SABS 'thrown under Gupta bus'

The trade and industry department has accused its own body – the SA Bureau of Standards (SABS) – of colluding to help Gupta-owned Tegeta coal mine maintain a supply contract with Eskom.

Lionel October, director-general of the department, presented papers to the portfolio committee on trade and industry this week that reveal a curious flip-flop.

Contained in his presentation – which DA shadow minister of trade and industry Dean McPherson used to call for the dismissal of the SABS board and the sacking of its CEO – was a letter, dated February 16, to the portfolio committee on public enterprises.

In the letter, October exonerates the SABS from allegations that it colluded with Eskom to supply irregular test results that enabled the continuation of the Tegeta supply contract, despite the coal failing to meet specifications.

The allegations stem from former Eskom generation head Matshela Koko’s evidence that his decision to buy coal from Tegeta was based on an SABS test report. Koko was testifying at Parliament’s public enterprise committee’s inquiry into state capture at Eskom.

October stated that Koko testified that he decided to suspend the Tegeta contract because more than half of the coal supplied from its Brakfontein mine was below the required quality.

The contract was suspended on August 31 2015 and the suspension lifted six days later on September 5.

SABS was contracted only on September 1, the samples from the mine were collected on September 6 and the results, which showed the coal was below specification, were produced on September 18.

However, an irregular test was conducted a day before the suspension, on August 30 2015, which could point to collusion “and/or manipulation of SABS’ processes”.

This, stated October, was “uncovered” by senior management at SABS, whose investigations found the test was irregular because the samples were brought to the Mpumalanga lab, meaning the source could not be verified.

He said that, when the tests were initially requested on August 26 2015, “it was on the explicit understanding that these tests would not be used for procurement purposes” because the sample could not be independently verified.

The only conclusion, October stated, was that Koko was relying on the irregular report of August 30 2015 and ought to have been aware it could not be used for procurement purposes.

However, this week, armed with exactly the same information, October told the portfolio committee on trade and industry that Koko’s reliance on the irregular test report “shows that collaboration between Eskom and the SABS in the procurement of noncompliant coal from Tegeta resulted in irregular expenditure of approximately R3bn”.

He said emails and information from Treasury showed the SABS acted in “a dishonest and hostile manner by impeding the investigation undertaken by Treasury into the SABS test report”, and that it “deliberately misled” Treasury over the existence of the irregular test report.

October’s statements were made in a week when Trade and Industry Minister Rob Davies filed his intention to dissolve the SABS board and put the bureau under administration.

In response to questions from City Press, October said the new information that had come to light, which precipitated his turnaround regarding SABS collusion with Eskom, was that the SABS did not disavow the results of the August 30 irregular test, despite Koko’s testimony before Parliament in January that Eskom used it to obtain Tegeta coal.

He said the SABS board and its CEO, Boni Mehlomakulu, were derelict in their duty in not investigating the August 30 testing after it was reported in the media on September 13 2015 and again by amaBhungane in August 2016.

During an interview with City Press, Mehlomakulu said that she was “blindsided” by October in Parliament this week.

She said she was “thrown under the bus”, and the usually reserved board chairperson Jeff Molobela “got mad” and defended the board.

She said she asked the SABS legal department to investigate the irregular test of August 30 2015 in June last year, and an email from herself to the department’s chief director Tshengedzeni Demana sent on February 1, which October used to vilify her, reveals her attempts to find out what happened on August 30 2015.

“I also don’t know what happened that Saturday night,” she said, adding that she was waiting for the results of a forensic investigation initiated on June 4 to get to the bottom of the matter.

As to why she didn’t investigate earlier, she said Treasury was looking into the matter and doing so “in a specific way”.

She did not want to put the SABS between Treasury and Eskom at the time, but responded when called upon to do so.

She said Davies’ intention was rejected by the trade and industry portfolio committee and it must have
been “embarrassing for the minister to have his own ANC not supporting [him]”.

Davies’ reasons for dissolving the board were that the SABS was not performing its mandate; it had been slow to institute an investigation into the Tegeta test results; and the SABS commercial subsidiary that conducted testing and certification did not have the required authorisation from the finance minister.

It has been reported that Molobela hit back at the department, stating that the forensic investigation ordered in February was delayed by two months because it took a month to issue a request for a proposal to procure the services of a forensic investigator.

The board had thus decided to use its own list of forensic investigators, the procurement of which took two months to finalise.

She said she was “not going anywhere” and “the issues would have to be tested in court” if necessary.

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