Acting senior general manager takes the stand Zondo Inquiry
JOHANNESBURG – Evidence leader at the Zondo Inquiry, Advocate Kate Hofmeyr, on Tuesday gave an overview of the evidence of corruption in Eskom’s coal supply contract with Gupta family businesses that was going to be presented by a new witness.
Daniel Mashigo, acting senior general manager for primary energy division at Eskom, took the stand on Tuesday at the Zondo Inquiry which is probing allegations of State capture, corruption and fraud in the public sector, including organs of State.
Hofmeyr said that Mashigo will show the Inquiry how in 2014 Eskom irregularly entered into a 10-year coal supply agreement worth R4.3 billion with Tegeta Exploration and Resources, a Gupta family coal mining company, to supply coal at Majuba power station from its Brakfontein mine in Mpumalanga.
She said that the evidence obtained from Eskom hard drives will show the inquiry that considerable pressure was placed on Eskom employees to finalise the coal supply agreement within 48 hours
Hofmeyr said that the evidence will be supported by four reports compiled between 2015 to 2018 by the National Treasury, Fundudzi Forensic Specialists, and two from audit firm PwC.
The reports show that Eskom had entered into the agreement with Tegeta in December 2014, prior to a financial due diligence being completed, without a condition precedent being completed, and with no successful combustion tests being done on the coal that was going to be supplied.
Hofmeyr said that when the due diligence was completed in April 2015, it concluded that Tegeta was not sound enough to handle a contract of that magnitude. She said that the contract was implemented for the better part of two years despite an auto mechanical sampler, who was going to sample the coal, being found.
As the contract continued, Hofmeyr said evidence shows that the quality of the coal from Brakfontein started becoming poor.
As a result, samples were taken to an independent coal laboratory firm, Sibonisiwe Laboratories, which failed 15 out of the 30 samples. When samples from Brakfontein were taken to South African Bureau of Standards (SABS) laboratory, 29 our the 30 samples failed the test.
Hofmeyr said that Eskom’s best-ever coal specialist, the late Dr Mark van der Riet, was so concerned by this development that he started investigating and a decision was taken that he would travel to Brakfontein to witness the sampling of coal.
“But shortly before this trip, then Eskom CEO Matshela Koko told Dr van der Riet not to travel and that meant the sampling happened without any Eskom personnel being present. It goes without saying that the sampling passed resoundingly,” Hofmeyr said.
Dr van der Riet apparently told Eskom executives that what was happening with the Brakfontein coal was cause for caution.
“He had started to compile a report in preparation to submit to Eskom, but was unable to do so because he was suspended the following week for 32 months,” Hofmeyr said.
“For the next two years, Eskom lost his services, but he was exonerated later and was reinstated back at work on 1 May 2018.”
Hofmeyr also told the Inquiry that when Tegeta started undersupplying on agreed coal supply in August 2016, Eskom had that year and in 2017 approached National Treasury for approval to give Tegeta R2.9 billion so it can increase the contract for 10.8 million tonnes of coal.
National Treasury turned down this request after getting wind of the substandard coal from Brakfontein and because Eskom had made its application based on “patently misrepresented facts” by hiding the fact that the adjectent mine, Brakfontein Colliery Extention, had come online.
Tegeta continued supplying coal but it was dwindling and in November 2017, the undersupply situation had become significant. In February 2018, Tegeta went into business rescue and has not supplied any coal to Eskom since.
Hofmeryr said that penalties that have been imposed by Eskom on Tegeta now amount to R500 million. Mashigo had started giving a background of his job before the Commission went on a tea break adjournment. – African News Agency (ANA)