OVERVIEW: Zwane initiated meeting with Glencore's Glasenberg in Switzerland, Ephron tells #StateCaptureInquiry

2019-02-27 16:00

The judicial commission of inquiry into state capture has adjourned after hearing the testimony of former CEO of Glencore, Clinton Ephron.

WATCH LIVE: State Capture Inquiry 

(Courtesy of SABC) 

Deputy Chief Justice Raymond Zondo
LIVE NEWS FEED

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Last Updated at 10:54
27 Feb 16:51
The commission adjourns until Thursday morning. 

27 Feb 16:50
Ephron says closer to the payment of the purchase amount, they learnt that Oakbay was R600 million short to buy Optimum mine.

27 Feb 16:38
Ephron says an agreement was reached at this meeting for Oakbay to buy Optimum.

27 Feb 16:37

27 Feb 16:35
Ephron says he attended the second meeting with former minister Zwane and Tony Gupta, Salim Essa. He says the meeting was opened by Zwane.

27 Feb 16:31

27 Feb 16:29

27 Feb 16:26
Ephron says a decision was taken to fund the business and take it out of of business rescue during a 29 November conference call.

27 Feb 16:08

27 Feb 16:05

27 Feb 15:58

Ephron says in an earlier meeting at which Ajay Gupta was present, in November 2015, he told Gupta that his offer of R1bn for all the assets of Optimum was declined.


27 Feb 15:54

27 Feb 15:49

27 Feb 15:49

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27 Feb 15:42

Maleka asks Ephron if he knows why the meeting was held at Saxonwold. "No, they requested it, and we agreed," Ephron tells Maleka.


27 Feb 15:41

Maleka asks Ephron about a meeting that took place on the 20th of October 2015, which involved representatives of different stakeholders - the BRPs, Glencore and representatives of Oakbay. Maleka confirms that Ephron was present at the meeting. 

Ephron: "The discussions were around the sale of shares of Optimum coal mine only, and did not include any of the other assets that were owned by Optimum Coal Holdings. It was a relatively brief discussion, and it was very much in line with offer number two that we'd received from Oakbay." 

Maleka: "Where did the discussion take place?" 

Ephron: "In Saxonwold, at the home of the Guptas."  


27 Feb 15:29

27 Feb 15:24

Ephron says he had a meeting with Molefe and Matshela Koko at Eskom, who demanded that Optimum restore its coal supply to Hendrina immediately. Ephron says Molefe said to him that Eskom would negotiate with Optimum in good faith, on this condition, but he told them it wasn't his call as the group was under business rescue.


27 Feb 15:13

Ephron says Optimum continued to supply Eskom with coal, but in July/August Eskom withheld payment. They eventually paid Optimum, but at that stage, a year later, Tegeta owned the mine.


27 Feb 15:05

27 Feb 15:01

27 Feb 14:57

27 Feb 14:55

Ephron says their position on the calculation of the penalties by Eskom, was that it was wrong. Ephron says they were of the opinion that they could defend that position, should the matter go into an arbitration process.


27 Feb 14:49

27 Feb 14:49

Ephron says Glencore didn't take the offer seriously, as it lacked details. The letter was still subject to due diligence. They considered this an indication to start negotiations.


27 Feb 14:45

Ephron, reading from KPMG's offer, says Oakbay was offering to pay R2bn to buy Optimum. Ephron tells Maleka he doesn't know how they arrived at this figure.


27 Feb 14:41

Ephron now moves on to offers to purchase Optimum, says the first offer came from an anonymous client via KMPG, but that Glencore did not deal with anonymous offers. KPMG then disclosed that it was Oakbay Investments.


27 Feb 14:37

27 Feb 14:30

Ephron says the Hendrina power station was designed for coal with the Optimum specifications.


27 Feb 14:29

27 Feb 14:24

27 Feb 14:23

Ephron says Molefe's stance was something of a "stonewall" negotiation. "It wasn't a discussion, it was a position," says Ephron.


27 Feb 14:20

27 Feb 14:19

Ephron says he can confirm that Molefe received the letter, but did not respond immediately. The letter was dated 22 May, but Molefe didn't respond until 11 June. Ephron says Optimum was on its last legs.


27 Feb 14:12

27 Feb 14:10

27 Feb 14:09

Back from the lunch adjournment, Maleka continues leading Ephron's evidence. Maleka wants to know why Ephron feels that Molefe's decision to not amend the CSA was a setback. Ephron starts off by saying that the negotiations were ongoing for a long time. 


27 Feb 13:04

Zondo calls for the lunch adjournment. Proceedings resume at 14:00.


27 Feb 13:03

Ephron: "At that point, we had no discussions. Mr Bester told us at the time that it had been taken to the board, and that the board had said that the new acting chief executive officer Mr Brian Molefe would be in contact with us, to discuss the fourth addendum." 

Ephron mentions a "very brief meeting" he had with Molefe at his office at Megawatt Park where he told Ephron that "Eskom would not be amending the terms of the CSA and that it would continue to enforce its rights in terms of the contract" and no amendments would be considered until the end of the contract - December 2018 at that time. 


27 Feb 12:57

27 Feb 12:53

27 Feb 12:38

Mention is made of a company called "Basis Points Capital", who did the financial analysis on behalf of Eskom. Ephron tells the commission he does not know who they are.


27 Feb 12:32

Ephron says by 2014, Optimum was losing R80m to R100m per month. Glencore made a decision to inject R480m cash into Optimum. Ephron says without the financial cash injection, "the mine would not have survived".


27 Feb 12:28

27 Feb 12:21

Ephron says the penalties were suspended and back-dated to May 2014, due to the co-operation agreement.

The negotiating team included Ephron and Johan Bester from Eskom. Maleka confirms that Bester is scheduled to testify before the commission.


27 Feb 12:16

27 Feb 12:10

Ephron says Optimum coal mine lost R829m in 2013 under the Eskom CSA. "That's a huge loss for anybody," he says.

Ephron says by early 2014, Eskom approached Optimum hoping to establish a new agreement, after the parties entered into arbitration after the "hardship" dispute/clause was invoked. 

Ephron says Johan Bester from Eskom approached Glencore for the possibility of a new agreement.



27 Feb 12:05

27 Feb 12:00

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