Special Investigating Unit picks at Eskom scabs to reveal the rot of corruption

The Special Investigating Unit (SIU) has begun to uncover the scale of corruption and mismanagement at state-owned power utility Eskom.

Eskom is in crisis, crippled by debt approaching R500 billion, capacity shortages which threaten to derail the government’s plan to ignite an economy, and surviving on bailouts to keep the country’s lights on.

The SIU updated the Standing Committee on Public Accounts (Scopa) on its investigations into the state firm on Wednesday (14 October).

Beginning August 2018, the SIU was mandated to investigate the procurement of coal, its transportation, the procurement of diesel, maladministration/failure to deliver/defective performance by service providers at the Medupi, Kusile and Ingula Power Stations, among others.

It was also tasked with uncovering any conflict of interest at the power provider, including failure by Eskom employees to declare their private interests, while probing those Eskom employees doing business with the state company.

The procurement of cloud computing services, software licences and support services were added to the investigation, programme manager at the SIU, Claudia O’Brien, told Parliament.

O’Brien said that the SIU had identified major areas for further investigation: namely that 324 Eskom officials have been identified who are linked to entities that are Eskom vendors, while 135 of these officials have conducted business with Eskom to the value of at least R6 billion – an average of around R45 million each.

She said that the unit was ‘looking at’ 34 red flagged former or current Eskom officials. These red flags, she said, resulted from a lifestyle audit at the request of the company.

O’Brien said that 5,452 officials failed to submit their declarations of interest – more than 10% of the total employees at the group.

SIU Findings

The SIU had already made 5,512 referrals to Eskom to date to institute disciplinary proceedings. It said that 60 of these referrals are in respect of officials who are either in business with Eskom, or who failed to declare their interests in outside business entities. It said that disciplinary referrals against 134 officials are still in progress.

To date, six matters have been closed by Eskom as a result of attrition of staff, while four officials resigned.

O’Brien said that of the 34 red flagged former or current Eskom officials eight have been referred to Eskom for institution of disciplinary proceedings. Seven officials resigned, while 19 are ongoing. Those who resigned will still be referred to the NPA, she said.

O’Brien said that the SIU and Eskom have instituted action against 12 parties in relation to the Optimum Coal Mine purchase by Tegeta, linked to the Gupta family, and amounting to R3.8 billion.

Similarly an investigation into a coal supply agreement at Koornfontein showed a R6.95 billion increase in the contract value following the acquisition of the mine as part of the Optimum Coal Holdings.

The SIU noted that since June 2018, Koornfontein has failed to supply Eskom with the monthly contractual tonnage required in terms of the existing contract, which terminates in 2023.
This investigation is ongoing, O’Brien said.

The SIU said that 29 contract packages at Kusile (21), Medupi (5), Matla (1), Majuba (1), and Ingula (1) have been flagged for investigation.

These packages relate to 20 build contractors. To date, 19 packages are ongoing, while the investigation into the remaining 10 packages must still commence.

Read: Eskom has the right to cut off customers that don’t pay: court

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Special Investigating Unit picks at Eskom scabs to reveal the rot of corruption