State is mak­ing a strong case for Eskom’s for­mer bosses to be in­ves­ti­gated, fi­nally giv­ing weight to the #Gup­taLeaks

CityPress - - Front Page - SIPHO MASONDO sipho.masondo@city­

Na­tional Trea­sury says Eskom’s for­mer chief ex­ec­u­tive Brian Molefe, along with sus­pended chief fi­nan­cial of­fi­cer Anoj Singh and for­mer act­ing boss Mat­shela Koko, must be in­ves­ti­gated for cor­rup­tion. This rec­om­men­da­tion is con­tained in an ex­plo­sive re­port, fi­nalised ear­lier this month, which ref­er­ences the #Gup­taLeaks ex­ten­sively.

This is the first time that the email tranche – which has re­vealed how the Gupta fam­ily has cap­tured var­i­ous arms of state and si­phoned off bil­lions of rands from state-owned com­pa­nies – has been given of­fi­cial weight by gov­ern­ment.

The fi­nalised re­port deals with the coal sup­ply con­tracts that Eskom handed to Tegeta Ex­plo­ration and Re­sources, a min­ing com­pany owned by the Gup­tas and Pres­i­dent Ja­cob Zuma’s son, Duduzane.

Trea­sury com­mis­sioned the re­port to in­ves­ti­gate whether Eskom fol­lowed proper ten­der pro­cesses when award­ing the con­tracts to Tegeta.

But the re­port – which has been sent to Par­lia­ment’s stand­ing com­mit­tee on pub­lic ac­counts (Scopa) as well as the Hawks – features an ex­panded set of rec­om­men­da­tions. Th­ese in­clude the need to probe whether Singh – who, like Molefe, pre­vi­ously oc­cu­pied the same po­si­tion at Transnet – re­ceived any “gra­tu­ities” for “fa­cil­i­tat­ing the ap­point­ment of sup­pli­ers for the lo­co­mo­tive ten­der at Transnet”.

The ten­der in ques­tion was to sup­ply 1 064 lo­co­mo­tives is­sued by Transnet in 2014.

In June, amaBhun­gane re­ported that the state-owned rail com­pany en­tered into kick­back agree­ments to­talling R5.3 bil­lion with the Chi­nese man­u­fac­turer that be­came Transnet’s favourite lo­co­mo­tive sup­plier, en­abling a Gupta front com­pany to pocket R10 mil­lion from each R50 mil­lion lo­co­mo­tive Transnet bought.

The Trea­sury re­port also rec­om­mends that the Of­fice of the Chief Pro­cure­ment Of­fi­cer “ap­point a foren­sic au­dit firm and re­port the mat­ter to law en­force­ment agen­cies” to in­ves­ti­gate whether:

. Tegeta or its as­so­ci­ates of­fered any “grat­i­fi­ca­tion” to Singh, Koko or any other gov­ern­ment of­fi­cial to im­prop­erly in­flu­ence de­ci­sions, and whether th­ese amounted to an abuse of power and a vi­o­la­tion of the Preven­tion and Com­bat­ing of Cor­rupt Ac­tiv­i­ties Act (PCCA).

. Tegeta re­ceived any con­fi­den­tial in­for­ma­tion from Singh, Koko or any other of­fi­cial.

. Tegeta was in­volved in or­gan­ised crime.

. Singh and Koko re­ceived any grat­i­fi­ca­tion by ac­cept­ing lav­ish trips to Dubai paid for by the Gup­tas, as al­leged in the #Gup­taLeaks, and whether this amounted to cor­rup­tion.

. Singh re­ceived any grat­i­fi­ca­tion for fa­cil­i­tat­ing the ap­point­ment of global con­sul­tancy McKin­sey and con­tracts with the Gupta-linked Tril­lian Cap­i­tal Part­ners or Reg­i­ments Cap­i­tal at Eskom and Transnet [which al­legedly fun­nelled hun­dreds of mil­lions of rands to Gupta front com­pa­nies], and whether this con­sti­tuted cor­rup­tion and an abuse of power.

. Eskom’s fuel sourc­ing head Ayanda Nteta or any other ex­ec­u­tive re­ceived any grat­i­fi­ca­tions for chang­ing the con­di­tions of the Tegeta coal sup­ply agree­ment, as al­leged in the #Gup­taLeaks.

. Eskom wasted money by over­pay­ing Tegeta in con­tracts with its Op­ti­mum Coal Mine and Brak­fontein Col­liery, and by how much.

The re­port also asks the chief pro­cure­ment of­fi­cer and law en­force­ment agen­cies to in­ves­ti­gate why Eskom, through Molefe, “gave an as­sur­ance” that Tegeta’s Brak­fontein Col­liery “sup­plies and con­tin­ues to sup­ply” good qual­ity coal de­spite ev­i­dence to the con­trary, and whether this con­sti­tuted abuse of author­ity and a con­tra­ven­tion of the PCCA.

On Fri­day, Trea­sury’s po­lit­i­cal head, Fi­nance Min­is­ter Malusi Gi­gaba, said he was wor­ried about the Gup­tas’ in­flu­ence and re­ports that they ex­ploited their friend­ship with Zuma to se­cure con­tracts with state-owned com­pa­nies. Gi­gaba was once close to the Gup­tas and, dur­ing his pre­vi­ous ten­ure as pub­lic en­ter­prises min­is­ter, re­struc­tured boards of state-owned com­pa­nies with Gupta al­lies, al­low­ing them ac­cess to lu­cra­tive con­tracts.

“Like all South Africans, I am very wor­ried about them and I think we need to es­tab­lish fact from al­le­ga­tion,” Gi­gaba told Cape Talk.

“The al­le­ga­tions are quite dam­ag­ing to in­vestor per­cep­tions, as well as rat­ings agen­cies, of the gov­er­nance of our state-owned com­pa­nies.”

On Thurs­day, The Times re­ported that Eskom sus­pended Singh af­ter an ur­gent in­ter­ven­tion by Gi­gaba and Pub­lic En­ter­prises Min­is­ter Lynne Brown – af­ter the De­vel­op­ment Bank of SA re­port­edly threat­ened to re­call a R15 bil­lion loan if Singh and other Eskom of­fi­cials re­spon­si­ble for the util­ity’s qual­i­fied au­dit opinion were not taken to task.

In April, City Press re­ported on a draft of the same Trea­sury re­port which found that in Au­gust 2016, of­fi­cials shot down Eskom’s request to ex­pand the Brak­fontein Col­liery’s 10-year coal-sup­ply con­tract by another R2.94 bil­lion.

This con­sti­tuted a 77% in­crease from the com­pany’s orig­i­nal agree­ment to sup­ply coal to the Ma­juba power sta­tion in Mpumalanga, and would have in­creased the con­tract’s value from R4 bil­lion to R7 bil­lion.

That same month, Trea­sury fur­ther barred Eskom from ex­tend­ing Op­ti­mum Coal Mine’s two-month con­tract to sup­ply Mpumalanga’s Arnot power sta­tion for a fur­ther six months with­out go­ing to ten­der. The ini­tial con­tract was worth R235 mil­lion and the con­tract’s ex­pan­sion would have in­creased that fig­ure by R855 mil­lion to to­tal more than R1 bil­lion.

How­ever, the fi­nalised re­port ex­ten­sively quotes a Daily Mav­er­ick re­port, pub­lished on June 9, which re­vealed how many trips Koko and Singh had taken to Dubai at the Gup­tas’ ex­pense, and how Singh “stayed in the lux­ury Oberoi Ho­tel, en­joyed spa treat­ments and was chauf­feured around in a limo – all paid for by the Gup­tas’ Sa­hara Com­put­ers”.

The ar­ti­cle de­tailed how Koko al­legedly sent se­cret in­for­ma­tion about Op­ti­mum Coal, then owned by Glen­core, to one of the Gupta broth­ers. It also al­leged that Koko strength­ened the Gup­tas’ hand in their bat­tle to buy the mine by send­ing a “vit­ri­olic” let­ter to the busi­ness res­cue prac­ti­tion­ers in charge of Op­ti­mum, in which he threat­ened to review all of Glen­core’s other con­tracts with Eskom.

The Trea­sury re­port fur­ther states that, in the light of this, a “foren­sic au­dit and crim­i­nal in­ves­ti­ga­tion must es­tab­lish” whether any “il­le­gal, dis­hon­est or unau­tho­rised ... sell­ing of in­for­ma­tion” or any other con­tra­ven­tion of the PCCAA had taken place in “con­tracts that were con­cluded in Eskom and Transnet”.

What they say

Scopa chair­per­son Themba Godi said the com­mit­tee had not yet re­ceived the re­port be­cause Par­lia­ment was cur­rently on re­cess.

“But I have no rea­son to doubt who­ever claims to have sent it. We will be back next week and we will deal with the re­port,” he said.

Trea­sury spokesper­son Yolisa Tyantsi said: “The re­port is a fol­low-up to the first, now in­clu­sive of the #Gup­taLeaks’ per­spec­tive. The re­port ex­tends its find­ing to go be­yond Eskom and in­clude Transnet since the leaks re­veal some form of relationship at the time.”

Eskom spokesper­son Khulu Phasiwe said: “Messrs Koko and Singh are cur­rently on spe­cial leave, pend­ing in­ves­ti­ga­tions by the Eskom board. More­over, Eskom wel­comes the pro­posed in­ves­ti­ga­tions by the Hawks, Spe­cial In­ves­ti­gat­ing Unit (SIU), Pub­lic Pro­tec­tor and Par­lia­ment.

“Th­ese probes, in­clud­ing the on­go­ing in­ves­ti­ga­tion that was launched by the Na­tional Trea­sury in July 2015, will help us to get to the bot­tom of th­ese al­le­ga­tions.”

Tum­bling domi­noes

Eskom, South Africa’s largest state-owned com­pany, is now fac­ing a lead­er­ship cri­sis. Singh’s sus­pen­sion fol­lows last month’s res­ig­na­tion of board chair Ben Ngubane and Brown’s rescis­sion of Molefe’s reap­point­ment as chief ex­ec­u­tive two months ago.

Eskom sus­pended Koko in April, fol­low­ing rev­e­la­tions that a com­pany in which his step­daugh­ter, Koketso Choma, was a di­rec­tor re­ceived Eskom ten­ders worth more than R1 bil­lion.

Last week, Brown asked Zuma to is­sue a procla­ma­tion for the SIU to probe cor­rup­tion at Eskom.

The pub­lic en­ter­prises port­fo­lio com­mit­tee in Par­lia­ment has also launched its own state cap­ture in­ves­ti­ga­tion.

This week, the com­mit­tee was pre­par­ing its own in­quiry into state cap­ture, set to get un­der way next week. It heard sub­mis­sions from the Or­gan­i­sa­tion Un­do­ing Tax Abuse and the SA Coun­cil of Churches.

MPs heard about the cre­ation of a mafia-like sys­tem, al­low­ing for the seizure and con­trol of state-owned com­pa­nies to siphon off bil­lions of rands into a few in­flu­en­tial pock­ets.

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