Home South African MPs set to grill Eskom over controversial R4 billion payment

MPs set to grill Eskom over controversial R4 billion payment

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Members of Parliament are also expected to question power utility over how it plans to recover the money

File picture: Siphiwe SIbeko / Reuters

MEMBERS of Parliament are expected to again grill Eskom over it’s controversial R4 billion payment to four companies, including how the embattled power utility plans to recover the money.

Chairperson of Parliament’s portfolio committee on public enterprises Khaya Magaxa said: “The next step will be the committee providing an opportunity to the shareholder minister to brief the portfolio committee and members asking questions, which will include how Eskom is going to recover the money.”

This comes after it emerged that Stefanutti Stocks-Basil Read Joint Venture, Swedish multinational ABB South Africa, and Tubulcar Construction Projects picked up R1 billion each in Eskom overpayments for their roles in the construction of the Kusile Power Station in Mpumalanga, according to Public Enterprises Minister Pravin Gordhan’s letter to ANC chief whip Pemmy Majodina this week. The fourth firm, Tenova Mining and Minerals SA, walked off with R735 million.

The revelation was made weeks after Eskom chief executive Andre de Ruyter refused to release the names to Parliament’s portfolio committee on appropriations but said they were working closely with law enforcement agencies “to recover some R600 million that was unlawfully paid to a company called Trillian, which was in partnership with McKinsey & Co”.

Eskom chief operating officer Jan Oberholzer is a shareholder in Stefanutti Stocks, which is under the leadership of chief executive Russell Crawford and chief financial officer Antonio Cocciante. ABB South Africa is managed by chief executive Leon Viljoen and CFO Stefano Valgimigli, while chief executive Roberto Pancaldia and CFO Giulio Bozzini are at the helm of Tenova. Chief executive Tony Trindade and group financial manager Pierre Erasmus are in charge of Tubular Holdings.

Eskom spokesperson Sikonathi Mantshantsha this week failed to respond to questions sent, including how the alleged R4 billion overpayment took place, who were the officials involved, what action has been taken against them, and why it took Eskom weeks to reveal the names of the beneficiaries.

He also failed to respond to allegations that Oberholzer is a shareholder in Stefanutti.

The utility further failed to answer questions relating to the alleged victimisation of an employee who had blown the whistle on Oberholzer’s dealings.

However, in an interview on Power Talk on Thursday, Mantshantsha confirmed that Oberholzer was a shareholder in Stefanutti but denied allegations it was one of the reasons Eskom did not want to reveal the names of contractors. He claimed Oberholzer declared his shares when he rejoined Eskom, which were valued at R6 000. Mantshantsha also denied that Oberholzer’s shareholding in Stefanutti posed a conflict of interest.

He added that an internal investigation by lawyer Nazeer Cassim had cleared him of any wrongdoing, an outcome dismissed by the EFF as a “farce”.

In a statement this week, the party said the process lasted only two weeks.

A whistle-blower submitted a one-page document to Eskom acting head of legal and compliance Bartlett Hewu last July alleging Oberholzer was also implicated in other procurement irregularities. The letter alleged Oberholzer “instructed procurement staff to correct documents for Black and Veatch”, another Eskom service provider.

Mantshantsha further claimed in the radio interview that Eskom had initially withheld the names of the firms to give ongoing negotiations with them a chance but released them out of respect for Parliament’s oversight role.

Asked if any contractor had admitted to wrongdoing, he said: “The nature of these things is that, if anyone admits to have committed a crime, you will never find such a party that says, ‘yes, we committed a crime’, but you will find an agreement.”

Mantshantsha also denied claims Eskom did not want to name the companies involved, especially Stefanutti, because it would affect their stock prices.

“It is not Eskom’s duty to protect anybody’s share price. Eskom’s duty is to protect its own best interest. You do not negotiate through the media. You do not want to negotiate in public. You give negotiations a chance by trying to find an amicable solution upon which, when there is an agreement, you go out to the public and make the announcement. If there is no agreement, then you go to the court process where everything now is in the public domain,” he maintained.

Stefanutti Stocks this week released a statement claiming it was not overpaid but it was, in fact, still owed money by the power utility.

“Stefanutti Stocks has considered the briefing document and notes, for the benefit of shareholders in particular, that the investigations being carried out by and on behalf of Eskom are not complete. That said, Stefanutti Stocks disputes that it, or the joint ventures in which it participates, have been overpaid,” the company said.

The company added that it was pursuing several contractual claims and compensation events on Eskom’s power projects. It said SSBR JV is owed additional amounts in respect of work done since December 2018 and in respect of which payments have been withheld.

“SSBR JV and Eskom have both committed to a claims resolution process which involves the employment of independent experts to evaluate the causes of delay and the quantum thereof. Based on the works completed, as well as Eskom’s inability to provide access, Stefanutti Stocks contends that there are significant amounts due to it. SSIJV commenced an adjudication process to recover these additional amounts in 2018. This process is ongoing and is anticipated to be concluded during the latter part of 2020,” read the statement.

ABB South Africa, Tubulcar Construction Projects, and Tenova Mining and Minerals could not be reached for comment this week.

However, in a statement read out on Power Talk, ABB’s parent company, ABB Group, reiterated its statement made last October that it had “self-reported” its questionable dealings with Eskom to the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC), adding it was co-operating with all investigations.

“Based on findings during an internal investigation, the company self-reported to the SEC and the DOJ to various authorities in South Africa and other countries potential suspect payments and other compliance concerns in connection with some of the company’s dealings with Eskom and related persons.

“Many of those parties have expressed an interest in commenced investigations into these matters and to the company. It’s cooperating fully with them.

“In its second quarter financial information, ABB made it public that the company believes that there may be unfavourable outcomes in one or more of these matters.”

Asked whether that sounded like an admission to Eskom, Matshantsha said he would “not be interpreting” ABB’s statement or message to the media.

“What I can confirm is that Eskom is claiming R1 billion from ABB, saying that the contract we signed with you we believe was overpriced by R1 billion. I can also confirm that ABB has offered at this point to pay R240 million back to Eskom, and the talks are still ongoing there.”

News of the R4 billion inflated payments came as Eskom increasingly battled to keep the lights on.

On Friday, it officially implemented load shedding for the first time in three months after cutting power to some communities it had accused of illegal connections.

Eskom also introduced stage 2 load shedding as it struggles to deal with demand, saying the power system was severely constrained.

It said five generation units were taken off the grid, significantly raising the possible need for more load shedding. There were two units at the Arnot power station, as well as a unit each at Kendal, Tutuka and Majuba. The five removed more than 2 600 megawatts of capacity from the system.