Special Hearings — Business Hearings — 1997-11-11

WILLEM KOK: I thank you chairperson.  Chairperson, as requested, the submission was done under three broad headings, namely Eskom, apartheid and the economy; Eskom, government and trade unions; Eskom and its' security arrangements.
 Eskom would like to deal with these issues against the backdrop of the following statement:
"Eskom acknowledges, that as will be seen from this submission, it did not behave as would be expected, from a good corporate citizen in the past.  Untill the late eighties as a public utility, it's actions and policies did little if any, to improve the plight of black people in South Africa.  In addition , as an employer, which employment practices were largely discriminatory.  Eskom wishes to unconditionally apologise to all black South Africans in general, and black Eskom employees in particular., for the fact that it entertained apartheid policies, and through its actions perpetuated it.  In addition, Eskom wishes to apologise to all South Africans, regardless of race or colour for the fact that as a major player in the South African industry and our economy as a whole, it did not take active steps to facilitate the demise of apartheid, and racial discrimination.  Also,  for not using its' link with the government to influence it's thinking and its' apartheid based policies."
This brings me to Eskom, apartheid and the economy.  Since its establishment, Eskom has played an important role, in the South African economy.  It is also generally accepted that the cost of electricity is an important element in the inflation rate.  Local manufacturers, also depend on a low electricity tariff to remain competitive in off shore markets and the mainly white manufacturing and construction industry, has over the years, benefited significantly from the capital projects, launched by Eskom.  Electricity supply industry over the years, reflected the peculiarities of apartheid.  The electricity act granted local authorities soul control over electricity supplies within their areas of jurisdiction.  Many of the larger towns and cities became involved in installing electricity in adjoining black townships, but at a drastically slower pace.  Partly because of the perceived inability of township residents to pay for electricity.  Eskom, as the predominantly bulk supplier of electricity , electricity, merely supplied electricity in bulk to such local authorities.  The Black Consolidation Act of 1945, and the Group Areas Act of 1950, enforced the policy of separate development in urban areas.  This often caused the separation of naturally integrated networks, or the creation of new networks, irrespective of the cost thereof.  Separating the administration of black urban areas from white cities, often meant that the black areas were left without electricity altogether.  Eskom has only since 1987, become involved in the supply to black local authorities.  Electricity supplies within black local authorities became caught up in national politics and rent and service boycotts at the time were employed as effective tools of political struggle in the townships.
 It is appropriate to refer to the difference between electricity demand in the black townships and that in white areas to understand the pricing of electricity.  White municipal areas normally had an industrial as well as residential demand which could be used to balance load factor resulting in lower overall costs, for industrial as well as residential users.  As some black townships were electrified, they had no industrial users to balance the peak load, resulting in consumers in those areas paying a very high demand charge, whilst using considerably less electricity.  This in effect meant, in certain instances, that electrified black townships subsidised neighbouring white municipal areas.  Eskom initially took no positive action to broaden access to electricity.  It never challenged the racial policies that prevented or inhibited investment and development of black townships.  Although no record could be found of Eskom's management debating and positively supporting this position, it is true that Eskom effectively operated as an institution of apartheid and in the process appears to have served mostly white interests.  Towards the late eighties, the financial position of local authorities and the effect thereof on  the electricity supply of such areas, became a matter of great concern to Eskom.  This led to the establishment of the Soweto project in 1989, which  was the forerunner of Eskoms' country wide involvement in electricity supply within various black local authorities.  A few words, on the Soweto project.  Following various meetings of various interested parties, including the then Transvaal Provincial Administration, towards the end of 1988, the committee was established under the chairmanship of Eskoms' then chief executive, to investigate electricity supply in the greater Soweto.  A steering committee was established consisting of representatives of Eskom, the Transvaal Provincial Administration - TPA-; the Central Witwatersrand Regional Services Council, various city councils, the Rand Water Board and some business interests, including organised business in Soweto and Nafcoc.  While the steering committee was busy with it's investigations, senior management from Eskom met with political and community leaders in Soweto to discuss the issue and debate possible solutions.  As a result of these discussions and the findings of the steering committee, Eskom established a project team to conduct negotiations and undertake planning to achieve the normalisation of electricity supply within the greater Soweto.
 The Eskom project team continued with their work during 1989 and also built up a working relationship with the Soweto's People Delegation, the SPD, while at the same time, negotiating with the TPA, and business and community leaders within the greater Soweto.  Eskom was severely criticised by political leaders at the time within the TPA and the national government for doing so; as it involved formal discussions with people who were known to be members of banned political organisations such as the ANC.  Eskom's involvement as aforesaid, was an attempt to bring about fairness and equity to all those that could benefit from the use of electricity.  These arguments by Eskom were never accepted by the TPA and Eskom was accused of being in cahoots with the enemy.  The TPA was concerned that official talks with the SBD would undermine the legitimacy of the city councils.  However, Eskom accepted the view of the SBD that if it was to support the Soweto council to act on its behalf, payment for services would not resume.  As a result of political developments early in 1990, the members of the SBD became involved in mainstream political activities and the project was formally terminated.  However, Eskom continued discussions with various black local authorities predominantly in the Transvaal, with a view to normalise the electricity supply in those areas.  This eventually led to Eskom taking over the supply rights within the greater Soweto as well as various other black townships.  
 As far as electrification is concerned the following.  Although Eskom initially operated as a bulk supplier, its rural electrification policy had been in place for many years; all being it focussing exclusively on the white agricultural and farming sectors.  Although Eskom was legally supposed to only provide electricity if it was commercially viable, it continue with rural electrification which was in line with government policy.  In 1984, the government subsidised the extension charges to be (unclear) by farmers in respect of the electrification of these farms.  The early part of 1987, Eskom embarked on a program to also bring the electricity to black townships and the rural communities in an effort to improve the quality of life in those communities.  It also made it's expertise available to all the relevant local authorities in an attempt to find schemes suitable for townships.  At the time it was connecting an estimated ten thousand rural consumers a year.  Since then, Eskom has made significant progress in its electrification program and since 1995, it has electrified on average three hundred thousand homes per annum, a thousand per working day.  
 The impact of apartheid on Eskom.  As an institution which had to procure a large portion of its capital equipment from suppliers abroad, Eskom was seriously affected by the international sanctions and the policy of disinvestment.  Eskom therefore had a choice to either pay a premium to secure such items by making use of intermediaries or to assist in the establishment and development of local suppliers during this period.  However, as local suppliers were predominantly white, or owned by so- called white capital, Eskom's significant buying power did not benefit black business at the time.  Only in 1992 did Eskom formally pledge its support for black business, particularly small and medium business enterprises.  During the first two years of this initiative, Eskom procured only services from black enterprises.  This brings me to Eskom and the Trade Unions.
 Eskom status as a so-called parastatle organisation, did not prevent it's employees from joining trade unions, they were never deemed to be civil servants and the provisions of the Industrial Conciliation Act of 1956, later known as the Labour Relations Act, have always been applicable to them.  Eskom's relationship with trade unions can be traced back to 1919, when trade unions affiliated with the South African Industrial Federation, were formally recognised by the Victoria Falls and Transvaal Power Company, the VFP.  Representations by the joint committee of mining trade unions resulted in the signing of a close shop agreement between the VFP and five trade unions on the 1st September 1939.  This agreement remained in force, when Eskom took over the operations of the VFP in 1948.  It is not known whether membership of the respective trade unions were limited to specific race groups.  In 1955, Eskom advised that the joint committee of mining trade union, that it no longer considered itself bound by the closed shop agreement referred to before.  Eskom concluded its' own closed shop agreement with seven trade unions, representing blue collar workers in May 1957.  An important feature of this agreement was that Eskom would not recognise any shop stewards.  The trade unions concerned, formed the Eskom Unions Joint Committee in 1959.  It was agreed that the quarterly meetings, which until that time being held with the respective trade unions, would in future be held with the joint committee.  It is known that black employees of the VFP belonged to the African Gas and Power Workers Union, while there is no record of any negotiations between Eskom and this trade union.  As far as black employees were concerned, Eskom primarily relied on  an 'induna' system; room representatives in the hostels, and accident prevention committees.  The period from 1960 to 1979.
 The close shop agreement referred to earlier on, has been replaced by a new agreement on the 1st July 1963, after the admittance of the South African Iron, Steel and Allied Industries Union.  Since 1964, regular meetings between representatives of Eskom and some of the unions in terms of the closed shop agreement took place.  During 1970, a request by the trade unions for a new closed shop agreement and the recognition of shop stewards, was turned down by Eskom and the dispute was referred to the industrial court which rejected the demands of the trade unions.  At that stage Eskom had serious doubts about external trade unions and expressed a clear preference for so - called house unions.  The presentations were made to the minister of economic affairs in 1973, to be exempted from the provisions of the industrial conciliation act of 1956.  These representations were repeated in 1976 as well as in 1979 when Eskom made its submissions to the (unclear) commission.  Eskom also established liaison committees for its black employees at plant level and by 1979, no less than 62 such committees were in operation.  By 1979, negotiations in respect of blue-collar workers as well as white-collar workers were conducted at separate but regular half-yearly meetings during which improvement in wages, salaries and conditions of service of white employees countrywide were discussed.  There was no forum for the collective bargaining in respect of the wages and conditions of service of black employees at that stage.  
 The period from 1979 to 1990.  Eskom reacted positively to the report of the Wiehahn Commission as well as the legislation that ensued.  The importance of trade unions autonomy was appreciated for the first time and Eskom deliberately refrained from fostering so-called sweetheart unions.  Eskoms' black and coloured employees eventually established their own trade unions.  Eskom appreciated the need for collective bargaining in respect of the black workers in particular and consequently decided to extend the liaison committee system in the interim.  Regional liaison committees as well as national liaison committees were established.  The national liaison committee served as a forum for collective bargaining in respect of the salaries, wages and conditions of service of all categories of black employees countrywide.  In June 1983, Eskom decided that it would no longer insist that trade unions be registered before engaging them in discussions.  And that the industrial relations system would be formalised and structured by means of three collective recognition agreements for salaried staff, monthly paids and general workers respectively.  The trade unions recognised in respect of these categories of employees, would participate in three racially integrated bargaining forums in respect of each category of employee.  The respective agreements provided for collective bargaining at corporate level as well as deliberations at regional and workplace level.  Shop stewards were also recognised for the first time.  They were encouraged to improve their skills and were granted special leave to attend trade union conferences or training courses.  The agreements were comprehensive and covered virtually every aspect of the relationship between Eskom and the trade unions, including the disciplinary code and procedure, as well as the grievance procedure.  The National Union of Mine Workers and let alone Allied Workers Unions subsequently known as NUMSA, were officially recognised in 1987 and they eventually also signed the recognition agreement in respect of general workers.  By October 1989, 69% of all Eskom workers, belonged to trade unions.  Eskom believes it is important to emphasise, during this period, unlike most other employers, it extended collective bargaining rights to all its employees, with the exception of managers on Patterson Bands of E and above. 
 The final period from 91 to 94.  In '92, Eskom rationalised the three forums into a single integrated negotiation forum.  Collective bargaining and trade union participation in decision-making structures, changed fundamentally in 1992.  In that year Eskom was in the process of restructuring the organisation to improve business efficiency, when the NUM in particular objected to what they regarded as unilateral decision making by management.  This led to the 'save Eskom' campaign which culminated in management and labour sitting down and developing internal structures, to accommodate full participation and meaningful influence by  all (unclear) labour and employees.  In the decision making structures and process at all levels through the unfolding vision agreement as it was named within Eskom.  As a consequence of this process, the electricity council appointments in May1993, including representatives from three trade unions, namely NUM, NUMSA and the Eskom Employees Association.  Trade unions now have a say in corporate (unclear) and are playing an important role in Eskom's future, through presentation on the electricity council, the Eskom Medical Aid Society, the Eskom Pension Fund and other participate structures and processes.
 Elimination of racial discrimination.  Negotiations on the better utilisation of Eskoms' manpower had been initiated during the early seventies but progress was slow.  Eskom in its' submission to the Wiehahn commission stated that it took eighteen months of negotiations before blacks were permitted to become lorry drivers for instance.  Negotiations in Eskoms better utilisation of Eskom's manpower committee, resulted in the establishment of  the Eskom Artisan Recognition and Training Scheme in March 1976.  This was a non-racial scheme from the outset.  In September 1979, Eskom adopted the policy on the elimination of racial discrimination.  This was followed by the act of recruitment, indenturing and training of black apprentices as well as the appointment of a number of blacks in senior managerial positions.  The advent of trade unions representing other race groups and growing aspirations emphasised the need to eliminate all remaining discriminatory practices.  A number of strategies were deployed which included parity exercises regarding the same benefits for the same job, the Artisan Recognition and Training Scheme, the rationalisation of designation and wages, an equal opportunity exercise; equalisation of conditions of service and fringe benefits and the sharing of facilities. 
  Eskom wishes to place on record, it's acknowledgement of the important role, the black trade unions played in the elimination of discriminatory labour practices.  Prior to 1990, Eskom's development of Black professionals and managers was spasmodic and not very successful.  Eskom concedes that not withstanding opposition by  (unclear) trade unions, it could have been more active in this area at a much earlier stage.  In 1993, Eskom's formal stance on affirmative action was developed and adopted.  An inherent part of this policy is training and development.  One of the major initiatives to support this, was the granting of bursaries which as you will see from the numbers grew rapidly from 1989 to the current status where 453 bursaries is granted to black students as opposed to 249 to white students.  Affirmative action targets have been set and Eskom is committed that by the year 2000, at least 50% of all the professional senior supervisory and management levels in Eskom will be black South Africans.  
 Eskom and its security arrangements.  The last part of the presentation.  During the period 1960 to 1994, Eskom experienced a number of incidents of sabotage during the 60's through to the 1980's.  This led to the establishment of an adequate security infra structure, to protect its installations.  The government also identified the threat against certain installations, considered to be of national importance.  The government therefore adopted certain legislation which included the National Key Point Act of 1980, in terms of which power stations, sub stations and control centres were classified as national key points in terms of the act and certain protection and safe guarding standards were laid down in respect of such installations, with which Eskom had to comply.  In terms of the National Key Points Act, key points had to liase with the various forces such as the South African Defence Force and the South African Police.  This liaison was evaluated on an annual basis.  In terms of the set legislation, all security officers and senior personnel employed at key points, had to obtain security clearances.  These were provided by the SA Police and the SADF.  In practice it turned out to be near impossible for blacks to get the necessary security clearance in order to be legible for appointments in senior positions at these key points. It may be appropriate to know that Eskom also required employees in certain other positions which were considered to be strategically important to obtain security clearances.  This likewise limited or nullified the chances of black employees being appointed in such positions as Eskom applied these conditions very strictly.  Following bomb explosions at Arnot and (unclear) power stations, Eskom' security established an intelligence, counter intelligence unit, the purpose of which was to obtain advanced information concerning planned sabotage of Eskom installations in order that preventative action could be taken.  This unit liased closely with the SA Police, the security branch and with military intelligence.  The parties exchanged information regarding national key points and possible threats to its security on a regular basis.  As a result of the threats to the installations, as well as the requirements of the National Key Point Act, that the key point guard should be armed, Eskom secured a substantial number of firearms during this period under discussion.  The firearms were licensed and controlled in accordance with the Arms and Ammunition Act and were kept at various armouries at Eskom's installations.  These armouries as well as security within Eskom gave rise to various allegations against Eskom during the past few years.  Some of these incidents are tabled in the full submission, but in none were it found that Eskom acted untoward, taking into account the allegations that were made by the various parties.
 Eskom's management is not aware of any facts, which support the various allegations made in respect of the investigations and discussed in paragraph five of the full submission.  However, as indicated, on various occasions in the past, Eskom is committed to pursue any substantiated allegations of this nature.  And Eskom wishes to re-iterate that commitment to the Truth and Reconciliation Commission.
 Chairperson, in conclusion.  Eskom acknowledges it did not behave as it should have in the past, for this Eskom apologises unconditionally.  Eskom believes that it currently is and in the future can, play a major role in reshaping the country for the benefit of all.  It pledges its commitment to righting the wrongs of the past and do whatever it reasonably can to bring about a fair and just society where all South Africans in terms of Eskoms' vision, can benefit from the access to low cost electricity for growth and prosperity.  Gentlemen, I thank you for your patience.