Two senior Eskom managers and two businessmen appeared in the Johannesburg Regional Court on Thursday afternoon for a bail application after being arrested by the Hawks on suspicion of fraud, corruption and money laundering related to the construction of Kusile power station in Mpumalanga.
The four accused are
- Abram Masango, former Eskom Group Executive for Group Capital Division;
- France Hlakudi, former Eskom Senior Manager: Group Capital Division;
- Tony Trindade, the CEO of Tubular Construction; and
- Hudson Kgomoeswana.
The state prosecutor told the court it was not opposing bail for the four accused. They were granted bail of R300 000 each and had to surrender their passports. The case has been remanded to May 2020.
Kusile is a coal-fired Eskom power plant under construction in Mpumalanga. Together with its sister plant Medupi, it is billions of rands over budget and years behind schedule.
In an earlier joint statement, the Hawks and the National Prosecuting Authority said the four accused were arrested earlier on Thursday morning in Mpumalanga, Limpopo and Gauteng by the Hawks’ Serious Commercial Crime Investigation team in collaboration with the NPA's Investigative Directorate.
"The suspects were arrested early this morning in Mpumalanga, Limpopo and Gauteng by the Hawks’ Serious Commercial Crime Investigation team in collaboration with the National Prosecuting Authority’s Investigative Directorate," read the statement.
"Investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations. This revealed that there was apparent gross manipulation of contractual agreements between contractors, Eskom employees and third parties at Kusile power station.
According to the Hawks and the NPA, investigations revealed that the contract was "manipulated in a number of ways", including an alleged:
- manipulation of the power utility's procurement system by officials who occupied senior management positions;
- descoping of the contract at Kusile without justification; and
- conflict of interest by Eskom employees.
'Descoping' refers to reducing what a contract is set to deliver.
"In June 2015, Eskom’s Kusile project management team submitted a request to Eskom Procurement Committee for a mandate to negotiate and conclude a contract with one of the companies. The contract was approved on 2015 for R745 million to build two Air Cooled Condensers units at Kusile power station," said the NPA and the Hawks.
"It is alleged that from February 2015 to July 2017, the appointed companies, other related entities and individuals shared approximately R30 million amongst themselves."
SIU welcomes arrests
Forensic investigation and litigation agency the Special Investigating Unit said in a statement on Thursday said the arrests were a "great milestone in the fight against corruption in our country".
The SIU said the arrests were testimony to cooperation between South African law enforcement agencies, and others agencies including the SA Revenue Service, the Asset Forfeiture Unit and the Financial Intelligence Centre.
"Our investigation into the Eskom matter has contributed a great deal in getting to the bottom of this and it has assisted a lot in ultimately arriving at this point where we see the arrests today," it said.
"The SIU is busy with an investigation involving four main contractors and a number of sub-contractors at Kusile. In the course of our investigation we identified sub-contractors that were used as conduits for corrupt payments to Eskom managers."
The unit said it had referred 16 matters to the NPA in this regard including "some of those arrested today".
"The SIU has been working closely with the Hawks and the NPA in this regard and we continue to work with them to ensure [the] arrest of other role players identified through our investigations. Our investigation is much wider as it includes three other main contractors."
Eskom, in statement, said while it is observing the legal principle of presumption of innocence, it will "leave no stone unturned in ensuring that perpetrators of corruption and malfeasance are brought to book"."At this stage Eskom will not be commenting any further on the matter."