André de Ruyter’s Truth to Power: The end of days

[Nat Quinn]

When André de Ruyter took over as Eskom CEO in January 2020, he quickly realised why it was considered the toughest job in South Africa. His account takes the reader inside the boardrooms and government meetings where South Africa’s future is shaped, with ministers often pulling in conflicting directions, and reflects on his three years at the power utility, his successes and failures, his reasons for leaving and his hopes for the future.

The 12th of December 2022 was destined to be the day that would bring matters to the boil. As I did my morning exercises, I knew of one pivotal moment, little knowing that there would be many more that day.

At 07:30, I met Mpho Makwana for my six-monthly performance appraisal. The Dainfern clubhouse, where I had first met him, was in a state of disarray at this early Monday hour, with cleaning crews polishing floors, and noisy leaf-blowers operating outside. Having a formal performance review was a rather unusual exercise at the level of CEO, although HR policies required these processes.

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More importantly, in appointing the new board, Pravin Gordhan had promised the country that all executives would be subject to rigorous performance reviews, to establish a culture of accountability. The minister also promised to share the results of these performance reviews with South Africa, which threatened to turn into an unappetising exercise, not of public accountability, but of scapegoating. I therefore had less than my usual relish for the engagement, but I also had an ace up my sleeve.

With his characteristic fondness for all things digital, Mpho flipped open his iPad Pro, and opened my performance contract, which had been agreed with the previous chairman.

Before he could even launch into the performance review, I interrupted him, ‘Chair, I think the discussion may be rendered redundant by this’, and I slid a letter across the table to him.

I had been polishing my resignation letter for some weeks, it having become clear that there was no reasonable prospect of working productively with the new board, and with political support evaporating. The wholesale firing of the previous board, with the sole exception of Dr Rod Crompton, was in my view a grievous error of governance. I had to again start from scratch to explain the strategy, the turnaround plan and, for some of the directors, the very basics of the business. This was an energy-sapping process, particularly when sniping comments were made by board members, or snap opinions based on an incomplete understanding of the issues.

We had to explain why Koeberg 1 had to go on an outage, we had to defend our request for cost-reflective tariffs, and after cursory visits were made by directors to power stations, opinions were formed without any reference to management. Particularly galling was the quick and effective sidelining of chief operating officer Jan Oberholzer. It was clear that he had become persona non grata. After more than a hundred days in office, the chairman of the board still hadn’t spoken to him or asked him for his views on operational matters – a galling display of disrespect.

The board had adopted a peculiar governance construct, called being an ‘engaged board’, based on an old Harvard Business Review article. This was in response to an exhortation by Gordhan for the board to be ‘an activist board’. What it meant in practice was that the board very quickly started to blur the lines between non-executive directors and executive management.

Instructions were given to employees several levels below the executive, without informing me or the line managers. The demands of the board went further, with the newly established board operations performance committee requesting reams of information to conduct their own analyses, and asking to get involved in outage management, something that was being done at plant level.

With the chain of command being bypassed, I was having to handle increasing frustrations from exco members, even as I myself was bypassed and excluded. Professor Malegapuru Makgoba had been a diligent chairman, dedicating Thursdays to signing documents. My office and the chairman’s office, under the capable stewardship of Zodwa Mantyi, had run like a well-oiled machine, with letters to ministers (which for protocol reasons I was not allowed to sign) being churned out as well as requests for exemptions from Treasury, reports to the Department of Mineral Resources and Energy on Koeberg, and correspondence to the chairs of parliamentary portfolio committees – all the bureaucratic baggage so favoured by the satraps and panjandrums in their dusty Pretoria offices.

Mpho had none of this dedication to efficiency: he would sit on letters and documents for months, both incoming and outgoing. At one stage eighteen documents were in limbo – not being signed, and not being actioned. He also didn’t wish to sign even self-explanatory letters and documents without these being syndicated by two or more board committees. It was particularly galling for the management of Eskom to be exhorted by both President Ramaphosa and Minister Gordhan to display a greater sense of urgency when we were at the mercy of the ‘activist’ and ‘engaged’ board under a go-slow chairman.

On 30 November, Zizi Kodwa, the deputy minister responsible for state security, had told SCOPA that I had refused ‘since June’ to share information with the SSA to enable them to vet me. Vetting is a process where employees have to submit to rigorous checks into contacts with foreign governments (I had a lot of those) and time spent in foreign countries (I had lived in three foreign countries and had visited a score of others), and to disclose in-depth financial information. Knowing the adversaries roosting in the SSA, I had very little appetite to give them personal financial information. After all, the SSA was one of the state entities which regularly used listening devices identical to the one found in my car.

Instead of gathering intelligence on saboteurs and coal thieves in Eskom power stations, the SSA had dispatched an agent to Sharm el-Sheikh in Egypt, where I spoke at COP27 about the Just Energy Transition at several engagements. I found this to be quite bizarre, as I had been CEO for three years, and now, of all times, I was being followed by the SSA, probably bugged, and going to be subjected to onerous vetting. If I had been trustworthy enough for three years to head up Eskom, what had suddenly changed that warranted this level of scrutiny? The only possible reason to my mind was that the intelligence services were discomfited by what I had been uncovering in Mpumalanga.

Instead of acting on this intelligence, the SSA decided to investigate me – a clear indication in my view that what they considered the bigger danger was an investigation into the networks feeding off Eskom, rather than trying to prevent crime and corruption from playing a pivotal role in loadshedding. Clearly, to their principals, this was an intolerable situation. Kodwa said, ‘We were promised by Mr De Ruyter that by the beginning of June, he will give us the outstanding documents.’

I had made no such promise, and in fact had not even heard from the SSA that they wanted to vet me. Only in October, with the arrival of the new board, was vetting put on the agenda of the first board meeting and I was sent the Z204 form to complete. Of course, with its customary alacrity, SCOPA jumped on the bandwagon and expressed its alarm that unvetted executives were in charge of Eskom.

On 29 November Gwede Mantashe bizarrely accused me of behaving ‘like a policeman’ who ‘must chase the criminals’ instead of fixing the utility. Either the minister was displaying breathtaking ignorance of the enormously negative impact of crime on Eskom, or he thought that I should rather allow the crooks and comrades to continue to eat.

This attitude reminded me of a discussion with a senior government minister on the COP26 deal to get $8.5 billion to support Eskom’s JET. When I expressed my concern that Eskom was being pushed to one side to circumvent my uncompromising stance on good governance, the minister breezily replied: ‘You know, you have to be pragmatic – in order to pursue the greater good, you have to enable some people to eat a little bit. Think of the bigger picture!’

In a similar vein, when I asked a colleague who has brilliant insights complementing my blind spots, why I did not get support for my strategy to implement JET to address capacity shortfalls and clean up the environment, she chuckled at my naivety and said, ‘But André, you are not showing the comrades a way to eat!’

The only conclusion is that profit-sharing by criminal and corrupt elements has become so normalised that it is self-evident: it is no longer questioned, and it has to be incorporated in plans. Without largesse being dispensed to the comrades, plans will fail, sometimes by being deliberately undermined. Now, I am not naive: I understand that in every society there is a certain level of corruption. Whether in the US, France, Germany or the UK, corruption seems to be a ubiquitous phenomenon. The difference is that even if a corrupt official abroad takes a 5 per cent bribe, the bridge still gets built, the power plant still gets repaired. In South Africa, corruption has become so overwhelmingly dominant that the system feeding the corrupt has begun to fail.

Saliem Fakir, an experienced academic and environmentalist, penned an influential piece in 2017 that distinguishes between political entrepreneurship and productive entrepreneurship. While the latter relies on innovation, skill and acumen to generate profit, the former relies on political connections to gain preferential access to government allocations of resources. Inevitably, political entrepreneurship creates fertile ground for corruption, as those allocating the resources (individuals in government and state-owned companies) are seldom content with assisting the enrichment of others. BEE is a race-based form of political entrepreneurship. As Fakir says, ‘not all BEE is corrupt’ but it is particularly susceptible to rent-seeking for little effort. When rent-seeking becomes devoid of links to tangible outcomes (think coal that doesn’t burn or power stations that don’t work), it degenerates into what is termed ‘piracy’, which ultimately can lead to state failure, as institutions are systematically denuded and resources stripped by rent-seekers.

The notion that the state capture project ended when the Guptas’ ZS-OAK departed Lanseria, allegedly laden to the gunwales with loot, is sadly mistaken. Like a cancerous tumour that has been removed, the residual corruption has metastasised and spread even more widely through South Africa’s body politic. The collective sigh of relief that everyone heaved after Ramaphosa’s 2018 victory at Nasrec, and the notion that we could start on a clean slate, with the original sin of the ANC forgiven and forgotten, has come to naught.

My efforts to combat corruption were clearly becoming too successful for some comrades’ liking. Despite the supine attitude of the SAPS and the SSA, I had been sharing the details of our private investigation with a few officers who were prepared to take on difficult cases. I had also informed the chairman of the Eskom board.

And, perhaps most crucially, in July 2022 I had decided that it was time to tell Gordhan. On the advice of the head of our investigation, I requested that Dr Sydney Mufamadi, the national security advisor, also be present at the meeting in Megawatt Park.

In the vacant office of the Eskom chairman, I told Gordhan and Mufamadi what the investigators had unearthed, but paused before dropping the biggest bombshell – the fact that two high-ranking politicians had been implicated.

‘Can I name them?’ I asked Gordhan, who was also accompanied by one of his advisors.

The minister indicated that I should go ahead.

I expected him to be shocked, but instead his reaction surprised me.

Gordhan looked over at Mufamadi and said, ‘Well, I guess it was inevitable that it would come out.’

They had known, or at least suspected, all along.

When government and the ANC later tried to disavow all knowledge of how high the Eskom corruption stretched, I could only shake my head in amazement. Surely there is a point where complacency becomes complicity. But party unity was to be protected über alles.

In any event, by November 2022, it was clear that news of the investigation had reached the ears of the corrupt cartels. It was therefore quite extraordinary that Mantashe accused me of behaving too much like a policeman who is focused on chasing criminals instead of fixing the power stations. The subtext here is quite alarming: stop chasing the crooks, but nevertheless end loadshedding. The apparent inability to be able to connect crime to loadshedding is a rather depressing scenario.

Knowing that ground zero for corruption in Eskom lay in the heart of the coal value chain in Mpumalanga, which is overseen by the Department of Mineral Resources and Energy in its role as mining regulator, made Mantashe’s next move all the more galling.

At a signing ceremony for new independent power projects at the IPP Procurement Programme Office in Centurion on 8 December, Mantashe made the astonishing statement that Eskom was ‘actively agitating for the overthrow of the state’. The Eskom representative at the signing ceremony sent me an alarmed WhatsApp, saying that the minister’s statement was so incredible that he wasn’t sure that he had heard correctly. He conferred with Terence Creamer of Engineering News, who confirmed that he had heard the same thing.

Following Mantashe’s speech, Creamer asked him if he considered this a responsible statement to make. Unrepentant, and in a combative mood, Mantashe doubled down and reiterated the claim. Apart from conflating the party and the state, it was an outrageous statement for a minister to make. If he had been minister of family planning, he could maybe have hidden behind ignorance of the energy portfolio. But this was the minister of energy himself, effectively accusing Eskom management, and by implication me, of high treason. While Mantashe has never developed a reputation for diplomacy, this accusation plumbed new depths of disingenuous diversion from the repeated failings of his own department to come to grips with the energy crisis.

In a meeting with Gordhan at a secure location in Pretoria the following day, where we discussed progress on intelligence-gathering in Mpumalanga with a senior police officer and intelligence operatives, I expressed my concern at the looming SSA fishing expedition, where my personal details would be at the mercy of people who had demonstrated no interest in my welfare. When I walked with Gordhan to our vehicles, I told him that Mantashe’s statements were unacceptable. I told him that I was considering resigning because I did not want my integrity impugned. Gordhan’s response was characteristic: ‘Hold on,’ he said, ‘I will tell you when it is time to go.’

My response was blunt: ‘No, Minister, I will tell you when it is time for me to go.’

We left, and I polished my letter that evening, making sure that it was definitive but dignified, by not stooping to the petulance that sometimes characterises letters of resignation.

On Monday 12 December, at the Dainfern clubhouse, Mpho read my letter. He looked at me and said, ‘This is sooner than I expected.’ He did not ask me to explain my reasons, or to reconsider, but did request that I stay on for another month after my notice period, to give the board more time to find a successor. I acceded, thereby confirming that the two months’ notice period in my contract, with no retention mechanism, was singularly inappropriate for such a senior executive position.

After the meeting, I was driven to Megawatt Park. A sense of quiet relief filled me. The die had been cast – I would go.

 

SOURCE:Extract of Andre de Ruyter’s Truth to Power: The end of… (dailymaverick.co.za)

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