Eskom refers employees suspected of contracts graft for criminal investigations

Eskom has referred cases to law enforcement agencies of several former employees involved in the management of contracts where the struggling power utility overpaid by about R4-billion.

More than 20 Eskom employees involved in the value chain of awarding or managing five contracts have been referred to the National Prosecuting Authority (NPA), the Special Investigations Unit (SIU) and the police’s Directorate for Priority Crime Investigation, the Hawks for criminal investigation and prosecution, as well as civil recovery of monies lost by Eskom in the past. 

Years of corruption, maladministration and state capture have brought Eskom, previously hailed as one of the world’s giants, to its knees and on the brink of financial ruin. Last year the government announced a R69-billion bailout to be paid out over three years to the crisis-ridden power utility, which had run up debt of more than R400-billion.

The ongoing investigations into “red-flagged” capital projects undertaken by Eskom in the past has uncovered the overpayment to contractors in five projects. The information is in a progress report to Parliament on investigations by the SIU, law firm Bowman Gilfillan and Eskom’s internal forensic division into contracts issued by the power utility. 

The overpayments were first made public by Eskom’s chief operations officer, Jan Oberholzer, during an oversight visit by Parliament’s standing committee on appropriations to Eskom in October last year. 

“The investigations by the SIU, Bowman Gilfilan, and Eskom into these overpayments to the contractors involved is ongoing and is not complete at this stage,” the letter said.

Eskom also said it is investigating various internal staff members, including project and contract managers, some of whom resigned with immediate effect either when the investigations were initiated or in the face of disciplinary action.

The companies involved are: 

• Asea Brown Boveri (ABB) South Africa: R1-billion;
• Tenova Mining and Minerals SA: R735-million;
• Tubular Construction Projects: R1-billion;
• Stefanutti Stocks, Basil Read and Izazi joint ventures: R1-billion; and
• Other contracts not in the SIU’s scope: R180-million 

“The SIU has referred evidence to supporting the institutions of criminal charges against the relevant role players (seven in total) to the NPA. The SIU is considering the institution of civil action against the relevant role players to recover losses incurred by Eskom,” the power utility said of one of the cases.

“Eskom has initiated the re-evaluation of the previously approved extension of time with forensic planning experts to ascertain actual entitlement. The findings in this regard will inform the SIU’s civil claim proceedings.”

In another case — the Stefanutti Stocks, Basil Read joint venture for the construction of 81 buildings at Kusile power station and the Stefanutti Stocks, Izazi joint venture to construct site finishes at Kusile — the companies were either compensated without final measurements being done or paid claims in monthly payments of between R15-million and R50-million between 2015 and 2018, which were not substantiated at the time.

The Swiss-based ABB, which started its own internal investigations into its work at Eskom two years ago, verbally offered to pay back about R240-million.

News24.com reported that the company, which makes robotics and power grids, had last year reported incidents to United States and South African authorities. The R1-billion paid to it relates to four major variation orders (deviations from the scope of work) on Kusile Unit 1 that had no particulars and were grossly inflated. 

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