LONG READ | Lynne Brown — The 'Guptas' minister' who captured Eskom
Former minister of public enterprises Lynne Brown, along with former president Jacob Zuma, were key figures in enabling the capture of Eskom by the Gupta family, further crippling SA’s biggest and most important public enterprise.
Volume three of the fourth state capture commission report, released on Friday, details how Brown facilitated the grand capture of Eskom by the Gupta family by enforcing the appointment of chosen Gupta managers and board members.
“When one has regard to all the evidence heard by the commission, it is quite clear that the Guptas were in control of the Eskom board. The president of the country, Mr Jacob Zuma, and minister Brown were manipulating the situation at Eskom to advance the business interests of the Guptas,” read an extract of the report painting Zuma and Brown clearly as two of the main initiators of Eskom’s capture.
Their end-goal, said the report, was to have a Gupta-controlled Eskom which would dole out contracts favourable to the Gupta business empire, namely lucrative coal contracts to supply Eskom power plants with coal at inflated prices through its Mpumalanga-based Optimum coal mine.
Eskom is the largest producer of electricity in Africa and was once considered a gold standard in terms of power generation capacity and sales. Most of Eskom’s power comes from its 13 coal-fired power stations which are serviced by various contracts from the SA coal mining industry, the world’s fifth largest in terms of production, and third largest in terms of exportation.
“The key role played by our coal reserves in the economy is illustrated by the fact that Eskom is the seventh largest electricity generator in the world,” read the report.
It is against this backdrop that the capture of Eskom became a lucrative venture for the Guptas.
The report details how the Gupta capture of Eskom started with the capture of the government department through the appointment of a minister who would do their bidding.
That minister first came in the form of former public enterprises minister Malusi Gigaba, also an alleged Gupta-sanctioned appointment.
But after Gigaba fell out of favour with the Gupta brothers he was replaced by Brown in May 2014.
Gigaba and his estranged wife Nomachule led evidence in the commission that for some time during his stint as public enterprises minister between 2010 and 2014 Gigaba had “a lot of engagements” with businessman Ajay Gupta.
After a while though he had stopped taking Ajay’s calls much to the frustration of Ajay, who according to Nomachule, eventually called Gigaba and told him what amounted to, “that they (the Guptas) had put Mr Gigaba in the position which he occupied then, namely as minister of public enterprises and they could take him out of that position and send him back to the department of home affairs”.
State capture commission chair chief justice Raymond Zondo said this alleged statement by Ajay is consistent with similar statements that he and his brother Rajesh “Tony” Gupta allegedly made in front of other witnesses who testified at the commission that Zuma would “do anything” the Guptas told him to do, including firing and hiring ministers at their request.
“With all the above said, it seems probable that the Guptas had a hand in the removal of Mr Gigaba from the ministry of public enterprises and in his reappointment to the ministry of home affairs in accordance with what Mrs Gigaba testified Mr Gigaba had told her Mr Ajay Gupta had threatened,” said Zondo.
“The Guptas also probably had a hand in the appointment of Ms Brown as minister of public enterprises in May 2014. A number of factors support this. Ms Brown testified that she and Mr Ajay Gupta knew each other before she was appointed as minister of public enterprises and Mr Ajay Gupta had called her to congratulate her on her appointment as minister of public enterprises,” he said.
When Brown was appointed to this position, it was her first appointment as a minister. Before going to parliament, she had served as premier of the Western Cape.
TimesLIVE contacted Brown for comment. She told TimesLIVE she had not read the report.
After being sent several damning extracts from the report to comment on Brown said, “I have no comment.”
The second state capture commission report which was published earlier this year found that Brown was working with the Guptas in the capture of Transnet, the public rail, port, and pipeline company.
According to Zondo, Brown was to become Zuma and the Gupta’s vehicle to capture every facet of Eskom.
First they needed to capture the board.
“We also know now that ... Brown was a Gupta associate. So, the Guptas had the minister responsible for Eskom on their side. Furthermore, they had a number of the members of the board of Eskom on their side,” said Zondo in that report.
In 2014 Brown appointed a new board from a list of individuals — over whom concerns were raised by Simphiwe Makhathini, deputy director-general for energy at the department of public enterprises, due to their lack of skills — none of whom were taken from the department’s database.
The Guptas were in complete control of Eskom. All the positions of strategic importance were occupied by their people. In these circumstances there was no way that, if they said that Mr Brian Molefe should be appointed Group CEO without a competitive process, a competitive process would be initiatedChief justice Raymond Zondo, state capture commission chairperson
Instead Brown thought it prudent to put out advertisements for the board, flouting regulations that board members be chosen from the government database. Several board members had close relations with the Guptas and their associates.
“During her evidence before the commission on March 19 2021, Ms Brown seemed unsure about what course she had taken in this regard, but proffered an explanation that she 'thought the advert was a good idea to add to the database' as, in her view, the database did not give the desired effect,” said Zondo.
“On the conspectus of all the evidence, Brown’s posture of innocence must be rejected. The evidence clearly shows that she was part of a scheme to capture Eskom,” Zondo added.
Next the board chairperson needed to be captured.
Zondo said when former Eskom board chairperson Zola Tsotsi eventually refused to play ball he was replaced with a more compliant chairperson, namely the late Ben Ngubane.
“They had made sure that the chairperson of the board of Eskom who had begun not to co-operate — Mr Tsotsi — was removed from the board and they had made sure that Dr Ngubane — who was also doing whatever the Guptas wanted him to do — was appointed as the chairperson of the board,” said Zondo.
“So, the minister was their minister; the President was their man. The chairperson of the board was their man and the acting group CEO was their man. The acting CFO was also their man. That is Mr Anoj Singh,” said Zondo.
Executives would also need to be captured but they would need to get rid of the existing executives first.
On March 11 and 12 2015 the Eskom board unexpectedly suspended four Eskom executives after a lightning fast inquiry including group CEO Tshediso Matona, financial director Tsholofelo Molefe, group executive: technology and commercial Matshela Koko, and group executive: group capital Dan Marokane.
“The suspension of these executives was a crucial step to pave the way for the capture of Eskom by the Guptas,” said Zondo.
“The evidence proves a scheme by the Guptas to capture Eskom, procure the suspension of the four executives under the guise of an inquiry into the affairs of Eskom, install the Guptas' selected officials in positions of influence within Eskom in the places of the four suspended executives and then divert Eskom's assets to the Guptas' financial advantage,” said Zondo.
“As I refer to the suspension of four executives, it must be remembered that the executives that the Guptas really wanted to push out of Eskom were Mr Matona, Mr Marokane and Ms Molefe and not Mr Koko.
“Many of the members of the 2014 Eskom board had connections in one way or another with the Guptas or with some or other associate of the Guptas. For that reason, it may well be that many of them knew exactly what the suspensions were about and what the proposed inquiry was about,” he said.
Zondo said the board likely knew they were supporting a Gupta scheme.
“However, even if some of them or all of them did not know that, in my view each one of those board members would at least have chosen to support the suspensions because they wished to do the bidding of President Zuma and minister Brown and not because they regarded the suspensions as being in the interest of Eskom.
“For that reason, those board members, therefore, breached their fiduciary duties to Eskom.”
Zondo said it was clear the board also went out of their way to shield Zuma and Brown and to disguise their involvement in the scheme.
“Ms (Chwayita) Mabude, in particular, sternly cautioned her fellow board members not to mention the name of the president or of the minister when talking about the decision to suspend the executives, as she said that this would expose the president and the minister to serious repercussions.”
Next was the position of Group CEO, but with the full capture of Eskom it would be easy for them to bring in their man, Brian Molefe.
“The Guptas were in complete control of Eskom. All the positions of strategic importance were occupied by their people. In these circumstances there was no way that, if they said that Mr Brian Molefe should be appointed Group CEO without a competitive process, a competitive process would be initiated,” said Zondo.
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