Eskom Auditors Raise Irregularities Relating to Former CEOs

  • Molefe, Koko’s actions reported to independent auditors’ board
  • Eskom says Koko issue resolved; Molefe awaiting legal case

Eskom SOC Holdings Ltd. said auditors have raised concerns about issues relating to Matshela Koko and Brian Molefe, who both ran South Africa’s state-run power utility this year, in their year-end review.

The company’s external auditors reported two irregularities to the Independent Regulatory Board of Auditors, Eskom spokesman Khulu Phasiwe said in an e-mailed statement Monday.

Brian Molefe

Photographer: Waldo Swiegers/Bloomberg

The first was Eskom’s relationship with Impulse International, which received contracts from the power provider while Koko’s stepdaughter was a non-executive director. The second related to the reinstatement of Molefe as chief executive officer in May. He was removed three weeks later and a legal case is ongoing.

Eskom had 30 days to report back to the IRBA to state whether the issues had been fixed or not. The “reportable irregularities” were stated by Eskom’s auditor, SizweNtsalubaGobodo, as being “continuing,” the IRBA said by email. They are being processed and will be forwarded on to the Companies and Intellectual Property Commission, the auditor-general and the Department of Public Enterprises, it said.

“Eskom’s board has taken adequate steps to the satisfaction of the auditors that the irregularities were no longer continuing,” the power utility said. “In Mr. Molefe’s matter, it was noted that the irregularity could only be closed out when the court proceeding had been concluded.”

Graft Ombudsman

Some of Eskom’s top leaders, including Molefe and Koko, were identified in a report by the graft ombudsman last year suggesting the company gave preferential treatment to members of the Gupta family, who are friends of President Jacob Zuma, by awarding coal-supply contracts and helping them buy Optimum Coal Holdings Ltd.

Chairman Ben Ngubane quit last month and Public Enterprises Minister Lynne Brown named four interim members to the board. Johnny Dladla, formerly head of Eskom’s enterprises unit, was appointed acting CEO on June 22.

SizweNtsalubaGobodo also flagged two irregularities at Transnet SOC Ltd., South Africa’s state-run ports and rail operator. One was reported as continuing while the other was not, the IRBA said. The relevant authorities including the police will be notified, it said.

“The IRBA cannot comment publicly on the nature of the reportable irregularities,” it said.

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