- Former Glencore CEO Clinton Ephron denied evoking the name of President Cyril Ramaphosa to apply pressure on Eskom to change a coal supply deal in Glencore's favour.
- Ephron acknowledged that when Glencore acquired Optimum Coal Holdings, it did not do a thorough due diligence on contracts.
- He also denied claims that Glencore evoked the hardship clause to strong-arm Eskom into a more favourable deal.
Former Glencore CEO Clinton Ephron told the Judicial Commission of Inquiry into State Capture on Thursday that claims of President Cyril Ramaphosa trying to influence the terms of coal supply deals that the company had with Eskom were "ridiculous".
Ephron was responding to evidence presented to the inquiry by former Eskom CEOs Brian Molefe and Matshela Koko. Both testified that there had been an adversarial relationship between the power utility and Glencore since the latter had acquired Optimum Coal Holdings in 2012.
Ephron denied that Glencore had relied on Ramaphosa's name as a shareholder to strong-arm Eskom's management.
The Optimum Coal Mine was a significant supplier to Eskom's Hendrina coal power station in Mpumalanga, but – facing financial troubles – it initiated a business rescue process, which put it on a collision course with Eskom's management at the time.
Koko had told the commission that Glencore would try to strongarm Eskom into disadvantageous arrangements with the company for the supply of coal and claimed that Glencore representatives would use the president's name to apply pressure.
However, Ephron slammed the claims early on in his appearance before the commission on Thursday morning. He denied asking Ramaphosa to intervene on any matters relating to Glencore or the coal supply agreement (CSA) and, to the best of his knowledge, Ramaphosa never did so himself.
"There is not an iota of evidence that points to Glencore wanting to rely on the relationship with Mr Ramaphosa as a shareholder to change the contract price. It's ridiculous. The commission has interviewed a number of Eskom directors, and nowhere has it ever come up that he was involved in any discussion or negotiation of the CSA of OCM," said Ephron.
Ephron told the commission, chaired by Deputy Chief Justice Raymond Zondo, that Eskom and OCM had a coal-supply agreement relationship for many years before Glencore acquired Optimum Coal Holdings and effectively became the owner of Optimum Coal Mine.
He acknowledged that during the acquisition, between June of 2011 and March 2012, Glencore did due diligence at a broad level, but did not conduct comprehensive due diligence in terms of operations and the finer details of contracts.
"We did not fail to do due diligence. We did a reasonably extensive due diligence. We mentioned that we did not do a comprehensive due diligence. OCM was listed one year before the Glencore group of companies starting to acquire the shares.
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"In order to list, OCH would have had to put out a listing statement and they did so. It included a competent persons report and independent report by SRK Consulting. All that info would have allowed us to prepare a due diligence, which was sufficient under the circumstances. One needs to understand there was a significant amount of information available for us to run models and do an assessment of this company," Ephron said.
Ephron said he did not see the coal-supply agreement of OCM at the time, although the acquisition of OCH meant that Glencore would effectively be taking over the coal-supply agreement.
"We only would have had sight of the coal supply agreement. We would only have sight of the competent persons report details like volume, valuation, and price. We would not have had sight of any confidential agreements of OCM, only certain deals and contracts," he said.
He said six months after Glencore issued a hardship notice, Eskom called OCM to suspend hardship and ask OCM to develop a proposal to ensure the longevity of the mine and more coal supply for Hendrina power station.