It’s not BEE that bothers Nyati, it’s corruption

Last week, slyly-crafted and misleading Sunday Times headlines screamed: “Throwing out the rule book to save Eskom” and “To save Eskom, empowerment must go”. And thus, a target for hate-filled invective and outrage was fixed on the back of Eskom nonexecutive director Mteto Nyati who, it turned out, never intimated that any “rule book” — an ostensible reference to BEE policies, particularly preferential procurement policies — be jettisoned at Eskom.

I hold no brief for Nyati, a battle-scarred “darkie” who I bet is capable of fighting his own battles. I just couldn’t sit by and watch another good human being be unjustly pilloried in the court of public opinion.

Let me explain.

In April this year — a full six months before Nyati and the new board of directors arrived at Megawatt Park — the National Treasury issued an “instruction note” that effectively “relaxed and exempted Eskom from key principles of the Public Finance Management Act supply chain management (SCM) processes”.

This note was intended to provide agility and control in Eskom’s procurement and SCM processes. The objective, per an Eskom statement the following month, was to unlock “some of the bottlenecks in [Eskom’s] attempts to speedily resolve some of the pressing operational challenges. The amendment allows Eskom to approve contract variations without National Treasury approval and to engage directly with the original equipment manufacturers (OEMs) and maintenance suppliers of the most critical equipment and services required in the process of generating electricity. The amendments also provide Eskom with flexibility and agility over expansions, deviations, and handling of urgent matters in its procurement processes.”

However, these exemptions aren’t a free pass to disregard the prevailing procurement and BEE prescripts. They attach requirements, including that Eskom engage with parliament’s standing committee on public accounts and report on procurement activities under this exemption within 14 days of any transaction.  In any event, the BEE Commission has also demonstrated agency to act against BEE noncompliant entities.

Undergirding Eskom’s application for deviations from normal procurement prescripts was the desire to improve operational efficiencies and cost savings while ensuring seamless supply of genuine spare parts and equipment.

To achieve this, the utility is compelled, just like any other power utility in the world, to engage directly with OEMs and maintenance suppliers. In practical terms, the days of middlemen and tenderpreneurs who add no value to Eskom will soon be over. Ditto for corrupt OEMs.

Democratic South Africa’s most consequential public procurement events are testimony of the pernicious role of corrupt middlemen and tenderpreneurs. 

Corruption at Eskom after the advent of democracy started when the ANC’s funding vehicle, Chancellor House, got ensnared in government procurement.  This culminated in Hitachi Inc — the parent company of Hitachi SA, which had partnered with Chancellor House — being punished by US authorities in connection with contracts to build Medupi and Kusile.  Chancellor House was a middleman used by the ANC to extend its grubby claws onto  public tenders.

Then the Gupta family leveraged their proximity to and influence over Jacob Zuma to plunge their claws into Eskom’s SCM processes. The result was egregious corruption and billions lost to Eskom.

To say corruption at Eskom is endemic would be an understatement. It permeates the entire fabric of the utility’s SCM through symbiotic relationships ensconced in strategic areas of the business and some labour unions.  There seemed to be no end in sight to load-shedding and graft at Eskom until the appointment of the new board and a rejuvenated management team.

It can never be overstated that BEE malpractice, abuse of preferential procurement policies, greed and operational inefficiencies are the root causes of Eskom’s woes.

Nyati’s “sin” seems to be that he articulated the silent part of Eskom’s problems (corruption!) out loud and asserted that it’s the responsibility of the board “to remove any blockages or challenges so that the management team can focus on doing what they know best”.

The enterprise supplier development programme, a key enabler for advancing empowerment, has become the tool du jour for committing procurement corruption at Eskom.

Eskom did not invent corruption and state capture, but its corrupt employees and unscrupulous suppliers have perfected the art. We should never delude ourselves into thinking that all the corrupt elements have been flushed out;  and  the mere installation of a new board will not achieve this.  Notwithstanding, thousands of committed, upright, and diligent employees give of their best.

And lest it be thought that procurement corruption is a sine qua non for employment and supplier engagement at Eskom, Nyati and his colleagues seek to engender ethical business practices. For this, they will become lightning rods for unfair criticism by those likely to be affected.  They must brace themselves for fierce resistance from internal and external forces with vested interests.

It’d be remiss of me not to castigate the Sunday Times headlines that inadvertently played into the hands of racist trolls who used the opportunity to denigrate the transformation project. Equally, some jaundiced BEE pundits hurled invective at Nyati without any appreciation of the nuances in his message.

The self-effacing Nyati is not only a trailblazer and patriot but one of the foremost champions of black empowerment. There’s no doubt that he seeks not only to hold those responsible for adverse BEE outcomes at Eskom accountable, but to improve those outcomes.

• Khaas is chair of Public Interest SA, a nonprofit that seeks to cultivate ethical leadership, good governance and responsible citizenship.

* Editor’s note: We have since corrected the online headline that did not accurately reflect Nyati’s views.