Ex-eskom man accused of R65m contract fraud
Assets seized in High Court action
A WHOPPING R65 million is the extent of the fraud allegedly committed by a former Eskom employee put in charge of a project to provide low-cost electricity services in Khayelitsha.
Details of the case against 59-year David Malherbe of Gordon’s Bay emerged in the Western Cape High Court this week, in an application the Asset Forfeiture Unit had lodged, which was heard behind closed doors, for an order to attach his assets and that of his company, Energy Utility Services (EUS).
Judge James Yekiso granted the order on Tuesday and, by Thursday morning, when Malherbe was formally notified of the order, members of the police’s Directorate for Priority Crime Investigations ( DPCI) arrested him.
He appeared in the Bellville Commercial Crimes Court that morning, where he was formally charged before being released on R10 000 bail.
It is alleged he and EUS defrauded Eskom of R65m, using the money to bankroll the lavish lifestyle he and his wife had.
In papers before the court, deputy director of public prosecutions Gcobani Bam, and DPCI investigator Piet Viljoen said the Khayelitsha project that Eskom had appointed Malherbe to head was the brainchild of Eskom, French electricity authority Electricité de France International SA (EDFI), and English company East Midlands Electricity (EME) plc. These electricity authorities established Phambili Nombane, now known as PN Energy Service ( PNES), through a joint general co-operation venture launched in 1993, and became its shareholders.
Malherbe was appointed as managing director of PNES.
However, by 2007 the French and English companies had pulled out, leaving Eskom as the 100 percent shareholder.
The result was that PNES became subject to the provisions of the Public Finance Management Act. It was decided a year later to dissolve PNES and incorporate its functions back into Eskom – a decision Eskom’s board approved towards the end of 2008.
It was then that Malherbe registered the company Bold Moves 449, with himself as the only director and shareholder.
According to the court papers, just a week later Malherbe presented to the board of PNES a proposal that crucial services carried out as part of the Khayelitsha project be contracted to his company.
His proposal included electricity reticulation networks, Eskom’s assets within Khayelitsha, the management and operation of the reticulation network, the maintenance and administration of prepaid vending systems, and the rendering of customer services and planned network maintenance activities.
It is alleged, however, that Malherbe did not disclose his interest in Bold Moves, which now goes by the name EUS. In addition, it is alleged that he presented to the PNES board that EUS would be a broadbased black empowerment company with “external share BEE empowerment” and “limited share per employee empowerment”. Malherbe was however its only shareholder.
In 2011, after it was discovered that Malherbe had an interest in the company, the high court ruled that the agreements reached between PNES and EUS were void.
Viljoen said it was evident that Malherbe fraudulently and unlawfully negotiated the contracts.
An investigation into the financial affairs of PNES and EUS had revealed that, between February 2009 and July 2010, PNES paid R65.1m into an EUS bank account at FNB, while an additional R242 553 was paid directly to Malherbe.
The investigation also found that money was transferred between the EUS account and a second EUS bank account, Malherbe’s personal bank account, the bank account of an entity linked to him, an Allan Gray Retirement Annuity Fund, and his wife’s account.
In addition, R2.56m was used to buy property in Gordon’s Bay, R1.3m to buy property in Bellville, and more than R400 000 was paid on his house’s bond.
These all now form the subject of the restraint order, together with an Alan Gray investment, retirement annuity fund investment, a Ford ranger vehicle, and his wife’s Suzuki Jimny.
Malherbe is to appear in court again in September.
CHARGED: Evelina Fortuin and Denise Muller walk across the Grand Parade as they make their way from the Cape Town Magistrate’s Court, where they appeared, alongside three others in connection with charges of rape, human trafficking and sexual exploitation of a 13-year-old girl.
LAVISH: Harbour House, a gated complex in Gordon’s Bay, is home to David Malherbe, who was arrested this week in connection with a multimillion-rand fraud case.