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Hon.Minister’sStatementPortfolioCommitteeonPublicEnterprises

13March2018

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Hon.Minister’sStatement[DRAFT21]

PortfolioCommitteeonPublicEnterprises13March2018

IhavebeencalledtoaccountformytenureattheDepartmentofPublicEnterprises(DPE),fromNovember2010untilMay2014.BeforeIbegin,Iwouldliketoextendmygratitudetothe Committee for thework being done in these inquiries, for upholding the democraticprocess,andfortheopportunitygrantedtometoaddresstheconcernsaroundallegationsofstatecaptureinsofarasIamabletodoso.Iamfurthergratefulfortheextensiongrantedto me to peruse the relevant documentation. I have had to request large volumes ofdocumentsfromtheDPE.Irequestedtheseinbatches,asIbecameawareoftheirnecessity,andsomeofthemhavenotyetarrived.Consequently,ifthisCommitteehasanyquestionsthat pertain to outstanding documentation, Iwill undertake to answer those in a furtherwrittensubmissionuponreceiptoftheoutstandingdocuments.Forthetimebeing;however,I ask the Committee to note that my testimony today is based on mymemory, and onconfidentialdocumentsthatwereprovidedtome.IhavenoissueprovidingthesedocumentstoParliamentshouldtheconfidentialityofthosedocumentsbelifted.Itakeseriouslyboththeallegationsthathavebeenmadeinrelationtostatecapture,andmyopportunitytoaddressthem.Ithasbeendishearteningandshockingformetowitnesssomeof the appointments that I made years ago, and which were hailed publicly as positiveappointmentsforGovernment,nowbeingimpugned.ItakeseriouslythetaskofassistingthisCommitteeinuncoveringtheextentofcorruptionthatappearstohavetranspired.TheperiodforwhichIamexpectedtoaccountcoversapproximatelythreeandahalfyears.I requestedclarity from thisCommitteeas towhatwasexpectedofme,and I receivedaresponseindicatingthatIamrequiredtodofourthings:ThefirstistoaccountforMr.Dames’testimony.ThesecondisthatIamexpectedtoaccountforgovernanceatEskom,thethirdisthatIamrequiredtoaccountforallBoardappointmentsmadetoTransnet,DenelandEskomduringmytenureatDPE,andlastly, Iamrequiredtoaddress the issueofanyallegedGupta-linkedcontracts thatmayhavebeenconcludedatEskom,DenelandTransnetduringmyDPEtenure.Toavoidconfusionandrepetition,Iamthereforegoingtostructuremysubmissiontodealwiththeabovetopicsinthefollowingorder:firstIwilldiscusscorporategovernanceatEskomduringmytenure,thenIwilladdresswhatIconsidertobethematerialandrelevantportionsofMr. Dames testimony before this Committee, and I will then deal with the additional

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aspectsrequiredbytheCommitteesuchasclarityonBoardappointments,governance,andcontracts.Brian’s testimony included four aspects that I perceive as being relevant tome. The firstaspect was the allegation about the Gupta meeting betweenmy then-legal adviser, Mr.MahlanguandaGuptaBrother.Thesecond issueraisedwastheallegeddifference in thequalityofgovernanceandstructurebetweentheBoardledbyMr.MakwanaandBoardasitwasledunderMr.Tsotsi.ThethirdpertinentissuewasMr.Dames’resignation,andthelasttopicpertainingtomethathedealtwithwastheKoebergSteamGeneratorContract.GovernanceatEskomI was then asked to address governance at Eskom. This request was not clarified by theCommitteesoIwillrespondbyoutlininggovernanceinverybroadterms,andIalsowanttosetoutthebasicgovernanceframeworkinwhichtheMinister,specificallytheDPEMinisteroperates,andintermsofwhichheisempoweredintermsofcertainactions,andconstrainedintermsofothers.Intermsofstructure,theSOCshaveunitaryBoardstructures,meaningtheyconsistofasingleBoard with both Executive and Non-Executive Directors. The Board’s Chairperson, ChiefExecutive,FinanceDirectorandNon-ExecutiveDirectorsareappointedbytheshareholder.Iwilldiscussdetailsofthoseappointmentslater.TheDirectorsaredrawnfromdiversebackgroundsandbringwiderangingexperiencesandprofessional skills to the Board. These skills are supplemented by external members atcommitteelevel.TheperformanceoftheBoardandindividualDirectorsisevaluatedeachyear.Thetermofnon-executivedirectorsisbetweenthreeandfiveyearsdependingontheparticularSOC’sMemorandum of Incorporation, and is subject to review at the annual general meeting(AGM). Retiring directors are eligible for reappointment. Themanagement of day-to-dayoperations is delegated to the Chief Executive. The Chief Executive is supported by theExecutiveManagementcommitteeanditssubcommittees.RelatingtoGovernancespecifically,Eskomadherestoamyriadoflaws,legislationandcodes,includingtheCompaniesAct(2008)andthePublicFinanceManagementAct(1999).KingIII,the Protocol on Corporate Governance in the Public Sector, and various internationalguidelinesguideSOCsregardingbestpractice.

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AllSOCsareanswerabletothegovernment.I,inmycapacityasMinisterofPublicEnterprisesfrom2010to2014,wastheshareholderrepresentativeoftheGovernmentandhadoversightresponsibilityfortheSOC’s.Relating to governance, I would like to outline for the Committee the general processfollowedbytheDPE,duringmytenure,inappointingtheSOCBoards,BoardSubcommitteesand Executives. I would also like to dealwith the extent towhich the DPEMinisters areinvolvedinProcurement.WhatIamabouttosetoutisthenormalpractice.ThereisusuallysomedeviationrelatingtotheprocessesinvariousSOC’sdependingontheirMOIs.InrespectofBoardappointments,theprocesscommencesintherun-uptotheAGMoftherelevantSOC.PriortotheAGM,theMinisterispresentedwithamotionrelatingtocertainBoardappointments,whichwillbecomepartoftheresolutionstakenattheAGM.Themotionnormally covers the proposed re-appointment, appointment or retirement or rotation ofservingBoardmembers.ThemotionisusuallysubmittedtotheMinisterwellbeforetheAGM,and, when it is received, the Department then evaluates the names, and submits amemorandumtheMinisterdetailingtheperiodsservedbyBoardmembers,andwhichBoardmembersshouldthereforebere-appointedorretired.IftherearevacanciesontheBoard,theDepartmentwillrecommendtotheMinistercandidatestofillthosevacancies.WhentheDepartmentconductsskillsaudits,anddiscoversthatthereareskillsgapsontheBoards,theDepartmentalsorecommendscandidatestofillthosepositions.Thenamesofcandidatesaresourcedwidely.WhentheDepartmentrecommendscandidatestotheMinister,itdoessobyprovidingarationalfortheproposedappointment,andtheMinisterisalsoprovidedwiththeresumesofthecandidates.OncetheMinisterhasappliedhismindtothesecandidates,and given his approval, the preferred candidate’s profile then serves before the relevantCabinetcommittee,andonlythendoesitservebeforeCabinet.CabinetapprovesallBoardappointments,includingexecutivedirectorswhoareex-officioboardmembers.I thenalsodeem itnecessary to setouthowsub-committeesareconstituted, inorder todispel any notion of interface by me in the establishment of allegedly problematic sub-committeesatEskom,DenelandTransnet.Allsub-committeesarethebusinessof,andarerecommendedbytheBoard.ThisisconsistentwiththeCompaniesAct.TheonlycommitteethatcomestotheDPEMinister’sattentionistheauditandrisksub-committee,becausetheSOC’smemorandumsof incorporation(MOIs)providethat,attheAGMs,theBoardsmustpresentformyapprovalthemembersandtheChairoftheauditandrisksubcommittee.ItisstandardpracticeandcommoncourtesyfortheChairoftherelevantSOCtosendalettertotheDPE,aftertheAGMs,settingouthowtherelevantsub-committeesareconstitutedbutthoselettershardlyeverreachtheMinister’sattention–primarilybecausetheMinisterhasnopracticalinterestinwhoisonwhatcommittee.Thisisbecause,iftheMinisterwishestointeractwithanSOC,thatMinisterwilleithermeettheChairorcallaspecialgeneralmeeting

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– the Minister does not engage with sub-committees because sub-committees are thedomainoftheBoard.IwouldalsoliketosayawordontheappointmentofExecutivesattheSOCs.AsImentionedabove,CabinethasestablishedaprinciplethattheappointmentofCEOsandCFOsmustberecommendedtoCabinetforapproval,andnotjustfornoting,asisthepositionwithotherDirectorships.WhileIamonthistopic,Ialsowanttodrawadistinctionbetweenactingandpermanent appointments. Acting appointments are within the exclusive purview of theBoard. The Board simply informs theMinister, and theMinister doesn’t need to informCabinet.Thepositionisdifferentforpermanentappointments,whichisthepositionIsetoutearlier.IhopethatthisclarifiesfortheCommitteetheRoleplayedby,specificallytheMinsterofDPE,intheappointmentsofBoardandCommitteesattheSOC,andIfurtherhopethatitdispelsthe incorrect notion thatMinisters are at liberty to interfere inBoard appointments. TherealityistheMinsterisseverelyconstrained,and,inreality,justonecoginaverylargewheelofSOCBoardapprovalmechanisms.HavingdealtwiththeBoard,IwanttosayawordontheMinister’sroleinprocurementatSOC’s.TheshortansweristhattheMinsteroftheDPEdoesnothavearoleinprocurement.TheonlytimethatprocurementissuesservebeforetheMinisteriswhencertainlargetendersrequire PFMA approval. Let me explain when this happens. Materiality thresholds aredeterminedateverySOC.Materialitythresholdsaretheamountsatwhichtendersrequiresection54PFMAapprovalfromtheMinister.MaterialitythresholdsaredifferentateachSOCbecause they are determined by asset values. If a proposed tender value falls below thethreshold,theMinister’sapprovalisnotrequiredandtheMinsterisusuallynotnotifiedofthoseprocurementinitiatives.Ifthethresholdisexceeded;however,theSOCneedstoapplytotheMinisterforPFMAapproval.Imustmakeitperfectlyclearthat,evenininstanceswherethe Minister’s approval is required, the Minister is kept at arms-length throughout theprocess.Firstofall, the section54approval request shouldgo to theMinisterbefore thetendergoesout,and,ifthereisanyoverlap,theMinisterisnotapprisedofwhothebiddersorpotentialbiddersare.Thereisnoscopeforinterference.WhentheMinisterconsiderstheapproval,hesimplyconsidersthebusinesscasebeforehim,andeitherapprovesorrejectstherequestonthatbasisalone.That concludeswhat I have to say on the general procurement practices. I nowwant toprogresstospecificdetailsthatwererequiredofmebythisCommittee.

EXECUTIVEAPPOINTMENTS

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I have thenbeen asked to address the Committee on Executive appointments duringmytenureatDPE.Thisrequestwastwo-pronged.First,theCommitteeaskedforclarityontheprocessofappointingallboardmembersduringmytenureatDPE,whichIhopeIprovidedabove. Second, my testimony is required in relation to allegations of undue influenceallegedlyexertedbymeontheappointmentofBoardmembers.Iwilladdressthesequestionschronologicallyandfactually,inrelationtoEskom,DenelandTransnetbeginningwithEskom.BrianDames’Testimony–theGuptaMeetinginMidrandIwillbeginwiththeGuptameeting.Mr.Damesmadementionduringhistestimonythatmyadvisor duringmy Tenure,Mr SiyabongaMahlangu (Mahlangu), called Brian to set up ameetinginMidrandto“seesomepeople”,andtodiscussofficialEskombusiness.BrianthinksthatoneoftheattendeesatthismeetingwasoneoftheGuptabrothers.Brianwentfurther,statingthat,atthemeeting,theydiscussedrequestsforcoalcontractstoLethabocoalstationintheFreeState,andrequestsforanothercoalpowerstationtobebuiltintheFreeState,afterMedupiandKusilewerecompleted.Thisnewcoalpowerstationwasreferredtoas“coalthree”.According toBrian,he receiveda call fromMahlangu. Ididnotknowanythingabout thisphonecall,nordidIhaveanyknowledgeoftheschedulingofthemeeting.Tothisend,IthinkitisrelevantthatMr.Dames,inhisevidencedidnotsaythatIcalledthemeeting.Thisisbothfairandaccurate.IcanalsotellyouthatBriandidnotcallmeaboutthismeetingeitherbeforeithappenedorafterwards.ThefirsttimeIheardofthismeetingwasfollowingMr. Dames’ testimony to this inquiry. If anything about themeetingmadeMr.Damesuncomfortable,I’dgoasfarastosaythatheshouldhavecalledmeaboutthis.Wehadagoodworkingrelationship,andwecommunicatedoften.Furthermore,thisisthefirsttimeIhaveheardaboutarequesttoprovidecoaltoLethabo,andfora‘coalthree’,specifically,tobebuiltintheFreeState.BrianDames’Testimony–theallegeddegenerationoftheBoardLetusnowdealwithBrian’stestimonyaboutthequalityandcohesivenessoftheMakwanaBoardcomparedtothequalityoftheTsotsiBoard.LetmeaddresstheproblemswiththeBoardthatconfrontedmeassoonasIarrivedatDPE.MembersoftheBoard,includingMr.Makwana,butwiththeexceptionoftwoappointments

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thatIretainedwhentheBoardwasrefreshed,hadsatontheboardforlongerthannineyears.ThishadbeenbroughttomyattentionbyapresentationtheDepartmentmadetome.Afterhavinghadsightofthepresentation,Iwasoftheviewthattheboardneededrotation,inordertocomplywithgoodcorporategovernance,withrespecttotwoissues.Firstly,wastherotationofboardmemberswhohadservedforalengthyperiod.Second,wasrevisingthemandateoftheExecutiveChairmantobeaNon-ExecutiveDirectorandChairman,toavoidoverlapbetweentheroleofBoardChairpersonandCEOoftheentity.HavingconcludedmyexplanationabouttheEskomBoardsandtheirquality,thatbringsmetothenextissue,beingBrian’sresignation.BrianDames’Testimony–hisresignationLetme say at the outset, so there is no uncertainty aboutmy position, thatwhen BrianresignedfromhispositionatEskom,itwasalosstothecompany.Letmesetouthowhisresignationunfoldedaccordingtomyrecollection:BrianwasalreadyCEOwhenIarrivedattheDPE.Ihadandstillhavethehighestregardforhim.BriansubmittedtworesignationstotheBoard.WhenheinitiallywantedtoleaveEskom,Iconvincedhimtostayon.IwasnotinfavourofBrian’sexitfromEskombecauseofhiscapability, integrityandstrongleadershipwhichbroughtstability,and instilledconfidenceamongEskom’sstakeholders.Therefore, Ithoughtitwasimportantforhimtostay.IrecallhavingtoldthemthatEskomcouldnotaffordtoloseBrianatthattimebecauseofthemassivebuildprogramsthatEskomwasinvolvedin,andbecausetheyneededtoraisecapitalinrespectofthosebuildprojects.ItwasacriticaltimeforEskomandBrianwasnecessarytomaintaincompanystabilityduringthatperiod.Itseemedtome,thatthereweretensionsbetweenBrianandsomemembersoftheboard,whichcouldhavebecomeadistraction.Iintervened,andrecallhavinginformedMr.TsotsiatameetingonceinmyresidenceinPretoriathat“Brianisnotgoinganywhere.”Imaintained thispositonuntilhe finally tenderedhis secondresignation in2013,when itbecameclearthatthetensionsbetweenhimandTsotsicouldnotberesolved.Atthatstage,theBoardacceptedhisresignationandIurgedthemtofocusontransitionalarrangements.I speak sincerelywhen I say that I endeavored to the best ofmy ability to ensure BrianremainedasEskom,anditwasunfortunatetohavelosthisservices. Intheend,BrianleftEskomtwomonthsbeforeIwasredeployedfromDPE.BrianDames’Testimony–TheKoebergSteamGeneratorTenderThe last issue I want to deal with in relation to Brian’s testimony is the Koeberg SteamGeneratorTender.Iwanttofactuallyclarifythereasonsthattheprocesshadtoberestarted.

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Thereasonsforthisaresimple.TheKoebergSteamGeneratorTenderwasalargeTender.ItwasaboveEskom’smaterialitythreshold.Becauseofthis,itfelloutsidethepurviewoftheBoard,andneededmyapprovalundersection54ofthePMFA.Irememberthatsection54approvallettershadbeensenttomeonaWednesday–Ican’trecalltheexactdate-andtheverynextday,whenIwasreadingtheapplicationdocuments,IreceivedarequestthatIneededtospeeduptheapproval. IcalledtheDepartmentandqueriedthis.ItoldthemthatIonlyreceivedthesedocumentsthepreviousday,andthatitwasnotpossible toexpeditetheprocess. Ineededtostudythedocumentsandapplymymind.Inresponsetomyquery,IdiscoveredthatEskomhadalreadycalledthecompanythatwasgoingtosupplythegeneratorsandthattheywerereadytosignthecontracts.Inotherwords,EskomwasgoingtosignthecontractsbeforeIhadevenfinishedapplyingmymindtothedocumentsthatwereinfrontofme.Iwasbeingexpectedtomerelyrubberstampthesection54application,insteadofapproveit,andIwasnotwillingtodothat.IalsorecallthattheDepartmentthenfoundthattheprocesswasflawed[CONFIRMWITHDPE]. ItwasforthesetworeasonsthatIthereforerefusedtograntthesection54approval,andItoldEskomtostarttheprocessafresh.Iunderstood,ofcourse,thatEskomwasunderpressuretodeliveronthebuildprojectsbutthatcouldn’tbeallowedtojeopardizetheentireprocess.That’swhyIrefusedtoapprovethesection54applicationatthatstage.ThisconcludesmycommentsonBrian’stestimonyforthetimebeing.ShouldtheCommitteehaveanyfurtherquestionsafterwards,Iwillofcourseanswerthem.ExecutiveappointmentsatEskomI will now address what have been deemed to be significant Board and ExecutiveappointmentsatEskom.Inthisrespect,Iwilladdressthere-constitutionoftheBoardin2011,Ms.Molefe’sappointmentastheCFO,andtherecruitmentofanewCEOatEskomduringmytenure.BeforeIbegin,itmayhelptheCommitteetonoteforthesakeofclaritythatEskom’sarticlesofassociationatthetimestipulatedthattheShareholderappointedtheChairman,theChiefExecutiveandthenon-executivedirectorsafterconsultationwiththeBoard.TheremainingExecutiveDirectorswereappointedwithShareholderapproval.BoardappointmentsTherehasbeenalotoftalkaboutmydecisiontore-constitutetheBoardatEskomin2011.Iwilladdress this first. Iaddressed theexcessive terms thathadbeenservedby theBoardmemberswhileIwasdealingwithBrian’stestimony.ThatwasthereasonforthedecisionI

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tookinMay2011,afteranauditoftheBoardhadbeencompleted.Ithereforeshallnotre-hashitnow.IrecommendedatthetimethattwoBoardMembers,DrBernardFanaroffandDrBoniMehlomakhulu,beretainedforcontinuity,andthatthefollowingcandidatesshouldbeappointedasnon-executivedirectors:1. First, Zola Tsotsi was appointed as the new Chairperson. Mr. Tsotsi presented as an

eminentlyqualifiedcandidate.HeheldaBScdegreeinmathematics,andchemistryandanHonoursinchemicalengineering.PriortohisappointmentasChairoftheEskomBoard,he held the position of Finance and AdministrationDirector at RPP Pipe Support andBellows, he had beenManaging Director ofMaisha Energy and had heldmany priorpositions at Eskom such as corporate consultant, corporate strategy manager, andcorporate environmental affairs manager. His work background provided him with anotableskillsetinGovernmentpolicyadviceandimplementation,strategicmanagementof companies, and management of administrative and financial performance ofcompanies.

2. Second, Mr Colin Matjila was appointed because of his skills in transformation, co-

operativegovernanceandeconomicdevelopment.3. Third,MsYasminMasithelawasappointedbecauseofherextensiveriskmanagement

experienceandhermanyyearsinthecorporatesector.ShealsoheldaMastersintaxlaw,anLLBandHigherDiplomaincompanylaw.

4. Fourth,SurpriseSedibewasappointedbecauseofhiswealthofexperienceonnumerous

executivecommittees.5. Fifth,NeoLeselawasappointedbecauseofherindustrialengineeringbackgroundandher

experienceinprogrammemanagement.6. Sixth,MrMkhwanaziwas appointedbecausehewas, at the time, theChairpersonof

Transnetandhadawealthofexperienceacting inCEOpositions (egatMetrorail andTransnet).Wealsowantedhimtohelpcreatealignmentbetweenthetwoentitieswithrespecttotheroadtorailprogramme.Hewasalsowell-qualifiedwithaBScdegreeinmathematics,appliedmathematicsandelectricalengineering.

InAugust2011,a further threeNEDswereappointed to fill vacancieson theBoard.Theywere:1. Ms Jabu Luthuli,whowas a chartered accountant skilled in riskmanagement, project

management,labourrelationsandstrategicplanning;

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2. MsQueendyGungubeleskilled inhumanresourcesmanagement, labourrelationsandstrategicplanning;

3. Ms Diatile Zondowhowas a charted accountant, with skills in auditing and strategic

management.ItrustthatgivessufficientdetailastotheappointmentoftheBoard.Tosummarise,themainreason for the re-constitution was to bring the Board into line with good governanceprinciples under the King Codes, and to retire Directorswho had been on the Board forunacceptablylongperiods.I will now turn to deal with the next topic: The appointment ofMs. TsholefeloMolefe’sappointmenttotheBoardasCFO.Ms.Molefe’sAppointmentasCFOTheappointmentofMsTsholefeloMolefeasFinancialDirectorofEskomhadalsocausedastir,becausetheincorrectpublicperceptionappearstohavebeenthathercompetitorfortheposition,Mr.Sehoole,onthefaceofit,appearedmorequalifiedthanshedid.Iwilloutlinewhat, in fact happened, andwhy, as the shareholder I refused to approveMr. Sehoole’sappointment,andinsteadconfirmedMsMolefe’sappointment.On7October2013,theMinistryreceivedaletterfromMrTsotsi,theChairpoersonofEskomatthetime,requestingapprovalfortheappointmentofMr.SehooleastheFinancialDirectorofEskom.IntermsoftheMOIofEskomatthetime,theBoardevaluated,nominatedandappointedacandidate,providedthattheshareholdersupportedeachcandidate.Intheeventthattheshareholderdidnotapprovethecandidate,thecandidatecouldnotbeappointedtotheBoard,andtheBoardwouldhavetonominateanalternativecandidate.Insummary,Ineededtosupportandendorsethecandidate.IreceivedadviceintheformofadecisionmemorandumfromtheDeputyDirectorGeneralofLegalandGovernanceonthistopicon29November2013.ItwasplainthatMr.Sehoolewas the Board’s preferred candidate at that stage; however Ms. Molefe’s names alsoappearedasonofthetopnamesonthelistthathadbeenprovidedtome.TheDepartmenthad identifiedcertainconcernsabouttherecruitmentprocesspertainingtoMr.Sehoole’sproposed appointment, and Iwas advised of these. Firstly, the letter recommendingMr.Sahoolehadomittedrelevantdocumentation.Inadditiontotheseshortcomings,IalsohadnumerousotherproblemswiththeproposedappointmentofMr.Sehoole.First,WoodburnMann,theheadhuntingagencyhadproducedareportthatindicatedthatMr.Sehoolemayhavedifficultyworkinginpoliticalenvironments.

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While thismay ordinarily not seem to be a problem, Eskomplays a public and thereforepolitical role. The Executive Directors must be able to hold their own in politicalenvironments,anddoubtshadbeenexpressedtomeaboutMr.Sehoole’sabilitytodothis.Second,IwasalsoalertedtothefactthatitwouldbedifficultfortheDepartmenttomeetMr. Sehoole’s current remuneration package. At the time, Mr Sehoole was receivingguaranteedannualremunerationofR4.5million+withabonusofR4.2million.Eskom’spriorCFOhadearnedatotalremunerationofR5.9million.Lastly,andofgreatconcerntomewasthattheproposedappointmentofMr.Sehoolegavenoconsiderationtogenderparity.ThemajorityofExecutiveDirectorsontheBoardsofSOCsweremaleatthetime.IdidnotwanttoberesponsibleforperpetuatinggenderinequalityifI could justifiably avoid doing so by ensuring that a competent female candidate wasappointed.Tothatend,IhadinfrontofmeMs.Molefe’sCVwhichindicatedthatshewaswell-qualifiedfortherole,andIwasoftheopinionthatshewouldcapablyfulfiltheroleofChiefFinancialOfficer,ifappointed.WhatwasmorewasthatMs.Molefe’snamewasoneofthetopthreecandidates’namesgiventomebuttherehadbeennocogentreasongivenfordenyinghertheappointment. ToassuageanydoubtofMs.Molefe’squalificationfortherole,herbriefbackgroundwasthat:1. ShehadaBComHonours,andhadqualifiedasachartedaccountant;2. ShehadjoinedEskomin2005alreadyasaFinanceManager;and3. WassoonthereafterpromotedtoDivisionalExecutive.4. She had been reporting directly to the CEO at the time and served as an executive

Committeemember.Overall,theconcernwasthatMr.Sehoole’sremunerationwouldproveachallenge,andIwasconcernedaboutthereservationshe’dexpressedaboutworkinginpoliticalenvironments.Additionally,Ms.Molefewhowasaqualifiedandexperiencedchartedaccountant,female,and had developed through the Eskom ranks was apparently, according to the advicememorandumIreceived,alsoconsideredfavorablybytheselectioncommitteebutnocogentreasonhadbeengivenfornothavingfavoredherpossibleappointment.I raisedmyconcernswiththeBoard.TheBoardsubsequentlyreviewedtheirdecisionandrecommended that Ms. Molefe be appointed. I had no hesitation in approving theappointmentforthereasonsstatedabove.ThatconcludesmysubmissionsonMs.Molefe’sappointment.TheRecruitmentoftheChiefExecutiveofEskom

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Whileitmayormaynotbecontentious,IalsofeelitisprudenttodealwithandexplainthefactthatanewCEOwasnotappointedatEskomafterBrianresigned.BrianhadresignedfromEskominNovember2013.HewasscheduledtoleaveEskomonthe31stofMarch2014.TheEskomBoardneededtoappointanewCEO.TheBoardneededtodosoinconsultationwithme.Thisdidnothappenduringmytenure.WhenIleftDPEinMay2014,anewCEOhadstillnotbeenappointed.ClosetotheendofBrian’sresignationperiod,theMinistryreceivedaletterfromMrTsotsi.Accordingtotheletter,theBoardrecommendedthataspecialcommitteefortherecruitmentandidentificationoftheCEObeconstitutedtoreviewthethreetopcandidatesatthetime.Idid not know who these were. Along with that request I was asked to sanction theappointmentofanactingCEOwhiletherecruitmentprocesswasundertaken.ThenamesIwasgivenwere:1. GroupExecutive(Technology)–MrDanMarokane;2. GroupExecutive(Sustanability)–DrSteveJLennon;or3. GroupExecutive(Transmission)–MrNtsokolo.WithrespecttotheappointmentoftheinterimCEO,Ideferredtotheboardonthatdecision,asIbelieveditwastheirresponsibility.Those are the only Board activities which I can recall as being somewhat contentious inrelation to Eskom. That concludes my submissions on the Eskom Board, and I will nowproceedtodealwithDenel.DenelandtheAppointmentofRiazSaloojee.One appointment at Denel during my DPE tenure which has been questioned, was theappointment of Mr. Saloojee, and the extension of his term. In terms of Denel’sMemorandumof Incorporationat the time, the shareholderappointed theChairmanandDirectors.Allexecutivedirectors,whichwouldhaveincludetheCEOandCFO,wereappointedbytheBoard,andtheirappointmenthadtobeapprovedbytheShareholder.Onthe15thofNovember2011,IreceivedadecisionmemorandumfromtheActingDDGofCIPM.Intermsofthismemorandum,IwasadvisedthatthecontractoftheDenelGroupCEO,TalibSadik,wascomingtoanendon31December2011.IwasfurtheradvisedthattheBoardhad conducted internal as well as an external searches (assisted by an Executive searchcompany)forthebestcandidate.TheBoardrecommendedMrSalojee,whowastheirpreferredcandidate.Mr.SaloojeewasatthatstagetheCEOofSAABSA,hadpreviouslybeentheVPofSAABInternational,andthe

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Group Executive of SAAB Grintek Defence. He was also the Chairperson of the AirforceReserveCouncil.HistrackrecordhavingbeenaCEOatTauAerospace,MetatekandGrintekIntegrated Defence Systems spoke for his executive capabilities. He was academicallyqualified after having completed the SANDF Joint Staff Course (equivalent to a Mastersdegree)andotherdevelopmentalmanagementcourses.I approved the decision memorandum on the 18th of November 2011, and signed bothattacheddocuments.Mr.Saloojee’sappointmenttotherolewaseffectivefrom1January2012foraperiodofthreeyears.InMay2013,theDepartmentreceivedaletterfromtheDenelChairperson,andconcernedthereviewofthetermofofficeofMrSalojee.TheChairpersonwasrequestingMr.Saloojee’stermbeextendedfromthreetofiveyears,onthebasistheDenel’snewMOIprovidedforthis.Iwasadvisedby theDepartment inanadvicememorandumon5 June2013that, in fact,Denels’MOIwasnot explicit on the termof aCEO; and that therefore theDepartment’sGuidelinesontheappointmentofCEO’sshouldbefollowedifDenelwantedMr.Saloojee’stermextended.AccordingtotheGuidelines,theBoard,inconsideringthesuccessionplanforthepositionshouldhavepreparedanannualreporttomewhichshouldhaveincludedtheStatusoftheCEO’scontract,theCEO’sperformanceassessmentandtheBoardshouldalsohavebeenabletoshowhowithadensuredthattheperformancescorecardoftheCEOhadbeenalignedtoshareholdercompacttargets.IwasoftheviewthatIcouldnotapprovetheBoard’srequest,untiltheBoardhadundertakentheproperprocedureprovidedforintheGuidelines,andprovidedsufficientmotivation.Atthetime,thishadnotyethappened.IthereforeaddressedalettertoMr.ZoliKuneneinJune2013 in which I raised the exact concerns I’ve just mentioned. My concerns weresubsequentlyaddressed,withtheBoardre-iteratingitssupportandcontentmentwithMr.Saloojee’sperformance.On22ndJanuary2014,IthereforegavemyapprovaloftheBoard’sdecisiontoextendtheCEO’stermto5years,afterwhichCabinetwasinformed.ThatconcludesmysubmissionsonDenelandIwillnowturntoTransnet.RegardingTransnetI intendtoaddressBoardappointments,BrianMolefe’sappointment, theproposalofMr.IqbalSharma’sappointmenttothepositionBoardChair,andrelatedappointments.Transnet–Appointment,Re-AppointmentandTerminationofTransnetBoardMembersAt Transnet, at the time, Non-executive Directors were appointed to the Board by theShareholderRepresentativeon,generally,athree-yeartermwhichwasconfirmedannuallyattheannualgeneralmeeting(AGM).Asfortheappointmentsthemselves,theBoardwas

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responsiblefortheappointmentofthemanagingdirector(whowasreferredtoastheCEO),afterconsultationwiththeShareholder,andtheBoardappointedtheCFOandinformedtheshareholder.AtTransnet’sAGMinJuly2010,whichwaspriortomyarrivalatDPE,itwasresolvedthatthenon-executive directors at Transnet be re-appointed for a period of one year, on actingappointments,untilthefinalizationofareviewoftheBoardwhichwastobeconductedbytheDepartment.Thefollowingnon-executiveDirectorswerere-appointedforaoneyearperiod:1. ProfEveringham(ActingChair);2. MsMatyumza;3. DrHaste;4. MsNtshingila;5. MrHankinson;6. MsGcaba;7. MrJoubert;8. MsRamon;9. MrMoyo.WhenIarrivedattheDPE,theTransnetBoardwas,ineffect,anactingBoard,operatingonone year appointments that had been made at the AGM. The review conducted by theDepartmenthadrevealedthattheTransnetBoardhadasimilarproblemtotheEskomBoardthatIdescribedearlier.ThemajorityoftheDirectorshadbeensittingforalongerperiodthanwaspermitted.AftertheAGM,andon9December2010,therefore,Iissuedlettersofre-appointmentonlytothreeNEDstomaintainBoardandcompanystability.Theywere:1. Mr.Moyo2. MsNtshingila3. Ms.GcabaI also appointed 12 new NEDs to ensure that vacancies on the Board were filled. Theseappointmentswere:1. MrM.Mkwanazi;2. MrDMkhwanazi;3. MrPMalungani;4. MrSkosana;

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5. MsMoola;6. MrFannuchi;7. MsDorisTshepe;8. ProfSchrempp;9. MrSharma;10. MsMnyaka;11. MsEllenTshabalala;12. MrGazendam;Here Iwould like to explicitly counter the narrative that these board appointmentswereincompetentoraimedtoweakenTransnet.Amongtheseboardmemberswererespected,leadingbusinesspeoplesuchas:

§ Mr.PeterMoyo,currentlyCEOofOldMutual§ Ms. Nasmeera Moola, a senior executive and economist with Investec Asset

Management§ Ms.NolwaziGcaba,currentlyaPartneratAdams&Adams

We certainly attempted to appoint strong and competent boards. As government, weappreciatetheneedtoreformoversightofstateownedcompanies,andthereareprocessesunderwaytostandardizeappointmentsofboardsandexecutivemanagement.Wethereforewelcome any lessons in this regard, which will emerge from this inquiry. It is importanthowever,thattheinquiryconcernitselfwithwhatwecouldhaveknownatthetimewhenmakingappointments.Ifpeopleweappointedwentontodowrongthingslater,wecannotbeheldaccountableunless there is somethingabout theirprofilewhich couldhavebeendetectedatthetimeweappointedthem,whichshowedtheywerelikelytodowrongthings.Chronologically,thenextnewappointmentwasthatofBrianMolefeintothepositionofCEO.Again, in relation to this position I re-iterate that the Board appoints the CEO, only inconsultationwithme.However, inthis instance,that isneitherherenorthereas IcannotpretendtohavehadanyobjectiontotheappointmentofMr.Molefeatthetime.Onthefactsbeforemeat the time,hewas a stellar candidate.Hewas a formerDDGat theNationalTreasury,andformerCEOofthePICwherehehadbeenappointedbythethenMinisterofFinance.MrMolefewashighlyregardedinthefinancialsectoratthetime.Marketsreactedvery positively to his appointment, as he was regarded as credible, highly skilled, andexperienced.ThatconcludesmysubmissiononBrianMolefebutIwantnowtoturntoMr.IqbalSharmaandtheattempttohavehimappointedasChairoftheBoard.Thereweresomeinter-relatedmovementsandappointmentsontheBoardsoIwilladdressthosesimultaneously,forthepurposeofcompleteness.

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It began in May 2011, when I received a decision memorandum from the Acting DDG:TransportintermsofwhichIwasadvisedontheproposedappointmentofnewNEDstotheTransnet Board. I was given their names and profiles. I was asked to sign a cabinetmemorandumseekingcabinet’sapprovalontheappointmentof:1. MsYasminForbes(asNED);2. MrNisiCoubey(asNED);3. MrAlmirDeSousa(asNED);4. MsMaphetoMohuba(asNED);5. MrIqbalSharma(asChairandNED)I will deal first withMs. Forbes andMr. Choubey in so far as there is interest in thoseappointments. In termsof thedecisionmemorandum, Iwasadvised that therewere twovacantpositionsontheTransnetBoard.Thefirsthadbeenreservedforarailspecialist,andthesecondhadbecomevacantafterProfessorSchremppresignedfromtheboardinFebruary2011.AfterSchrempp’sresignation,askillsauditwasconductedanditwasfoundthattheBoardhadskillsdeficits in twoareas,The firstwas the rail, riskmanagementandpipesorportssections,andthesecondwastheriskandauditcommittees.TheBoardwasoftheviewthatapersonwithanITCbackgroundshouldbeappointedtofillthegapontheauditcommitteebuttheDepartmenttooktheviewthatsomeonewithportsmanagementexperiencewouldbemoreeffectivegiventhedifficultiesfacedbyTransnetatthattime.NotwithstandingtheDepartment’sfeelingthatsomeonewithportsmanagementexperienceshould fill the vacant post, they were willing to accept an ICT candidate. As such, theyrecommendedtheappointmentofYasminForbeswhohadtheITexperienceandMrChoubeywhowastherailexpertthatthefirstposthadbeenreservedfor.IwilldealnowwiththesuggestedappointmentofMr.DeSousaandMr.Mohuba.Tothisextent,thememorandumalsoadvisedmethatDonMkhwanazishouldretireatthe24June2011AGM,tobereplacedwithMsMohuba.thereasonforthiswasthathisskillsetwasnotconsidered unique. It was a duplication and therefore unnecessary on the Board and anunnecessaryexpense,whereasMs.MohubawastheownerandMDofMeretengInvestmentandhadawealthofbusiness,operationalandexecutiveexperience. IwasfurtheradvisedthatMr.AlmirDeSousashouldbeappointedasanadditionalNEDoftheTransnetBoard.HewasaprojectlawyeratAureconandhisskillswereinlegal,internationaltrade,publicprivatepartnershipsandprojectfinance.

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LetmenowfinallycometoMrIqbalSharma.IwasadvisedthatMr.MafikaMkwanazi,theChairatthattime,shouldbereplacedwithMr.IqbalSharma.BeforeIdealwithMr.Sharma,itmaybeprudenttoexplainwhytheBoardwaspossiblygoingtobeinneedofanewChairin the firstplace.Thereasongiven in thememorandumtomefor the terminationofMr.Mkwanazi’s Chairmanship was that prior to being Chairperson, he had been a CEO ofTransnet, and that as there should be a strict line between executive and non-executivefunctionsontheBoard,theDepartmentadvisedthataChairpersonwhowasaformerCEOcouldcreatedifficulties.Consequently,itwasthereforeanticipatedthatareplacementChairwouldbenecessary.ThereasonforMr.Sharma’sproposedappointmentwasrelatedpurelytohisskillset.Atthetime,Mr.Sharmawasawellregardedbusinessman.HewastheformerDDG/CEOofTradeandInvestmentSouthAfrica(TISA),inSouthAfrica’sDepartmentofTradeandIndustry.Hewasresponsibleforhavingledthedevelopmentandimplementationoftradeandinvestmentpoliciesandstrategies.HehadalsopreviouslyheadeduptheTradePolicyDivision,overseeingSA’s global economic strategies, managing South Africa’s bi-lateral trade relations andnegotiations. Prior to working with the DTI, he worked for large multi-nationals such asPepsiCoandtheBankofAmerica.Irecallthathewashailedbythemediaas“oneofSouthAfrica’smost remarkable entrepreneurs”. It was on this basis that I did not register anyobjectiontoMr.Sharma’sproposedappointment.Inanyevent,theissuesrelatingtoMr.MkwanaziwereresolvedandhecontinuedasChair,which rendered the debate as to his successor moot. Cabinet consequently rejected hisappointmentasChairbutapprovedhisappointmentasaNED.AtthetimewhenIsignedoffon the Cabinetmemorandum recommendingMr. Sharma’s appointment, no informationrelatingtoanyquestionableGuptaassociationshadbeenbroughttomyattention.Isignedoffonhisproposedappointmentpurelyonthebasisofhisskillset.ThatconcludesmysubmissionsonMrSharma,andIwouldliketodealnextwithMrSingh’sappointmentasCEO.AppointmentoftheChiefFinancialOfficer–Mr.AnojSingh.On the14thofDecember2011, I receiveda letter fromMr.Mkwanazi, regarding theCFOpositionatTransnet.Atthetime,thepositionwasthatMr.AnojSinghadbeentheactingCFOsinceMarch2009,afterMr.WellswaspromotedfromCFOtoCEO.Thiswasbefore IwasappointedMinisterofPublicEnterprises.InNovember2011,theTransnetBoardmandatedtheCorporateGovernanceandNominationsCommitteetofinalizetheappointmentofMr.SinghastheCFOandtoconsultmeinaccordancewiththeirMOI.Accordingtotheletter,theBoardhadconductedtheirprocesses,andhadbeensatisfiedwithMr.Singh’sperformanceinhisactingpositionandthuswantedhimappointedpermanently.

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IwasalsoadvisedbytheDepartmentthatMr.SinghhadbeenatTransnetsince2003andhadinstitutionalmemory,thatthepositionofCFOhadbeenvacantsince2009andMr.Singhhadbeenactinginthatpositionsincethatdate.ItwasalsoobviousthatMr.Singhpossessedtheappropriate skills and experience for the role, and that appointing a new CFO mightdestabilizeTransnetjustbeforeitembarkedonamassivebuild-project.IinformedMr.MkwanazithatIconcurredwiththeappointmentofMr.Singh.Toconcludeonthispoint,Mr.SinghwasalreadyactingCFOatTransnetwhenIarrivedattheDPE. His profile clearly set out that his career progression at Transnet was highlycommendableandtherewerenocomplaintsabouteitherhimorhispersonalandbusinessassociations. Further enhancing his profile was that he had served on boards such asNedbank,theLandBank,andTelkom.Atthetime,anyGuptaconnectionsthathehadwereunknown tome.On the facts as theywerebeforemeat that time, IwouldhavehadnojustificationforrejectingtheappointmentofMr.Singh,evenifIwasempoweredtodoso.WithrespecttotheboardchairedbyMr.BenNgubane,thisboardwasappointedaftermytenure.ThatconcludesmysubmissionsonBoardappointmentsatthesethreeSOCs.GuptaRelatedContracts.Ihavethen,lastly,beenrequestedtoinformtheCommitteeofanyGupta-relatedcontractsthatwereconcludedduringmytenureatDPE.ThistopicischallengingastheextentofGupta-related corruption is only now surfacing. It is becoming increasingly apparent that eventendersthatappearedlawfulmayhavebeentainted.ThebestIcandotherefore,istoaddressthe tenders that occurred at Eskom, Denel and Transnet, duringmy tenure, which haveattractedsignificantmediaattention.AtEskom,theprimaryissuesthathaveattractedattentionwereTrillian,theRegimentsSaga,andTegeta.AlloftheseoccurredoutsideofmytenureatDPE.Icannotthereforecommenton them. The only interaction I had in relation to Tegeta, is when I ordered a forensicinvestigationin2017astheMinisterofFinance.Insofarasthesteamgeneratortenderisconcerned,Iprovidedtherelevantinformationearlier.AtDenel, theonlyGupta-related contract I amawareofwas theproposedVR LaserAsiapartnership,whichhappenedaftermytenureasMinisterofPublicEnterprises.AsMinisterofFinance,IdidnotgiveconcurrencetotheVRLaserproposal.

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At Transnet, the pertinent issues that arose under my tenure at DPE was the Transnetapplicationfor1064locomotives,andthesponsorshipofTheNewAgeBusinessBreakfasts.Iwilldealwitheachofthesebelow.TransnetPFMAApplicationfortheAcquisitionof1064LocomotivesIamgoingtooutlinemyrolerelatingtothelocomotivesTender.Itrustthatthiswillclarifytheextentofmyinvolvement,andconsequentlyandnecessarilydispelanynotionthatIwasinanymannerinvolvedinpreferringorselectingsuppliers.On2May2013,afterhavingsoresolvedon25April2013,Transnetsubmittedasection54PFMAapplicationtometoapprovetheacquisitionof1064locomotives(465Dieseland599electroniclocomotives)thatwasestimatedtocostR38.6billionoverasevenyearperiodtoallowtheagedfleettobereplaced.Thiswasabovethematerialitythreshold.On13June2013,IreceivedadecisionmemorandumfromtheDDGTransportadvisingmeofTransnet’sapplicationforapprovaltoinvestR38.6Billionintheacquisitionthelocomotives.The locomotiveswere for Transnet Freight Rail’s (TFR)General Freight Business (GFB). Interms of the memorandum, I was advised to sign the letter to the Chair approving theapplication.Thebusinesscasethatwasmadeoutwas,insummarythefollowing:1. First,therehadbeennoinvestmentinGFBlocomotivesbetween1992and2008;2. Second,theaveragelifeofthefleetlocomotiveswas32yearswhereasthedesignlifeof

alocomotiveis30years;3. Third,374ofthelocomotivefleetwereexpectedtobewrittenoffwithin7years.4. Fourth,theabovewasunworkableconsideringthatTransnet’smarketdemandstrategy

(MDS)hadprojecteda90milliontonnesgrowthinGFB.ItwasnecessarytoreplacetheagingfleetiftheMDSstrategywastoberealized.

5. Furthermore,GFBwasexpectedtogrowby9%by2018/19,andthemajorityofgrowth

wouldbegeneratedbyrail-friendlybulkcommoditiessuchasmanganese,manganiteandironore.Further,coaltransportwasexpectedtoshiftfromroadtorailtransport.

6. Historically,theGFBunitinTFRhadbeenplaguedbyinefficienciesbecauseoftheaged

locomotivefleet.Asaresult,TFRplannedtoinvestR194billionoverasevenyearperiod,ofwhichR143billionwasallocatedtoGFB.Itwashopedthatthiswouldleadtoincreasedcustomersatisfaction,andstopthecustomerexodusfromrailtoroadfreight.

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7. Theagingfleetwasaseriousproblem.Thefleetplanshowedthatthefleetwoulddecline

from1889in2014to1692by2019,andafurther50%reductioninthefleetwouldoccurwithin10yearsafterthat.Withafleetthatsize,TFRwouldonlyhavebeenabletomeet50%ofitsMDStarget.

8. Theprocurementofthelocomotives(andotherrollingstock)wouldprovideTransnetand

therestofthecountryauniqueopportunitytostrategicallyre-positiontherollingstockindustryforlocalizedassemblyandlocalizedmanufactureofcomponentparts,andtheprojectwasalsoaimedatincreasinglocalizationofmanufacturing.

6. In summary, the new locomotive purchasewas going to create value for Transnet by

enablingTransnettoachievetheirMDStargetresultinginapositiveNPV,toplinegrowth,enhanced return on assets, an improved environmental footprint, an increase inoperationalefficiencies,anditwouldassistinananticipatedshiftfromroadtorail.

7. AsidefromthebenefitstoTransnet,therewerealsoenormousbenefitstotheeconomy

such as: R68billion in localization benefits due to the local content requirements; thecatalyzing of the development of a locomotive production industry, the developmanufacturingskillsandthecreationandpreservationjobs.

Intermsofgovernanceontheproject,Iwasadvisedthatanenhancedgovernanceprocesswas inplace for theacquisition,and that this included theestablishmentofa locomotivesteering committee (LSO) which was mandated by Transnet’s Executive Committee andchaired by the Group CEO. The purpose of the LSO was multi-dimensional and includedmonitoringbusinesscasedevelopment,recommendationofthebusinesscaseforapprovalto the relevant authorities, procurement and tenderprocesses, negotiating contracts andtenders.Overandabovethat,agovernanceframeworkhadbeendevelopedspecificallyforthistransactionandincludedhighstandardsofconfidentiality.Iwassatisfiedwiththebusinesscase,andIapprovedthememorandumon3August2013.On the samedate, Iwrote a letter toMr.Mkwanazi granting the approval sought, citingcertainconditions.Therewerethreeconditions.ThefirstwasthatTransnetwouldprovidemewithaclearstatementwithregardtoTransnetEngineering’s(TE)visioninthelocomotivesupplychain,andwhatcapabilitieswouldneedtobedevelopedtomakethisareality.Thesecond conditionwas that theywould supplymewith TE’s seven year locomotive supplychainstrategy.ThethirdconditionwasthatTransnetwouldprovideaclearplanastothestrategicfitofthislocomotiveprocurementtotheboarderroadtorailmigrationobjective,andthelastconditionwasthatIwouldbeprovidedwithaviewofthelocalizationstrategy.

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TransnetEngineeringsubsequentlyprovidedtheinformationsought,andtheymetwiththeDepartment on the 28 February 2014. After this meeting, and on the 11March 2014, Ireceived a decision memorandum from the DDG: Strategic Partnerships in which I wasadvised that, in light of the discussion and information provided, the Department wassatisfied that the procurement process and negotiations that were under way sought toachieve and address the industrial development objectives (nationally). However, theDepartmentatthatstageregistereditsconcernsaboutTE’sroleasopposedtotheroleoftheprivatesectorinprocurement,whichwaslaterresolved.Subsequenttothis,thereweretender-relateddelaysintheacquisitionofthelocomotives.AlthoughtendersclosedinApril2013,PFMAapprovalwasonlygrantedinAugust2013andtendernegotiationscouldnotcommenceuntilPFMAapprovalhadbeenattained.ItwasthusexpectedthatcontractswouldonlyfinallybeawardedbyFebruary2014.Theacquisitionofthe1064locomotiveswasrunningatleastayearbehindschedule.Asaresultofthedelay,therewasarevenueshortfallwhichwasexacerbatedbythedelayoflocomotivedelivery.Becauseofthis,andinApril2014,IreceivedanapplicationfromMr.Mkwanazirequestingapprovalfortheacquisitionof100dualvoltageelectriclocomotivesforanexportcoallineatanestimatedcostofR4.840Billion.IwasinformedthatthisacquisitionwasinitiallyapprovedbytheBoardon24January2014atanestimatedcostofR3.8BillionwhichwaswithintheBoard’sthreshold,howeverafterthecontractnegotiationprocess,ittranspiredthattheestimatedtotalcostoftheinvestmentwouldbeR4.840billionwhichrequiredshareholderapprovalundersection54ofthePFMA.The100 locomotiveswouldbedeployedon thecoalexport linewhichwould release125locomotivestobeusedintheGFB,protectingrevenueintheGFBandallowinggrowth.WhatIhavejuststatedherewastheextentofmyknowledgeofthelocomotivestenderatthetime.Ihadnootherinformation.Ididnotknowwhowasinvolvedinthebiddingprocess,andthereforeinterferedinnoway.MyinvolvementintheprocesswasingrantingthePMFAauthorization.IwouldlikenowtomoveontotheNewAgeSponsorshipBreakfasts,andtoclarifythemeasurestakenbymyselfandtheDepartmentinanattempttocurbthisissue.NewAgeSponsoredBreakfastsInearly2011,numerousSOCsinformedtheDepartmentthattheywerereceivingrequestsfromothergovernmentdepartmentsandSOCstoprovidethemwithinformationabouttheSOCs,toprovidesponsorships,andpurchaseflighttickets.IwasinformedthattheSOCs,whoweretryingtofostergoodinter-governmentalrelationswerefindingitdifficulttodeclinetherequeststhatwerebeingmade,andtheyrequestedtheDPE’sintervention.

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Aroundthesametime,IbecameawarethattheNewAgewantedsponsorshipsfromTransnetandEskomforbusinessbreakfasts.Iwasupsetaboutthesesponsorshipsbecauseitwasalarge sumofmoney, even though itwasbelow themateriality threshold andwas strictlywithintheoperationalpurviewoftheBoard.Ifeltitwasinappropriatethatsuchlargesumsofmoneywerebeingspentonbreakfastsponsorships,especiallyinthemidstofsuchlarge-scalebuildprojectsthatwerebeingundertaken.Iconsideredalloftheabove,andIissuedinstructionstotheChairsoftheSOCsthatallsuchsponsorshiprequests,andrequests forinformationmustberoutedthroughtheDepartmentinthefuture.By2013,theproblemhadescalatedandthePublicProtectorhadinitiatedaninvestigationintothematter.IwasinformedthatthePublicProtector’smainfocuswasaninvestigationinto fruitless and wasteful expenditure at Eskom, Transnet, SABC and Telkom, and theallegationthattheDepartmentexercisedundueinfluenceonthosecompaniesindecidingtosponsortheTNAbreakfasts.ItisapparentfromwhatIhavejuststated,andfromthewritteninstructionsthatIsenttotheChairsoftheSOC’sthatIwasdoingtheoppositeofmilitatinginfavouroftheTNAsponsorships.Iwas,infact,highlyincensedbythenewsthathadreachedme.Inissuingthewritteninstructions,IdidthebestIcouldtocurbsuchrequestsforsponsorshipsbutthereality istheaccountingauthorityoftheBoardsofSOCsaresolelyresponsibleforpreventingfruitlessandwastefulexpenditure(section51(1)ofthePFMA).TheBoardsofSOCswerethereforesolelyresponsibleforhavingmeasuresinplacetoensurethatthesponsorshipofTNAbreakfastswereconsistentwithapprovedpolicies.TheBoardswouldordinarilyhaverecordsrelatedtothissortofexpenditurereadilyavailableandtheyaretheonlyoneswhocanaccountforthem.Needless to say, in relation to the Public Protector’s investigation, full transparency wasexpectedfromtheDPEtoassisther.ThemajorityoftheinformationrequestedbythePublicProtectorwasinthepossessiontheSOC’sBoards.IthereforerequestedtheSOCstoreleaseall requested documentation directly to the Public Protector. Under the PFMA, I wasempoweredtoinstructtheSOCstocedetheinformationtomedirectly,butIfeltthatthiswouldbeinappropriategiventheallegationsofundueinfluencealreadybeingmadeagainsttheDepartment.IfurtheraddressedalettertothePublicProtectoraffirmingmineandtheDPEsfullsupportoftheinvestigationandfurtherinformedherofthefactthatIhadrequestedthattheSOCscedetheinformationrequesteddirectlytoheroffice.ConclusionThisbringsmysubmissionstoanend.IamhopefulthattheaccountthatIhavegiventhisCommitteewillvindicatemeinrelationtotheissuesthatIhavebeencalledheretoaccountfor.DuringmyDPEtenure,Iwantedmylegacytobeoneofdecisiveandfairaction,andI

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actedaccordingly.Imadedecisionstoensuregoodgovernance,andIappointedpeoplewhoIviewedascompetenttofulfillsomeveryimportantrolesintheSOCsthatwereundertheDPEPortfolio.Iamseverelydisappointedthatthoserolesappeartohave,incertaininstances,beenabused.IregretanyrolethatIinadvertentlyplayedintheappointmentofanyDirectorwhosubsequentlyfailedtoprioritisetheinterestsoftherelevantSOC,andmoreimportantly,thiscountry.Atthetime,Iactedonthefactsavailabletome,andmadewhatIthoughtatthetime were meritorious appointments. I, at all times during my DPE tenure, acted in theinterestsoftheSOCsandofthepublic.AtnotimedidIinterferewithBoardappointments,committee constitution, or tenders duringmy tenure. I re-affirmmy commitment to theConstitution,tothepublic,andasaresult,tothisprocess.Ithankthecommitteeandcitizenswatchingathomefortheirpatientattention.Iwillnowtakequestions.