The Central Energy Fund (CEF) is the state company mandated to provide sustainable energy security solutions for South Africa. Subsidiaries under its oversight include coal mining company African Exploration Mining and Finance Corporation, iGas, the Petroleum Association of South Africa, PetroSA and the Strategic Fuel Fund (SFF).
Like many other state owned companies, CEF is said to be in clean-up mode — PetroSA and the SFF alone have lost billions of rands to chronic mismanagement, bad investments and corruption.
But the CEF is under new management.
Cabinet recently ratified the appointment of a new board of directors, who were submitted by the fund’s government shareholder represented by Mineral Resources and Energy Minister Gwede Mantashe.
The inclusion of former Railway Safety Regulator (RSR) chief executive officer Nkululeko Poya to the board has however raised questions about how exactly these appointments are made, and whether any security checks or vetting are conducted on proposed directors.
Poya is currently the subject of at least two criminal investigations related to maladministration and corruption, as well as unlawful surveillance and cellphone interception of his fellow board members, as well as Mail & Guardian journalist Athandiwe Saba.
He procured the services of a private investigator who was able to intercept the communication of his former board colleagues at the RSR, including Masindi Tshamunwe and Saba, a journalist who had been reporting on RSR at the time.
Tshamunwe is reportedly one of the board members who attempted to reign in Poya after allegations of impropriety emerged against him in 2016.
He said the RSR learnt that Poya had spied on some board members after they pushed back against his usage of unauthorised legal opinions and forensic investigations to legitimise or conceal reports of maladministration.
“I also lodged two complaints against Poya to the public protector [PP] in 2014 and 2016. When I requested an update from the PP office I was told the docket is missing, and I can confirm that it’s now six years and nothing came forth from the PP’s office regarding the three investigations against Poya,” said Tshamunwe.
“He brought RSR to its knees … We cannot have a person of his calibre providing oversight over executives when he does not respect corporate governance,” he added.
Saba is similarly dismayed by Poya’s appointment to the CEF board.
“I am appalled that Gwede Mantashe could appoint Poya who has admitted in his labour court case papers that he surveilled me and RSR employees using state funds. There are criminal cases against him. And he resigned from RSR before the completion of his disciplinary hearing after a lengthy forensic investigation into his dealings into the RSR. This points to the many things that are wrong and rotten within the state,” Saba said.
Poya resigned from the railway regulator last June shortly after the labour court dismissed his application to halt disciplinary action against him.
He faced 14 gross misconduct charges related to alleged infractions dating back to 2014. The charges ranged from misleading the board on financial matters by ordering the deletion of purchase orders from the RSR system, abuse of his corporate expense account, altering the scope of commercial agreements and causing millions of rands in additional costs, to abuse of authority in relation to unauthorised investigations, said RSR spokesperson Madeleine Williams.
“We are equally surprised by the alleged recent appointment of Mr Nkululeko Poya to the board of the Central Energy Fund given the circumstances under which he left the Railway Safety Regulator. Be that as it may, we are unaware of the circumstances under which he was appointed to the board of the Central Energy Fund,” she said.
Williams said the charges against Poya followed a forensic investigation by auditing firm, PwC. “Based on the serious nature of the charges that were levelled against Mr Poya, it is our subjective view that he failed to act in the best interests of RSR during his time as the CEO at RSR and that he did not understand corporate governance,” she said.
“Based on the various acts of corruption and maladministration that Mr Poya is alleged to have been in engaged during his tenure at the RSR, the RSR has opened a criminal case against Mr Poya … This case is currently under investigation by the Hawks,” Williams added.
When contracted for comment this week Poya did not address specific questions related to his illegal surveillance of certain board members, as well as Saba. He did, however, cast aspersions on the PwC investigation and the motivations of RSR, saying three other auditing firms and the auditor general had also investigated him and nothing was found against him. He also accused board members of the RSR to have been “captured” by railway companies.
“The audit methodology used to investigate these allegations has never been made available to neither myself or my legal team for review. It is clear from the ultimate report produced by them, which forms the basis of the charges against me, that only carefully selected information was provided by the RSR to PwC, which resulted in an outcome that suited the desires of the board. I however undertook to defend myself against the charges, as I made myself guilty of the conduct complained of,” he said.
In his new role at the CEF, Poya will form part of the board under the chairmanship of Monde Mnyande.
The last CEF chairperson Luvo Makhasi resigned or was fired, depending on whether you ask him or former energy minister Jeff Radebe, after allegations that he solicited bribes from companies that bought the country’s strategic oil reserves surfaced.
Earlier this year the M&G reported that the 2016 deal, which saw 10.3-million barrels of crude oil sold to three companies for R4-billion, was the subject of a Hawks investigation after R20-million in payments was traced to a former SFF executive.
The M&G also found that the state stood to lose hundreds of millions whether it decides to procure another strategic stockpile, at today’s prices, to replace what was sold, or even if it decides to reverse the sale. This is because 1.3-million barrels — which are today valued at more than R1-billion — have deteriorated inside the tanks.
Mantashe’s spokesperson, Ayanda Shezi, in response to detailed questions about whether Poya had been subjected to any checks and vetting prior to the appointment, said: “The Central Energy Fund (CEF), together with its subsidiaries, is a strategic entity.
“As a result, all appointments to the board are subject to verification -— which includes background checks and other aspects — by the relevant and appropriate state entity.”
“The ministry’s priority remains that of ensuring good governance at the state-owned entities in the department’s portfolio. This is done to ensure that these entities are stabilised and can deliver on their respective mandates,” she added.
Digital rights campaigner Murray Hunter, who has worked with OpenSecrets and the Right2Know campaign, said Poya’s appointment indicated that there was no political cost for surveillance abuses.
“To our knowledge, despite surveillance abuses being a pretty widely accepted problem — the president essentially launched an entire inquiry into the SSA [State Security Agency] on this basis — there’s only ever been one prosecution that we’re aware of for illegal spying,” he said.
“The Saba surveillance case was one of only a handful of instances where the person who’d been illegally spied on was able to get the paper trail that proved the abuse … But 18 months later, it appears to have led to nothing except a new appointment for the person accused.”
“Barely a month ago, the High Court struck down parts of Rica [Regulation of Interception of Communication Act]. As you know, that case also involved spying on a journalist [Sam Sole]. At the heart of that judgment, the court was issuing an indictment of the climate of abuse and interference that the state has allowed against journalists, whistleblowers and other perceived trouble-makers,” Hunter said.
Williams also said the RSR also learnt that Poya established a consulting company, Umtongata Proprietary Limited, and worked for it during suspension. “In light of this, the RSR instituted an action against Mr Poya and Umtongata Proprietary Limited as this conduct was wrongful and in breach of his contractual, statutory and fiduciary duties to the RSR. “Furthermore, this conduct was in direct conflict with Mr Poya’s position as the CEO of the RSR and it was also in direct conflict with the business interests of the RSR,” she said.