Eskom, Transnet in SIU cross hairs

2018-04-08 05:55

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President Cyril Ramaphosa this week upped the ante in the fight against corruption when he appointed the Special Investigating Unit (SIU) to probe state capture at Eskom and Transnet.

The proclamation, which was gazetted on Friday, will add another layer of investigations aimed at unearthing multibillion-rand corruption in state-owned enterprises allegedly masterminded by the Gupta family with the help of former president Jacob Zuma.

Zuma, senior government executives, and former and current Cabinet ministers have been accused of allowing and aiding the Gupta family to extract billions from public companies and government departments through irregular tenders.

In January, Zuma appointed a commission of inquiry into state capture following a high court judgment in December ordering him to do so according to recommendations made by former Public Protector Thuli Madonsela in 2016. Zuma had challenged Madonsela’s recommendation in court, arguing that he alone, as president, had the constitutional power to appoint judicial commissions.

The inquiry, which will be headed by Deputy Chief Justice Raymond Zondo, will run concurrently with another state capture investigation already under way in Parliament.

Ramaphosa has ordered the SIU to investigate:

. Coal and diesel procurement and transportation at Eskom;

. Irregular, unauthorised, fruitless and wasteful expenditure incurred by the power utility;

. Maladministration and any losses suffered by Eskom in relation to the construction of the Kusile and Medupi power stations, and the Ingula Pumped Storage Scheme;

. “Defective performance and nonperformance” of contractors at Kusile, Medupi and Ingula;

. Undisclosed and unauthorised interests by Eskom employees, agents and service providers;

. Corruption that may have resulted from the appointment of Trillian and McKinsey at Eskom and Transnet;

. Irregular, unauthorised, fruitless and wasteful expenditure at Transnet; and

. All contracting and procurement of goods at Transnet.

Eskom spokesperson Khulu Phasiwe said: “We welcome the fact that the SIU will conduct its own investigations into what happened at Eskom.”

He said there were several investigations already under way at Eskom.

“Internally, Eskom has already started a process to review 5 000 contracts, and I’m sure some of them will eventually be referred to the SIU. The Hawks are also investigating procurement issues at Eskom.

“At the end of the day, while reputation is not everything, the plan is to restore the reputation of the institution. All we want is for the company to do the right thing,” he said.

Transnet spokesperson Molatwane Likhethe said: “Transnet welcomes the president’s proclamation for the company to be probed by the SIU. Transnet will fully cooperate with all authorities involved in this matter.”

WHAT THE SIU HAS TO INVESTIGATE

In April last year, City Press reported that Treasury stopped Eskom from expanding two coal supply contracts that would have seen the Gupta family and Zuma’s son Duduzane become R4bn richer.

Treasury commissioned the investigation to determine whether Eskom followed proper supply chain policies when it handed coal supply contracts to Tegeta Exploration and Resources, the company the Guptas owned with Duduzane.

Treasury shot down Eskom’s request to expand the Tegeta-owned Brakfontein colliery’s 10-year coal supply contract by another R2.94bn, which would have meant a 77.42% increase from its original agreement to supply coal to the Majuba Power Station in Mpumalanga, and an increase in the value of the contract from R4bn to R7bn.

Treasury also barred Eskom from extending Tegeta-owned Optimum coal mine’s contract to supply coal to Arnot Power Station in Mpumalanga by six months and R855m. The coal was also of poor quality.

GUPTAS’ TRANSNET PAYDAY

In November, Transnet chief executive Siyabonga Gama told Parliament that the parastatal was investigating six multibillion-rand deals linked to the Gupta family. Among them was software giant SAP’s 10% “sales commission” to a Gupta-controlled company in exchange for business from Transnet.

Gupta-linked company Tequesta also netted a R5bn kickback in Transnet’s R50bn rolling stock renewal programme, and a Gupta-related company appointed to handle the parastatal’s pension fund misappropriated R232m with Transnet’s knowledge.

TRILLIAN AND MCKINSEY

In 2016, Eskom contracted and paid McKinsey about R1bn to deliver a “turnaround strategy”. Eskom paid a further R564m to Gupta-linked Trillian Capital Partners for additional work, despite having no contract with the company.

Trillian has been accused of fronting for McKinsey, which was appointed without a public tender, to secure contracts worth billions of rands from Eskom and Transnet.

In October, Eskom asked McKinsey and Trillian to pay back the R1.564bn they were paid after an internal investigation found that the “payments were unlawful”.

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Read more on:    transnet  |  eskom  |  cyril rama­phosa  |  jacob zuma

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