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Pamensky admits to ratifying Eskom’s dodgy R43 million New Age deal

  • mark pamensky
Johannesburg chartered accountant Mark Pamensky, a former Eskom non-executive board member, has admitted to ratifying a dodgy sponsorship contract between the cash-strapped power utility and Gupta-owned newspaper The New Age (TNA).
by NICOLA MILTZ | Nov 07, 2019

Pamensky was testifying to the Zondo Commission of Inquiry into state capture last week.

He admitted to the commission that he didn’t get a copy of the contract between Eskom and TNA before ratifying the R43 million advertising and sponsorship deal between Eskom and the newspaper in 2015.

The contract, according to evidence, bound Eskom to a sponsorship agreement in which Eskom would bankroll TNA’s controversial business breakfasts every month at a cost of R1.2million a breakfast.

The Zondo commission has heard evidence that Eskom spent more than R50 million on three advertising and sponsorship contracts with TNA. This was the third of such agreements.

Pamensky said he was unaware at the time of the serious misgivings surrounding the controversial sponsorship agreement.

However, audit firm Sizwe Ntsaluba Gobodo (SNG) had already reviewed the contract and found it to involve “reportable irregular expenditure”. Also lawyers from Ledwaba Mazwai Attorneys had called for a termination clause in the contract. And SNG had found that Eskom’s interim chief executive, Collin Matjila, exceeded his authority when he signed the deal (before ratification).

Also, according to testimony before the commission, Eskom’s sponsorship policy requires that contracts above R3 million be properly assessed and approved by its sponsorship committee first.

The contract was concluded without the termination clause in spite of legal advice to the contrary.

Even before Pamensky ratified this contract, the TNA breakfasts being aired on SABC were being scrutinised in the media and in parliament. He told the commission he didn’t know about this.

The Gupta’s close relationship with former President Jacob Zuma resulted in a lack of impartiality in the newspaper’s handling of controversial stories relating to Zuma and the ruling party.

Pamensky testified before inquiry chairperson, Deputy Chief Justice Raymond Zondo, on 31 October. Evidence was led by advocate Kate Hofmeyr.

He said he didn’t know that Eskom’s previous board had found no value in the utility’s prior sponsorship agreements with TNA.

He also claimed not to have known that then Public Protector Thuli Madonsela had asked for a delay in the decision by the board to enter into a deal until her report into state capture was finalised.

And, he claimed no knowledge of the two prior contracts between Eskom and TNA that were concluded without the involvement of the sponsorship committee.

Hofmeyr asked whether he would maintain his decision to ratify the contract if he had known then what he knew now. Pamensky answered, “Never.”

Pamensky’s appointment as an Eskom board member allegedly coincided with meetings he held with Gupta brothers Atul and Tony at roughly the same time as the controversial advertising and sponsorship contracts were being scrutinised by parliament and the media.

He joined the Eskom board on 11 December 2014, serving on the investment and finance committee as well as the audit and risk committees. At the time, he also sat on the boards of about 25 other companies, including Gupta-owned Oakbay Resources and Energy Limited and Shiva Uranium.

“In mid-2014, I was planning to move on from Blue Label Telecoms within about a year or two. Roughly on about 28 September, there was an advert in the Sunday Times newspaper. I duly printed it, scanned it, and applied to become a director of Eskom,” he told the commission.

“I felt that my skills in relation to turnaround M&A (mergers and acquisitions) and restructuring would be ideal for this environment, especially the position that Eskom was in at that point in time.”

He described Eskom as being “in a state of financial disarray”.

In September 2014 he became a director at Gupta-owned Oakbay Resources, according to advocate Hofmeyr.

“I was called to a meeting by Mr Atul Gupta, who explained to me that they were listing a subsidiary of theirs called Oakbay Resources and Energy which had a subsidiary called Shiva Uranium that was involved in the uranium and gold industry, and they were looking for independent non-executive directors to join their boards,” said Pamensky.

In June 2014, Tony Gupta contacted him. “He said, ‘Would you like to come over and have a cup of tea and a discussion’. It was a general discussion. I explained who I was. I explained what Blue Label did. He explained a little bit about Sahara Group, a little bit about Shiva Uranium, and just a general chat about the group.”

Pamensky said there was no talk about him becoming an Eskom board member in either of these discussions.

Hofmeyr brought up the Public Finance Management Act (PFMA), and asked Pamensky if he agreed that the act placed heightened obligations on the directors of boards of state-owned enterprises compared with ordinary private companies. And, whether he accepted that the reason for this “might be that state-owned enterprises are spending public money?” He agreed, and said he became familiar with the act within the first six months of his directorship.

He said he wasn’t aware of scathing newspaper articles in October and November 2014 explaining how Matjila had allegedly disregarded internal legal advice and approved the R43 million contract, saying he didn’t know the contract was mired in controversy.

Earlier, evidence given by Peter Pretorius, Eskom’s acting strategic communications and marketing manager, suggested that his take on the value of these business breakfasts was that “they made no financial sense”.

Hofmeyr said that she understood from Pamensky’s affidavit that he never actually got a copy of the third contract that was entered into which he was asked to ratify.

Pamensky replied, “That is correct.”

“Is it your evidence that you didn’t think it was necessary for the board to see the agreement it was being asked to ratify before it took that decision,” she probed.

To which he replied, “Yes it is.”

“Do you think you should have seen the agreement that you were being asked to ratify before ratifying it?”

“No ma’am, I do not,” he replied.

At this point Zondo said, “But I would think that if you are asked to ratify a contract you must have the contract in front of you. If a board is asked to ratify anything every member would say, I need to see what I am ratifying.”

Hofmeyr said Pamensky knew at the time that TNA was owned by the Gupta family or its companies.

He was asked if he wasn’t concerned about ratifying a contract relating to a Gupta entity in 2015 at a time when there was “huge concern” about the role of the Gupta family in state-owned enterprises and the running of the country.

Pamensky said, “No chair, it didn’t cross my mind at that point. And also at that point in time, the Guptas weren’t so toxic as they are now.”

Pamensky testified that by the time he took up his board position, he had no knowledge of the prior Eskom-TNA contracts.

He said he relied, among other points, on Matjila’s representation to the board to explain why the contracts had value.

Hofmeyr said, “I want your comment on the proposition that it wasn’t reasonable to rely on Mr Matjila’s assessment of the value of this contract given all of this backdrop.”

“I had no reason to disbelieve him. I felt his representations were comprehensive in the sense of explaining himself, and I didn’t at that point have a reason not to take it at face value,” Pamensky replied.

“I took all the points into consideration when I ratified this. There was sufficient information, we received a legal opinion, we received an audit report, and in my mind, at that point in time, there was a sufficient amount of information for us to make a decision,” he said.

In August 2017, the Organisation Undoing Tax Abuse laid criminal charges against Pamensky for his conduct while he was a director at Eskom and Oakbay. He allegedly shared Eskom information with the Guptas that assisted them in their R2.15 billion purchase of Optimum Coal Holdings, which had coal contracts with Eskom.

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