Three Gupta-linked companies were awarded multi-million rand contracts with power utility Eskom despite having fraudulent B-BBEE certificates or misrepresenting their empowerment statuses, according to a report seen by the DA.
Dean Macpherson, a member of Parliament for the DA, on Wednesday released correspondence between the B-BBEE Commission and the DA about a complaint against the companies, which he lodged in March 2018. The commission, which falls under the Department of Trade and Industry, is mandated to investigate complaints related to the B-BBEE Act.
The three documents, between 7 and 14 pages long, state they are the commission's "final findings". They are all dated July 12, 2019, and are signed by the commission's executive manager of investigations and enforcement, Moipone Kgaboesele.
While the findings state that they include "restricted information" and should not be shared until the commission has published a final report, Macpherson told Fin24 by phone on Wednesday that the DA had obtained legal advice that the findings may be released as there is no rational reason to withhold the content.
Sidwell Medupe, spokesperson for the Department of Trade and Industry, confirmed to Fin24 that it had finalised its investigations of the complaints and issued its findings. It would, however, publish the findings in due course as guided by the B-BBEE Act, he said.
Two of the investigations relate to B-BBEE verification company BEE Matrix. The DA had alleged in its initial complaint that the company had in 2016 irregularly awarded B-BBEE certificates to Gupta-owned companies Tegeta Exploration and Resources and Optimum Coal Mine. The DA says the commission found that BEE Matrix and its technical signatory, Simone Mitchell, "acted in a manner that is contrary to the B-BBEE Act".
Some of the commission's other findings, according to the DA:
- A B-BBEE certificate was awarded to Optimum Coal Mine without following due process of verification, making it invalid;
- Tegeta and Trillian Management Partners misrepresented their B-BBEE statuses to secure Eskom contracts;
- Tegeta was wrongfully classified as an exempted micro-enterprise with an annual turnover of not more than R5m and a B-BBEE Contributor Level 3. The commission stated that based on multi-million-rand contracts Tegeta entered into with Eskom the year before, it should have been classified as a large entity.
- Trillian Management Partners misrepresented its B-BBEE status as that of a B-BBEE Contributor Level 4. The company was classified as an exempted micro enterprise, when it was not the case.
- Eskom accepted an invalid B-BBEE certificate from Tegeta and Optimum Coal Mine. The power utility also accepted a B-BBEE sworn affidavit from Trillian and the invalid B-BBEE certificate from Tegeta – which misrepresented the B-BBEE status of the companies. All the while, Eskom had known the value of the contracts it awarded to the entities, and that it exceeded the limited turnover of R10m required for companies to be classified as exempted micro enterprises.
Eskom was also criticised for failing to follow empowerment legislation. "Eskom failed to implement the requirements of the B-BBEE in the procurement process relating to the three entities in question … its conduct and /or omission may have aided misrepresentation of the B-BBEE entities," one of the letters from the commission read.
While Eskom officials had "all the necessary information at their disposal to identify the misrepresentation of the B-BBEE status, especially in regard to Trillian and Tegeta", they did not do so.
Call for further investigations
According to the DA's documents, the commission made several recommendations, including that:
- BEE Matrix should have its accreditation as a verification agency removed;
- The Companies and Intellectual Property Commission and the SA Revenue Service should investigate Trillian;
- Eskom report implicated officials to police
- That the power utility lays a complaint against the Gupta-linked companies with police and or National Prosecuting Authority.
Macpherson, meanwhile, said in a statement the DA would be laying a raft of criminal charges against the three companies and various executives, including, Mitchell, for allegedly issuing fraudulent certificates.
This is not the first time that the verification agency has been found wanting by the commission. After it was found to have issued an invalid certificate in July 2018, the commission wrote in a report that responses received from its leadership showed a "total disregard of their fiduciary duties as shareholders and directors."