the Guptas fund the ANC, how much are they donating and how? We will not know, as there is no requirement on any political party to declare how much money it raises. Such secrecy creates an environment ripe for those who wish to buy influence and gain access to state tenders, even if they are ill-equipped to deliver.

It also means that in a country as unequal as ours, there are some who seemingly enjoy not only special access to those in power, but who also deprive us as citizens of proper services by, in this case, allegedly delivering sub-standard coal. One of the major challenges facing our economy is the energy crisis.

It is a pity that Eskom – no doubt nudged and supported by powerful politicians – would play fast and loose with our economy, citizens’ trust as well as the threat of potential downgrades.

One wonders whether Zuma has much, if anything to say about this. After all, there was no political accountability when the Guptas landed their private jet at Waterkloof.

As ever, bureaucrats paid the price. As the major shareholder in Eskom, one might have expected some outcry at this blatant failure to deliver coal at such a crucial time. Yet there is no such outcry. It is clear that as citizens we need to ‘follow the money,’ but also that we will never clean up state-owned enterprises unless tenders are awarded in a transparent manner.

Judith February, Consultant, Governance, Crime and Justice Division, ISS Pretoria

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