BRIAN MOLEFE cries foul

CEO dis­misses ev­i­dence show­ing Gup­tas’ min­ing com­pany lied about the money it needed to pro­vide emer­gency coal

CityPress - - Front Page - DEWALD VAN RENS­BURG dewald.vrens­burg@city­

Eskom CEO Brian Molefe this week dis­missed as ir­rel­e­vant ev­i­dence in the State of Cap­ture re­port show­ing that the Gup­tas’ min­ing com­pany lied about the money it needed up­front to pro­vide emer­gency coal to the Arnot Power


For­mer pub­lic pro­tec­tor Thuli Madon­sela’s re­port shows how R659 mil­lion was used to par­tially fund Tegeta Ex­plo­ration and Re­sources’ ac­qui­si­tion of the Op­ti­mum Mine – not for equip­ment to make the coal de­liv­er­ies pos­si­ble.

Eskom paid Tegeta this money af­ter a board ten­der com­mit­tee meet­ing held late at night – on the same day that Tegeta had come up R600 mil­lion short for its ac­qui­si­tion of the Op­ti­mum coal mine on April 11.

Eskom this week held two sep­a­rate me­dia brief­ings, one to re­port earn­ings and one to re­spond to Madon­sela’s State of Cap­ture re­port.

Re­gard­ing the pre­pay­ment, Molefe said: “If I buy a car for R200 000 at Toy­ota, does it mat­ter what they do with the money?” he said. “We paid for coal and we got coal.”

Molefe and other mem­bers of the Eskom board not only de­fended the Eskom-Tegeta trans­ac­tions flagged in Madon­sela’s re­port, they held them up as in­cred­i­bly ben­e­fi­cial to Eskom and South Africa.

The three Gupta coal deals with Eskom saved the con­sumer bil­lions, the power util­ity claimed.

The Eskom pre­pay­ment formed part of a fran­tic scram­ble for funds by the Gupta fam­ily and its com­pa­nies to buy Op­ti­mum early this year.

There were 32 trans­fers to the Bank of Bar­oda to­talling R2.5 bil­lion, which are de­tailed in Madon­sela’s re­port.

At the time, there was lots of spec­u­la­tion about how Tegeta would pay R2.15 bil­lion for the mine.

Tegeta got the Bank of Bar­oda to is­sue a let­ter say­ing that it was ready to pay over this sum.

“The con­duct of the Bank of Bar­oda ap­pears highly sus­pi­cious,” said Madon­sela.

They had writ­ten a let­ter to Op­ti­mum cred­i­tors mak­ing it seem as though they were fund­ing the deal with debt. In­stead, they al­lowed a flood of dis­parate trans­ac­tions over four months to put R2.5 bil­lion into an ac­count, which was then used to pay for the Op­ti­mum mine.

“Ac­cord­ingly, it is safe to say that the fre­quency and amounts de­posited should have at­tracted at­ten­tion and an in­ves­ti­ga­tion by other fi­nan­cial in­sti­tu­tions’ an­ti­money laun­der­ing de­part­ments due to money laun­der­ing risks,” said Madon­sela.

One of the com­pa­nies con­tribut­ing to this fund was Al­ba­time, seem­ingly owned by Eskom board mem­ber Viroshini Naidoo’s hus­band.

Eskom’s pre­pay­ment seemed to have been the last top-up Tegeta needed to seal the deal.

Madon­sela said: “It ap­pears that the pre­pay­ment pos­si­bly amounts to fruit­less and waste­ful ex­pen­di­ture as it ap­pears that the pre­pay­ment was not used to meet pro­duc­tion re­quire­ments at Op­ti­mum Coal Mine and was thus made in vain.”

This could be a con­tra­ven­tion of the Pub­lic Fi­nance and Man­age­ment Act, she wrote.

Molefe and his team avoided an­swer­ing ques­tions about what the pre­pay­ment was for.

“They sup­plied the coal, it has been de­liv­ered. The pre­pay­ments are set­tled. I don’t know what the Pub­lic Pro­tec­tor means by ‘waste­ful ex­pen­di­ture’,” said Molefe.

Eskom was still de­cid­ing whether to launch a review ap­pli­ca­tion against the re­port on the ba­sis of “in­con­sis­ten­cies” con­tained in it, said Eskom’s com­pany sec­re­tary, Suzanne Daniels.

Molefe is seem­ingly mulling his own le­gal ac­tion, par­tic­u­larly in re­la­tion to his cell­phone records, with Madon­sela sub­poe­naed with­out his knowl­edge to es­tab­lish his re­la­tion­ship with the Gup­tas.


Madon­sela’s re­port sup­ports the al­le­ga­tion that Eskom un­fairly forced Glen­core to put the Op­ti­mum mine into busi­ness res­cue.

“It can only be in­ferred that Eskom wanted to ex­ert pres­sure on [Op­ti­mum],” she wrote.

The mine was mak­ing mas­sive losses due to its decades-old con­tract to sup­ply coal at R150 a ton to the Hen­d­rina Power Sta­tion. Eskom also slapped it with a R2 bil­lion penalty re­lated to coal qual­ity.

The ev­i­dence of bul­ly­ing is that Eskom went through sev­eral rounds of painstak­ing rene­go­ti­a­tion of the Op­ti­mum-Hen­d­rina con­tract and then sud­denly just re­fused to sign off on an amended con­tract giv­ing it a higher price the month Molefe joined the com­pany – April 2015.

“On the in­for­ma­tion pro­vided, the only party who prob­a­bly stood to ben­e­fit from [Op­ti­mum] be­ing fi­nan­cially dis­tressed … would be a prospec­tive suitor. In this case, that prospec­tive suitor was Tegeta,” said Madon­sela.

Molefe on Thurs­day said that he did in­deed scrap the rene­go­ti­a­tions of the Op­ti­mum-Hen­d­rina con­tract.

He por­trayed himself as a new broom that could not ac­cept the costly terms Glen­core wanted. “I think it is all be­cause I re­fused to give Glen­core R570 for coal.”

Be­cause he did not, a “domino ef­fect of phe­nom­e­nal pro­por­tions” led to the cur­rent sit­u­a­tion.

Ac­cord­ing to Molefe, all that re­ally mat­ters is that Eskom is now still get­ting coal from Op­ti­mum at R150 a ton.

Now that the busi­ness res­cue is con­cluded, the R2 bil­lion penalty orig­i­nally levied on Glen­core will be pur­sued against Tegeta, he said.


Madon­sela’s re­port says that “Molefe’s re­la­tion­ship with the Gupta fam­ily as well as the direc­tors of Tegeta can­not be ig­nored”.

“There was a firm line of com­mu­ni­ca­tion be­tween Mr Ajay Gupta and Mr Molefe.”

This re­la­tion­ship is in­ferred from cell­phone records that seem to prove Molefe vis­ited the Gup­tas in Sax­on­wold 14 times, and that he called Ajay 44 times around the cru­cial time Glen­core was al­legedly be­ing squeezed to exit Op­ti­mum to make way for Tegeta.

Ajay himself also told Madon­sela that he and Molefe were “very good friends”, and that Molefe does in fact of­ten visit the in­fa­mous Sax­on­wold house.

Molefe this week avoided con­firm­ing whether he was in fact ha­bit­u­ally vis­it­ing the Gupta home.

In­stead, he at­tacked the cell­phone ev­i­dence, say­ing it only shows he was “in the area”.

Molefe said that Madon­sela may as well have con­cluded he went to the strip club Teaz­ers ev­ery day be­cause he drives past one on the way to work.

How­ever, he did not deny hav­ing vis­ited the Gupta home in Sax­on­wold or be­ing a fam­ily friend.


Madon­sela ob­served that half of the Eskom board ap­pointed at the end of 2014 – a few months be­fore the Gup­tas started do­ing busi­ness with the state-owned com­pany – had some or the other link to the fam­ily.

These con­flicts of in­ter­est were “of no con­se­quence”, board mem­ber Pat Naidoo said at the me­dia brief­ing on Fri­day.

This is be­cause the rel­e­vant peo­ple re­cused them­selves from board meet­ings deal­ing with Tegeta – or were never on those board com­mit­tees to be­gin with.

One board mem­ber, Viroshini Naidoo, ap­par­ently failed to dis­close that her hus­band was the sole di­rec­tor of one of the many com­pa­nies that chipped in to help Tegeta buy Op­ti­mum.

Ac­cord­ing to Madon­sela, how­ever, “even if board mem­bers are not present dur­ing said meet­ings, they are still privy to min­utes of meet­ings as well as other com­mer­cially sen­si­tive in­for­ma­tion that would def­i­nitely give cer­tain in­di­vid­u­als and/or en­ti­ties an ad­van­tage”.

She pointed to Naidoo’s hus­band as be­ing a par­tic­u­larly se­ri­ous con­flict, but this was not dealt with by Eskom at its brief­ings other than to, in a pre­sen­ta­tion, call this link “al­leged”.

Eskom chair Bald­win Ngubane told jour­nal­ists that “there is a big agenda from some quar­ters to dis­credit this govern­ment”.

He de­scribed Madon­sela’s ob­ser­va­tions as “spec­u­la­tive”.

“My gripe with the whole sit­u­a­tion is that the Pub­lic Pro­tec­tor never called me or [Eskom fi­nan­cial chief Anoj] Singh.

“She sub­poe­naed us, but can­celled the meet­ing. I thought the Con­sti­tu­tion also talked about the right to be heard. It was painful for me.”


BIT­TER Eskom CEO Brian Molefe has lashed out at for­mer pub­lic pro­tec­tor Thuli Madon­sela’s re­port on state cap­ture, in which he was im­pli­cated for dodgy deal­ings with the Gupta fam­ily

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