Eskom and the mythology of black empowerment
On 12 September 2017, the Eskom Inquiry Reference Book was launched in Cape Town, ahead of the parliamentary reviews set to commence in October. Here, an energy sector commentator declared that a proper analysis of Eskom’s State of Capture should go all the way back to the politically influenced procurement that took place during Mbeki’s presidency. He’s not exactly wrong, but he’s not right either. Like so many commentators, he’s missing something fundamental: the entire historical and current economic context for all of it.
Here we are, in 2017 and it is still not precisely clear what was promised in 1994, to whom and who was doing the promising. I do not think it is so clear to the people protesting for decent service delivery, nor for those #feesmustfall students who have taken up the burden of reminding us of the intolerable paradox that sits at the heart of South Africa’s remarkable nationhood. We live after apartheid, and apartheid lives with all of us.
In this moment of political identity crisis, the Gupta-funded Bell Pottinger’s now plainly exposed divisive PR narrative of ‘white monopoly capital’ has provided a catchy refrain and spectacular smoke-screen for a band of ne’er-do-well politically connected actors across the public and private sectors. This propaganda has provided a rationale for the systematic corrosion of democratic institutions to enable massively corrupt public procurement to the estimated tune of hundreds of billions of rands. It has provided a shroud for public funds funnelled out of Eskom and away from critical needs: servicing debt, proper maintenance to avoid further load-shedding, ensuring equitable energy access for all South African residents.
In the middle of their post-rainbow hangover, old comrades and bankers alike, clawed at reductive analyses of JSE holdings to try to prove #WMC does not exist. But like all good lies, ‘white monopoly capital’ is built on more than a grain of truth. That truth is that our democratic government has embraced a political pathway that has done little to bring about a more equitable spread of the social and economic privilege that being born into whiteness still brings one in South Africa.
How does structural inequality relate to Eskom and public-sector corruption? Well, for that we need to understand how economic power is still concentrated in SA. In the private sector, in 2015, only 10% of our CEOs were black, down from 15% three years earlier. In academia, 71.4% of professors at 13 universities collectively are white. Poverty continues to shape the lives and prospects of the majority black third of our population, living on less than R797 a month. Broadly speaking, to the exclusion of people of colour, white people hold opportunities for better education, access to beneficial professional networks, access to clean, safe and healthy environments, and home ownership.
This is the context that must be brought to bear in properly understanding the historical patterns of corruption and the capture of Eskom. It’s not entirely surprising, given the concentration of economic and intellectual/advisory power as it is, that a government that had painted itself such a narrow selection of policy options for wealth redistribution might consider using its political position to bring about some redistribution through public expenditure. Public expenditure is significant. In the last financial year, Eskom’s annual capital expenditure was R55.8 billion; its revenue was R177 billion.
South Africa’s electricity sector and the coal-mining industry on which it is built also has a long and dirty history of collusion and racist labour exploitation. Responding to this, between 1998 and 2009, the government’s transformation efforts encouraged good corporate governance, competent management and parliamentary processes for accountability in the energy sector. It also pushed for 100% energy access and free energy allocations for the most vulnerable. It’s not radical, but it is transformative for those that depend on subsidies to keep their lights on. Post-apartheid transformation has also been pursued through legitimate BBBEE in the sector with variable success.
There were also less legitimate strategies pursued under the guise of transformation. After Mohammed Valli Moosa, member of the ANC national finance committee since 2002, succeeded long-time Eskom Chairman, Reuel Khoza in 2005, he oversaw a R38 million Medupi Boiler tender process that benefitted Chancellor House. The ANC investment company had a 25% stake in Hitachi Power Africa, which had a 60% stake in the winning bid consortium. While the contract stood, it was found that Moosa should have recused himself from all procurement proceedings. In 2015, Chancellor House was implicated in another procurement scandal, this time in coal-fired power-station project to be built at Colenso.
It makes sense to point to these deals as instances of bending process to pursue political aims. But one cannot do that without also considering the immutable, apartheid distribution of resources and power as the context in which:
(a) politicised public procurement has unfolded, and
(b) the narratives of transformation, and now ‘radical economic transformation’ and ‘white monopoly capital’, play out to legitimise and delegitimise major procurement decisions.
This includes decisions about the nuclear deal and the current saga over renewable IPP connections.
What we see in Eskom now with so-called state capture departs in both magnitude and ambition from the Chancellor House-linked deals. No claim to transformation, radical or otherwise, can defensibly be offered in support of billions lost through the Tegeta-Optimum travesty and other Gupta-linked coal contracts, the Trillion-McKinsey invoices, the New Age contract, the T-Systems contract, and more. These deals are part of a systematic, wide-spread, network of actors that are directing billions to a band of politically connected players that although few, are of different races, genders, agendas, sectors and nationalities. One thing though, they are all rich now.
An honest review of inequality and its potential remedies in South Africa is necessary, I believe, to guard against all forms of corruption in state-owned companies in any enduring way. Because while we continue to fail in this task, the real need for radical economic transformation will be used as a cover for people who are undermining government’s ability to afford even the most basic redistribution of resources to the most vulnerable, through social grants, housing, free basic utilities and public employment programmes.
This analysis offers no answers and no comfort. Its point is precisely to disturb the heroes versus bad guys narrative that pins all our hopes on a few good men and women to save us from the Guptas, or whoever comes next. What we really need is for every voting South African, especially those sipping on flat whites taking tone-deaf selfies at the next #zumamustfall march, to think about what culpability we will assume, what we will contribute, and what we are willing to give up in order to create a society in which corruption no longer makes so much sense.