Losing the battle to win the war

Two senior Eskom officials facing contempt of court proceedings and possible jail time produced, at the last minute, documents relating to the R4-billion Koeberg steam generator tender demanded by nuclear company Westinghouse.

This means that the group executive for technology and commercial, Matshela Koko, and a senior manager in Koko’s division, Suzanne Daniels, are off the hook – at least for now.

But Eskom’s heel-dragging means that the parallel court review of the tender will be heard only in late January, nearly six months after it was awarded to Westinghouse’s French-owned rival, Areva.

If the court decides it is too late to overturn the award, the two officials may reflect that they lost a battle this week but won the war.

Westinghouse lost the contract to replace ageing steam generators at Koeberg to Areva in August.

Aiming to build a case for a review of the tender award, it immediately took Eskom to court demanding that the utility disclose a wide range of documents relating to the decision. This was settled on September 5, with terms agreed to by both parties made an order of court.

The order gave Eskom five working days to give Westinghouse’s attorneys “copies of all relevant documents leading up to and forming the basis of” the tender decision.

Delays
Eskom handed over some documents but Westinghouse spent another two months chasing down the full body of documents to which it believes it is entitled.

It lost patience last week and hit Eskom with an urgent contempt of court application.

Westinghouse’s urgency may be motivated by similar cases in which aggrieved bidders turn to a court for help, only for it to rule that too much time has passed since the tender was awarded for it to reverse a decision.

A recent example is AllPay, which lost a R10-billion tender to disburse social grants. A high court judge ruled that although the tender process was invalid he could not reverse it because it would jeopardise the social grants system.

Having concluded the contract with Areva, Eskom expects it to meet tight deadlines.

In court papers prepared for the contempt application, Westing­house’s managing director, Frederik Wolvaardt, alleged that Eskom “never held a genuine intention to comply with the order and instead embarked on a course of action that had as its sole objective delay and obfuscation”.

He accused Eskom, and the two officials in particular, of “deviousness and mendacity that defies belief”.

Key documents
Koko and Daniels replied, accusing Westinghouse of “an abuse of court process” and seeking “any and all documents, whether or not relevant”.

Eskom had released documents in dribs and drabs for two months but before this week’s climb-down had still not disclosed several that are likely to be central to Westinghouse’s case. These included:

  • Areva’s final submission, which Westinghouse alleges occurred after the tender cut-off date and allegedly contained an unsolicited improved offer on which basis Eskom awarded it the contract; and
  • Progress reports by an external technical adviser, AF Consult, which advised Eskom to consider “strategic considerations” that were not part of the original tender specifications. Eskom used them to appoint Areva rather than Westinghouse.

These were among the 473 other digital document files delivered to Westinghouse at noon on Tuesday this week, less than 24 hours before the scheduled contempt hearing.

Koko stated, however, that he could not give Westinghouse recordings and transcripts of two tender committee meetings that clinched the decision-making process because “no such recordings and transcripts are made or kept”.

He originally disclosed only “extracts of minutes” from these meetings.

Eskom’s own procurement policy states: “It is essential that all actions and decisions taken [at tender committee meetings] … are fully recorded and documented … and may serve as evidence in legal proceedings.”

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

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