Eskom slashes Optimum’s R2.1bn fine for the Guptas
In terms of a confidential settlement, Eskom has slashed to a 10th a nonperformance penalty of R2.1bn it had levied on Optimum Coal — now that it is owned by the Guptas.
Eskom levied the fine on the then Glencore-owned coal supplier for what it said at the time were coal supplies failing to meet agreed specifications.
It demanded payment and refused to negotiate the quantum, forcing Glencore to place it on business rescue, later selling it to the Gupta family. The utility went on to make significant discounts to the new owners, who are close associates of President Jacob Zuma and in business with his son, Duduzane.
On March 14, Eskom agreed to accept a payment of R255.4m from Optimum Coal, slashing its original claim 88.3%, according to a settlement document leaked to Business Day .
This will be in equal monthly instalments starting in April and ending on December 31 2018, when the coal-supply agreement comes to an end.
“For clarity, the claimant [Eskom] shall not be entitled to set off or deduct the monthly instalments from the monthly payments due by the claimant to the defendants [Optimum and Tegeta] for the remaining period of the coal-supply agreement,” reads the document. “In full and final settlement” and on behalf of the utility, chief financial officer Anoj Singh signed the arbitration deal, along with a Tegeta and Optimum executive.
The agreement was kept confidential, until a few days ago. Sources told Business Day the penalty was slashed by then Eskom acting CE Matshela Koko to about R500m. But it turns out that the settlement amount is even lower than that.
Whereas the parties agreed in a private arbitration to settle the dispute with a R577.8m payout to Eskom, they also agreed that Eskom had deducted the difference from payments it had made to the coal supplier in the three years between March 2012 and May 2015.
A separate document shows that a day before the deal became a binding arbitration award, both Koko and Singh had given their approval to the Eskom legal department to make the settlement.
That both Koko and Singh acted for Eskom, in what effectively became a R1.6bn gift to a Gupta-owned company, would seem to be a conflict of interest. Their names appear in thousands of leaked e-mails as associates of the Gupta family — who appear to be involved in irregular and possibly illegal efforts to capture key players in the state and government.
The e-mails show that both men have been recipients of largesse by companies owned by the family. Both separately travelled to Dubai and stayed at the Oberoi hotel, with their bills covered by Sahara Computers’ CE Ashu Chawla in 2016.
At a media briefing last week — and when pressed by this newspaper to reveal the quantum of the arbitration — Public Enterprises Minister Lynne Brown instructed Eskom to find a legal way to release it from the confidentiality clause so that it could make the document available to the public.
When Business Day inquired about the process on Wednesday, Eskom said “in the spirit of accountability” it was seeking a legal solution to disclose the details of the arbitration settlement to the public. “Until then, we are not in a position to respond in any detailed way to the questions.” It was able to say “the settlement and its parameters were considered” by its board tender committee.
But, the committee includes more alleged Gupta associates, such as Chwayita Mabude, fired by the minister last week, board chairman Zethembe Khoza and Pat Naidoo.