HOME INTEGRATED REPORT ANNUAL FINANCIAL STATEMENTS SUPPLEMENTARY AND DIVISIONAL REPORT CORPORATE SOCIAL INVESTMENT ESKOM FACTOR INTERIM REPORT
 

INTEGRATED RESULTS PRESENTATION
KING III APPLICATION
 
   



Corporate governance framework

The governance framework that regulates the relationship between the shareholder, the company and the board includes the following:

A memorandum of incorporation, which sets out certain powers of the shareholder and the board. Eskom’s revised memorandum of incorporation (MoI) is being finalised. The board and the shareholder are in consultation on various provisions of the MoI
A strategic intent statement, which sets out the agreed mandate and strategy for Eskom
The corporate plan, which forms the basis of Eskom’s operations and outlines the company’s purpose, values and strategic objectives
A shareholder’s compact, which sets out annual key performance indicators and targets in support of the strategic intent statement. To the extent necessary, the shareholder’s compact seeks to clarify the objectives of Eskom in the context of the strategic intent statement
Codes of good governance such as King III and the Protocol on Corporate Governance in the Public Sector. Eskom has endeavoured to apply all the King III principles and practices. However, as a state-owned company, a few of these cannot be applied and Eskom has, in some instances, adopted alternative practices to those recommended by King III. A report on Eskom’s King III exceptions and alternative practices can be found at www.eskom.co.za/ IR2014/03.html
Relevant legislation, including the Companies Act, the Public Finance Management Act (PFMA), National Treasury regulations, the Eskom Conversion Act (2001), and regulations of NERSA and the National Nuclear Regulator (also refer to page 34)
Materiality framework which sets out the requirements regarding matters needing approval in terms of the PFMA
Relevant policies and procedures of the shareholder and Eskom
Delegation of authority framework which delegates power and authority from the board to committees and employees. The revised delegation of authority framework was approved and is being implemented

One of the essential components of the governance framework is the emphasis on the clarity of roles between the board, shareholder and management, and this is addressed through the strategic intent statement and shareholder’s compact.

A subsidiary governance framework is in place to ensure that Eskom’s subsidiaries align with the group’s sustainability goals.

Responsible and ethical leadership

Eskom’s leadership focuses on effective ethical leadership and corporate citizenship. As can also be seen from what is set out earlier regarding the performance of Eskom and its key priorities, the board and executive management have recognised the need to integrate strategy, governance and sustainability.

The Eskom board ensures that the group’s ethics-management programme is effectively implemented. Eskom manages fraud and corruption by:

Fostering ethical standards
Raising awareness regarding ethics through training, reporting and providing advice through an ethics help desk
Encouraging whistle-blowing through mechanisms such as a fraud and corruption hotline on 0800 112 722
Conducting forensic investigations

A detailed forensic report is tabled with the audit and risk committee on a quarterly basis. This report contains information on:

New forensic incidents reported, including those reported through the hotline
Progress on investigations relating to incidents of corruption, fraud, irregularities and sexual harassment
Losses and recoveries recorded by Assurance and Forensics
Disciplinary action taken (11 employees were dismissed during the year as a result of the outcome of forensic investigations)
Trends and observations stemming from investigations
Preventative action taken (for example, fraud awareness training to enhance vigilance among employees was attended by
1 933 employees during the year)

Eskom is a signatory to the United Nations Global Compact LEAD initiative, which includes an anti-corruption clause, as well as the World Economic Forum’s Partnership Against Corruption initiative.

Committees

The board’s effectiveness is improved by the use of board sub-committees, to which it delegates authority without diluting its own accountability. Board committees consist of a majority of independent non-executive directors who exercise their authority in accordance with approved terms of reference, which are reviewed on an annual basis. These terms of reference define each committee’s composition, role, responsibilities and authority, and are aligned with regulatory requirements and best-governance practices. The board provides the strategic direction, while the chief executive, who is assisted by the executive management committee, is accountable to the board for implementing the strategy.

The diagram below sets out Eskom’s key governance structures:

Eskom board

The board held 11 meetings during the year. The board committees held the following number of meetings:

Audit and risk committee 9
Investment and finance committee 12
Tender committee 12
Social, ethics and sustainability committee 5
People and governance committee 6
Build programme review committee 10

Please see www.eskom.co.za/IR2014/08.html for more information on the committees and their activities throughout the year. For the report of the audit and risk committee, please refer to page 3 of the annual financial statements, which can be found at www.eskom.co.za/IR2014/01.html

Executive management committee

The executive management committee is established by the chief executive and assists the chief executive to guide the overall direction of the business and exercise executive control in managing day-to-day operations. The executive management committee held 17 meetings during 2013/14. Refer to page 43 for Eskom’s operational structure as well as the related executive management committee member responsible for each function.

Other than the chief executive and finance director, who are executive directors, Eskom’s group executives are appointed by the board. Group executives are full-time employees subject to Eskom’s conditions of service.

Please see www.eskom.co.za/IR2014/09.html for executive management committee members’ qualifications, significant directorships and appointment dates.

Changes in executive management committee in 2013/14

Refer to changes in board composition on page 68 for changes regarding the chief executive and the finance director.

Mr Paul O’Flaherty, who was also the group executive: Group Capital, resigned with effect from 10 July 2013 and Mr Dan Marokane (group executive: Technology and Commercial) was appointed to act as group executive: Group Capital.

Mr Kannan Lakmeeharan (divisional executive for Office of the Chief Executive) was appointed to act as group executive: Technology and Commercial. Mr Lakmeeharan resigned with effect from 30 April 2014 and Mr Matshela Koko was appointed to act as group executive: Technology and Commercial until the permanent appointment has been concluded.

Ms Erica Johnson, group executive for Enterprise Development has been acting as group executive: Group Customer Services from
20 January 2014 after Ms Tsholofelo Molefe vacated the position.

Mr Bhabhalazi Bulunga, group executive: Human Resources went on early retirement on 31 January 2014. Mr Mongezi Ntsokolo, group executive: Transmission, was appointed acting group executive: Human Resources from 1 February 2014.

Filling of the executive vacancies will be one of the first priorities for the incoming chief executive.