Godsell quits Eskom, Maroga back

Sikonathi Mantshantsha & wires | Mon, 09 Nov 2009 14:17
[miningmx.com] -- SOUTH African power utility Eskom has been rocked by two high-level resignations and the return of CEO Jacob Maroga, raising concerns that foreign money to fund its expansion plans will now be harder to find.

Allen Morgan, a non-executive director, tendered his resignation following that of chairperson Bobby Godsell. Morgan works at Kumba Iron Ore, owned by Anglo American.

Last week, Godsell announced to staff at Eskom, the power monopoly, that Maroga, who came under fire for his management of the parastatal, had resigned with immediate effect.

However, the ANC Youth League and the Black Management Forum insisted that he had not. The BMF charged that state-owned enterprises had become "slaughterhouses" for black professionals while the Youth League reportedly said Godsell had turned on Maroga because he was black.

Godsell resigned on Monday morning as news spread that Maroga was back in his office.

In a statement released on Monday night, Godsell said government was unable to support the board's original decision to accept the resignation of Maroga or its two attempts at resolving this dispute.

"In these circumstances, and with the best interests of the organisation in mind, the only course of action seems to me to resign as chair and as director."

Godsell said Maroga offered to resign on Wednesday October 28. "The board accepted the resignation. The board's legal advice is that the resignation was quite clear in its intent, and the board was entitled to accept it," said Godsell.

However, on Thursday Maroga denied resigning. Godsell said the board offered to submit this dispute of fact to binding private arbitration. "Mr Maroga has not responded to this offer."

Godsell continued that government, as Eskom's sole shareholder, has been unable either to support the board's original decision (to accept the resignation) or its attempts at resolving this dispute.

Serious challenge

Minister of Public Enterprises Barbara Hogan on Monday acknowledged Godsell's resignation and appointed Eskom non-executive director Mpho Makwana as acting chair. Makwana heads the Association for Communication and Advertising.

Analysts have expressed concern over the developments at Eskom.

"You will only see the effects of the current spat in about 10 years' time," warned Econometrix economist Azar Jammine. He added that the organisation will now have to deal with the current crisis instead of building infrastructure.

"This will now also have severe implications for Eskom's ability to carry out its infrastructure-building programme," he said.

Lumkile Mondi, chief economist of the government-owned Industrial Development Corporation (IDC), said government's undermining of the Eskom board presented a serious challenge for remaining board members.

"Boards are given the authority to look after the interests of the company, not individuals," said Mondi. "The board at Eskom has been undermined by the shareholder in the interests of individuals," he said.

Investment Solutions economic Chris Hart says this kind of interference is becoming a "familiar pattern" in state-owned enterprises, reports Fin24.com's Troye Lund.

The week's dramatics were akin to the recent power play over a new CEO at Transnet.

Senior ANC members expressed their disapproval (and threatened to take the matter further) when the board failed to shortlist parastatal executive Siyabonga Gama for the job. The position has yet to be filled.

Funding struggles

Ulrich Joubert, an economist at Kruger International, questioned whether Godsell's resignation reflected political pressure, which in turn could affect investors' willingness to fund the utility, already struggling to raise the billions of rands it needs to fuel its expansion.

"International investors don't like political intervention ... if Godsell resigned because of political interference in the managing of the business, then it's bad for Eskom and they will have to pay more to get the funding they need," he said.

Meanwhile, President Jacob Zuma's office refused to comment on Godsell's resignation. It also would not explain what had transpired at a meeting between Godsell and Zuma on Sunday, which followed a gathering of the ANC national executive committee where the matter was also discussed.