On Thursday 29 October, well over a week ago, a fateful Eskom board meeting heralded an unprecedented management crisis within this key South African state-owned enterprise.

The company is still reeling from a generation capacity crisis, the power black-outs of 2008, a serious skills shortage, a funding crisis for its new-build programme, and applications to the Regulator that would increase the price of electricity five-fold over the five-year period from 2008 to 2012.

Of course it is no coincidence that the new crisis has occurred at this critical juncture. In fact, this latest management crisis is simply a manifestation of the convergence of pressures and tensions arising from these and many other issues at this time.

Since its inception on 29 October, the sorry saga has been characterised by a total lack of visible leadership and authoritative, official communications by the government, the minister of Public Enterprises, the Eskom chairman, its CEO and board of directors.

As would be expected, this has cleared the way for speculation and rumours, and a number of concerned / reckless / outrageous pronouncements (take your pick) by politicians, opposition political parties, and other organisations and individuals with clear political agendas, and no first-hand information.

Most notable among these are the Public Enterprises parliamentary portfolio committee chairperson, Vytjie Mentor, the Democratic Alliance (DA), the Black Management Forum (BMF), and the well-known ANC Youth League leader, Julius Malema.

This week, as the crisis intensifies, we are likely to see more of the same. But what do we actually know so far, noting that most information in the public domain comes from determined journalists following an important story in the public interest, and from the whistle-blowing / malicious leaks of concerned / disgruntled Eskom staff (depending on one's world view on these things)?

First there were reports of an anonymous letter delivered to Public Enterprises minister Barbara Hogan from Eskom staff, complaining about the performance of their CEO Jacob Maroga, and his lack of response to their concerns.

Then, leaks to the DA from within Eskom revealed that Maroga had terminated the services of American consultant Susan Olsen on receipt of her report of serious coal procurement deficiencies at Eskom, some months before the onset of the pre-emptive load-shedding in January 2008 that shut down the mining industry.

Subsequent leaks to the DA provided details of an internal Eskom technical audit showing 50% levels of key staff vacancies during the load-shedding period. Currently the Eskom Exco has vacancies for the heads of finance, human resources, corporate communications, and now perhaps the CEO too.

We also know that an Eskom board meeting was held on Thursday 29 October, and that during the course of the meeting the shareholder representative, Minister Barbara Hogan, was called upon to be present. Clearly something serious was brewing, because the board meeting went on well into the night, and then through the whole of the next day.

On Friday morning 30 October, Business Day reported that the Eskom board had asked Maroga to step down as CEO [1], but Maroga later denied this in a telephone call from Radio 702 [2]. Could this denial just be a matter of semantics? Subsequent reports indicated that after presenting conflicting plans for Eskom, both Godsell and Maroga offered their resignation to the board, and after recusing themselves for the board to consider the matter, Godsell's concerns and vision, and Maroga's resignation, were accepted.

On the 1 pm news that same day, SABC3 TV reported an irretrievable breakdown in the relationship between Godsell and Maroga, with Godsell saying: "If he stays, I go". A joint Eskom / Public Enterprises statement was expected on the subject by the end of the day, but this did not materialise. That same Friday also happened to be the last day of work at Eskom for Fani Zulu, Eskom's former head of Corporate Communications.

In the meantime, rumour had it that Moroga was out, and Eskom Generation COO Brian Dames would take over as acting CEO. Some rumours also included Eskom head of networks and customer service, Erica Johnson, as joint acting CEO with Dames [3].

But then on Wednesday 4 November, Sake24 reported that President Zuma had intervened to save Maroga [4], but this was followed by categorical denials by president Zuma's ANC spokesman, as well as by Minister Hogan.

At a briefing to Eskom staff on Thursday 5 November, Godsell advised that the CEO had resigned, and that an acting CEO would be sought, and a new CEO appointed within 90 days. However, a media briefing scheduled to take place immediately after the staff briefing was summarily cancelled, with Godsell and the Eskom board summoned to appear before the Public Enterprises parliamentary portfolio oversight committee in Cape Town the next day, which meeting was also subsequently cancelled.

In the meantime the Black Management Forum and Julius Malema had entered the fray to politicise the matter and issue deeply disturbing perspectives laced with offensive racial invective [5], [6].

Finally, on Friday 6 November, a Mail & Guardian article entitled: "Eskom upheaval: The case against Maroga" [7] included links to download both Maroga's [8] and Godsell's [9] conflicting visions and strategy of the way forward for Eskom.

So why would the board accept an offer by Maroga to resign, or ask him to step down? As previously stated, media reports indicated a breakdown in the relationship between Godsell and Maroga, and a gauntlet thrown down by both CEO and chairman, with both offering to resign after presenting their conflicting visions and strategies for Eskom.

It appears that the consensus or majority decision of the board was in favour of Godsell. Faced with an untenable situation and a stark choice between CEO and chairman, the board accepted Maroga's offer to resign. But then, perhaps not expecting the decision to go against him, Maroga appears to have changed his mind and withdrawn his resignation. 

The Eskom board was appointed by the government of South Africa as shareholder, and has been in place for some time without dispute. Therefore is it not somewhat disingenuous for parties such as the BMF, Julius Malema and politicians to only now question the credentials, composition and actions of the board taken in terms of its lawful authority, when it makes decisions or acts in a way that may go against their own particular world views?

One may have thought that, in a consensus decision or majority vote by a duly appointed board of directors, the loss of confidence in its CEO would be sufficient for the CEO to tender his resignation to the board. But this is not the way things happen in South African state-owned enterprises, if past experiences at SAA, Transnet and SABC are anything to go by.

Would it be acceptable for the CEO to subsequently withdraw his resignation after acceptance by the board, thus placing the board and chairman in an untenable and invidious position, filled with conflict? Is it not somewhat disingenuous for the CEO and various external parties to claim that as no written letter of resignation existed, no resignation had in fact taken place?

Surely the eye-witness evidence of the shareholder representative, Minister Hogan, the company secretary and others present at the board meeting, plus recordings, transcripts and minutes of the meeting, would suffice to prove an offer of resignation by the CEO and its acceptance by the board?

But this is all speculation. We do not actually know what happened at the board meeting, and all those present - the minister, the chairman, the board and the CEO - remain silent, giving the impression that perhaps things are not as clear-cut as they may seem. Populist opportunists with only one-sided, second or third-hand hearsay at their disposal, and political axes to grind, are thus given free reign.

Whatever the rights or wrongs of the saga, Eskom  board-level battles, power struggles and legal actions will be undoubtedly be extremely demoralising, debilitating and divisive to the management and staff of Eskom, and will take management focus off the many critical issues being faced right now by the company. A hamstrung management and the inaction caused by protracted infighting at board level will clearly have very serious consequences.

While the demise of the SABC has certainly wasted tax-payer money, the country and the economy could proceed without batting an eyelid, even if the public broadcaster were to shut down completely. The same cannot be said of Eskom.

The SABC's losses will pale to insignificance compared to the immense damage that will be done to Eskom, the wider electricity supply industry, the economy and the country at large if a similar protracted dispute plays out within the Eskom board and management structures, and the courts. I dread to think that this could happen to a vital state-owned enterprise such as Eskom at this critical juncture, where there is so much at stake.
 
At the urging of Jacob Maroga only a few weeks ago, South Africa should be embarking on an important national discourse involving government, Nersa, Eskom, municipalities, stakeholders, customers and the general public on a funding plan for Eskom and the wider electricity supply industry to ensure that huge new generation projects can be undertaken.

If the pricing and funding debate is high-jacked and stalled by unaccountable, loose-cannon, populist opportunists with little understanding of the serious issues, this could have dire economic consequences, with delays to many critical supply and demand-side opportunities to relieve the generation capacity crisis.

The end result will be power blackouts on a much bigger scale than before.

[1] "Board asks chief executive of troubled Eskom to resign", Business Day, 30 October 2009
[2] "Maroga denies being asked to go resign as head of Eskom", Business Day, 30 October 2009
[3] "Eskom leadership battle erupts", MiningMX, 5 November 2009
[4] "Zuma saved Eskom boss", Fin24, 4 November 2009
[5] "BMF stance on the assault on black professionals in state-owned enterprises: The case of Jacob Maroga at Eskom", Tembakazi Mnyaka, BMF, 6 November 2009
[6] "ANCYL statement on Maroga resignation", ANCYL, 5 November 2009
[7] "Eskom upheaval: The case against Maroga", Mail & Guardian, 6 November 2009
[8] "Chief Executive strategy document", Jacob Maroga, 22 October 2009
[9] "Note for the board breakaway: October 2009-10-23", Bobby Godsell, 23 October 2009