Sabotage, coal theft and the other high-level crimes rocking Eskom

 ·19 Oct 2022

Power utility Eskom has presented an operational update to the Standing Committee on Public Accounts (Scopa), including the progress being made on investigations into employees doing business with the group and acts of sabotage that have led to breakdowns and load shedding.

Eskom roped in the help of the Special Investigative Unit (SIU) and the Directorate for Priority Crime Investigation (Hawks) to investigate several high-profile incidents and ongoing issues with employees over the last few years.

Through its investigation, the SIU identified hundreds of employees at the power utility that were doing some form of business with the entity, creating massive conflicts of interest.

Eskom employees are prohibited from having a personal or other interest in an Eskom contract, whether as a supplier, advisor or by being director or owner of the business or in any other capacity.

This includes third-party-related transactions with an indirect link to Eskom.

The SIU identified 334 conflicts of interest cases at the group, where employees were found to be potentially linked to various entities and vendors doing business with Eskom. Further, 5,464 employees have been identified for failing to submit declaration forms declaring their interests.

The investigation unit said that in some cases, the links between employees and contracts are not easily identifiable, with family or friends conducting the business on the employee’s behalf.

Some instances see Eskom officials approaching complete strangers to set up sub-contractors and bank accounts through which they channel funds.

Eskom vendors also often pay kickbacks in indirect ways – like paying school fees, or other bills – which make tracking money flows difficult, it said.

In terms of scams and acts of sabotage at the power utility, the SIU said it observed cases of non-compliant coal being delivered to the group. This was achieved by manipulating pre-certification processes at the mines where the coal originated, the SIU said and managed to pass other checks and balances through the involvement of Eskom employees.

“(The employees) made sure that samples for testing were obtained in the absence of Eskom observers, and facilitated the swapping of samples by transporting samples to the laboratory in a truck that was not fitted with the contractually required tracking device,” it said.

The SIU said that employees also colluded with mines, entering into contracts with inflated coal prices to accommodate “transportation costs”. These contracts are entered into between mine and transporters with links to the Eskom employee – and because the companies are outside Eskom, the pricing is not visible to the power utility.

Transport costs are inflated by procuring coal from mines far away from the stations instead of the suitable locations close by.

Coal theft

The unit said that there is also collusion among transporters to mix poor-quality coal from certain mines with good-quality coal from others. This ensures that contractually required quantities are delivered to the power stations.

“Due to the fact that coal quality is often not tested once the coal is delivered to the power station, it is not possible to identify the source of the sub-standard coal.”

The unit said that Eskom can only mitigate this by installing automated real-time combustion testing facilities linked to the test results of a specific truck, as soon as the coal arrives and before offloading.

Eskom CEO Andre de Ruyter said that the current system has a certified stockpile of coal tested at the mines, which is loaded into trucks, covered with a seal, and the vehicle itself is fitted with a tracking device.

However, he said the group has discovered that there is significant tampering with the seals and jamming devices used to block the tracking signal.

“The coal trucks are then taken while they are ‘off the radar’ to sites where the good quality coal is swapped out for discard coal – instead of 18 kilojoules per kilogram, it’s seven or eight – and this has a very negative impact on our mills, our boiler tubes. The knock-on effects are significant,” he said.

The CEO said real-time testing is challenging because trucks are offloading on a continuous basis. However, he said that the group is working on new methods, including container samplers, to do a better job.

Claim scams

The SIU is also investigating instances of corruption or conflicts of interest related to the Medupi and Kusile builds, with 29 contracts valued at R135 billion under review. The bulk of the contracts are related Kusile (24) valued at R88 billion, where various cases are being prepared, and litigation against employees had commenced.

It is also looking at key problems around contractors submitting inflated claims that are subsequently settled by Eskom officials with little or no investigation. These claims are often unsubstantiated, and Eskom is letting them get away with it, the SIU said.

This is either through manipulation or deliberate stalling of the claims process by Eskom employees or even employees working with the contractors against Eskom in the process.

High-level crimes

The Hawks- also presented its update on investigations at Eskom.

The group is investigating several alleged crimes, including the theft of coal, the theft of diesel, the theft of cables, bomb threats, fraud and corruption, sabotage and various others.

One such case involved almost 6,000kg of aluminium being stolen from Eskom. The driver of the truck was arrested, and further investigations into the entity involved found that R20 million worth of stolen infrastructure was identified.

Diesel worth R200,000 was stolen from Kriel Power Stations, where transporters colluded with Eskom weighbridge clerks to steal the fuel.

The receiving officer let the transporter drive out after weighing the diesel load, and the fuel was put in a different truck at a farm down the road. The transporter then drives back to the power station, weighing an empty load – in and out mass is registered, and the receiving officer acknowledges receipt of the diesel, but it was never delivered.

“Eskom will then pay the diesel bill of the fuel it has never received,” the Hawks said. “The driver, after selling the diesel, will be paid either cash or electronically.”

Several cases of alleged theft and sabotage are still under investigation – or have been provisionally withdrawn for more evidence gathering, the group said.

Read: Eskom investigating suspected sabotage that took down one of its stations

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