Brown drags feet on Eskom report
Minister received notice of dodgy Trillian payment
PUBLIC Enterprises Minister Lynne Brown was handed damning evidence against senior Eskom employees in a scathing report on Gupta-linked Trillian and McKinsey, but has for two weeks failed to act on it.
Documents seen by Business Day show Brown was given the prima facie evidence that Eskom used to suspend top officials for authorising the irregular payments of R1.6-billion for six months work in 2016.
They include Eskom’s former acting chief executive Matshela Koko, chief financial officer Anoj Singh, acting head of group capital Prish Govender, former procurement head Edwin Mabelane and senior procurement manager Charles Kalima.
Under Brown’s leadership and with her alleged political influence, the utility has also failed to take action against any of the executives accused of causing Eskom to incur R3-billion in wasteful and irregular expenditure. The qualified audit opinion this caused could trigger the recall of billions of rand that Eskom owes investors.
Instead Brown appears to be employing delaying tactics by asking Eskom for information already in her possession.
Govender, Mabelane and Kalima were charged in August in relation to the Trillian payments, but their suspensions were reversed a day later, allegedly after board chairman Zethembe Khoza intervened. Khoza denies this.
Koko is on suspension for an unrelated matter and Singh is on special leave after Eskom’s lenders called for his head when the utility posted R3-billion in irregular expenditure, thereby breaching some of its covenants and risking a trigger default on outstanding debt.
Koko was suspended four months ago on full pay but his disciplinary hearing has allegedly been blocked by the board. Executives report to the CEO, but Eskom sources say acting chief executive Johnny Dladla appears happy to let the board usurp his executive responsibilities.
The documents seen by Business Day show that Brown was handed evidence of a litany of gross irregularities related to the Trillian and McKinsey payments almost a fortnight ago. They included financial misconduct, unauthorised and irregular expenditure and breaches of the Public Finance Management Act.
The documents show Eskom had no legal basis for paying Trillian R600-million as McKinsey’s partner when Trillian had no contract with either McKinsey or Eskom.
They also show there is no record on file of Eskom asking the Treasury for permission to deviate from normal procurement processes before signing the contract with McKinsey as it was required to do.
“This in and of itself constitutes financial misconduct for those involved in motivating for authorising the conclusion of the McKinsey contract, including Koko, Mabelane and Govender,” one of the documents reads.
The officials have directed queries to Eskom’s media desk.
Asked on Tuesday why Brown had not acted on the evidence, her spokesman Colin Cruywagen said the public works minister “cannot overstep statutory powers in order to satisfy particular media/ interests”.
“The minister must act on the duly instituted investigations, not on media reports,” said Cruywagen.
Brown had insisted the board investigate both Koko and Singh, which led to them being placed on special leave.
Brown had “taken a particular interest in the Trillian matter as information received from Eskom, relayed to parliament in good faith, has subsequently been brought into question”.
Brown, relying on false information from Eskom, previously told parliament that the power utility had not paid Trillian.
In July Eskom admitted this was a lie but said the payments had the blessings of management consultancy Oliver Wyman.
But in August Eskom was forced by Oliver Wyman to concede that this, too, was a lie as the firm’s final report had in fact red flagged the payments and recommended a legal review before making a final settlement.
This week Eskom declined to respond in detail to questions about its failure to suspend particular officials implicated “due strict confidentiality considerations of the HR processes currently under way”.
“It is worth noting that most of the officials mentioned have been charged and are currently being subjected to internal processes which are being undertaken expeditiously,” Eskom said.
“While Anoj Singh is currently on special leave pending an investigation, Matshela Koko is on suspension pending his disciplinary hearing.
“It is noteworthy that all these actions have been undertaken under the interim group chief executive, Johnny Dladla. It is therefore incorrect to suggest that he has not acted against perceived misconduct.”
The documents sent to Browndescribe in great detail the roles played by particular officials in the Trillian debacle.
Trillian repeatedly denied any wrongdoing. The company insists it only billed for work done.
The documents show the contract’s methodology for calculating payments was not approved by Eskom’s compliance division and should not have formed the basis of making payments.
They suggest Govender misled the board tender committee when he “updated [it] on the proposed settlement on February 8 2017 and incorrectly advised that the [Oliver Wyman] final report supported the settlement amount”.
In fact Oliver Wyman’s final report on December 15 2016 read a legal review was needed before making any more payments.
The settlement amounted to R524-million in addition to more than R1-billion the consultants had already paid. — BDLive