Eskom, Africa’s largest electricity company, could well become the final nail in South African President Jacob Zuma’s political coffin, as it has become synonymous with the worst corruption scandals in South Africa.
The sacking of yet another one of its short-lived CEOs last week and the release of dire financial results confirmed the depth of the crisis plaguing the power utility.
South African Minister of Finance Malusi Gigaba said that Eskom represents the single worst crisis facing the government.
The South African parliament has for months been probing Eskom over so-called “state capture” — alleged corruption at South African state institutions.
A damning report published a year ago by the then-South African ombudswoman Thuli Madonsela first laid bare misconduct at Eskom, a state-owned monopoly founded in 1923.
Madonsela detailed how the Gupta business family, who are close friends of Zuma, allegedly arranged the 2015 appointment of Brian Molefe as Eskom chief executive to line up lucrative contracts to syphon off cash.
Officials and former workers appearing before a parliament hearing over the past few weeks have made startling revelations about how Eskom executives helped the Gupta family benefit from favorable deals.
Whistleblower Mosilo Mothepu, who worked for a company advising on the deals, told the parliamentary committee that Eskom was identified as a “cash cow” by the Guptas.
In one case, Eskom paid more than US$49 million to Gupta-owned mining firm Tegeta to help it buy a coal mine from Glencore. The Guptas would then sell the coal to Eskom.
Former Eskom chairman Zola Tsotsi told lawmakers that one of the three Gupta brothers, Tony, summoned him to a meeting and threatened him with dismissal because he was not “helping” them.
“Tony told me ‘Chairman, you are not helping us with anything. We are the ones who put you in the position you are in. We are the ones who can take you out,’” he said.
Respected former South African minister of finance Pravin Gordhan, who was abruptly sacked by Zuma in March last year, sharply rebuked former Eskom executives appearing before the committee.
“You brought Eskom to its knees, the biggest utility in Africa,” Gordhan told former Eskom chief financial officer Anoj Singh.
All implicated executives have pleaded innocence.
Eskom’s woes started in 2007 with highly unpopular power shortages that plunged many neighborhoods into darkness on a nightly basis.
Outages have been sharply reduced, but credit rating agencies have repeatedly downgraded the power utility over its financial and liquidity problems.
Eskom’s annual financial results, released on Tuesday last week, showed that profits plummeted 34 percent and the firm is heavily indebted to the tune of more than 300 billion rand (US$24.81 billion).
New African National Congress party President Cyril Ramaphosa has moved in to overhaul Eskom — as well as ease Zuma out of office. In his first major move, Ramaphosa has already appointed a new board and ordered it to sack corrupt executives.
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