/ 1 June 2022

Brian Molefe calls for investigation of Glencore’s South African operations

Former Ceo At Eskom Brian Molefe Testifies At The Commission Of Inquiry In South Africa
Former Eskom Chief Executive Officer, Brian Molefe. (Photo by Papi Morake/Gallo Images via Getty Images)

Former Eskom chief executive Brian Molefe has accused the Zondo Commission into state capture of being “very sympathetic” towards Swiss mining house Glencore over its relationship with President Cyril Ramaphosa.

Molefe has added his voice to calls for an investigation into Glencore’s South African operations after the company last week pleaded guilty in a US court to corruption in countries including the Democratic Republic of Congo, Brazil and Venezuela and agreed to pay a fine of $1.1-billion.

Both Molefe and another former Eskom chief executive, Matshela Koko, told the Zondo Commission that Ramaphosa had been used by Glencore in its attempts to fleece the power utility out of millions of rands by supplying sub-standard coal to the Hendrina power station.

Ramaphosa was Glencore’s local empowerment partner at the time it acquired Optimum Coal Holdings in 2012, but divested his interests in Glencore in 2014. Optimum was forced into business rescue after Molefe scuppered the renegotiation of a long-term coal supply deal with Eskom.

Glencore eventually sold Optimum to the Gupta-linked Tegeta for R2.15-billion, R1.68-billion of which was covered by a coal repayment guarantee issued by Eskom.

On Wednesday, Glencore denied any wrongdoing in its South African operations, saying that there had been “significant misinformation” in the reporting on its agreements with the US, British and Brazilian authorities.

“None of the investigations relate to our business in South Africa or our coal, ferroalloys or Astron businesses,” Glencore spokesperson Charles Watenphul said.

Glencore had “cooperated fully” with the Zondo Commission and the Public Protector’s  investigation into Optimum Coal, he said, neither of which had made any adverse finding against the company over its conduct.

“Glencore denies any allegation of wrongdoing and the conclusion of both processes confirms this,” Watenphul said.

Glencore also came to the defence of Ramaphosa, saying that he had “no direct involvement in the day-to-day operations of Optimum Coal Holding or Optimum Coal Mine” and had divested his entire interest in Optimum prior to becoming deputy president and prior to his involvement in the Eskom war room.

This meant that Ramaphosa had “no interest” in Optimum during the period when the company was renegotiating its agreement with Eskom.

“The suggestion that Glencore involved Mr Ramaphosa in the acquisition of OCH (Optimum Coal Holding) with a view to, or with the expectation of, leveraging Mr Ramaphosa’s influence to achieve amendments to the CSA (coal supplier agreement), is false and baseless,” Watenphul said.

Molefe, however, said he was “not surprised” by the Glencore denial and called for a further investigation into its South African operations — and the allegations he and Koko had levelled against the president.

“I can just speak for the facts as I know them. The facts are that Glencore had a R2.2-billion penalty that was payable to Eskom, and that penalty arose while the president was the chairperson of the company,” he told the Mail & Guardian.

“He might say he didn’t know because he was not in an operational role, but a chairman should know about a contingent liability of R2.2-billion, otherwise it is a dereliction of duty.”

Molefe said by the time he became Eskom chief executive, Optimum was about to conclude a deal to increase its price from R150 per tonne to R530 a tonne, which he had halted.

“I don’t know who they had persuaded that they could increase the price from R150 to R530, but they were very close and I scuppered it,” he said. 

“What I also know for a fact is that as soon as I got there, we issued summons for R2-billion and this seems to have irritated them immensely. R1.4-billion of the R2-billion has since been prescribed and nobody has bothered to go and recover that money. I can’t say they bribed so and so, but it just doesn’t add up. It looks strange, and that was my evidence to the commission,” Molefe said.

Molefe said Koko had laid a charge with the police over the R1.4-billion prescription in an attempt to find out if there was “any undue influence” brought to bear over the failure by Eskom to recover the money from Glencore.

“It is an open secret that this was the way Glencore did business,” he said.

Molefe added that former public protector Thuli Madonsela and the Zondo Commission had been “very sympathetic” towards Glencore and had “felt we had not treated Glencore fairly” despite evidence that extending the Optimum contract would have cost Eskom R8-billion.

“As an unemployed citizen at the moment I don’t know what I can do. I can only hope that the authorities are going to deal with the matter. (United Democratic Movement leader leader Bantu) Holomisa has asked for an investigation. I can only hope that the authorities take it seriously,” he told the Mail & Guardian.

In its fourth report, the Zondo Commission rejected the complaint against Ramaphosa by  Koko that the decision to fire him was an act of state capture and his claim that the then deputy president had acted in the company’s interests “to the detriment of Eskom and South Africa”.