Eskom facing R2 billion fraud probe – report

A preliminary forensic report claims that over R2 billion has been stolen from state power firm Eskom through a network of ghost service suppliers and well-placed officials, according to City Press.

The money was allegedly funnelled via fraudulent transactions over the last three years, and involved numerous companies invoicing Eskom for work that was never carried out.

The report was compiled by forensic investigators from Seekers Finders Forensic Auditors and Risk Services after a whistle-blower alleged that prominent Eskom employees were colluding with service providers to generate the fraudulent invoices.

Companies were paid for services including labour for coal outage plans and refurbishing of injectors, which were never carried out.

At least three Eskom officials have been implicated, City Press reported.

The report has been handed over to the Special Investigating Unit (SIU), which has confirmed it is investigating certain issues contained therein.

“The report has been reviewed by the SIU’s assessment committee and the Eskom investigation team. Limited areas that fall within the SIU’s current mandate were identified from the report,” SIU spokesperson Kaizer Kganyago told City Press.

Suspension

Last week, Eskom chief executive officer, André de Ruyter suspended chief procurement officer Solly Tshitangano for his failure to turn around the company’s procurement division.

De Ruyter said that Tshitango had been tasked with cutting Eskom’s annual expenditure in its procurement division by at least 4%, but failed to do so.

Eskom spends around R140 billion per year on foods and services, which De Ruyter said was more than the utility should be paying.

“R2 billion savings is not a lot, it’s about 4% of R140 billion. That is exceptionally modest, but Solly has not delivered what was asked of him,” De Ruyter told News24.

De Ruyter added that the utility would have paid R238,000 for a wooden mop without his intervention.

He further claimed that Eskom had previously been paying R28 for a roll of single-ply toilet paper and R56 for a 2 litre bottle of milk.

Tshitango had also failed to attend a board subcommittee meetings, and several other meetings with De Ruyter, Eskom’s human resources executives, people management, and the company’s chief financial officer.

Tshitango has accused De Ruyter and Eskom’s legal head of racism by stating they had used “the colour of their skin to undermine his authority”.

Housing scrutiny

The debt-stricken power utility faced further scrutiny after lawmakers criticized a housing project for workers that cost more than five times the initial estimate and was eventually abandoned, Bloomberg reported.

Planned accommodation at Eskom’s Kusile plant ballooned to R840 million from an estimated R160 million as a result of “fruitless and wasteful expenditure,” according to parliament’s portfolio committee on public enterprises.

The project was scrapped and remains unfinished, while Eskom is alleged to have spent billions of rand on rental accommodation and transportation for its employees, the committee said in a statement.

The failed project is an example of mismanagement at Eskom that’s left it struggling to meet demand for electricity and needing continued bailouts from the government. Kusile, the utility’s newest plant, is behind schedule and over budget.

The loss-making utility relies on government to service R464 billion rand of debt and is at the center of investigations into allegations of widespread corruption during the administration of former president Jacob Zuma.

Eskom had shown a “serious disregard for taxpayer money,” and the matter must be investigated and action taken against all involved, the committee said.

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