Who approved Jacob Maroga - CEO of Eskom 27% salary increase?

The same board that has apparently asked Jacob Maroga to resign recently approved a massive 27% salary adjustment for the embattled CEO.  The same board headed by Bobby Godsell who apparently became a spokesperson of the board and told Eskom staff that Maroga has resigned. No proof of Maroga's resignation was provided.

I would imagine that they are many factors the board would have considered in adjusting the salary of the CEO, which include:

• Comparative pay for the same responsibilities;

• Reasonable satisfaction about ones job;

• Overall performance of the company; and

• Effectiveness of the turnaround strategy implemented by the CEO - this might possible hold in case of Eskom's management of load shedding and blackouts which have since became a thing of the past (hopefully).

Why the same board which approved the salary increase of the CEO would now want him out?

There are some many possibilities. To me it seems as if Maroga was used and then pushed! He was firstly lambasted for the failures of Eskom for which key weaknesses emanated way before he was CEO of Eskom. The former President admitted to and explained the reasons for lack of investment in maintenance of Eskom infrastructure which is the main reason why we are where we at today.

Maroga recently tabled his turnaround strategy for Eskom and he is very clear and candid on his approach going forward.  In summary he says Eskom need new ways of doing things, with a motivated work force and in line with the developmental needs of South Africa as informed by the ANC-led government's programme of action as spelled out by the President in his state of nation address and other pronouncements.

For Eskom to be the force that it should be for our development economy, it needs expanded generation capacity. To do this, a lot of capital is required hence one of the funding options is for the tariff increases. Generation capacity must be expanded and unfortunately this exercise comes at a price!

Whether we like it or not, it is inevitable that the days of low electricity prices are gone!  Whether we have a new CEO or not - they are gone!

The same board which justifies tariff increases, approves CEO salary adjustments and does not act timely on the reported neglect by the CEO on the so-called "Susan Olsen report" asks the CEO to resign. Why now? Why the board approved his salary increase first and then ask him to resign? Should we read too much to this saga?

The statement (November 5 2009) by DA gives us some hints:

Jacob Maroga's resignation follows months of exposes from the Democratic Alliance, including the public release of confidential memos that demonstrated serious failures on Maroga's behalf. Of particular importance in this regard is:

• Maroga's decision to fire international energy consultant, Susan Olsen, who warned in a confidential memo to Maroga that Eskom's coal procurement practices were placing electricity supplies in jeopardy. Maroga appeared to do little to act on Olsen's advice, and ultimately South Africa endured a period of "load shedding" which cost the country approximately R2 billion per day. The Olsen memo was leaked publicly by the DA.

• The details provided in a series of classified memos and reports, leaked to the public by the DA, which show how Eskom's lack of experience and failure to understand coal markets played a significant role in their later supply problems, and how Eskom's "haemorrhaging [of] talented staff" - in Olsen's words - had left the power utility lacking "leadership, experience, knowledge and direction". This week, DA released a report by Eskom's technical corporate audit division, which outlined the serious shortages in senior staff at the utility and supported Olson's findings. Again, Maroga appeared to pay no attention to these warnings.

• How, under Maroga's tenure, no action has been taken to address serious problems with the Medupi power plant, raised in a ­confidential memo released publicly by the DA. Of particular concern here was that, under the current plan, the power plaint may drain parts of the Waterberg, including Hartebeestpoort dam, and may inflict untold and irreversible environmental damage. Again, Mr. Maroga has failed to respond adequately to this matter.

It is clear to me that the confidential information was leaked to the third parties by a senior employee of Eskom. Why would this employee do this? Why this third party?

The biggest problem we have in South Africa is that we shy away from frank debate and when this is done people are labelled as rude. There is a consistent effort to discredit people simple because they are frank and open in their engagements.

I would encourage everyone to read Jacob Maroga's proposed turnaround strategy document and engage him on his propositions.

I would also like the Minister of Public Enterprises to investigate the leaking of confidential information to the media or other parties by the State Owned Enterprise Senior Employees. This runs directly opposite corporate governance and the principles of integrity and honesty. In fact this is bad for our country.

Each member of the board of Eskom should be ask himself/herself whether he/she is proud to be in that board where the issues of the board are put on the public wide open like this.

I agree with the BMF that we need a new governance and policy framework for the SOEs which will clarify the role of the SOEs in:

• The developmental state;

• Fostering transformation; and

• Supporting economic development for all.

Jacob Maroga should be allowed to implement his turnaround strategy and the Minister of Public Enterprise should move swiftly in investigating ways of clarifying the roles of the Chairman and the CEO.

The minister should also consider whether the board as currently constituted is appreciative and supportive of the developmental state approach undertaken by the ANC-led government.

Senzo Masengemu writes in his personal capacity.

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