South Africa's Eskom CEO resigns over anti-graft watchdog report

by Reuters
Friday, 11 November 2016 14:53 GMT

* Molefe leaves Eskom in January

* CEO says departure not admission of wrongdoing

* Public Protector questioned Eskom's coal deal

* Zuma complains of "attacks" by former graft watchdog (Adds comments on resignation)

By Tiisetso Motsoeneng

JOHANNESBURG, Nov 11 (Reuters) - The head of South Africa's state power utility announced on Friday he would step down, a week after he was implicated in a report by the anti-graft watchdog on alleged influence-peddling.

"I would like to reiterate that this act is not an admission of wrongdoing on my part," Brian Molefe, chief executive of Eskom, said in a statement.

"It is rather what I feel to be the correct thing to do in the interests of the company and good corporate governance." He said he would leave the post in January.

The report by the Public Protector, a constitutionally mandated watchdog, raised questions over coal deals between Eskom and a company controlled by the Gupta family, who are friends with President Jacob Zuma.

Molefe has been with Eskom since April last year, when he was drafted in from state rail freight firm Transnet to try to stabilise the troubled utility, which at the time was battling to keep the lights on in Africa's most industrialised economy.

He was confirmed as CEO in September last year and is widely credited with halting the power cuts.

He leaves the company in the middle of the crucial construction of three new coal-fired power stations. Eskom is also considering a building a second nuclear power plant.

"First head to roll. Put simply he had no credibility left after the report," said Peter Attard Montalto, Nomura International's head of emerging markets, in a note.

Eskom's 2026 bond weakened on the news, with the yield rising 10 basis points.


Public Enterprises Minister Lynn Brown was "sad" to lose Molefe, spokesman Colin Cruywagen said, while Eskom's Chairman Baldwin Ngubane said the resignation was "regrettable".

The watchdog's report showed 58 telephone interactions between Molefe and Ajay Gupta between August 2015 and March this year. It stopped short of saying crimes had been committed, and called for an inquiry to investigate allegations of corruption in Zuma's government.

Zuma denies granting undue influence to the three Indian-born Gupta brothers, who run a business empire ranging from media to mining, or to anyone else. The Guptas have denied seeking influence.

Separately, the president's office said it was concerned about "unwarranted public attacks" on Zuma by former Public Protector Thuli Madonsela, a day after Madonsela defended the release of an audio recording of her meeting with the president during her investigation.

Zuma, 74, survived a no-confidence vote in parliament on Thursday. He has defeated two other votes to unseat him this year, backed by the support of his African National Congress which controls about two-thirds of the 400-member assembly. (Additional reporting by Mfuneko Toyana; Editing by James Macharia and Andrew Roche)

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