Johannesburg - Eskom’s chief financial officer Anoj Singh is set to face charges of breaching the Public Finance Management Act (PMFA) as well as the Companies Act.
Singh is currently preparing a statement on all the allegations against him, which will be revealed at the Eskom parliamentary inquisition that starts at the beginning of August.
At an explosive media briefing on Eskom's financial results on Wednesday, he confessed that he signed a R1.6bn guarantee to Absa Bank for Tegeta Exploration & Resources to buy the Optimum mine. Experts have described such a guarantee as highly irregular.
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Tegeta is owned by the Gupta family and President Jacob Zuma's son Duduzane.
But Eskom acting chairperson Zethembe Khoza told journalists that Singh would not be facing any action from Eskom at present.
Singh called for space to prepare a response to allegations he faces about Gupta-sponsored trips to Dubai, while he was negotiating Gupta-related business deals.
But the Democratic Alliance is not waiting to hear Singh’s explanation, with the party's Natasha Mazzone planning to lay criminal charges against Singh on Thursday.
Mazzone said the DA now has reason to believe that Singh may have played a pivotal role in the Guptas’ capture of Eskom.
“It appears he may be one of a number of seemingly compromised individuals at Eskom who have sought to loot our public coffers,” she said.
Charges against Singh will include his alleged breaching of the PMFA as well as the Companies Act. Mazzone believes Singh should face imprisonment, as stipulated by the PMFA.
The act states that the accounting officer at a public entity, in this case Singh, must “ensure reasonable protection of the assets and records of the public entity” and “act with fidelity, honesty, integrity and in the best interests of the public entity in managing the financial affairs of the public entity”.
Furthermore, the act states that an accounting officer at a state owned enterprise may not use their “position or privileges" for personal gain or to improperly benefit another person”, Mazzone said.
The companies act charges would include giving false statements, reckless conduct and non-compliance. She said the act stipulates that if a director of a company is convicted of an offence, they are liable “to a fine or to imprisonment” of up to 10 years.
As CFO of Eskom, Singh would have been best placed to provide access to those intent on looting the entity for their own selfish gain, Mazzone said.
“This possibility must be fully investigated and should the allegations prove true, the DA will ensure that Singh has his day in court and that he accounts for his hand in the capture of Eskom.”
Mazzone said Singh was involved in at least four questionable actions at the state utility, which should be investigated.
These included the Trillian contracts of R495m, as a subcontractor of McKinsey, upfront coal contract payment to the Gupta-linked Tegeta, Eskom turnaround in an arbitration settlement of R577m, reduced from R2.1bn, for Tegeta as well as giving Tegeta a R1.6bn guarantee to purchase Optimum.
The gifted guarantee
At the briefing on Wednesday, Singh for the first time publicly admitted that he signed a R1.6bn guarantee to Absa Bank for Tegeta to buy Optimum.
The guarantee committed Eskom to stand surety for R1.6bn on behalf of Tegeta in December 2015.
Khoza was surprised, saying that this was the first time that he has heard about it after earlier denying that the guarantee existed. The Eskom chair was on the Eskom board and chaired the tender committee at the time.
Singh emphasised that the guarantee was never used and was later cancelled.
A 72% discount
Mazzone also called Singh’s explanation of how the Opitmum fine was reduced “absurd”.
Eskom reduced a massive R2.1bn fine levied on Tegeta because an investigation revealed that a coal crusher was at the heart of the problem.
The struggling Optimum mine was bought by Tegeta, after it went into business rescue. Tegeta then inherited the fine when it bought the mine from Glencore, before it was concluded in arbitration.
But the fine was settled after an arbitration process, which Tegeta stipulated as part of its sale. An investigation during arbitration found that the poor quality was because of a change in sampling equipment in 2010.
"The change meant it was different than the original sampling equipment. The new design had a crusher, which increased the reject coal put in the plant. It gave a false positive of quantity of reject coal. This was the outcome of investigations over three to four years," Singh explained.
Based on a legal opinion, Eskom then opted to settle for R577m.
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