Former senior Eskom managers arrested on charges of fraud and corruption

South Africa’s police arrested two senior ex-managers at the state electricity company and a number of other suspects over allegations of fraud, corruption and money laundering at the Kusile power plant.

The detention of the Eskom Holdings SOC Ltd. officials are the first by judicial authorities carrying out President Cyril Ramaphosa’s pledge to end corruption that’s stalled growth in Africa’s biggest economy. The debt-laden utility has turned to the government for bailouts to remain solvent as it confronts massive cost overruns at two partially completed plants — Kusile and Medupi — and its other ageing facilities struggle to produce enough power to meet demand.

The arrests were made earlier Thursday in three provinces by the Hawks’ Serious Commercial Crime Investigation team, a special unit of the police, and the National Prosecuting Authority, the agencies said in a joint statement. The unidentified Eskom managers, two business managers and representatives of seven companies will appear in the Johannesburg Regional Court later today, they said.

“Investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations,” Hawks spokesman Hangwani Mulaudzi said in the statement. “There was apparent gross manipulation of contractual agreements between contractors, Eskom employees and third parties at Kusile.”

The apprehended people are being investigated for alleged fraud, money laundering and corruption, according to the statement. Kusile, Eskom’s newest facility, remains under construction after years of delays and cost overruns.

The investigations found that contracts were manipulated by senior managers through Eskom’s procurement system, “descoping of the contract at Kusile without justification and with conflict of interest by Eskom employees,” the agencies said.

A contract for 745 million rand ($52 million) was approved in 2015 for the construction of two air-cooled condenser units at Kusile and “it’s alleged that the appointed companies, other related entities and individuals shared approximately 30 million rand amongst themselves,” they said.

Read: South Africa is one of the biggest emerging market losers of 2019 – thanks to Eskom

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Former senior Eskom managers arrested on charges of fraud and corruption