/ 18 March 2019

Trillian payments were illegal — Eskom counsel

The first payment was settled in April 2016
The first payment was settled in April 2016, and the last invoice was submitted to Eskom by Trillian in February 2017. (Waldo Swiegers/Getty)

Gupta-linked Trillian billed Eskom directly for R600-million, despite the consulting company having no contractual agreement with the power utility, the Pretoria high court heard on Monday.

Eskom’s battle to claw back the millions it paid to Trillian, established by Eric Wood and Gupta lieutenant Salim Essa, kicked off at the high court this week. The three judges presiding over the matter are judges Selby Baqwa, Moara Tsoka and Dawie Fourie.

The power utility is seeking to reverse the decisions taken by former board members and executives that resulted in R1.6-billion in allegedly unlawful payments being made to Trillian and consultancy firm McKinsey.

READ MORE: Eskom wants its Trillian millions back

McKinsey agreed to pay back R902-million to Eskom in July last year. But Trillian has not given up the fight to hold on to the almost R600-million paid to it by Eskom, which it contends it earned by providing extensive services to the utility.

But on Monday, Eskom’s counsel, Tembeka Ngcukaitobi argued that there was no contractual basis for the power utility to make five separate payments — amounting to almost R600-million — directly to Trillian.

The first payment was settled in April 2016, and the last invoice was submitted to Eskom by Trillian in February 2017.

Trillian maintains it had been subcontracted by McKinsey, as its black economic empowerment (BEE) partner, to provide a portion of the consulting services offered by the global firm.

Ngcukaitobi told the court on Monday that a draft subcontracting agreement did exist between McKinsey and Trillian, but it was never signed. “But despite the absence of this contract between Trillian and Mckinsey, Trillian submits these five invoices,” he said.

“At the same time, Trillian had no agreement with Eskom,” Ngcukaitobi added.

Ngcukaitobi explained that McKinsey told Trillian that it was unable to conclude an agreement with it on the grounds of reputational risk. At the time, media reports detailed how alleged Gupta ally Mohamed Bobat’s links to Trillian.

READ MORE: A timeline of scandal: The reach of Gupta-associated Trillian into state money

Bobat was an adviser to Des van Rooyen during his four-day stint as finance minister in December 2015. He was accused of forwarding a classified treasury document to Wood. The documents were also allegedly later sent to Essa.

After McKinsey had cut ties with Trillian, it alerted Eskom to this. Despite this, five payments were made to Trillian after the subcontracting relationship with McKinsey had been terminated, Ngcukaitobi said.

Ngcukaitobi also argued that, despite presenting itself as McKinsey’s BEE partner, at the time the payments were made Trillian did not have BEE status. “So one of the pillars of the case that will be made by Eskom is that it was entirely fraudulent for Trillian to claim that it was black-owned,” he told the court.

According to Ngcukaitobi, Trillian indicated to then Eskom chief financial officer Anoj Singh that the firm was in the process of transferring 60% of its shares for black ownership in order to fulfil BEE requirements. But this alleged transferral only occurred after McKinsey had already disavowed Trillian.

“On the facts here … everybody knew … that there was no reason for Trillian to be hanging around,” Ngcukaitobi said.

Judge Baqwa asked Ngcukaitobi how, if it is common cause that McKinsey had cut ties with Trillian in March 2016, any of the five payments could have been made. “How does gainshare arise under those circumstances?” Baqwa asked.

Ngcukaitobi reiterated Eskom’s position that these payments should not have been allowed to be made under the circumstances.

Judge Tsoka probed Ngcukaitobi about the legality of the payments.

“We argue that there was no contractual basis for the work, no contractual basis for the payment,” Ngcukaitobi said. He further explained that, as an organ of the state, Eskom is strictly regulated by the Public Finance Management Act, which requires a contract to exist between a public entity and a supplier.

“The idea that there was somehow a legal basis for the payments to be made is completely destroyed by the facts of this case,” Ngcukaitobi contended.

The hearing continues.