/ 27 October 2022

Koko, wife and stepdaughters arrested over Kusile power station contract

Although he has resigned
Although he has resigned

Former Eskom chief executive Matshela Koko was arrested on Thursday morning, along with four other people and his wife and stepdaughters, becoming the first former top executive of the power utility to be brought before court on state capture charges.

Koko, his spouse Mosima, stepdaughters Koketso Aren and Thato Choma, and the remaining accused, appeared in the Mpumalanga magistrate’s court. The others are the Eskom project director at the Kusile power plant, Hlupheka Sithole, and lawyers Johannes Coetzee and Watson Seswai.

The National Prosecuting Authority’s Investigating Directorate said they were arrested “at the crack of dawn” at different locations in Gauteng and Mpumalanga. Further arrests are expected. By late afternoon, a bail hearing was ongoing, with lawyers for Koko opposing the state’s demand of a sum of R500 000.

They face charges of corruption, fraud and money laundering stemming from irregular contracts worth R2-billion granted during the construction of the Kusile power station.

The state alleges that Koko failed to disclose a conflict of interest, when he was receiving material benefit from the local arm of the Swiss engineering firm, Asea Brown Boveri (ABB), in return for further its aims as well as those of two directly implicated employees.

In 2015, Eskom entered into a contract with ABB, which signed up Impulse Trading as a subcontractor, in a deal worth R800-million. Choma served as a director of Impulse and allegedly got R30-million from the deal.

Koko allegedly promised the firm further contracts worth more than R6-billion, should it enter into an arrangement with Impulse. The charge sheet states that he abused his position at Eskom to manipulate the tender process. It further alleges that he took bribes for rigging tender processes and approving variation orders. These allegedly flowed to him and his wife from Impulse.

The charges relate to a period spanning 2014 to 2017. Koko served as chief executive of Eskom between 2016 and 2017.

ABB in 2020 concluded a settlement agreement with Eskom to refund R1.56-billion. But in September, the company said it would put aside R6-billion as a provision to cover costs that might arise as a result of ongoing investigations into contracts linked to Kusile. 

Koko was implicated in state capture in the Zondo report, with Chief Justice Raymond Zondo urging that he and former Eskom chief financial officer Anoj Singh face criminal charges for paving the way for the Gupta family to purchase the Optimum Coal Mine using Eskom money.

The pair, Zondo wrote, led Eskom to believe that the transactions were for coal when they knew the money would be used by the Guptas to cover the shortfall they needed to acquire Optimum Coal Mine.

Koko was employed by Eskom for more than 20 years. He has denied any wrongdoing, including on the ABB deal. In his testimony to the commission, Koko insisted he was ignorant of the fact that he was exchanging confidential company information with key Gupta associate Salim Essa.

Their correspondence included an email, in December 2015, that set out the favourable terms on which Eskom was to enter into a R1.68-billion prepayment arrangement with Tegeta Exploration for coal.

Singh and former Eskom chief executive Brian Molefe have been charged with corruption that occurred during their term at Transnet but no senior figures have yet been charged in relation to the Tegeta deal.