Tsotsi and Eskom executive at war over tender

An extraordinary slanging match erupted this week between Eskom board chairperson Zola Tsotsi and a suspended senior executive over a messy R60-million electrics supply deal, exposing how procurement disputes are destabilising the troubled utility.

The saga has led to the suspension of a senior general manager in Eskom’s commercial division and appears in part to underlie Tsotsi’s targeting of two of the four top executives he suspended two weeks ago.

The two are technology and commercial head Matshela Koko and chief executive Tshediso Matona.

After Tsotsi told amaBhungane he believed Koko’s commercial division was “rotten” and that Koko was resisting a forensic inquiry, Koko hit back saying that the board chairperson “regularly interferes … in procurement”.

All procurement at Eskom is channelled through Koko’s commercial division. “Commercial is the glittering prize at Eskom. Control commercial and you control all tenders,” said an Eskom executive unconnected to this battle.

Matona and Koko are said to be good friends with several sources confirming that they studied together at university.

A source sympathetic to Koko said that after he suspended a senior commercial general manager, Malesela Sekhasimbe, for allegedly working in cahoots with Tsotsi, Tsotsi lobbied Matona to unsuspend Sekhasimbe and to split the technology and commercial portfolio between Koko and Sekhasimbe.

The source said the planned split was aimed at divesting Koko of the commercial portfolio, and to hand it to Sekhasimbe.

‘Sound operational reasons’ basis for portfolio split
But Tsotsi has denied that he lobbied Matona, saying that there have been discussions at Eskom for at least a year about splitting the portfolio, that this was based on “sound operational reasons”, and that Matona was “already looking into it”.

Tsotsi also denied asking Matona to unsuspend Sekhasimbe: “I would not have asked the chief executive to intervene. What I did do was to express unhappiness that my name had been dragged into a suspension hearing of an employee.”

The electrics supply deal dispute centres on a claim by Japanese conglomerate Sumitomu in April last year that it had manufactured some transformers for Eskom that were awaiting collection and payment.

AmaBhungane has seen the Sumitomu correspondence with Eskom, which is addressed to Tsotsi directly and not the commercial division.

It is common cause that Tsotsi last August replied to Sumitomu, committing Eskom to paying the amount demanded – about R60-million. 

But Tsotsi and an Eskom commercial division source sympathetic to Koko this week gave diametrically opposed versions as to how that came about.

The source sympathetic to Koko said Tsotsi in turn asked Koko to “deal with” Sumitomo’s demand, “by which he [Tsotsi] meant: sign off on this purchase”.

He said, He said
Tsotsi, however, told amaBhungane that he had been obliged to deal with an aggrieved Sumitomu because Eskom had asked the Japanese company to build transformers, but then would not sign purchase orders for them.

“Sumitomu were frustrated, they wrote to me, and I asked Koko and Eskom’s legal department to sort it out,” Tsotsi said.

According to a document seen by amaBhungane, Eskom’s legal department advised commercial that there was no binding commitment to Sumitomu to buy the transformers and that Eskom would have to order them first.

Eskom did not need transformers and could not afford them, added the source sympathetic to Koko.

Because the supply agreement with Sumitomu was expiring shortly, the commercial division proposed extending it – as long as Eskom’s various tender committees granted approval – so as to absorb the Sumitomu equipment over a longer period of time.

Koko delegated the matter to Sekhasimbe, said the pro-Koko source, on the understanding that Sekhasimbe would follow the legal department’s advice and Eskom’s supply chain processes.

The source said that Koko was shocked to discover, some six months later, that Sekhasimbe had prepared a letter of commitment to pay Sumitomu, and that Tsotsi had already signed it back in August last year. 

Tsotsi is a nonexecutive chairperson, said the source, and had exceeded his powers in signing the letter because he does not have delegated authority.

But Tsotsi, in turn, claimed that it was in fact Koko who had drafted the commitment letter and brought it to him to sign, and not Sekhasimbe.

“Sekhasimbe is a junior and I would never have dealt with a junior, going over his manager’s head like that,” Tsotsi said.

Koko suspended Sekhasimbe on misconduct charges on March?2, linked to the allegation that Sekhasimbe had overstepped the bounds of his delegated authority by taking the letter to Tsotsi to sign.

Koko was himself suspended – together with Matona and two other executives unconnected to the dispute – 10 days later.

Sekhasimbe declined to comment on the circumstances of his suspension because he said his lawyer had advised him to “allow the process to unfold without any hindrance”.

A Sumitomu representative in Johannesburg said that the company had still not been paid, but referred further questions to the company’s head office in Tokyo.

Tsotsi told amaBhungane that he has butted heads with Koko for the past year because he believes the commercial division is “rotten” and should be subjected to a forensic inquiry. But Koko is opposed to any inquiry, Tsotsi alleged.

Koko had initially declined to comment on the Sumitomu matter pending the resolution of his suspension.

But late on Thursday Koko said he felt compelled to respond to Tsotsi’s remarks: “Records show that Mr Tsotsi dealt with Mr Sekhasimbe directly and gave him instructions on the matter. As chairman, he ought to have known that he cannot sign a commitment to bind Eskom without approval from a tender committee authorising him to do so and following the governance processes.

“We have it on record that the chairman regularly interferes on transactional level in procurement and welcome the upcoming enquiry. It would provide the opportunity to deal with these matters. It is only when matters are not resolved to his liking, then he labels it ‘rotten’.”

Matona did not respond to calls and SMSes.

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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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