Koko’s Eskom looting frenzy

Exclusive: global giant blows whistle on how it got R6.5bn in work from ex-CEO

● Former Eskom boss Matshela Koko allegedly guaranteed a multinational engineering company R6.5bn in future contracts if it subcontracted work on the Kusile power station to Impulse International, a company part-owned by his stepdaughter.

Explosive details of how Koko facilitated the looting of millions of rands from Kusile in cahoots with Swiss-based electrical engineering firm Asea Brown Boveri (ABB) have been exposed in reports provided to the Special Investigating Unit (SIU).

The company is one of 11 international engineering giants being investigated by the SIU for their role in looting about R139bn earmarked to build power stations.

The documents detail how ABB colluded with Koko and senior executives at Eskom to win billions of rands in Eskom contracts.

They also shatter Koko’s repeated claims that he was in fact a corruption-busting crusader at Eskom and was pushed out as part of a “frenzied campaign” calculated to break Eskom and discredit the government.

This is the first time a company with contracts at Eskom has linked Koko directly to corrupt activities at the utility and has given investigators evidence to back up its claims.

In March 2015, ABB scored a R2.2bn control and instrumentation contract for Kusile. It subsequently secured Impulse as a subcontractor and awarded it R800m in work that, according to the documents, was later found to be substandard and overpriced.

SIU spokesperson Nazreen Pandor confirmed the ABB/Impulse investigation, saying the unit was working with whistleblowers in SA and abroad. ABB could now face criminal investigations in SA, the US and Europe in connection with the contract.

Koko slammed ABB’s allegations as “ridiculous” and said the company had been appointed legitimately. Impulse International owner Pragasen Pather said his company won all its contracts fairly.

The Sunday Times first exposed Koko in 2017, detailing how he helped his stepdaughter Koketso Choma rake in about R800m through Eskom contracts with Impulse. Koko was head of Eskom’s generation division at the time, while Choma was a director at Impulse between April 2016 and March 2017. The Sunday Times also later revealed how, in 2016, Eskom paid R81m to Koko’s wife’s bank account via Impulse. However, at the time, Koko’s role in the contracts was still unclear.

The latest documents submitted to the SIU — including e-mails between ABB and Eskom senior executives, financials and integrity reports — explain how, despite failing ABB’s tests for subcontractor appointments twice, and not qualifying for the Kusile work, Impulse was appointed by ABB anyway.

Just days before the Zondo state capture commission of inquiry began in August last year, ABB — facing US justice department and Securities and Exchange Commission investigations — approached US authorities and the SIU through international law firms Mayer Brown and Pinsent Masons. The approach, according to a source close to the investigation, was to stave off criminal investigations for money-laundering, corruption, racketeering, fraud and organised crime, which could see its executives imprisoned.

The extensive paper trail that ABB has given to SIU investigators shows that Koko worked through ABB employee Sunil Vip to plan and secure kickbacks through Impulse International. The documents also show that senior ABB executives breached anti-graft laws and deliberately ignored red flags that were raised by its own ethics unit.

The company claims Vip assured colleagues that Koko had undertaken to ensure ABB would qualify for future contracts worth R6.5bn at Eskom’s Kendal, Matla and Tutuka facilities if Impulse was included.

An e-mail from a senior ABB official says: “Sunil had discussions with Eskom acting CEO Matshela Koko and discussed various issues. Sunil indicated that he would meet Matshela later that evening too. The CEO indicated that there is potentially R6.5bn worth of new business that ABB would be eligible for … Sunil said that from his discussion with the CEO, we can secure all of this provided we work with Impulse because this is Eskom’s preferred supplier.”

Vip failed to respond to a Sunday Times email, WhatsApps and SMSes.

The ABB documents show that within weeks of Koko’s appointment as Eskom’s head of generation in October 2015, company representatives met Impulse International owners at their Johannesburg offices to establish how to work with them.

Despite Impulse twice failing subcontractor qualification questionnaires — scoring first 59% and then 43% — Impulse was hired, receiving a $1.75m (R25m) contract without necessary approvals. Only in April 2016, months after Impulse had started work, did it achieve a pass score of 94%.

Once Impulse was on board, Eskom approved several variation orders, hiking the contract’s value by hundreds of millions of rands. ABB has told the SIU investigators that Koko was personally involved in these negotiations and would go as far as negotiating and agreeing on a price for each contract with ABB employees before the company had even submitted proposals.

Among the variation orders were three valued at R249m, R300m and R289m, issued between April 2016 and February 2017. The orders, according to the documents, were awarded to ABB with instructions that the company would have to subcontract work to Impulse. After agreeing on prices with Koko, senior ABB executives would then be told not to negotiate lower prices “at site level”.

The form for the R249m variation order specifies that ABB will “bring an additional installation contractor (Impulse International) to assist with the priority areas and release the backlog”.

Eskom project managers who queried the payments and asked for proper costing were “removed from the project”.

At the time, the deals known to have been awarded to Impulse included a R79m contract for construction supervision at Kusile, extended by 10 months in a R198m deal, and a R300m contract for trunk cabling for Kusile’s Unit 2 to bring it online six months earlier than scheduled.

Eskom spokesperson Khulu Phasiwe said that after subcontracting Impulse, ABB secured a further 46 contracts, worth R1.08bn.

Impulse — which also contracted with Eskom before Choma was employed — was said to have been kicked off Kusile’s site in July 2017, two months after the Sunday Times published its first exposé on the company’s dodgy relationship with Eskom.

Koko was suspended in May 2017 but was

Koko worked through ABB employee

Sunil Vip to plan and secure kickbacks Evidence to the SIU provided by Swiss-based engineering firm ABB

exonerated in his disciplinary hearing in December. On the day of his return on January 31 last year he was again suspended. He resigned on February 16 2018, an hour before another disciplinary hearing.

The Zondo commission last month heard how Koko apparently sent nearly a dozen emails to an e-mail address widely deemed to have been used by Gupta kingpin Salim Essa, on Koko’s first day back at the office following an earlier suspension in July 2015.

The e-mails allegedly included a headsup on a future senior vacancy at Eskom, its response to National Treasury cost containment directives, and the company’s plans and budget for the training and retention of engineers that paved the way for a R1.6bn deal involving McKinsey & Co and its partner, Trillian Capital Partners.

The inquiry also heard that Koko signed off on a R659m coal pre-payment to the Gupta company Tegeta, which was used to buy Optimum coal mine.

Pandor said this week that the SIU was analysing and weighing up the information ABB had provided.

ABB spokesperson Michael Isaac confirmed the company had been paid R2.2bn for its work on Kusile, which was still under way, and said it was co-operating with the SIU and Hawks probe.

He said if ABB was found to have benefited unduly, the company would engage with authorities “to come to a mutual understanding in relation to reimbursement”.

Isaac declined to say how much Impulse was paid, “as it may compromise investigations”. He declined to comment on several other questions put to him.

Asked why ABB did not report Koko’s insistence that Impulse be subcontracted, he said that at the time the Swiss company was unaware of the relationship.

Koko denied the ABB allegations, saying Impulse had been appointed legitimately. He denied having had contact with ABB employees and said he had never been involved in subcontractors’ appointments.

He said the allegations against him stemmed from a labour court dispute between him and Eskom.

“Eskom was under pressure to put a face to corruption. Investors wanted to know why this face was not in jail … They told the court it was me, but when the court said where’s the evidence, they withdrew their claim … the evidence doesn’t exist.”

Impulse owner Pather denied ABB was told to subcontract to it, claiming the company had won the contracts fairly.

“We were asked for help because ABB was in trouble,” he said.

He rubbished allegations his company was given the work because of Choma.

“Two years before Choma we were already working for Eskom,” he said.

Pather said Impulse left Kusile because Eskom had suspended its contract without pay. “What happened was pure dirty business politics,” he said.