Eskom coughs up R1bn for labour broker

Johannesburg - In just five years, Eskom has spent at least R1bn of taxpayers’ money on a labour consultancy, which made the ailing power giant pay double for contractors.

The consultancy, Khum-BIE, has now taken Eskom to the South Gauteng High Court to fight for money it’s owed. Its directors are Byron Jansen van Rensburg, a Joburg businessman, and former City Power boss Mogwailane Mohlala.

Fin24's sister publication Netwerk24 obtained court documents last week as Eskom appealed to fed-up South Africans to use power sparingly and brace themselves for more load shedding.

Trade union Solidarity is representing three former Eskom contractors in arbitration before the Commission for Conciliation, Mediation and Arbitration after they had been recruited by Khum-BIE, but suddenly lost their jobs in October 2013.

Invoices in the court documents in Khum-BIE’s fight with Eskom reveal that the company made the utility pay double for the three Solidarity members’ services.

The services of one contractor, Johan Jacobs, cost Eskom R1 096 per hour in August last year, according to the invoices.

But Jacobs’ payslip from Khum-BIE shows he was only paid R535 per hour. He said even that rate was high for the industry.

The other Solidarity members also only received less than half the fees charged by Khum-BIE for their services.

According to another court document, Khum-BIE’s services for August and September last year cost Eskom R150m.

Khum-BIE says in the document it spent about half that amount on contractors, salaries and subcontracted labour. It is not clear what the other R75m was used for.

Eskom paid more than R1bn to Khum-BIE between 2009 and October 2013, documents reveal. Khum-BIE was one of five companies that supplied hundreds of contractors to Eskom and the amount the utility spent on labour expenses could still climb dramatically as details of the four other contracts emerge.

Last year, Eskom was forced to dismiss hundreds of contractors – mainly quality-control engineers – because it could no longer afford the high costs of the consultants it had recruited.

One of the engineers told Rapport on Friday the quality control they applied in particular at Eskom’s new power stations was critical and that the recent power crisis when a coal silo at Majuba Power Station in Mpumalanga collapsed, could have been avoided if the power giant had responded to the warning about the silo’s condition that his team gave in a report more than a year ago.

Eskom declined to comment on its court battle with Khum-BIE, or to supply information about its dealings with other labour brokers.

“Given the court case between the parties [Eskom and Khum-BIE], we cannot provide further details or answer your questions,” said Eskom’s media team in an emailed response.

Mohlala denied his company charged Eskom too much for the contract workers. “We never made Eskom pay more than the fees agreed upon in the contract. I would like to provide more information on the issue as soon as the trial is completed.”

Meanwhile, Jacobs and dozens of former Eskom workers recruited by Khum-BIE are struggling to keep their heads above water.

“I had a good job at a company when Khum-BIE approached me to work for Eskom. They said there was work for about 15 years,” said Jacobs, who is now running a coffee shop with his wife in Benoni and sometimes resorts to welding and construction work to make ends meet.

He said Eskom would have saved taxpayers billions if the utility had appointed its own staff.

* This article was first published in Afrikaans newspaper Rapport and later appeared on City Press. They are both sister publications of Fin24.

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