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State capture probe told of Eskom ‘fixer team’

Publish date: 19 October 2017
Issue Number: 584
Diary: Legalbrief Forensic
Category: Forensic

The heat is on for the Guptas, with more senior people at Eskom pointing fingers at the family, President Jacob Zuma and Cabinet Ministers allegedly involved in state capture, notes a Cape Times report. It says former Eskom chief executive Brian Dames and another former employee said the looting began several years ago when Eskom took a different direction and began flouting governance procedures. Dames, who worked for Eskom for 27 years before he was pushed out, told the inquiry into state capture in Parliament yesterday he was left fuming after meeting the Guptas after they proposed they be awarded coal contracts by the power utility. But Dames said his tenure at Eskom became difficult after a new board was appointed in 2010 following the appointment of Malusi Gigaba as Public Enterprises Minister. Dames complained of interference by some of the former chairpersons of Eskom in the operations of the power utility. Another former Eskom employee and consultant, Ted Blom, who is now with the Organisation Undoing Tax Abuse, said he met Zuma in 2008 at his Forest Town house in Johannesburg, where the President told him to meet the ‘fixer team’. But he too was left fuming after the ‘fixer team’ told him they wanted to ‘eat at Eskom’. The report notes Blom did not name the fixer team, but said it comprised ‘eminent persons, including doctors and lawyers’. He has promised to send the list of the team to Parliament.

Full Cape Times report (subscription needed)

Eskom has a history of kickbacks, said Blom, Outa’s head of energy. A Mail & Guardian Online report notes that on Tuesday, Blom said that R1tn loaned to Eskom and approximately seven rugby fields of coal have gone missing. The report states that according to Blom, the self-proclaimed whistleblower of corruption at Eskom, ever since the Public Finance Management Act law came into existence, Eskom has been in breach of it and has not re-negotiated its tenders on an open tender system. Blom has noted there are at least a 1 000 cases of alleged tender corruption that have not been brought before the parliamentary inquiry. In his report, Blom also said that Eskom is paying four times more for coal than it should be, and that 400 000 tonnes of coal that it had paid for is now missing.

Full Mail & Guardian Online report

Mineral Resources Minister Mosebenzi Zwane has vehemently denied being captured by the Guptas. Zwane yesterday (Wednesday) again denied making any decision favouring the influential Gupta brothers, who are at the centre of state capture allegations, while at the same time not denying he has met members of the family and their associates, notes a report on The Citizen site. It says Zwane was answering questions by MPs sitting on Parliament’s Portfolio Committee on Mineral Resources on whether he helped the Gupta family, who are friends with President Jacob Zuma, exercise undue influence over the state and its parastatals, and thereby giving them control over government decisions and state money. The report says Zwane scoffed at suggestions he was aware of R30m being diverted from a dairy farm project in the Free State, which he initiated while Agriculture MEC in that province, via Dubai and then used to pay for a lavish wedding for a niece of the Guptas at Sun City.

Full report in The Citizen

See also a Daily Maverick report

Dames told MPs he was pressed for coal contracts by one of the Gupta brothers at a meeting arranged by an advisor to Gigaba, according to a report on the IoL site. ‘I was asked to meet with them by a ministerial advisor,’ Dames told the inquiry in response to a question from DA MP Natasha Mazzone. The chairperson of the Portfolio Committee on Public Enterprises, Zukiswa Rantho, asked him to be more specific and name the Minister as well as his advisor. ‘It was an advisor to Minister Gigaba, I think his name was Siyabonga Mahlangu,’ he replied. ‘He arranged a meeting where I was present. It was a very strange meeting.’ Dames said somebody he ‘assumed was one of the Gupta brothers’ made three requests pertaining to coal supply during the meeting, after telling him: ‘We think we can work with you.’ He said his response was to inform Mahlangu that he would not entertain a meeting of this kind. ‘I said: ‘’You will not bring those people to me again.’’’ Former Finance Minister Pravin Gordhan suggested that Dames should ‘join the dots’ between his observations and the current allegations of state capture, but the former CEO said he did not have firm evidence implicating anybody in corruption.

Full IoL report

In more fallout from the state-capture allegations, embattled consultancy firm McKinsey has suspended all work for state-owned enterprises, until further notice, says an eNCA report. The move follows an investigation into allegations of wrongdoing involving its relationship with Eskom. The firm says it violated its own professional standards, making several errors of judgment. But it has rejected claims it was involved in bribery or corruption. McKinsey also denied serving the Gupta family or any companies linked to the family. But it concedes it should not have started working alongside Trillian at Eskom until it had completed its due diligence.

Full eNCA report

See also: McKinsey’s astonishing attempt at self-exoneration

McKinsey admitted to lapses in judgment and failing to adhere to its administrative processes in its work for Eskom with Gupta-linked Trillian. But a Business Day report says the global consultancy claims that it had not fired any staff or found evidence of intentional wrongdoing. Eskom wants McKinsey and Trillian to pay back the R1.6bn they earned for six months of work, after the utility announced last week that it would go to court to have the unlawful contract set aside. The contract’s ‘at risk’ payment model, allowing fees to be calculated as a percentage of savings, did not receive Treasury approval, as required by law. This payment method resulted in Eskom paying higher fees to McKinsey and Trillian than if the utility had been billed by the hour. McKinsey said that senior partner Vikas Sagar – who was investigated for instructing Eskom in a letter to pay Trillian directly – had left the firm. Sagar’s letter ‘should not have been issued for a party with whom we did have a subcontract’, McKinsey said. However, the firm ‘found no evidence of bad faith in the drafting of this letter’. Several other McKinsey staffers have been disciplined or left the firm for their role in the scandal. McKinsey said its findings were based on a review by global general counsel Jean Molino and two law firms of 2.4m e-mails, hundreds of thousands of documents and more than 60 interviews. The consultancy admitted that it should not have started working with Trillian before completing a due diligence and without a contract.

Full City Press report

It is unlikely that the Gupta brothers will be called to give evidence, notes a TimesLIVE report. Opening proceedings‚ Rantho said the inquiry was aimed at uncovering facts and as such ‘no one is accused of any wrong doing’. She said ‘individuals likely to be implicated by the testimony’ would be allowed to attend the proceedings in Parliament or send a representative‚ but they would not be called upon to give evidence. The committee has kept the list of people giving evidence under wraps‚ with those coming before the committee only being identified on the day of their appearance. First to appear was energy specialist, Professor Anton Eberhard‚ who was part of a team of academics from UCT and Stellenbosch which prepared a reference book for the inquiry‚ gathering and detailing information relating to Eskom. The inquiry is being conducted in phases – looking at Eskom before moving onto Transnet and then Denel. Eberhard told the committee that the ‘core hypothesis’ around state capture was that ‘it's not a number of individual acts of corruption‚ but a systemic political project to benefit a politically-connected elite’.

– TimesLIVE

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