Madam Deputy Speaker, I would like to thank the House for the opportunity to account to it as a shareholder of Eskom.
Regrettably, the past 14 days have been a turbulent time for Eskom and the economy, due, unfortunately, to a breakdown in the relationship between the board and its former chief executive officer. Unfortunately, this dispute did not remain an internal matter for the company to resolve in terms of its own corporate governance framework, as it should have but, disturbingly, it entered the public domain through groups with their own political and vociferous campaign in support of one party against another. They provided undue pressure through a never-ending stream of public commentary that sometimes had no basis in fact or law, and only served to inflame and exaggerate an already complex and difficult boardroom matter. This is indeed lamentable.
As my colleague, Minister Naledi Pandor, commented yesterday, the boardroom of Eskom was politicised. This has wrongly painted an exaggerated image of a company in crisis. Yes, there was a breakdown in the critical relationship between the board and the chief executive officer and this is indeed a serious matter. But the fact of the matter was that Eskom and its operations continued. Lights went on, mines were mined, factories manufactured, the wheels of commerce and industry continued to turn, our homes were lit and our food was cooked. The timing of this debate was potentially damaging, as it happened at a time when the Minister of Finance was abroad, raising funds from investors in our parastatal. Fortunately, the damage done to Eskom's reputation was minimal, as investors are well-acquainted with Eskom's performance, but those who want to make a political crusade out of boardroom politics need to reflect on the potentially damaging consequences for a company such as Eskom and for the economy of South Africa. As one frustrated board person said to me in this process, "Minister, how can it be that one person can be so important and override completely the interests of this country and its economy?" [Interjections.]
It is very disturbing to note that this matter also became a racial football, targeting certain individuals who I believe have integrity and only the best interests of the country at heart. Such a racial slur, particularly directed at Mr Bobby Godsell, the former chair of the board, goes against what we fought for and codified in Kliptown and is also against the core values of our society and our Constitution, especially the value and importance of nonracialism and building a united, nonracial and nonsexist South Africa. I want to thank Mr Godsell for his exemplary leadership in this moment and for his leadership in the last 15 months.
In the midst of all of this, I am grateful for the sanity and sobriety that prevailed in important sectors of our country. Madam Deputy Speaker, let me say thank you to Cosatu, to the ANC and to the National Union of Mineworkers, NUM, and those people and forces in our country who chose not to enter publicly into this fray, but to maintain their discretion in the interests of Eskom and the country in these trying two weeks. They have served this country well. They have also served this country well in speaking out on principles that we all love and adhere to. I also look forward to further constructive engagement with the trade unions, especially NUM and the National Union of Metal Workers of South Africa, Numsa, and Solidarity on matters relating to Eskom.
Eskom is probably the most important company and parastatal in our country. We do not deny that Eskom has problems, but we cannot allow Eskom to be fundamentally upset by forces trying to push a political agenda that has no relation to the actual issues that Eskom is trying to address. [Applause.]
In this highly charged and volatile environment, I felt it wise to maintain a prudent silence and to refrain from making public commentary, which would only serve to heighten tensions and embroil government itself in that debate. Instead, the Deputy Minister and I, together with the board, busied ourselves, tirelessly trying to reach an amicable settlement. Days of long hours and complex negotiations ensued. Our aim was to try and reach an amicable settlement that would resolve the matter in the best interests of Eskom and the country.
Madam Deputy Speaker, I wish to acknowledge my colleague in the House here, the Deputy Minister, Enoch Godongwana, for his unflagging support, energy and effort in this matter. I also wish to thank the staff at the Department of Public Enterprises and in particular the directors-general for their unstinting and invaluable support.
We tried to pursue options of facilitation, mediation and arbitration, even a negotiated settlement. During this difficult period, a demand arose that the Minister must provide "leadership". As we were to discover, the subtext of this demand was much more sinister. It was in actual fact a demand that I, as Minister, override the board and confirm a person in his position as chief executive officer, against the wishes of that board and against all corporate governance principles. As Minister, I refused to override the principles of corporate governance by using my political authority to impose a person in the position of chief executive officer without the authority of the law. The type of leadership I preferred to exercise was rather to work indefatigably behind the scenes to resolve the matter within the confines of good corporate governance.
At a certain stage, the President's Office offered its assistance to break the deadlock, and the board was approached to delay its processes in a final attempt to resolve the matter. This intervention, I must stress, was not taken lightly and was not done to undermine the board but rather to lend it support to resolve the dispute. Government's overriding concern was the strategic importance of Eskom to the economy and to the country, and addressing the highly charged political environment that was infusing this debate and dispute and that was, indeed, creating the false notion that Eskom's operations were being compromised.
Let me say upfront, that this government is completely committed to abiding by the principles of proper corporate governance in all of our relationships with our state-owned enterprises, SOEs. As a shareholder, the Articles of Association of Eskom allow me to appoint a chief executive officer, after consultation with the board. The chief executive officer then enters into a contract of employment with the board, which is governed by company and labour law. Included in that contract are the terms for termination of that employment relationship. It would have been inappropriate and entirely illegal for a Minister to interfere in that contractual relationship and, might I add, I am not a signatory to that contract. The right of either party to that contract can be asserted in a court of law, a right that this progressive government entrenched.
Madam Deputy Speaker, I am constitutionally obligated to operate within this legal framework, one which has due regard for our country's labour laws and the Companies Act. As a shareholder, I am already attending to ensuring that we align our state-owned enterprises with the King III report and the new Companies Act, which is due to be implemented in mid-2010.
Let me stress that the integrity of a board is paramount. Boards are appointed by government and, by law, are obligated to govern the company with the support of senior management. The shareholder oversees the functioning of the board, to ensure that the board and the company give effect to the strategic intent and objectives of government.
I am now pleased to inform this House that the board has moved decisively in the last few days, and in the interests of the company and the country, to finally resolve this matter in the following manner: A press conference was held earlier this afternoon, in which the board announced the measures that are being taken. The following facts are relevant: Mr Maroga is no longer the chief executive officer of Eskom. The search for a new chief executive officer will now commence. [Applause.]
Mpho Makwana - you know, the very thing that I have been speaking about of people using political agendas to drive comment on the chief executive officers of boards is just unacceptable. [Interjections.] Mr Makwana will act as the executive chair of Eskom until a permanent chief executive officer is appointed, and he will be appointed by two senior managers ...