Publication: Business Day Issued: Date: 2010-02-23 Reporter: Siseko Njobeni Reporter: Franny Rabkin

Eskom says Maroga was dishonest, failed in his duties

 

Publication 

Business Day
Date 2010-02-23
Reporter Siseko Njobeni
Franny Rabkin
Web Link www.bday.co.za


Eskom revealed yesterday how its board was forced to fire its dishonest former CEO Jacob Maroga after he reneged on his resignation.

In court papers opposing an R85,7m claim by Maroga, Eskom shed light for the first time on events leading to a bruising leadership battle in which the African National Congress Youth League and the Black Management Forum leapt to Maroga's defence while the Congress of South African Trade Unions and the National Union of Mineworkers defended former Eskom chairman Bobby Godsell against claims of racism.

In its response to Maroga's claim for R85,7m or reinstatement, Eskom unveiled details of a week of drama in October during which Maroga resigned, then changed his mind and plunged the utility into crisis.

In the court papers, filed in the South Gauteng High Court yesterday, Eskom's acting chairman, Mpho Makwana, revealed how Maroga wished his resignation to be elegant and amicable, but when he changed his mind, the board was forced to fire him on grounds of incompetence. The board has branded him dishonest.

At a board meeting in October last year, Godsell had sought clarity on the respective roles of the shareholder, chairman and CEO and proposed what he believed their roles should be. When the board indicated that it agreed with Godsell's view, Eskom said in its court papers, Maroga then offered to resign.

Godsell also offered to resign on the basis that the board should be entitled to choose who it wanted to work with. The board accepted Maroga's offer and declined Godsell's later that evening at a dinner meeting at the Sandton Sun.

At the meeting, Maroga agreed to meet Godsell the next morning to discuss how this would be made public. But the next morning Maroga did an about-turn, Eskom said.

In a letter to the board, he said his remarks of frustration were not to be taken as a resignation.

The board was completely taken aback as they had all perceived Maroga's offer as unambiguous. �The board took a dim view of this about-turn. It was not only wrong but untruthful, it said.

After Maroga's letter, the board resolved that in the event that it is found that (Maroga's resignation was) not valid, to terminate his employment contract with immediate effect on the grounds of incapacity, specifically poor performance. Eskom has accused Maroga of failing to perform his duties.

The board had given him ample warning and time to perform. He simply failed to perform.

It cited two instances in particular: the failure to produce a funding model to narrow the utility's severe funding gap, and the failure to renegotiate contracts with aluminium producers in terms of which Eskom delivered electricity at a discount. This resulted in an accounting loss of R9,7bn.

Maroga was instructed to address the losses inherent in the long-term electricity supply contracts and to negotiate the contracts with aluminium producers at four board meetings. Despite the instructions, he failed to present a funding model and had also not informed the board of measures to address the losses in the contracts. *1

Eskom cannot be required to retain a CEO who is guilty of such a material failure to perform, the affidavit says.

Eskom also said the board had lost confidence in his capacity as executive leader of Eskom to take measures to stem the crisis and to lead Eskom out of its crisis.

Eskom has urged the court to dismiss Maroga's R85,7m compensation or reinstatement claim and asks for a cost order on a punitive scale to be made against him.

Maroga's claim included R14,5m for loss of salary, R45m for incentives and R7m for other benefits.

He earned more than R5m a year. His five-year contract was due to expire in 2012.

Maroga, who left the parastatal in November, is suing the company, its acting chairman Mpho Makwana, and Public Enterprises Minister Barbara Hogan .

Hogan's department has indicated it will also oppose the claim. The department said it would file its response by yesterday.

The department said Hogan and her deputy, Enoch Godongwana, would yesterday file a answering affidavit and a confirmatory affidavit, respectively.

With acknowledgements to Siseko Njobeni, Franny Rabkin and Business Day.


Like I was saying a couple of years ago, the Eskom contracts with Alusaf were the primary cause of loadshedding.

These clearly cost Eskom R9,7 billion, but they cost the country R250 billion.

They fact that this poephole refused to deal with this matter shows that there was something, actually some among us, behind this killer deal with Eskom.

Someone in the DTI or DPE or somewhere was clearly being paid for having renewed the supply contracts on such advantageous terms to Alusaf.

And the logic is that these payments were not once-off; they were enduring while the cushy electricity supply contracts were ongoing.

Someone big.

Really big.