‘Eskom treasury officials should have told the board about dodgy deals’
THE Zondo commission of inquiry into state capture has heard how Eskom treasury officials had been scared of airing their concerns around dodgy transactions. Yesterday, another senior official corroborated how a controversial R21 billion deal with a Chinese company was pushed through within Eskom, flouting the utility’s rules in the process.
In 2015, Eskom entered into a loan agreement with Chinese company Huarong. Eskom’s corporate specialist for funding, Sincedile Shweni, testified that senior officials involved in the controversial transaction did see the red flags, even though they were reluctant to speak out.
The commission had previously heard from Eskom treasurer, Andre Pillay, how Huarong had approached the utility, offering to grant an unsolicited $1.5bn (R21bn) loan, which was accompanied with a facilitation fee of R340 million and cancellation fee of R42.7m, a transaction he said was pushed by former Eskom chief financial officer Anoj Singh.
“I could see that things were not working out the way I thought they would. We were dealing with very erroneous terms and we were dealing with companies that we could not verify and people who were exerting pressure,” Shweni said.
He said it was only until after the new board was appointed that treasury staff within the utility became comfortable about raising their concerns about the contract.
“We should have alerted the board much earlier. I think the landscape at that time was very different. We knew the agenda and why they were brought there, hence in my presentation to them we were comfortable to recommend we do not proceed with the transaction.
“It could have been that the regime before that board… we had to play it safe. We did not know who is behind you,” Shweni said.
Eskom board chairperson Jabu Mabuza has told the commission how former Eskom interim chief executive Sean Maritz hid information around the Huarong deal, including the fact that he had signed the agreement to pay a facilitation fee a few day before the new board was appointed in January 2018.
The board subsequently suspended Maritz, before he resigned as the utility was taking disciplinary action against him in relation to the Huarong deal, which has since been cancelled.
Shweni corroborated Pillay’s evidence before the commission that Singh wanted to ensure that the transaction went ahead, even bypassing the assets and liabilities committee (ALCO) which undertakes a vetting process of companies that engage in business with the utility.
“Instructions that were coming from Anoj had to be done expeditiously and in the manner in which he wishes,” he said.
Shweni said Huarong had claimed that it was backed by a financially sound parent company, Ideva Holdings, but Eskom could not verify this, adding that the company had no track record of trading or revenue.
“The links between Huarong Africa and the parent company, which they purported to be their company, were very weak. Letters of confirmation would be required for us to get assurance that there is support from the parent company and that did not come to the fore,” Shweni said.