n 5 June 2020 a formal complaint was lodged with the Office of the Public Protector of South Africa following media reports that Eskom had “in error” made an over-payment of, variously, R4 Billion or R5 Billion to an undisclosed contractor or contractors.
But the complaint goes further than that and invites the Office of the Public Protector to investigate, among other things:
- The seven coal suppliers said to have been identified for charging Eskom “too much” and to what extent those contracts are being renegotiated
- The basis for the Minister of Public Enterprises refusing to disclose to Parliament the prices that companies that supply Eskom charged Eskom for coal supplies, and to direct both the Minister of Energy and the Minister of Public Enterprises to disclose that information to Parliament
- What the circumstances are surrounding the procurement of other forms of electricity sources in South Africa such as renewable energy, nuclear, etc with IPPs
- Who the beneficial shareholders are (not just representative shareholders) in each of the IPPs doing business with government and/or Eskom
- What the true nature and use of the funds recouped by Eskom through its annual Regulatory Clearing Account (“RCA”) application to Nersa is, and how it is accounted for in the Eskom financial statements, if at all
- “Evergreen Contracts” or long-term contracts that Eskom has with contractors and what impact these have on Eskom’s finances, the price that ordinary domestic consumers of electricity pay to Eskom and National Treasury (or Nersa) that is often called upon to bail out Eskom or inject funds into Eskom
- The identity of companies which have “evergreen contracts” or long-term coal supply contracts with Eskom
- Whether the directors of Eskom involved in the making of decisions that are not in the best interests of Eskom and the domestic consumers of Eskom electricity may not be delinquent
- Whether the internal auditors of Eskom (including members of the Eskom Risk and Audit Committee) and external auditors should not be held responsible for the financial problems at Eskom and/or referred to the South African Institute of Chartered Accountants (SAICA) and/or the Independent Regulatory Board for Auditors (IRBA) for investigation.
The complaint is brought in terms of s 6(5) of the Public Protector Act, 1994 which reads:
“(5) In addition to the powers referred to in subsection (4), the Public Protector shall on his or her own initiative or on receipt of a complaint be competent to investigate any alleged-
(a) maladministration in connection with the affairs of any institution in which the State is the majority or controlling shareholder or of any public entity as defined in section 1 of the Public Finance Management Act, 1999 (Act 1 of 1999);
(b) abuse or unjustifiable exercise of power or unfair, capricious, discourteous or other improper conduct or undue delay by a person performing a function connected with his or her employment by an institution or entity contemplated in paragraph (a);
(c) improper or unlawful enrichment or receipt of any improper advantage, or promise of such enrichment or advantage, by a person as a result of an act or omission in connection with the affairs of an institution or entity contemplated in paragraph (a); or
(d) act or omission by a person in the employ of an institution or entity contemplated in paragraph (a), which results in unlawful or improper prejudice to any other person.”
In terms of s 2 and s 3 of the Eskom Conversion Act, 13 of 2001, Eskom is a public company with its entire share capital held by the state. It is thus the “institution or entity” envisaged in s 6(5) of the Public Protector Act. Thus, the Office of the Public Protector has jurisdiction to investigate these matters involving Eskom.
The Office of the Public Protector is a creature of the Constitution of the Republic of South Africa, 1996, established “to strengthen constitutional democracy” in South Africa. It shares that heavy burden with only 5 other institutions. Other organs of state have a constitutional obligation to “assist and protect these institutions [so as] to ensure [their] independence, impartiality, dignity and effectiveness”.
No person or organ of state may interfere with the functioning of these institutions. It is a criminal offence to interfere with the functioning of the Public Protector. So protected is the importance and functioning of the Office of the Public Protector in South Africa that it is a criminal offence to insult the Public Protector or the Deputy Public Protector in connection with an investigation or to do anything which, if the said investigation had been proceedings in a court of law, would have constituted contempt of court.
Any person convicted of interfering with the Pubic Protector or of insulting the Public Protector or the Deputy Public Protector in connection with an investigation could be fined up to R40,000 or subjected to a prison sentence of up to 12 months, or receive both such fine and imprisonment.
Read the Full Complaint by clicking at the links below, together with supporting documents: