Former Public Enterprises Minister Malusi Gigaba overruled Eskom's board's appointment of an acting CEO in 2014 because the candidate was white and it was a general election year, the power utility's former chairperson Zola Tsotsi has told the commission of inquiry into state capture.
The inquiry has been investigating allegations of state capture, corruption and fraud at state entities since August 2018.
Tsotsi was testifying on Thursday about the sponsorship of the Gupta-linked New Age business breakfasts, which cost the power utility millions, and related matters.
According to Tsotsi, Gigaba reversed the board's decision to appoint former Group Executive (Sustainability), Steve Lennon, as acting CEO in early 2014, following the resignation of Brian Dames. Instead, he insisted on the appointment of Collin Matjila, who Tsotsi said ended up signing off on a questionable New Age Breakfast sponsorship deal.
Tsotsi told the inquiry that, in early 2014, Eskom's board was looking to appoint an acting CEO. The board resolved that a board member could not fill the role and it would ask one of the power utility's executives to lead the company while a search for a permanent CEO continued.
The board then decided to appoint Eskom executive Lennon, Tsotsi told the commission. He said he had discussed this with Gigaba in December 2013. Gigaba, he said, was at the time in agreement with the board.
Tsotsi said he then instructed Lennon to start leading the Eskom team in developing a strategic outlook for the business, to hand over to the new CEO that would be appointed.
"The exco spent a couple of days looking at the organisation and taking a strategic view on how best to position the organisation going forward. In the process, when they came back, they had a configuration of the business, slightly different to what existed at the time," Tsotsi said.
The former chairperson said that, after Dames left in 2014, he got a call from Gigaba, who was quite "irate".
"I was taken aback. His manner was surprising. I managed to calm him down and have a proper conversation with him."
Gigaba, said Tsotsi, lambasted the Eskom board for requesting that a white person act as CEO of Eskom when the ANC was facing the general election.
Responding to Gigaba, Tsotsi said it was not best to discuss the matter over the phone. "I made it clear to him (Gigaba), it was not him speaking and someone had put him up to this."
Gigaba then informed Tsotsi that he would write a letter. Tsotsi said that when he finally received Gigaba's letter, it stated that the board should not pursue attempts to restructure the organisation, until the new CEO is appointed.
In a later conversation with Gigaba, Tsotsi said the minister informed the board that their fellow board member, Collin Matjila, should be appointed as acting CEO. At the time the minister had the final say on the appointment of acting CEO at the power utility, Tsotsi told the commission.
"The board was unhappy. This flew in the face of our decision that none of the board members were to act in the position of CEO," he said.
"When I say my term was turbulent at the time - it was a result of unhappiness from many board members of the situation that transpired and that a board member, Matjila, was appointed to act."
Tsotsi said he was perplexed by Gigaba's change of mind. The minister never provided him with an explanation.
The former chairperson's testimony on Thursday appears to contradict what he said publicly in 2014, when Matjila's appointment was announced. At the time, in a statement, Tsotsi said that the appointment of Matjila was a "unanimous decision by the board, based on his deep knowledge of and experience in the South African electricity industry emanating from his previous role as chairman of the National Energy Regulator of South Africa and from his current role as Eskom board member".
The inquiry's chairperson, Deputy Chief Justice Raymond Zondo, asked Tsotsi if it was embarrassing for him to break the news to Lennon.
Tsotsi said the situation was very embarrassing and he dealt a sense of guilt. "I went back to Steve. I could not say to him in [clear conscience] what Gigaba said to me... I do not recall the exact excuse I gave him," Tsotsi said.
He added that Lennon decided not to stay on at Eskom as the matter damaged his integrity. The industry had already got wind of the fact that he would be Eskom's acting CEO. Lennon opted to retire.
The inquiry continues.