Top 5 on Fin24: Koko challenges ultimatum to resign, unsecured lending ‘unsustainable’

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Cape Town – In case you missed it, here is a roundup of Friday’s top 5 Fin24 reads.

Koko takes Eskom board to Labour Court

Embattled Eskom executive Matshela Koko will not be forced to resign just yet, after the Labour Court in Johannesburg issued an interim order restraining Eskom from firing him on Friday afternoon.

Koko lodged an urgent application in the Labour Court on Friday morning asking the court to interdict Eskom from firing him, or issuing any ultimatum to him to resign. 

His application comes after interim Eskom CEO Phakamani Hadebe issued an ultimatum to Koko to either resign or be fired by 14:00 on Friday. 

He stated that Eskom’s contemplated “unlawful conduct”, threatened on less than 24 hours’ notice, could only be met by an urgent application to court. Koko also asked the court to declare Hadebe’s Thursday ultimatum “unlawful and invalid or null and void”.

SA has no money for nuclear power says Ramaphosa

Deputy President Cyril Ramaphosa, who is next in line to lead the country, said the government currently can’t afford to build new nuclear power reactors.

“We have to look at where the economy is – we have excess power and we have no money to go for a major nuclear plant building,” Ramaphosa told reporters at the World Economic Forum in Davos, Switzerland.

“We have said the nuclear process will be looked at in the broad context of affordability.”

Ramaphosa’s approach differs markedly from that of President Jacob Zuma.

Zuma has championed plans to build as many as eight reactors that would generate 9 600 megawatts of energy starting from 2023 and cost as much as R1trn – a programme critics say the country can’t afford and doesn’t need.

Unsecured lending: SA sitting on another Steinhoff bubble – expert

South Africa is rushing headlong into another major corporate collapse in the near future, according to Glen Jordan, director of IMB Financial Services.

In his view, reckless credit in the unsecured lending sector was at the centre of the major business failures in the former African Bank and Steinhoff. He thinks it is just a matter of time until the next big player’s bubble bursts.

“While unsecured lending bore fantastic results for companies such as Steinhoff and [former] African Bank (Abil) in the short term, it should be plainly apparent that this model is unsustainable and inevitably leads to collapse,” warned Jordan.

Steinhoff files show Jooste ‘repeatedly lied’ to investors and regulators

The Public Servants Association (PSA) said on Friday that former Steinhoff CEO Markus Jooste “repeatedly lied to investors, the SA Revenue Service and regulators in South Africa and internationally” based on internal Steinhoff documents the union has been reviewing. 

The PSA was given a trove of documents last week at Steinhoff’s Stellenbosch headquarters, including minutes of board meetings and financial documents dating back to 2002.  

In a statement which expanded on what the union had said at a briefing on Thursday, the PSA said its preliminary investigation of the documents showed that Jooste had provided assurances in his director’s report about the sound financial health and ethical business practices at Steinhoff.

Strong rand spoiling the gold rally for SA mines

For South African gold miners, it’s both the best and worst of times.

The metal started the year with a bang, rising more than 4% to the highest since August 2016. But an equally impressive rally in the rand means that South Africa-focused producers are likely to miss out on the party.

Because mining companies pay most of their expenses in local currency, a stronger rand squeezes profit margins and can render some operations unprofitable.

Many of South Africa’s gold mines date back to the 1950s and 1960s and much of the easily accessible metal has been exhausted, while labour-intensive mining methods compound the effect of currency moves.

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