The controversial appointment of Andre de Ruyter to CEO of Eskom has chins wagging across the land. One issue is that he is a white male, which has Zwelinzima Vavi bemoaning the appointment as a reversal of ‘transformation’. More serious observers look to De Ruyter’s past actions to evaluate whether he is fit for purpose.

The bad news is that the packaging company, Nampak, which de Ruyter has presided over since April 2014, has experienced major decline. Its market capitalization was around R29 billion and has fallen by almost 85% to R5 billion today. During this time, he collected R21.5 million in bonuses on top of his generous salary, according to Bloomberg. Not, at first glance, a good look.

The counter argument is that De Ruyter inherited a highly indebted, overvalued company that would have gone into liquidation had he not intervened decisively. If this is what he pulled off, it is exactly the trick to pull off again at Eskom.

According to EngineeringNews, Nampak Kenya retrenched 19% of staff, Nampak Tanzania was effectively shut down (rationalized), while 32% retrenchment is ascribed to Nampak SA under ‘decisive’ management. Estimates of Eskom’s staff surplus range from 33% (according to board chairperson Jabu Mabuza) to 50%, based on its 2006 staff levels. If De Ruyter is retrencher-in-chief, a nasty burden to bear, then maybe he is the right person for the job.

Tempting as this thought is, a word of caution; most observers predicted that Andy Calitz would be picked to head Eskom, and for good reason.

Calitz boasts a stellar global career, most recently as CEO of LNG Canada, an international natural gas joint venture with almost R590 billion total investment. To get a sense of context, Eskom’s assets were valued in its 2018 report at R720 billion, its debt at R571 billion. But this is about much more than Calitz knowing how to play in an energy-league one order of magnitude larger than anything De Ruyter has had to handle until now.

One of Shell’s chief executives explained the Canada deal to me in its planning stages, years ago, as ‘awesome … not in the US sense of the word. I mean something to strike you with awe’. Not only has the deal been billed as the largest private investment in Canada’s history, it is distinctly international in its investment scope.

Shell is the lead partner (40%), with Petronas (Malaysia), PetroChina, Mitsubishi (Japan), and Korea Gas all throwing in significant investment, too, and all this under Canadian authority. As ITER is to nuclear, so LNG Canada is to natural gas when it comes to balancing potentially terrific conflicts of interest between companies with close government ties across the planet. The potential for conflicts of interest and mistrust is deep, while the oil industry is known to be a highly competitive global environment. ‘But unlike ITER, this has to make a profit’.

Nor could the hub-manager to these investment-spokes be a chameleon compromise candidate who simply aims to please everyone, changing tune room to room, to the detriment of the collective. Such chameleons do find themselves in powerful positions sometimes but only when the venture (or political party) is already established. LNG Canada was, by contrast, still just an idea and one that would never have got off the ground in the first place if all of its stakeholders did not believe they had found a leader they could equally trust.

In short, the world’s energy elites had to find someone that they could trust to be a fair arbiter across divergent cultures and make a value-add proposition that would bite. They found Calitz and said, yes, that’s the one.

For him to step down after a year in operations and return to save Eskom would have been noted from Ottawa to Oslo, New York to The Hague, Seoul to Beijing to Tokyo. It would have sent the message that Calitz’s patriotism and Ramaphosa’s reform commitments were deeply serious. Calitz would have entered negotiations with Eskom’s lone shareholder (government) and the unions with clout and the eyes of the energy-world at his back.

This is not all. Calitz had a plan to reform the utility and did his due diligence. De Ruyter is reported to have done neither. ‘De Ruyter did not do background consultations and due diligence, whereas Calitz was known to have thought deeply about how Eskom needed to be reformed,’ according to Intellidex analyst Peter Attard Montalto.

So why was De Ruyter chosen instead of Calitz? To answer that question, one must consider seriously the Daily Maverick’s claim that only four ministers were on the panel to make the final decision on who should take over Eskom. Pravin Gordhan, Thoko Didiza, Ebrahim Patel and Gwede Mantashe.

Where is Tito Mboweni’s name? Given the finance minister’s responsibility to protect the nation’s sovereignty – whose greatest threat is Eskom’s continued function as a cadre-patronage network – his omission is shocking.

Well-placed sources indicate to the Daily Friend that tensions between Mboweni and Gordhan are simmering. One might ask why? Is Gordhan not an honest politician who resisted the last death throes of Zuma-led extractionism?

Yes. Gordhan was brave and remains honest. Personally, the first time I toyi-toyied was in Pretoria the morning after Gordhan was fired by Zuma in 2017. The next two weeks saw the largest #ZumaMustFall protests in this country’s history, an indicator of widespread faith in Gordhan’s personal financial integrity at a time when so much of Zuma’s cabinet was on the take.

But honesty and bravery are not enough. Realism is necessary, too. Gordhan already pushed for above-inflation wage hikes at Eskom when the Eskom board was prepared to freeze wages. Gordhan has also obstructed retrenchments thus far.

His record on SAA is hardly better. Google ‘Gordhan SAA can fly’ now and you will find November articles in which Gordhan has been forced to concede that ‘SAA is not too big to fail’. This just at the time when SAA was shutting down.

But a more precise search will remind one of his statements in mid-year 2019 when he said ‘there is an investment case to be made’ for SAA. ‘We are in the process of strengthening the company executive and the board to ensure stability in the organisation. A joint implementation committee has been established between management, the board and my department to accelerate implementation, accountability, and to enable quick decision making.’ To what effect?

Dithering and dragging the process of hard reform seems to be Gordhan’s effect, whatever his intention. And note further that while SAA has been allowed to cross the Rubicon of shutdown, there is a political element in play; its unions are led by ANC-opponent Irvin Jim, who can be opposed by ANC-loyalists in ways that an Eskom strike might not.

In De Ruyter, Gordhan has a CEO who will be easier to bully than Calitz would have been, and in the selection process, Mboweni has been further frozen out. If this is another exercise in ‘strengthening the company executive’, Eskom’s woes are far from over.

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