[ad_1]
Defender Wim Trengove SC earlier this year unconditionally acquitted Eskom CEO Andre de Ruyter of allegations made against him by former Eskom non-executive director Sifiso Dabengwa (former MTN CEO).
The Eskom board adopted Trengove’s report at its July 20 meeting and expressed its full support for De Ruyter.
The utility released the full report on Monday (October 5), stating that it was doing so in response to misinformation “contained in some recently published articles in headlines associated with the Independent Newspapers Group.”
Sequence of events
In May 2019, Eskom solicited bids for the supply of heavy fuel oil to its power plants for five years. The contracts were awarded to Sasol, Econ Oil & Energy and FFS Refineries for a budget of R14 billion.
When De Ruyter, who had recently joined Eskom as CEO, attended the Finance and Investment Committee meeting on January 10 this year, the procurement officer requested an increase in the budget from R14 billion to R18 thousand. millions.
The report notes that De Ruyter questioned the “quality of the information provided in the request for an increase in the budget for heavy fuel contracts and decided to investigate the matter.”
At the January 16 board meeting, De Ruyter “foresaw” the cancellation of the fuel oil contracts amid allegations of fraud and corruption against some fuel oil suppliers. He asked Bartlett Hewu, Acting Executive of Eskom Group: Legal and Compliance, to draft a memorandum covering these topics.
Memoranda
The Hewu memo, distributed to the board, recommended that fuel oil contracts should be canceled when: there are potential collusive practices; the bidding process is not fair, transparent and equitable; the pricing methodology is obscure; and it is not profitable. Furthermore, the report claimed that the Eskom team evaluating the offering lacked the “necessary skills, competence and understanding” of the fuel oil market, and that the board-approved strategy of sourcing fuel oil directly from refineries was not followed.
Eskom Acting Chairman Professor Malegapuru Makgoba circulated a shift resolution to the board for the cancellation of the oil contracts.
Dabengwa and Eskom’s non-executive director, Dr. Pulane Molokwane, strongly opposed the proposal on the grounds that the reasons for the proposed cancellation were “speculative and unproven.”
De Ruyter responded with a detailed memorandum of ‘Key Findings’, pointing out shortcomings such as: not following the procurement strategy directly from the refineries, not conducting technical evaluations, not comparing bidders and not achieving the optimal combination of price and volume. De Ruyter said BP was excluded as a strategic partner (as this could be costly) and Engen because their pricing was not understood.
De Ruyter warned that Eskom would be locked into a suboptimal five-year contract.
Dissent and accusations
The proposal to investigate the oil contracts was approved by a majority of seven to three at a board meeting held on March 25.
Eskom’s non-executive director, Professor Tshepo Mongalo, said that the grounds were based on “unproven allegations of wrongdoing and / or fraud”, and that cancellation would not amount to a proper exercise of the fiduciary functions of a director, as which is a duty of care, skill and diligence. .
Dabengwa followed up with a series of emails accusing management and De Ruyter of misleading the board by providing it with “false and unsubstantiated” information in support of the cancellation of the contracts.
Dabengwa calls for investigation
Dabengwa’s serious accusations were discussed at the next board meeting, held on April 29. Dabengwa noted that the board was already in conflict because it had based its decision on “alleged false information.” Therefore, the matter must be investigated by an independent party.
Dabengwa crystallized his complaints into three issues:
- De Ruyter had not provided documentation to support his view that the board had adopted, in January 2019, a resolution to purchase heavy fuel oil only from refineries.
- De Ruyter should provide a detailed report on “anti-competitive practices”.
- De Ruyter must provide documentary evidence to support his “fraud and corruption” allegations.
Trengove’s investigation
Alleged deception of the Eskom board
Trengove found the January 2019 meeting minutes to be inconclusive.
However, the group’s procurement officer, Solly Tshitangano, who had attended the board meeting, referred to the board’s resolution to purchase oil directly from refineries in a letter sent to the National Treasury in February 2019. The National Treasury agreed to “support the implementation of the optimal procurement approach on condition that it is profitable for the business and that the refineries compete with each other.”
Dabengwa told Trengove that he was unaware of the “correspondence trail.”
Trengove found that de Ruyter’s statement that the board had adopted a new strategy to acquire heavy fuel oil only from refineries was “in all probability correct” and that the statement was made “honestly and with good reason.”
Trengove found that Dabengwa’s “charge of dishonesty was nevertheless unfounded and irresponsible.” Furthermore: “Dabengwa did not have a shred of support for his charge of dishonesty. It was irresponsible on their part to achieve it. ”
Alleged collusion between bidders
In Hewu’s memo to the board to inform it of the serious problems related to the fuel oil contracts, he said there was a suspicion that Sasol and Econ Oil may have colluded in preparing their bids.
Dabengwa asked De Ruyter to “provide particularity as regards anti-competitive practices” and to provide a detailed report. And if de Ruyter did not accept, “it would lead to the inference that his claims were made recklessly.”
Trengove discovered that de Ruyter did not mislead the board and had disclosed all available information to him.
Trengove further found that the suspected collusion between Eskom and Econ Oil was worth investigating. “If verified, it would mean that Sasol and Econ Oil had illegally and fraudulently induced Eskom to pay more for its heavy fuel oil than it should have. It was a consideration in favor of the cancellation of the fuel oil contracts ”.
De Ruyter was found not guilty of any misconduct in this regard.
Alleged ‘fraud and corruption’
Dabengwa accused De Ruyter of having made a “bold and unsubstantiated statement … that there has been fraud and corruption”, particularly by Econ Oil, and that “the evidence of misconduct is neither proven nor related”.
However, there have been previous allegations against Econ Oil.
In January 2019, Bowmans, designated to investigate allegations of misconduct, discovered evidence of a potentially inappropriate relationship between Thandi Marah, an Eskom employee, and Econ Oil. Before Bowmans could publish his final conviction report, his term was canceled.
Trengove found that De Ruyter had never claimed that current evidence proves “fraud and corruption” on the part of Econ Oil; it simply held that there was evidence that Econ Oil had in the past been guilty of misconduct in its relationship with Eskom, and this was the subject of investigation.
Trengove found that De Ruyter did not mislead the board, had presented the evidence to the board for the directors to make their own assessment, and is innocent of any misconduct. Furthermore, Eskom should have investigated the incriminating evidence against Econ Oil before awarding the new contract.
Perspective
De Ruyter is the second senior Eskom executive to be acquitted of unsubstantiated and unsubstantiated allegations in the space of less than two months.
Eskom COO Jan Oberholzer was acquitted and vindicated by a court ruling, as well as an Eskom report that was presented to the board on August 31.
Charged with the gigantic and unenviable task of turning over South Africa’s beleaguered power company at this crucial moment, there is no doubt that Eskom’s CEO and COO should be able to focus on the urgent matter without unnecessary distraction.
Dabengwa resigned from the board on July 23.
Read:
