/ 23 April 2010

Zille approaches competition watchdog over Eskom-Hitachi deal

Democratic Alliance leader Helen Zille has written to the Competition Commission to investigate possible collusion between Hitachi Power Africa (HPA) and Alstom for a R38,5-billion tender to build boilers for Eskom.

Zille wrote in her weekly newsletter that Hitachi and Alstom appeared to have “stood back” to allow each other to win a part of the multibillion-rand contract to build the boilers at Eskom’s new Medupi and Kusile power stations in Limpopo and Mpumalanga while “maintaining the facade that this was a competitive process”.

“The evidence, although very powerful, must still be tested,” Zille said. “I have therefore written to the Competition Commission to request that it investigates the possibility that there was collusion in this tender process.”

Eskom announced the awarding of the contract in November 2007, saying at the time that a consortium of engineering firms, Alstom and Steinmuller, had originally outscored HPA and that the board had approved the award of the tender to them.

The Alstom and Steinmuller consortium then hiked its price following a difference of opinion over the scope of the work and negotiations reopened with Hitachi, which then emerged as the preferred bidder.

‘Plot thickens’
Zille said “the plot really thickened” after the European Competition Commission imposed a record R7,5-billion fine on a cartel that included Alstom and Hitachi for colluding to fix prices and share out tenders.

In its press release, the European Competition Commission said it had “put an end to a cartel which has cheated public utility companies and consumers for more than 16 years”.

It found that members of the cartel met regularly “to divide projects and to prepare sham bids by the companies not supposed to win the tender, in order to leave an impression of genuine competition”.

Zille said this raised “new and interesting questions” about the Eskom tender process.

“Given Hitachi and Alstom’s previous corrupt relationship, it introduces the possibility that there may have been some form of collusion between the two companies in this instance,” she said.

Allowing Alstom to win the Medupi boiler contract, only for it to pull out later, would have given the eventual awarding of the tender to an ANC-linked company the veneer of legality and respectability required to ensure that Hitachi was awarded the tender with no comebacks, Zille said.

It was “laughable” that Hitachi had claimed that it did not know the ANC had a 25% stake in the deal through its investment arm, Chancellor House Holdings.

“Hitachi has admitted that the ANC’s front company, Chancellor House, paid only R1-million for a 25% stake in this mega-company. Hitachi obviously believed that, with the ANC as a 25% stakeholder, it could look forward to many state tenders and contracts,” she said. — Sapa