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Eskom wants to pay bonuses to alleged rogues

Publish date: 17 July 2017
Issue Number: 4264
Diary: Legalbrief Today
Category: State capture

Scandal-plagued Eskom has only enough cash to last it for the next three months – but it still wants bonuses to be paid to axed CEO Brian Molefe, suspended acting chief executive Matshela Koko and others, says a Sunday Times report. According to its annual financial statements, the power utility is sitting on its last R20bn. This means that, unless something is done urgently, the parastatal could find itself unable to pay November salaries. The financial statements, which the Sunday Times says it has seen, were presented to Public Enterprises Minister Lynne Brown late last month. The power utility postponed the announcement of its results the night before they were scheduled to be made public, leaving industry analysts speculating about the reasons for the delay. Despite its precarious financial position, the state-owned company has asked Brown to approve short-term bonuses totalling R5.5m for three of its most controversial former and current executives. This is part of a R13m payment proposed for Eskom's top executives. It proposes that Molefe – who left the utility under a cloud after being singled out in the Public Protector's report on state capture for unduly favouring the Gupta family – be paid a R2.1m bonus for the eight months he served as CEO in the 2016-17 financial year. Koko – who is suspended and is scheduled to face a disciplinary procedure this week for alleged conflict of interest for failing to disclose his stepdaughter's shareholding in a supplier, Impulse International – stands to gain a R1.5m bonus. Chief financial officer Anoj Singh, who has links to the Guptas, is scheduled to receive a R1.9m windfall.

Full Sunday Times report (subscription needed)

More alleged Eskom shenanigans are revealed in a Business Day report. It says three days after Eskom put acting CE Matshela Koko on leave to probe allegations that a company partly owned by his stepdaughter was awarded enormous contracts, the electricity producer sneaked the company in question onto the Eskom supplier database. And as late as last week, Eskom gifted Impulse with more new contracts, despite its relationship with the supplier still being under investigation. This, says Business Day, would appear to be a post facto attempt by Eskom to correct a breach in which Impulse was awarded contracts by a division headed by Koko before it was included in the panel of suppliers. According to law firm Cliffe Dekker Hofmeyr and auditor Nkonki, Impulse was awarded contracts by a division headed by Koko from July 2014, and was paid more than R390m without tendering for work or being on an approved panel of suppliers. Impulse also failed to submit crucial documents such as tax and black economic empowerment certificates, among other alleged breaches. The firms were instructed by Eskom to investigate allegations of conflict of interest and other impropriety against Koko. It later emerged that Koko’s stepdaughter, Koketso Choma, owned 35% of Impulse shares, and that he had not declared this, in contravention of Eskom’s conflict of interest policy. Pending this investigation, Koko was put on leave on 12 May, and still remains on leave. ‘It looks like they are trying to sneak them (Impulse) in (as suppliers),’ a source is quoted as saying when confronted with the tender committee’s minutes. 'They did try to add more members to the panel. (But) all the contracts with this supplier must be investigated.’

Full Business Day report (subscription needed)

Eskom has denied reports suggesting it is ‘broke’, saying it was confident it could keep going, notes a News24 report. ‘Eskom refutes the notion that it is facing a cash crisis, and that it has only enough cash to last for the next three months,’ it said. ‘The company is confident that it will maintain sufficient liquidity to support its operations,’ it added. It said that, because it was making an official announcement on its finances this coming Wednesday, ‘Eskom is not in a position to respond comprehensively to the specific issues raised at this stage’.

* The Daily Maverick is running a detailed report today on how its investigative unit, Scorpio, has uncovered the truth about Brian Molefe’s R30m Eskom ‘golden handshake’.

Full News24 report

Full Daily Maverick report