Audit call 'triggered' removal of Eskom execs

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A call for proposals from auditing firms for a review of Eskom's tendering processes may have been the trigger for the suspensions, it emerged yesterday. Though Eskom chairman Zola Tsotsi has gone to great lengths to assure the public the suspensions were above board, it is understood the proposed audit was behind the move.

At the beginning of this month Eskom published a notice on its website asking for a panel of audit firms to submit tenders for a review of its tendering processes for transactions of more than R300m. Transactions below this value do not need the executive committee's approval.

Eskom's executive procurement and tender committees "require independent assurance reviews on the transactions they adjudicate", said the notice. A week later CEO Matona was suspended with finance director Tsholofelo Molefe and two other executives.

The auditors were required to conduct probity reviews of transactions approved by both committees, and of the adequacy and effectiveness of business processes, including governance, risk management and controls.

Eskom wants to enlist the services of up to 20 auditors for three years. The submissions deadline is Tuesday and bids will be evaluated in April and May - but the executives are suspended for these three months.

After the suspensions, Tsotsi's interference in the running of the utility came to light. His irregular involvement included writing letters of commitment to suppliers. The investigation into Eskom seemed rushed and may yet be shelved as the board has passed a motion of no confidence in Tsotsi.

"There have been suggestions that the suspensions of the key executives may be intended to block the appointment of the audit panel and resulting investigations which may expose some of the inevitable conflicts of interests among Eskom board members," said EE Publishers energy analyst Chris Yelland. He said those may include senior political figures and their business interests, particularly those active in the areas of coal and diesel procurement where costs have been rising rapidly.

Tsotsi has ignored more than 30 questions sent to him and Eskom. He has been accused of hijacking executives' roles and undermining the incumbents while he created an executive role for himself.

A letter addressed to Sumitomo bears Tsotsi's signature. In it he commits Eskom to buying transformers. Reports have emerged that a GM was suspended as a scapegoat for irregular expenditure of about R60m.

A source close to some of the people on suspension said the audit tender may have sparked their removal as some politically influential people may have been involved in business transactions that would have conflicted with their roles as Eskom directors.

A former Eskom senior executive told Business Day the board in 2013 shot down a proposal that sought to ban directors from having business interests in the parastatal.

Source: Business Day