Corruption Or Business As Usual?

Rothschild's Letter To Eskom Suggesting It Be Appointed As Financial Advisors

By Pinky Khoabane

A Letter from Rothschild to Eskom CEO Phakamani Hadebe shortly after the appointment of the new Eskom Board in January this year makes it very clear that the campaign to sell-off parts of the power utility should be in the mix of solutions to address its liquidity problems. In the letter, Rothschild CEO Martin Kingston proposes that his organisation be appointed as the “independent financial advisor” to the Board. Many questions arise: Is this procedural, can one propose a solution to a state owned entity with the intent of being the approved supplier when there are procedures to be followed in appointing suppliers, and what will be the guidelines of the terms of reference be? Will those terms of reference be influenced by this proposal or not?

Furthermore, is this not an attempt to influence policy direction of a state-owned company
and could this not be defined as a classical example of state capture or an attempt to capture an organ of the state?

A part of the letter reads: “Eskom should also consider alternative funding sources including:

  • Potential asset sales: The sale of quasi instruments in individual assets (e.g. in Kusile in return for funding to completion), the sale of existing generation, transmission and distribution assets….
  • Acceleration of receivable. Recovery of municipal arrears and/or direct distribution to client in defaulting municipalities….”

Even before this letter dated 20 February 2018, Kingston had written an email on 23 January proposing that the new Eskom board should prioritise the “independent assessment of the financial position of Eskom”. He goes on to mention that “At the Eskom results presentation, I had the opportunity to discuss Eskom’s sustainability with Caleb and Andre, both of whom acknowledge the value an independent an independent advisory could bring”.

Andre is Andre Pillay, Eskom’s Treasurer and Calib Cassim who’s the acting chief financial officer. At the time of publishing this story Eskom had not responded to the question of whether Rothchilds were appointed as financial advisors.

Heres are pages of the full letter

In the letter Kingston mentions an “independent financial advisor” and proposes Rothschild. Kingston himself could never be seen as an independent player in the South African economic environment. He was Chairman of Deutsche Bank when through the Rand Commission of inquiry into the Rand’s 37% decline, it was established that he was an architect in the decline of the Rand and the bank was fined R800m for its assault on the Rand.

A 2006 article in News 24 wrote: “Deutsche finally confirmed Kingston’s departure in June under a cloud of allegations concerning his wife’s involvement in the Old Mutual empowerment transaction that Deutsche advised and an alleged irregular contract between Deutsche and former National Empowerment Fund (NEF) CEO Sydney Maree”.

Trevor Manuel is currently Chairman of Old Mutual, serves the Rothschilds and was in the circle of Transitional Executive Committee (TEC) which through an $850million IMF loan to pay for apartheid debt made concessions including privatisation and cuts in state spending for the Reconstruction and Development Programme (RDP).

Privatisation of State Owned Entities In South Africa

“When the World Bank and the International Monetary Fund lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called ‘structural adjustment policies.’ These policies require debtor governments to open their economies to penetration by foreign corporations, allowing access to the country’s workers and environment at bargain basement prices. Structural adjustment policies mean across-the-board privatization of public utilities and publicly owned industries. They mean the slashing of government budgets, leading to cutbacks in spending on health care and education. And, as their imposition in country after country in Latin America, Africa, and Asia has shown, they lead to deeper inequality and environmental destruction.” Global Exchange.

One of the institutions that arose out of the negotiated settlement was the Transitional Executive Committee (TEC) as an interim government comprised of members of the ANC and the Nationalist Party. The TEC had many sub councils one of which was the sub-council on finance. The terms of the $850 million IMF loan the ANC government took in 1993 included cuts in state spending, the privatisation of SOEs, large cuts in public sector wages, and commitment to abandoning nationalisation. The ANC took out this loan to service the apartheid debt which was used to buy arms in its battle against Black people and to prop-up a system that oppressed them. In 1951-67 for example, the World Bank lent the apartheid regime more than $200m, half of which went to support electricity generation when the sprawling townships were denied electricity. In effect, the ANC paid for apartheid loans which were meant to destroy the Black populace. The IMF and World continued to supply loans to apartheid South Africa despite calls for anti-apartheid financial sanctions.

Since the $850m loan there have been more millions poured into the country as loans from the World Bank and with it, the ditching of the more progressive aspects of the Reconstruction and Development Programme (RDP). The Bank has had many representatives advising post-apartheid SA on policy which has been more “market orientated” and anti-poor.

Who were among the members of the TEC sub-council on finance that agreed to this deal.

  • Former President Thabo Mbeki headed the council
  • Former Finance Minister Trevor Manuel who was Chairman of World Bank and IMF at one stage and is now head of Rothschild Africa
  • Maria Ramos who was Director General of Treasury. She left for Transnet before ending at Barclays Africa as CEO
  • Pravin Gordhan who was co-chair of TEC from 1991 – 1994, Sars Commissioner from 1999 – 2009, was appointed as finance minister in Zuma administration and returned for a second term after Nenegate. He was fired as part of Zuma’s last cabinet reshuffle and returned in President Cyril Ramaphosa’s cabinet. It was Pravin who signed for the $850m IMF loan
  • Tito Mboweni who became Minister of Labour and thereafter Governor of Reserve bank between 1999 – 2009, and is currently advisor of Goldman Sachs International
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  1. As always , thanks for sharing with us Cde PK .Had this appeared in the Sunday Times or on eNCA, it would have been dubbed “breaking news”.But then we know that these media platforms are always on the side of big business and in particular White Monopoly Capital and that being the case, such an expose would never make it to the front pages and television screens of these agents of WMC.
    As for the contents of the letter itself , it seems to disclose :
    1. a brazen attempt to influence policy direction of a state-owned company;
    2.corrupt practice of a WMC entity to exert and or seize control of a strategic sector of the economy in pursuit of narrow commercial ends;
    3.a classical example of state capture or an attempt to capture an organ of the state.

    1. Thanks Cde Greg, so nice to hear from you.

      Who’s capturing who? It would seem in the exit of the Gupta looters we have new or existent looters rearing their heads.



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