### 33. Corporate Governance Failures At Eskom

**Introduction**

Eskom Holdings SOC Ltd is South Africa’s major state-owned electricity utility and performs an important public function in electricity generation and supply. Corporate governance failures at Eskom have been examined through parliamentary inquiries, investigations by the Zondo Commission, the Public Protector and law-enforcement institutions. The documented concerns have included weaknesses in board oversight, procurement irregularities, conflicts of interest, financial-management failures and inadequate accountability. Parliament’s 2018 inquiry specifically examined allegations of governance failures and state capture at Eskom. citeturn0search0

**Legal And Institutional Framework**

Eskom’s governance operates within the **Companies Act 71 of 2008**, the **Public Finance Management Act 1 of 1999 (PFMA)**, the **Electricity Regulation Act 4 of 2006**, its founding legislation and constitutional principles governing public administration. As a Schedule 2 major public entity under the PFMA, Eskom’s accounting authorities have obligations concerning financial management, internal controls, expenditure and accountability.

In **Eskom Holdings SOC Ltd v Vaal River Development Association (2022) [2022] ZACC 44**, the Constitutional Court recognised Eskom's status as a major public entity subject to the PFMA and emphasised its performance of public functions within the electricity regulatory framework. citeturn0search1

**Board Oversight And Accountability**

Effective corporate governance requires an independent and competent board capable of supervising executives, managing conflicts of interest and protecting the interests of the entity and the public. The Public Protector’s **State of Capture** report raised concerns about the appointment of Eskom’s board and potential conflicts of interest. These were findings and observations subject to the relevant investigative and legal processes, rather than judicial determinations of criminal liability. citeturn0search26

The Zondo Commission subsequently examined the capture of Eskom and reported concerns involving governance structures, management and procurement processes. Its report described governance failures associated with certain contracts and their financial consequences. citeturn0search2turn0search25

**Procurement And Financial Governance**

Procurement represents a major area of governance risk in state-owned utilities. The Zondo Commission reported that certain Eskom contracts were found to be irregular and that litigation was undertaken to challenge contracts and recover payments. It also identified breaches of Treasury requirements concerning consultant appointments and procurement procedures. citeturn0search25

The **Special Investigating Unit** has separately reported investigations into irregular Eskom contracts and alleged PFMA violations, including proceedings concerning the Kusile power-station project. citeturn0search6 These matters demonstrate the importance of transparent procurement, internal controls, conflict-of-interest management and effective consequence management.

**Public-Law Responsibilities**

Eskom’s governance cannot be treated solely as an ordinary corporate matter because electricity is an essential public service. In **Eskom Holdings SOC Ltd v Vaal River Development Association**, the Constitutional Court considered the effects of Eskom’s electricity-supply decisions on residents, municipalities and essential services, highlighting the constitutional and regulatory dimensions of Eskom’s functions. citeturn0search1

**Conclusion**

Corporate governance at Eskom involves the interaction of **company law, the PFMA, electricity regulation and constitutional accountability**. Investigations have documented concerns regarding board oversight, procurement, conflicts of interest and financial controls, while subsequent legal and institutional processes have sought recovery of public funds and accountability. The Eskom experience demonstrates the importance of independent oversight, transparent procurement, effective internal controls, responsible board governance and enforceable accountability mechanisms in state-owned utilities.