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To: All Media Date: 15 December 2017 for Immediate Release To: All Media Date: 15 December 2017 For Immediate Release Minister Lynne Brown’s statement at Eskom’s Special General Meeting Deputy Minister, Dikobe Ben Martins, Chairperson, Members of the Board, Director-General and Officials of the Department, Members of the media, Ladies and gentlemen, Fellow South Africans… Good morning to you all. I have called this Special General Meeting to introduce Eskom’s new Board of Directors, welcome new members and, from the Shareholder’s perspective, communicate a concise set of short-to-medium term marching orders. The appointment of this Board in three phases is a pragmatic response to the well-publicised challenges Eskom has faced. In June, new members were brought onto an interim board under the leadership of Zethembe Khoza, after the resignation of former chairperson, Dr Ben Ngubane. In December, two more Board members, with particularly valuable experience and skills were welcomed aboard – and the new Board was formally appointed for three years. In the coming months, more new members, with appropriate expertise from the business sector, will join the Board. Several strong candidates have already been identified and expressed their willingness to re-build the Eskom brand. By the time we convene Eskom’s regular Annual General Meeting in June 2018 the Board will have ensured that investigative and disciplinary processes into alleged malfeasance involving some of Eskom’s senior executives have been completed and the company will be fully equipped to execute its mandate under a new chairperson. Before proceeding any further, let me say a few words about Professors Makgoba and Mongalo, the two new Board appointees. Together, they add invaluable ethics, corporate government and corporate law expertise to the mix. Professor Makgoba is an internationally recognised public health advocate. A former Principal of the University of KwaZulu-Natal, he is currently South Africa’s Health Ombud and the Deputy Chair of National Planning Commission. He is highly regarded as a transformation and ethics authority, and is well versed in government policy, corporate governance and human resources. Professor Mongalo is a legal practitioner and academic, an expert in company law who is familiar with the environment within which State-Owned Companies operate. He served as Vice-Chairperson of the Department of Trade and Industry’s Specialist Committee on Company Law. His corporate financial law, business strategy, ethics and corporate governance skills undoubtedly strengthen the Eskom Board’s hand. In terms of the Memorandum of Incorporation (MOI) read together with the Board appointment framework, the Minister is required to test the eligibility of directors through consideration of best practice – which includes a proper balance of skills, demographics, generation mix and tenure. I am satisfied that, with the addition of business expertise in the first quarter of the new year, the Board will meet the appropriate criteria. Let me add that prior to the addition of the two new Directors the combined skills and competencies of the Board included leadership, energy industry expertise, business strategy and operations, financial management, auditing and risk management, procurement, public policy, nuclear, chemistry and corporate governance. With the addition of the two new Directors, skills further strengthened include corporate governance, ethics, legal and compliance, financial management and human resource management and transformation. I am also satisfied at the sensibility of the arrangements that provide continuity at a difficult time for Eskom. Not continuity for continuity’s sake, but to complete processes underway to deal with the past and lay strong foundations for the future. Ladies and gentlemen… Serving as Board members of State-Owned Companies in the presently contested political and business environment is not for softies. Unlike those who serve on the Boards of private companies, such as Steinhoff will be regarded with suspicion and mistrust. They make “accounting mistakes,” while you are susceptible to corruption, capture, greed and malice. Who they associate with is inconsequential, they call it lobbying; you must be careful who you play golf with because it will be used as evidence against you. Many have bent over backwards, performed cartwheels and somersaults to declare private sector corruption fundamentally different to public sector corruption, the truth is that they are equally repulsive and fundamentally inseparable. The companies currently in the news, massively influence both the business and political sectors, lending their muscle to certain politicians and political parties – ultimately to achieve economic objectives that not only benefits themselves but also influence the whole country. Eskom’s Board must be thick-skinned and steadfast. Eskom is one of the country’s economic powerhouses, if you’ll excuse the pun. You must not only maintain and observe the highest standards of integrity and probity in the execution of your responsibilities, but also contribute to the transformation of the supply chain to benefit more black South Africans. Many, including powerful media/business interests, will try to undermine this process in favour of retaining the present economic status quo. They equate the very policy of economic transformation – radical or not – to corruption. Chairperson… Ultimately, Boards can only be as strong as the Executive teams they command. Eskom is as reliant on the expertise, honesty and diligence of its CEOs and CFOs as Steinhoff is. And Eskom’s Shareholder Representative is as reliant on you as Steinhoff’s shareholders are reliant on its Board. The Shareholder Representative at State-Owned Companies is not an operational post; the Board must not over-reach but is must take control and lead the company. Further it must take decisive action to address challenges of leadership, governance, liquidity and ethics. Among my first instructions to the Board was therefore to engage the process of appointing a new Group Chief Executive as a priority. The finalisation of the investigation to all suspended Executives is of paramount importance to rebuild board reputation and restore investor confidence. Furthermore I urge to deal with all issues that led to a qualified audit opinion as the company cannot afford a repeat in the current financial Year You must focus on rebuilding systems of governance and ethics to decisively address, among others, internal control deficiencies and the audit qualification, to avoid a repeat. Investigations and suspensions at EXCO level must be prioritised and finalised expeditiously. These issues are critical to improving the Eskom brand, investor confidence and performance of the company at all levels. I wish you success. The nation and I, as Shareholder Representative, have entrusted you with a company that has an asset base of more than R700 billion. Your task is to restore the public’s confidence in a company that is the heartbeat of the country’s economy. It is now clear that a weak Eskom has a negative impact on the country’s GDP. I therefore urge you to fast-track the company’s turn-around. I thank you. For enquiries contact Colin Cruywagen on +27 82 3779916. Issued by Ministry of Public Enterprises 15 December 2017 .
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