[ad_1]
The SA subsidiary of Swiss automation firm ABB will pay R1.56 billion to Eskom to resolve an overpayment dispute related to an illegally and corruptly awarded contract to work at the Kusile power plant. (Photo: Twitter / @ABBgroupnews)
This is the largest amount recovered by the Special Investigation Unit and follows a lengthy investigation that involved the SIU, the Hawks and Eskom.
First published in Daily Maverick 168
The SA subsidiary of Swiss automation firm ABB will pay R1.56 billion to Eskom to resolve an overpayment dispute related to an illegally and corruptly awarded contract to work at the Kusile power plant.
An investigation involving the Special Investigation Unit (SIU), the Hawks and Eskom traversed several jurisdictions, and the US Securities and Exchange Commission, the FBI, and the US Department of Justice participated and were involved. kept informed of the process, said attorney Andy Mothibi, director. of the SIU, at a press conference held on Friday.
Investigations into bidding irregularities and other corrupt practices at Eskom began in August 2018, after President Cyril Ramaphosa signed Proclamation R11 authorizing the SIU to investigate. The SIU has broad powers to subpoena documents and witnesses, which Eskom’s own internal forensic investigators do not have.
The agreement between ABB and Eskom was signed on Friday, December 11, and stems from last week’s commitment by global firm McKinsey to return illicit proceeds of R 650 million in connection with the Transnet and SAA contracts (this is adds to the R1- billions in consulting fees that it offered to reimburse in 2017), and Deloitte, of R150 million, agreed to reimburse after an “irregular acquisition process”.
In addition, Eskom has issued a R95 million demand letter to PwC related to consulting fees incurred in 2017 and has launched civil lawsuits to recover R3.8 billion from the Gupta family and its associates.
This is part of an ongoing process to recover approximately R3 billion in irregular expenses incurred at the Kusile power plant. “After that, we will follow up on all irregular contracts at Medupi. We will not take our foot off the pedal, ”Eskom CEO André de Ruyter said at the same briefing.
The contract for the “control and instrumentation” (C&I) work at Kusile was awarded on April 29, 2015. At R2.24 billion, R324 million more than the lowest bidder, but ABB won the contract based on the promised ability to speed up delivery. “As subsequent events have shown, this was not the case,” says De Ruyter. Eskom ended up paying ABB 3.1 billion rand in total.
ABB cooperated with the SIU and the Hawks after its own internal investigations revealed corruption in the process.
“We accept that ABB has done work for which we receive value,” says De Ruyter, “so we have not claimed the value of the entire contract.”
At 0.25% of Eskom’s total debt of about R480 billion, this will not be a big hit. “It is useful to ease our liquidity constraints, that’s all,” says De Ruyter.
“This is an example of the practical actions being taken to return money to Eskom’s coffers. We need to make sure that more of this work is being done and intensified, ”said Public Business Minister Pravin Gordhan.
“This is a small contribution to the debt, but the message for companies that have been involved in corruption is that now is the time to approach the SIU and make a voluntary disclosure,” he says. “If not, at some point … you will face the music.”
Once a company is found guilty of corruption and collusion, the National Treasury can blacklist it from working with the government again. Eskom will not search for this blacklist. “Our challenge is that the C&I related work at Kusile is 90% complete,” says De Ruyter. “Approaching the market for a new contractor will likely cause a four-year delay at Kusile and will open Eskom to claims for value damages. [about] One billion rand from other contractors forced to wait while the new technology is implemented. “
With that said, the SIU will begin the process to void the contract. “It is clear from the evidence that it was acquired in an irregular and corrupt way,” says Mothibi. “We have a duty to implement civil litigation, which we will do in conjunction with Eskom.”
The SIU, he says, also has a duty to refer the matter to criminal investigation. “The file is open and is under investigation.”
In addition to collusion in the award of the contract, certain Eskom officials illegally and fraudulently induced Eskom to pay an estimated R 800 million to ABB in illegal modification orders. Two former Eskom executives have already appeared in court and are being prosecuted in connection with these and other irregularities. However, Mothibi declined to name them because they have not yet been charged.
ABB will return the money within the next 14 days. DM / BM
