New SARS legal head was named in State of Capture report

2017-02-02 19:50
(Gianluigi Guercia, AFP)

(Gianluigi Guercia, AFP)

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Johannesburg - The new executive in charge of legal affairs at South African Revenue Service (SARS) was named in the Public Protector's State of Capture report as part of a team that made a submission recommending that Eskom give a tender to controversial Gupta company, Tegeta.

Advocate Neo Tsholanku was made the acting chief officer of legal counsel at SARS on Wednesday.

In a memo sent to all SARS staff by commissioner Tom Moyane on Wednesday, it was announced that the chief officer in charge of legal counsel, Kosie Louw, had left and SARS was in the process of finding his replacement.

"In the interim, I have pleasure in confirming that Advocate Neo Tsholanku, currently the Group Executive: Criminal Investigations will serve as Acting Chief Officer: Legal Counsel while the recruitment process is underway," the memo states.

Tsholanku, who was previously the legal services general manager at Eskom, was named in the State of Capture report under the investigation into Eskom's deal with Tegeta and Optimum Coal Holdings.

Tegeta is partly owned by the Gupta family through Oakbay Investments, but smaller stakes are owned by President Jacob Zuma's son Duduzane Zuma, businessman Salim Essa and a company registered in the United Arab Emirates.

READ: Mkhwebane seeking legal advice on Zuma's review of 'State of Capture' report

Eskom paying double

Tegeta's purchase of Optimum from Glencore has been muddied by allegations of political interference and favouritism.

The report showed that Tegeta supplies the Arnot Power Station with coal at a cost of R580 per ton with delivery costs, making it one of the most expensive contracts Eskom has.

Tegeta's six-month contract is worth nearly R700m.

On average Eskom pays R231 per ton of coal, making Tegeta's coal more than double the average price.

Despite this Tegeta was given a 10-year contract to supply coal to the Majuba power station and another supply contract for the Hendrina power station.

AmaBhungane revealed in October that at a tender committee meeting Eskom executives agreed to give Tegeta Exploration and Resources a R587m contract to supply coal to Arnot Power Station.

The money was used, two days later, to help pay the R2.15bn purchase price for Optimum Coal.

The contract was awarded six hours after the banks refused to give the Guptas a R600m loan for their controversial Optimum Coal deal, the amaBhungane report said.

Eskom paid the money upfront and the deal was reported to the Hawks by business rescue practitioners Piers Marsden and Peter van den Steen in terms of section 34 of the Prevention and Combating of Corrupt Activities Act.

'No adverse findings'

The Public Protector's report indicated that Tsholanku was part of a team that made a submission to the board tender committee to "consent the cessation of the Hendrina coal supply agreement [CSA] between Optimum Coal Holdings and Eskom to Tegeta and Eskom".

According to the report, the submission made to the board tender committee was signed by Mr Vusi Mboweni (senior general manager: primary energy), Mr Neo Tsholanku (general manager: legal) and Mr Matchela Koko (group executive: generation).

"The document states that a risk has been identified in Tegeta's possible inability to pay the penalties levied by Eskom to OCH/OCM [Optimum Coal Holdings/ Optimum Coal Mine]."

This essentially meant that Eskom would pay Tegeta directly, instead of Optimum Coal Mine which was still being managed by business rescue practitioners.

SARS spokesperson Sandile Memela said the Public Protector made no findings "let alone adverse findings against Advocate Neo Tsholanku".

Memela said it was SARS's view that Tsholanku had not done anything untoward.

Read more on:    sars  |  eskom  |  state capture

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