You could hardly blame prospective CEO candidates for fleeing from Eskom’s headhunters.
After all, André de Ruyter, Eskom’s most recent CEO — the 11th in as many years — was not only publicly attacked by his shareholder (the government), but was actually poisoned with cyanide in the last months of his tenure. Few jobs seem less appealing.
Yet, incredibly, as many as 147 candidates had reportedly thrown their hats into the ring after De Ruyter threw in the towel in December.
In the end, four frontrunners were named publicly: Eskom’s former head of group capital, Dan Marokane; its former CFO, Paul O’Flaherty; its former distribution head, Ayanda Noah; and Vally Padayachee, an adviser to the Association of Municipal Electrical Utilities.
Back in May, Eskom’s board made its preferred choice — who the FM understands to have been Marokane — known to public enterprises minister Pravin Gordhan. Yet Gordhan, operating at the glacial speed typically associated with the ANC-led cabinet, spent months mulling the appointment.
Finally last week, it emerged that Gordhan had vetoed the board’s preferred choice because that person “was deemed to not fully meet the requirements” set out in Eskom’s memorandum of incorporation.
“The board must be very frustrated at this last-minute intervention,” says one former Eskom executive.
Gordhan’s rejection of the decision now suggests a clear tension between him and Eskom’s board, chaired by Mpho Makwana.
Insiders tell the FM that Gordhan was unhappy that he was given only one candidate, rather than a choice of three; the board, equally, is unhappy that it took four months to communicate this, given how urgent the situation is.
Gordhan’s rejection of the decision now suggests a clear tension between him and Eskom’s board, chaired by Mpho Makwana
Evidently stung by the accusations of foot-dragging, Gordhan — who, similarly, took months to appoint the Eskom board last year — has lashed out at what he deems the “politicisation of this process” which, he said, “shows that our efforts to clean up our state-owned companies will always be met with resistance and political opportunism”.
It’s a curious response — you’d imagine that any effort to clean up state enterprises ought to begin with speed. And in any event, the Zondo commission findings show that those who have most deceived the public around Eskom came from within the ANC’s ranks, such was the political meddling that crippled the country’s most important company.
As it is, Eskom remains the tightest fiscal choke around the National Treasury’s neck — a fact which becomes only more glaring as the seconds tick away until acting CEO Calib Cassim’s contract expires in three months.
Yet part of the reason Eskom and other state-owned enterprises became such colossal governance failures is precisely that, unlike most boards which appoint CEOs, these entities defer to the state when it comes to executive appointments.
As we now know, appointing people for political reasons, or because they could help some well-connected businesspeople have their sordid way with state assets, was a well-honed practice during the state capture era.
It’s a problem repeatedly flagged by governance experts.
Parmi Natesan, head of the Institute of Directors South Africa, says boards ought to be “fully involved in the appointment of the CEO”, and that CEO should then be “accountable to the board, not the minister”.
Natesan argues that if this approach isn’t followed, CEOs who don’t have the confidence of the board may be appointed, and CEOs may consider their reporting line leading directly to a politician, rather than to the board.
It’s a structural problem which, you’d think, should be an easy fix.
Until then, the odds of attracting someone else to head Eskom, when some government minister could flash a red light at the last minute, are narrowing all the time.
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