Eskom Suspended CFO Quits Before Facing S. African Lawmakers

JOHANNESBURG (Capital Markets in Africa)  – The suspended chief financial officer of South Africa’s cash-strapped power utility resigned a day before he’s due to face a parliamentary inquiry on mismanagement of funds and two days after the government overhauled the company’s board.

Eskom Holdings SOC Ltd. received a letter of resignation from Anoj Singh’s attorneys Monday, the Johannesburg-based electricity producer said by email. He resigned with immediate effect, it said.

Eskom suspended Singh in late September after placing him on special leave in July following the CFO being linked to a series of questionable deals. These include transactions with Trillian Capital Partners Ltd., a local partner of U.S. consulting company McKinsey & Co. that had links to the Guptas, a family of wealthy businessmen working with President Jacob Zuma’s son who are alleged to have used their relationship with the leader to win lucrative contracts from state companies. They all deny wrongdoing.

Eskom’s coal-supply agreement with Gupta-controlled Tegeta Exploration and Resources Ltd. has also been questioned.

Singh did not approve any transactions involving Tegeta, Trillian or McKinsey alone and “always acted within the framework and parameters of my responsibilities,” he said in a copy of his submission to the portfolio committee on public enterprises, which is holding an inquiry into the problems at Eskom, seen by Bloomberg and confirmed by his lawyer.

The transactions were approved by Eskom’s board or its board tender committee, he said.

Eskom is “an organization with deep-rooted problems that have evolved over years” and it would be a mistake “to allow the inquiry to be hijacked by one narrative of one family,” Singh said in his submission.

The government appointed a new board for the utility at the weekend to try address governance concerns raised by lenders, who told the company to fix issues before they would make more funds available. The new board includes high-profile South African executives including Telkom SA SOC Ltd. ChairmanJabu Mabuza, who was named chairman at Eskom, as well as Imperial Holdings Ltd. CEO Mark Lamberti and former MTN Group Ltd. CEO Sifiso Dabengwa.

Biggest Risk
The utility is spending billions of dollars on delayed power plants and is the largest recipient of state guarantees at a time when South Africa’s finances are buckling under lower tax revenue and higher debt. Goldman Sachs Group Inc. said in September that Eskom, which has more than 400 billion rand ($33 billion) due in interest and debt payments in the next five years, was the biggest single risk to the economy and that the government needed to replace its management.

Eskom will ask banks for funding commitments to return its liquidity buffer to the required 20 billion rand, spokesman Khulu Phasiwe said by phone on Monday. The yield on the Eskom bond due in January 2021 fell two basis points to 5.53 percent by 9:10 a.m. in Johannesburg on Tuesday, adding to a 37 basis point drop on Monday. This takes the rate to the lowest since Nov. 7.

Source: Bloomberg Business News