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The Special Investigation Unit (SIU) has begun to uncover the scale of corruption and mismanagement at the state energy company Eskom.
Eskom is in crisis, crippled by a debt of close to 500 billion rand, the capacity shortage that threatens to derail the government’s plan to ignite an economy and survive bailouts to keep the country’s lights on.
The SIU updated the Standing Committee on Public Accounts (Scopa) on its investigations into the state firm on Wednesday (October 14).
As of August 2018, the SIU was mandated to investigate the procurement of coal, its transportation, the procurement of diesel, mismanagement / failure to deliver / faulty performance by service providers at Medupi power plants , Kusile and Ingula, among others.
He was also tasked with uncovering any conflicts of interest at the energy supplier, including the failure of Eskom employees to disclose their private interests, while investigating Eskom employees working with the state-owned company.
Acquisitions of cloud computing services, software licenses and support services were added to the investigation, SIU program manager Claudia O’Brien told Parliament.
O’Brien said the SIU had identified important areas for further investigation: namely, that 324 Eskom officials have been identified who are linked to entities that are Eskom suppliers, while 135 of these officials have conducted business with Eskom for the value of at least R6 billion – an average of around R45 million each.
She said the unit was “watching” 34 former or current Eskom officials on red alert. These red flags, he said, are the result of a lifestyle audit at the company’s request.
O’Brien said 5,452 officials did not submit their declarations of interest, more than 10% of the group’s total employees.
SIU findings
The SIU had already referred Eskom 5,512 to date to initiate disciplinary proceedings. It said 60 of these references refer to officials who do business with Eskom or who did not disclose their interests in outside business entities. He said disciplinary referrals against 134 officials are still ongoing.
To date, Eskom has closed six cases as a result of the downsizing, while four officials have resigned.
O’Brien said that of the 34 former or current Eskom officials with a red flag, eight have been referred to Eskom for initiation of disciplinary proceedings. Seven officials resigned, while 19 continue. Those who resigned will still be referred to the NPA, he said.
O’Brien said that the SIU and Eskom have initiated actions against 12 parties in connection with the purchase of Optimum Coal Mine by Tegeta, linked to the Gupta family, for an amount of R3.8 billion.
Similarly, an investigation into a coal supply deal at Koornfontein showed a R6.95 billion increase in the contract value following the acquisition of the mine as part of Optimum Coal Holdings.
The SIU noted that since June 2018, Koornfontein has not provided Eskom with the required monthly contract tonnage under the existing contract, which ends in 2023.
This investigation is ongoing, O’Brien said.
The SIU said that 29 contract packages in Kusile (21), Medupi (5), Matla (1), Majuba (1) and Ingula (1) have been flagged for investigation.
These packages relate to 20 construction contractors. To date there are 19 packages in progress, while the investigation of the remaining 10 packages has yet to begin.
Read: Eskom has the right to interrupt non-paying customers – court
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