Eskom ‘pulls a fast one’ with Impulse
• Company added to utility’s supplier database • Receives contracts while being investigated
Three days after Eskom put acting CE Matshela Koko on leave to probe allegations that a company partly owned by his stepdaughter was awarded enormous contracts, the electricity producer sneaked the company in question onto the Eskom supplier database.
And as late as last week, Eskom gifted Impulse with more new contracts, despite its relationship with the supplier still being under investigation.
This would appear to be a post facto attempt by Eskom to correct a breach in which Impulse was awarded contracts by a division headed by Koko before it was included in the panel of suppliers.
According to law firm Cliffe Dekker Hofmeyr and auditor Nkonki, Impulse was awarded contracts by a division headed by Koko from July 2014, and was paid more than R390m without tendering for work or being on an approved panel of suppliers. Impulse also failed to submit crucial documents such as tax and black economic empowerment certificates, among other alleged breaches.
The firms were instructed by Eskom to investigate allegations of conflict of interest and other impropriety against Koko. It later emerged that Koko’s stepdaughter, Koketso Choma, owned 35% of Impulse shares, and that he had not declared this, in contravention of Eskom’s conflict of interest policy.
Pending this investigation, Koko was put on leave on May 12, and still remains on leave.
“It looks like they are trying to sneak them [Impulse] in [as suppliers],” said a source when confronted with the tender committee’s minutes. They did try to add more members to the panel. [But] all the contracts with this supplier must be investigated.”
Impulse CEO Pragasen Pather disclosed his own rela-
tionship with Koko only after the probe had started. In mitigation, Pather offered in a letter to Cliffe Dekker on May 26: “In hindsight, disclosure should have been made and was prudent not only to safeguard the interest of Eskom, but also, as afore stated, to be transparent and accountable and thereby serve the interest of the respective contracting parties as well as the public interest.”
The board’s tender committee, in which current board chairman Khoza sat, approved “the augmentation” of Impulse on May 17, together with 76 other suppliers, onto the engineering and project management services in respect of a tender that was advertised in December 2016.
Ordinarily, no new business would be allocated to Impulse until it was cleared of wrongdoing. After acknowledging receipt of Business Day’s questions on Friday, Eskom had failed to respond at the time of publication on Sunday.
Board approval gives powers to Eskom’s procurement department, headed by Koko protégés Edwin Mabelane and Charles Kalima, to “negotiate and conclude contracts” with companies. It was during this phase that it was decided that Impulse’s benefits would expire in March 2018, but could be extended to September 2019.
On June 23, Cliffe Dekker and Nkonki submitted their report to Eskom, and recommended that Koko be charged and brought before a disciplinary hearing on no fewer than six charges. Eskom’s board and Public Enterprises Minister Lynne Brown have been dragging their heels on the recommended action. Acting chairman Zethembe Khoza said last week that Koko would be charged last week. But on Sunday Khoza said the board’s audit committee had prepared charges that would soon be presented to Koko.
“We are now in the process of recruiting the independent chairman of the disciplinary panel, then we can invite him [Koko] to respond,” Khoza said.
But in its report to Eskom, Cliffe Dekker said on June 23: “It was further established that Impulse International was not appointed on any Eskom panel of service providers.”
In a letter on June 26, Nkonki said: “It appears from documentation that Impulse was awarded a contract prior to being appointed as a vendor. Impulse provided services to Eskom that might have been described as services to be provided by service providers appointed to the engineering panels and that in two of the contracts awarded, almost all other tenderers were found to be technically restricted.”
Both firms found this to be suspicious and recommended further investigation.
Among the allegations facing Koko were that he had failed to disclose his stepdaughter’s shareholding in Impulse and that he failed to ensure that she got rid of the interest when it was discovered.
After pleading ignorance of Choma’s relationship with Impulse, and after being caught lying about telephone conversation he had with Pather, Koko said he had instructed Choma to resign from the supplier and get rid of her shares.
Instead, Choma transferred her shares into the Mokoni trust, of which she is a beneficiary.
“In addition, most of the contracts awarded to Impulse International were either emergency or sole sourcing contracts, without a tender process having been followed,” said Cliffe Dekker and Nkonki in their report recommending disciplinary action against Koko.
“Now, whilst there is justification in particular circumstances for contracts to be concluded on that basis, it seems rather too coincidental that after Choma became involved with Impulse International, the number of contracts it acquired from Eskom had gone from an initial contract (concluded during 2014) to a further nine contracts with a total combined value of R380m,” reads their report.