SAfrica business dispute sets off racism charges

JOHANNESBURG - A struggle over how to manage South Africa's state-owned power company has opened debates on racism in the boardroom and political meddling in a country where politics and race remain a volatile mix.

Chairman Bobby Godsell and CEO Jacob Maroga were brought in recently to turn around Eskom, a utility that has been troubled for years, but they could not agree on strategy. In a statement Thursday, Eskom's board said both men were out, and that an acting chairman was in sole charge until a new chair and CEO were named.

Accusations are being made that Maroga was being pushed out because he is black. The youth wing of the ruling African National Congress party said: "The time of treating black people ... as subjects, who can be fired as and when the white master wishes is over."

The Black Management Forum, an independent lobby group, said state-owned companies were becoming "slaughterhouses for the black professionals recruited to head them" because white board members did not want to give up control of the economy 15 years after the end of white political rule.

But the secretary general of the National Union of Mineworkers, who is black, defended Godsell, saying the former mining company executive was no racist and pointing out that most of Eskom's board members are black.

Neither Eskom nor Godsell have addressed the race issue, and Maroga has not commented.

While the Eskom statement released Thursday was an attempt to dispel uncertainty, it was likely to raise even more questions, said Ebrahim-Khalil Hassen, an economist at the National Labor and Economic Development Institute, a think tank for South African unions.

"With this situation, I'm not going to predict anything," Hassen said. "It changes every day. It's crazy."

Godsell resigned Monday, saying the government had not supported the board in its dispute with Maroga. Godsell said then that Maroga had offered to resign Oct. 28, then later denied resigning.

Thursday's statement said Maroga's "clear and unambiguous" offer to resign was accepted and stands.

"The board recognizes that Mr. Maroga's resignation brings uncertainty," the statement added, saying acting chairman Mpho Makwana "maintains that while this is a difficult time for Eskom, he is confident that the organization remains focused on the job at hand and will continue to power South Africa's economy."

Christopher Hart, Johannesburg-based chief economist at international investment management company Investment Solutions, said the issue was not what criteria were used to select managers but whether policies were clear and rules were followed.

He said in the case of Eskom and other troubled state-owned companies it appeared politicians were overriding boards rather than working with them. That could leave potential investors with the sense economic decisions were being made arbitrarily in South Africa, Hart said.

"You can expect political involvement, but it must be done through the structures," he said. "It's a sign of a totalitarian state when the rules ... are ignored."

In South Africa, Eskom blamed a 2008 electricity crisis on years of under-investment and rising demand. Widespread power cuts hit the industrial hub of Johannesburg and at one stage gold and platinum mines — the backbone of the national economy — had to stop production because of lack of power.

In a statement this week, a multiracial group of business leaders said Eskom's management problems needed to be quickly resolved, so that the utility could play a part in helping South Africa recover from the global recession.

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