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Three Chief Executive Officers (CEOs) and one Chief Financial Officer (CFO) have resigned from the Central Energy Fund (CEF) group of companies in the last year. This comes against the backdrop of the CEF having lost over R1 billion in the last financial year owing to poor investment decisions and insufficient controls.

At the end of last month, a number of senior staff also departed from the CEF. Particularly problematic is the most recent loss of approximately R184 million in connection with tender irregularities regarding the lease of fuel storage space at Saldanha.

This must sound alarm bells to the Department of Energy, which controls the CEF. But the Department seems to be in denial. Given that Ompi Aphane, Deputy Director-General (DDG) of the Department, sits on the board of the CEF, the denial is all too convenient.

I have today written to the Public Protector, Advocate Thuli Madonsela, to request an investigation into the operations of the CEF.

The Public Protector should seek answers to the following questions:
Are the financial losses of the CEF attributable to irregularities around the tenders to lease storage capacity at Saldanha? The Minister refused to answer in Parliament whether the R184 million losses associated with the Saldanha tenders are a function of legal fees against the department or foregone income. Either way, an investigation is required to ascertain what justification could possibly exist for this loss, given the significant profit potential at play.
Was there inappropriate board interference with the Saldanha fuel storage tender process? Procurement for the leasing of tank storage space was put out to tender in 2010 (to take effect in 2011), but then closed and re-opened. The acting CEO of the Strategic Fuel Fund Association (SFF), one of the CEF’s subsidiaries, admitted to Parliament this week that the reasons the tender process was stopped were vague at best. He also could not answer the question of who actually ordered it to be stopped. The CEF faced R51.3m expenditure on legal costs in the last financial year. An investigation into whether irregular tender practices occurred is necessary.
What are the reasons behind the unacceptably high levels of staff turnover in the CEF? This week, questions posed on this issue in Parliament to the CEF were not answered satisfactorily. The acting CEO defended the high turnover rate by attributing it to personnel capabilities (lack of appropriate skills) and lack of commitment to the agency. Insiders have suggested that inappropriate interference by the board into the operations of the CEF lies behind the slew of exits. Staff turnover appears to be symptomatic of deeper structural problems.
The CEF is controlled by the Department of Energy and its only share is held by the state. State-owned companies owe it to South Africans to operate in a manner that is beyond reproach in every way. It is patently clear that the CEF is not doing so, and so we look forward to hearing whether the Public Prosecutor will indeed launch an investigation.