Though the PFMA takes precedence in the governance of state-owned companies, Eskom directors could still be called to account for their failures under the Companies Act. The odds of that happening, though, are small.
Public enterprises minister Pravin Gordhan. Picture: FREDDY MAVUNDA/BUSINESS DAY
We listen, more or less, to endless explanations about Eskom’s inability to provide power to SA and the economy. One of the apparent reasons for this lack of generation capacity — apart from boilers being dropped by the Chinese manufacturers or new control rod mechanisms at Koeberg that don’t work — is the lack of maintenance at power stations. This, we are told, has been the case for decades.The basic duty of a board is to ensure long-term sustainability for the company.
What this means is that “ownership” — whatever that may mean in company law — is not the test of what constitutes an SOC. Instead, that falls to the provisions of the PFMA.The involvement of the PFMA in Eskom’s life is an additional, and substantial, complication from a governance perspective. The PFMA is the “ultimate” act if there is a conflict with the Companies Act.
While Eskom CEO André de Ruyter, COO Jan Oberholzer and a lot of other people were running out of fingers to plug the holes in the dykes, what was the board up to?
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