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A screenshot shows former Eskom consultant Nicholas Linell testifying via video link in the state capture investigation on October 5, 2020 (Image: Screenshot).
Zondo commission testimony suggests that an outside consultant close to former SAA board chairman Dudu Myeni was hired to provide a veneer of legitimacy to a plan to oust Eskom executives who stood in the way. from a Gupta acquisition.
Evidence of how the Capital of Regiments, which beetles describe As the Gupta family’s secret conduit to state-owned companies, an executive dismissed in a bogus investigation organized by former President Jacob Zuma has provided the Zondo State Capture Commission with Eskom’s secret path.
Eskom returned as the focus of the investigation this week, with consultant Nick Linnell testifying on Monday after being named in the evidence presented by former Eskom board chair Zola Tsotsi.
Linnell was questioned about his relationship with Dudu Myeni and his role in coordinating an investigation into mismanagement at Eskom in 2015, following a meeting with former President Jacob Zuma at his Durban residence on March 8 of that year.
Linnell’s time on the bench was shortened by a severe storm in Joburg on Monday and he continued before Supreme Court Vice President Raymond Zondo on Tuesday morning, resuming the Eskom investigation launched at Zuma’s urging.
It was an investigation that would see four top executives suspended just three days after Linnell meeting with Zuma, paving the way for the purchase of Optimum Coal by Gupta, Tegeta Exploration and Resources, and the resulting flow of hundreds of millions of rands from Eskom to Tegeta. It also resulted in the appointment of Gupta’s lackey Singh Members as Eskom CFO and Brian Molefe as CEO.
In Tuesday’s session, Linnell, positioning himself as an objective consultant operating within legal constraints, recounted how he left the Zuma meeting with the mandate to prepare a memorandum for the Eskom board, chaired at the time by Zola Tsotsi, “ proposing an investigation into the matters at Eskom ”.
To ensure that the investigation could do its job quickly and unobstructed, some senior executives would need to be suspended and Linnell drafted suspension letters for the board to notify.
“I would prepare a draft Memory aid to support the board in conducting pre-suspension hearings with the individuals involved, ”said Linnell, who defended himself when Zondo questioned why he should have been hired when Eskom had the internal human and legal resources capacity to do the job itself.
He was also forced to defend the need for the suspensions, saying that subordinates with information needed to feel free to tackle the investigation and not be intimidated by their superiors.
He insisted that the suspensions were temporary, for a maximum of three months, and that executives had to be sure there was no wrongdoing on their part. Executives were also required to be in communication with the board and bring them in to assist in the investigation.
However, things did not happen as Linnell supposedly believed they would.
The documents were quickly emailed to Tsotsi that same day, to be presented to the board on Monday, March 9. The board initially resisted the need for the investigation, but this changed on Wednesday, March 11, which turned out to be a fateful day for the power company.
Linnell said there were “three or four meetings that day.” First was the board meeting, then a board meeting with then Minister of Public Enterprises Lynne Brown, then a third meeting during which she met with the board, and then a governance committee meeting.
One of the executives suspended that day, CFO Tsholofelo Molefe, not associated with Brian Molefe, provided insight into what happened when he testified Tuesday afternoon.
As a director, Molefe attended Eskom’s board meetings, and at the first meeting on March 9, 2015, when the research requested by Zuma was proposed, she said there was no support for her and Tsotsi, as chair, did not raise the issue of suspensions.
The board meeting two days later, on March 11, lasted about 45 minutes before Minister Lynne Brown arrived. Molefe said the investigation was not discussed before Brown entered the room.
Brown complained to the board about the reports that were leaked to the media, before asking her and Eskom CEO Tshediso Matona to recuse themselves.
Zondo noted that this may have had to do with the impending suspensions, but the evidence at this time indicated that Molefe’s name was not on the list of three executives who would be suspended to lead to the investigation.
According to Tsotsi, Zondo said, “someone on the board said the minister said his name should be added to the list of executives (to be suspended).”
When they called Molefe after 5 pm and told her they would suspend her, she said: “If that’s what the board wants, I can’t get in the way. I signed the letter and left ”.
He then tried to communicate with the board about what was being said in the media, but received no response.
He later communicated other concerns and requested the terms of reference of the investigation, only to receive a letter from Eskom’s law firm, Bowmans, dismissing his requests.
She then wrote to the new acting chairman of the board, Ben Ngubane, about her concerns and a meeting was arranged for May 4, in which she was asked if she would be willing to “part ways”, despite not having tried to leave the company.
Realizing that the board wanted her to leave, she negotiated an exit package equivalent to about 18 months’ salary.
But before providing her detailed account of what happened on March 11, 2015, Molefe recounted how, when she was recently appointed CFO in 2014, the former board was subjected to an investigation into a contract with The New Age newspaper in Gupta, who needed to be reported as an irregularity in the financial audit.
There was “pressure from outside” to smooth this over, Molefe said.
Furthermore, two months after taking office, Nhlanhla Msomi, who was the chief of staff of the former Minister of Public Companies Malusi Gigaba, introduced him to Gupta’s henchman Salim Essa. Essa, whom he agreed to meet when he was in a rush on the way to the airport, said he worked with several companies and wanted to do business with Eskom. She referred him to the relevant processes at Eskom and shortened the meeting, but Essa, through Msomi, kept pushing for another meeting.
“I refused to continue participating,” Molefe said.
However, he met Essa again after a strategy session with the Eskom board in April 2014, in which he presented turnaround strategies. The chairman of the board, Tsotsi, said he was not happy with the presentation and that the interim CEO at the time, Collin Matjila, called a meeting in Times Square in Montecasino to deliberate on the next steps to formulate a financial plan. It was at this meeting that Essa was summoned.
“Matjila said that she is someone who can help us. They have helped Transnet, SAA and City power. “
Essa suggested that Eskom work with Regiments Capital and a meeting was arranged with Regiments CEO Eric Wood. With Matjila’s assistance, Wood presented the credentials of the Regiments, which had worked with McKinsey on long terms.
Molefe said he insisted that proper procurement processes must be followed, but Matjila insisted it was an emergency, as it was necessary to deliver a change strategy to the Minister of Public Enterprises within three months.
“We fought,” Molefe said, adding that he argued that there were procurement procedures for emergency situations. She refused to sign the Regiments agreement and took the matter to the board.
The result was that Regiments was hired for a “high-level desk exercise”, for which the company was paid around 1 million rand because “the board wanted reassurance” that nothing was omitted or not covered in the plan presented to the new Minister of Public Enterprises Lynne Brown, who was appointed in May 2014.
Former Eskom group equity executive Daniel Marokane, another of the suspended executives, also testified Tuesday.
Marokane was on leave, having seen the first unit of the Medupi power plant online a few days earlier, when he received a call at 9 p.m. on March 11 to say that the board, which had been meeting all day , I wanted to see him.
He went to work at 8 in the morning the next day and they called him and informed him about the investigation and that it had to take place “in a space free of influences.”
“They made it clear that the investigation would not take more than three months and no charges were brought against me.”
He said the investigation was billed as a fact-finding exercise and the board told him that he had made statements regarding his suspension and that these had been considered.
No such representation had been made. “I could see right away that the procedure was getting quite complicated.”
There were also inaccuracies in his suspension letter, including the date. He said he crossed out the inaccuracies and signed.
As with Molefe, Marokane’s attempts to communicate with the board went unanswered; he never received the terms of reference for the investigation and was not called in to help as promised.
Trust with the board was broken and an agreement was reached in late May of that year, in which Marokane paid the equivalent of six months’ salary and some of the bonuses owed.
Linnell, although he was instrumental in setting up the investigation, was frozen a week after the executives’ suspension, and received one final communication from Eskom’s board on March 17, he said.
The other two executives suspended were CEO Tshediso Matona and business and technology executive Matshela Koko.
The Zondo commission continues to hear evidence related to Eskom on Wednesday from former Eskom CFO Nonkululeko Dlamini, as well as former board members Norman Baloyi and Venete Klein. DM
