Koko evidence leader had Eskom business ties

Sebetja Matsaung, the lawyer leading evidence at the disciplinary hearing of Matshela Koko, owns shares in a firm Eskom had planned to do business with, says a Business Day report. The newspaper says it has established that FBC and Associates is the lead contractor of a joint venture to which Eskom had planned to award a five-year contract in 2016, potentially worth R500m. Matsaung later became a 20% FBC shareholder and director. A copy of the award letter reportedly obtained by Business Day lists Koko as the person who would sign it on Eskom’s behalf. The letter said the joint venture would be awarded a five-year contract starting on 1 July 2016 to supply scaffolding and insulation cladding to Eskom’s Grootvlei and Komati power stations in Mpumalanga. Matsaung’s company owns 51% of the joint venture, with the remaining stake owned by Johannesburg Scaffolding and Nova Plant Services. Nova CEO Bobby Pillay confirmed receiving the acceptance letter but said it was withdrawn shortly afterwards after objections were received from rival bidders. The contract was potentially worth ‘over R100m a year’, he said. His firm had partnered with FBC because ‘they supplied the BEE’ and its owners had contacts in Eskom. Matsaung confirmed he owned a 20% stake in FBC. When asked if his company’s efforts to do business with Eskom represented a conflict of interest with the Koko prosecution, Matsaung said the contract was not relevant to the case. He stressed he had ‘bought shares and became a director in FBC long after the tender was awarded to FBC’. ‘We black lawyers struggle to get business from government, and you’re now busy distracting us with something that’s not relevant,’ he said.

Full City Press report

It was also revealed yesterday that Koko personally signed off on a deviation order that allowed his stepdaughter’s company to score a R66m deal from Eskom without going out to tender. Business Day says it has obtained a copy of a confidential ‘sole source justification’ memo signed by Koko on 26 October 2015 to award Impulse International a contract worth R65.8m. Five months later, Koko’s stepdaughter Koketso Choma, who was living with him at the time, became a director and shareholder of Impulse. Choma initially received a 25% stake hidden in a trust, which was later increased to 35%. Afterwards Eskom awarded Impulse nine contracts worth R380m and subcontracts worth another R260m. This, says Business Day, brings Impulse’s total earnings from Eskom since Koko’s 26-year-old stepdaughter joined the company to R640m. The deviation Koko signed is listed as an exhibit in an investigation report by law firm Cliffe Dekker Hofmeyr and audit firm Nkonki likely to be submitted as evidence in Koko’s disciplinary hearing. The report, which Business Day says it has seen, said it needed to be established whether Choma had paid for the additional 10% stake she was allocated in Impulse. Koko faces six charges, including failing to declare Choma’s shareholding in Impulse and his wife’s business dealings with Impulse CEO Pregasan Pather. Asked whether he considered it a conflict of interest to sign a deviation order that his stepdaughter could later benefit from, Koko initially questioned its authenticity before declining to respond, says the report.

Full City Press report

The goings on over the Impulse deal also featured when the disciplinary hearing continued last night. A Fin24 report notes a forensic investigator revealed that in an effort to earn credits for Impulse International BEE scorecard, CEO Pragasen Pather approached Mrs (Mosima) Koko to get her daughter involved at the firm. Forensic investigator Annemarie Krugel revealed the findings of a probe conducted by Nkonki Incorporated earlier this year. Nkonki Incorporated was commissioned by law firm Cliffe Dekker Hofmeyer (CDH) to conduct a ‘fact-finding’ and interviewing exercise relating to the conflict of interest that arose given Koko’s stepdaughter’s (Choma’s) involvement at Impulse that clinched R1bn worth of contracts awarded by Eskom. Koko allegedly failed to declare this interest. Krugel spoke on the nature of the relationships which existed between Pather and Koko’s family. The probe revealed that Pather had relations with Eskom in the past, but not Koko himself. They had met at a social ‘level’, but not for work or business purposes, she explained. ‘The relationship was not with Koko, it was with the stepdaughter of Mr Koko,’ said Krugel. Consultation with Mrs Koko revealed that she had met Pather in ‘late 2014, early 2015’ and later introduced her daughter to Pather in March 2016. Pather had expressed an interest in bringing Choma on board for BEE scoring purposes. Consultation with Koko revealed that he was not aware of his daughter’s involvement at Impulse, and only found out in August/September 2016, said Krugel. ‘He spoke to her and her mother about the matter; he requested her to remove her shares and resign … According to Mr Koko the matter was dealt with.’ The investigation further revealed no evidence that Koko was involved in any commercial processes where Impulse International was appointed by Eskom, said Krugel. Koko’s counsel, Frans Barrie, asked Krugel whether Koko influenced the awarding of contracts to Impulse International, to which she replied: ‘We could not find in this investigation any evidence.’

Full Fin24 report