Projects like the Medupi and Kusile (above) power stations, which experienced extended timelines and higher-than-planned costs, highlight the complexities involved in large-scale infrastructure delivery within parts of South Africa’s public sector
Swiss engineering firm Asea Brown Boveri (ABB) will pay more than R2.5 billion in punitive reparations to South Africa for its part in allegedly corrupt deals linked to Eskom’s Kusile power station.
The National Prosecuting Authority (NPA) announced on Thursday that its Investigating Directorate had finalised a settlement agreement with ABB.
The settlement “represents a bold and innovative step towards accountability and justice for alleged offenders, particularly in the form of restitution for the serious crimes committed at Eskom during the state capture period”, the statement said.
It said the amount must be paid into South Africa’s criminal asset recovery account within 60 days from 1 December and is in addition to the R1.6 billion that ABB paid to Eskom in 2020.
In September, the company said it would put aside R6 billion as a provision to cover costs that might arise as a result of ongoing investigations into contracts linked to Kusile.
In 2015, ABB won a R2.2 billion contract to provide the control and implementation system for the Kusile.
Earlier this year, two former ABB employees — Mohammed Mooidheen and Vernon Pillay — and their wives were arrested on charges of fraud, corruption and money-laundering stemming from contracts awarded to Impulse International for lucrative work at the plant.
In July, Mohammed and Raeesa Mooidheen appeared in the Randburg magistrate’s court while Vernon and Aradhna Pillay appeared in the Durban specialised commercial crimes court.
At the heart of the case was a contract initially worth R25 million and eventually some R526 million following a string of variation orders, awarded to Impulse International by ABB allegedly at the behest of the accused. The rates were inflated and the processes followed did not align with ABB’s standard practice.
Mooidheen and Pillay allegedly accepted bribes to ensure the awarding of subcontracts to two companies, Impulse International and Indiwize Construction. Mooidheen allegedly cashed cheques worth R2.8 million from the company while Pillay allegedly cashed R3.8 million.
Both allegedly spent the money on cars, with the Mooidheens buying a Golf 7 and a Mercedes. The Pillays allegedly bought a Landcruiser, which they registered in the false name of Shamin Ramdev, which was the name of Mooidheen’s wife until the date of their wedding in 2000.
Former Eskom chief executive Matshela Koko has been accused of playing a leading role in the scheme.
Koko’s stepdaughter, Koketso Choma, reportedly held a sizeable stake in Impulse. Koko allegedly signed off on justification for a sole source deviation that secured Impulse some R66 million in work from Eskom before Choma acquired a 35% stake in the company.
It has been reported that Koko liaised with a staff member of ABB to arrange kickbacks for the contract and promised that contracts at more power plants would be arranged. It is further alleged that he became personally involved in setting contract prices.
In October, Koko, his wife Mosima and two stepdaughters were arrested on charges of corruption, fraud and money laundering stemming from irregular contracts worth R2 billion granted during the construction of the Kusile.
The state alleged that Koko failed to disclose a conflict of interest, when he was receiving material benefit from ABB.
“ABB has acknowledged liability and taken responsibility for the alleged criminal conduct of its employees involving contracts with Eskom. As a result, ABB has been forthcoming in cooperating with law enforcement agencies conducting the investigations into such alleged conduct,” the NPA said on Thursday.
ABB has assisted the Investigating Directorate to secure evidence and key witnesses “which have formed an essential part of the NPA’s ongoing investigations into the company’s alleged offences”, the statement said.
The settlement agreement was negotiated with partner countries, including the United States, Switzerland, Italy and Germany.
“South Africa is getting the bulk of the settlement amount due to the nature of the crimes and the negative impact on South Africa and its people. The settlement has the immediate benefit of saving costs in the context of a protracted trial against the corporate entity … and securing funds up front for the fiscus while ongoing criminal investigations into implicated persons continue.”
Once the money is paid, it will be used as restitution for victims and to assist in building South Africa’s capacity and resources in its ongoing fight against serious corruption, the NPA said.
“It needs to be made clear, however, that this settlement does not indemnify any individuals involved in criminal conduct, including directors, staff and contractors of ABB,” the statement said.
“The NPA will continue to pursue these criminal prosecutions, with the support of ABB who has committed to ongoing collaboration to ensure accountability for the crimes allegedly committed by its employees.”
[/membership]