State capture report finds R15 billion of dodgy deals at Eskom during Zuma rule

Former South African President Jacob Zuma knowingly and willingly facilitated audacious looting and wanton mismanagement at the state power utility during his almost nine-year rule, a judicial probe concluded.

Eskom entered into irregular contracts worth R14.7 billion mainly with entities linked to members of the Gupta family, who were Zuma’s friends and in business with one of his sons, Chief Justice Raymond Zondo said Friday in a new report on government corruption.

While much of the content is already in the public domain, its publication will increase pressure on law-enforcement agencies to take action against those who were implicated in wrongdoing.

“The evidence proves a scheme by the Guptas to capture Eskom, install the Guptas’ selected officials in strategic positions within Eskom as members of the board, the committees of the board and the executives and then divert Eskom’s assets to the Guptas’ financial advantage,” Zondo said.

“Central to the Guptas’ scheme of state capture was President Zuma, who the Guptas must have identified at a very early stage as somebody whose character was such that they could use him against the people of South Africa.”

The judge recommended that prosecutors consider filing criminal charges against former Eskom chief executive officers Brian Molefe and Matshela Koko, ex-Chief Financial Officer Anoj Singh, and some members of its 2014 board.

Eskom, which supplies more than 90% of South Africa’s electricity, is still struggling to repair the damage caused by the embezzlement of public funds. Weighed down by about R400 billion of debt and unable to afford to properly maintain its aged plants, it continues to subject the nation to rolling blackouts to prevent the grid from collapsing, curtailing economic growth and deterring investment.

Scores of witnesses who testified before Zondo over the past four years described how Eskom entered into deals secured with bribes and kickbacks, and bypassed procurement procedures. The primary beneficiaries were identified as the three Gupta brothers, who fled to Dubai shortly before the ruling party forced Zuma out of office in 2018 to stem a loss of electoral support.

“It is clear that from quite early in his first term, President Zuma would do anything that the Guptas wanted him to do for them,” Zondo said.

The Guptas and Zuma deny wrongdoing.

Eskom said it’s set up a team to deal with Zondo’s recommendations and has already taken steps to reclaim money irregularly paid to suppliers.

“We look forward to working with the National Prosecuting Authority to ensure that the miscreants speedily face criminal charges,” Chairman Malegapuru Makgoba said in a statement.

Eskom was one of several state companies targeted by looters during Zuma’s tenure.

In his earlier reports, Zondo said state port and freight-rail operator Transnet signed dubious contracts worth R41.2 billion over almost a decade, making it the “primary site of state capture in financial terms.” He also found the abuse of taxpayer funds was rife at state weapons company Denel, South African Airways and the national tax agency.

President Cyril Ramaphosa, who succeeded Zuma, estimates that more than R500 billion was stolen during his predecessor’s almost nine-year tenure.

Zondo expects to submit his final report by mid-June, and Ramaphosa will have four months from that date to respond to it. The president has said he will only act on the panel’s recommendations once he has considered its findings in their entirety and submitted them to parliament.

The annual budget released in February allocated R426 million to the National Prosecuting Authority’s investigating directorate and the Financial Intelligence Centre to enable them to hire a total of 158 permanent new staff and follow up on cases highlighted by Zondo.

Read: SARS was ‘systemically and deliberately weakened’ – state capture findings

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State capture report finds R15 billion of dodgy deals at Eskom during Zuma rule