[dropcap]E[/dropcap]skom staff received a huge bonanza on 11 July when their performance bonuses were paid out, at an average of R88 883.35/employee.
On the same night, the presentation of the utility’s annual financial results scheduled for the next day were hastily postponed to assess the impact of the auditors’ qualified opinion.
It has since also come to light that the power utility, on an alone-standing basis, in fact showed a loss of R870m for the year ended 31 March 2017. The R1bn profit it reported on Wednesday when the financial results were ultimately presented was in fact a rounded up R888m and was the group result.
The group consists of the power utility and also the Eskom Finance Company, Escap (a captive Eskom insurance company) and the Eskom Development Foundation. The results of these other entities boosted the power company’s loss-making numbers at a group level.
At the results presentation, Eskom distributed a brief document that only reported on “Eskom”, without differentiating between the group and the company. It showed a R1bn profit. Members of the media were only given the full financial and integrated reports after the event.
The complete financial statements show that staff cost increased by around 13% at company as well as group level. When asked about the sharp increase at the presentation, Eskom chief financial officer Anoj Sigh said increased overtime payments as well as bonuses were contributing factors.
The financial statements show that the group paid a staggering R4.2bn in bonuses, up 98% from the previous year. That means that, on average, the 47 658 employees received R88 883.35 each.
Linked to performance
Eskom spokesman Khulu Phasiwe said the bonuses are linked to performance. Some divisions within Eskom that failed to meet their targets were penalised and received smaller bonuses than the rest of the staff, Phasiwe said.
At a company level, where the loss occurred, the cost for paying bonuses increased by R1.6bn. That means that by decreasing the size of the bonuses by about 50%, Eskom could have avoided reporting a loss.
Moneyweb earlier reported that Eskom’s performance scheme provides for certain “gatekeepers” that could affect an employee’s bonus amount even when he achieved all his predetermined targets.
The annual report released on Wednesday does not disclose what the gatekeepers were, but last year it stated five measures. Two were safety related and the other three were making a loss, getting a qualified audit report and in case of significant transgressions of the Public Finance Management Act (PFMA).
If any of these “gatekeepers” are triggered, the board’s People and Governance committee has the discretion to reduce the bonuses by a percentage or even completely scrap them.
At the results presentation on Wednesday, Moneyweb asked Singh how the bonuses were impacted by the “gatekeeper” conditions. At that stage it was not yet clear that Eskom recorded a loss at company level, but the news of the qualified audit report and two reportable irregularities which constitute non-compliance to the PFMA had become public.
Singh responded “he thinks” a penalty of 15% was imposed.
The People and Governance committee was also responsible for the resolution that resulted in a R30m pension payout to Molefe. This payout was later reversed and is currently the subject of a court challenge.
- This article was originally published on Moneyweb and is used here with permission