STEPPING DOWN

South Africa’s “state capture” corruption report claimed its first high-ranking casualty

Quartz africa
Quartz africa

The head of South Africa’s power utility is stepping down, after being implicated in an explosive state corruption report. Eskom CEO Brian Molefe announced his resignation on Nov. 11, saying it was in the interest of “good corporate governance,” in light of the reputational damage done to him and Eskom.

Molefe maintains that his resignation is not an admission of guilt. He insists that the report was merely a series of observations rather than concrete findings. He said he looked forward to the opportunity to defend himself in a legal investigation.

“I go now, because it is in the interests of Eskom and the public it serves, that I do so,” concluded Molefe’s statement today. He will officially leave at the end of January 2017.

Molefe joined Eskom last year, after he was drafted from the state rail company Transnet, to fix the blackout-prone power supplier.

Molefe featured heavily in South Africa’s public protector’s “state capture report.” Former public protector Thuli Madonsela launched the investigation after several whistle-blowers revealed how much influence the president’s friends had over large state-owned companies like Eskom.

Published on Nov. 2, it describes a double-dealing relationship between Molefe and Johannesburg’s wealthy Gupta family, who are also close friends of president Jacob Zuma. The report alleges that Eskom issued a questionable early payment to Gupta-owned company Tegeta for a coal shipment earlier this year. That amount in turn allowed the Guptas to finance a deal to acquire a coal mine, ensuring that they would become one of the state-owned power company’s main coal suppliers.

The 355-page report shows 58 phone calls between Molefe and the eldest of the Gupta brothers Ajay. Molefe allegedly placed 44 of those. It also claims that Molefe was in the vicinity of the Guptas’ home 19 times between August and November last year. Last week, a day after the report was made public, Molefe broke down in a televised media briefing on Eskom’s results—becoming tearful, reaching for his handkerchief and at times rocking back and forth—as he struggled to explain his movements around the city’s Saxonwold suburb.

Molefe may be the first to fall on his sword, but he is not the only executive or high-ranking official named in the report, which also outlines the extent to which the Gupta family benefited from dealings with state-owned businesses and top government officials.

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