Guptas name drop Zuma in effort to get Eskom involved in illegal mine

07 July 2014 - 13:30 By Piet Rampedi, Stephan Hofstatter and Mzilikazi Wa Afrika
Atul Gupta at his mansion in Saxonwold, Johannesburg. File photo.
Atul Gupta at his mansion in Saxonwold, Johannesburg. File photo.

An illegal mine in a wetland is angling for a deal with Eskom understood to be worth R500-million.

The mine is co-owned by the politically connected Gupta family.

Documents seen by Sunday Times reporters show that Eskom rejected the deal because Idwala Coal Crypts continues to break environmental laws despite being ordered to clean up its act last year.

Two independent sources said the Guptas had put pressure on Eskom chairman Zola Tsotsi to approve the deal. Idwala is part owned by Tegeta, an entity controlled by the Gupta family, who have close ties with President Jacob Zuma.

The Sunday Times exposed how Idwala was illegally mining in a wetland in Mpumalanga. This was confirmed by a legal opinion in 2012.

The company was ordered to "rectify its illegal activities". The Mpumalanga government said the mine had stopped operating and its environment department was "working with the mine to achieve compliance".

A confidential Eskom report, signed by three senior officials on May 29, said Idwala's "illegal" mining made the deal too risky for Eskom.

Two independent sources told Sunday Times reporters that Atul Gupta then called Tsotsi to pressure Eskom executives to approve the deal.

A senior Eskom source said Tsotsi irregularly called a staff meeting last month, a week after Eskom rejected the Idwala proposal, and accused management of failing to speed up procurement transformation. This was seen as code for his anger over Eskom's decision to turn down Idwala's bid, the source said.

"The chairman of the company bypassed all the managers and executives and addressed the staff on procurement issues. He said they were not transforming," said the Eskom source.

"Ask for a breakdown of the Eskom spend on black-owned coal mines over the past three years - it tells a different story. You can see that this pressure is masking other interests."

Information on the Idwala application had been "kept under lock and key", said the insider.

Another source familiar with the Idwala bid said the Guptas had informally raised concerns with cabinet ministers about Eskom's failure to give them the contract.

"They have been mentioning Zuma's name to put pressure on the ministers and Eskom executives. I am told Atul contacted several people, including members of the Eskom board, ministers and senior government officials," said the source.

The mine's CEO, Ravindra Nath, said he had applied for an Eskom supply contract last year and was awaiting a response. He disputed it was worth R500-million, but declined to provide the correct figure. He claimed the mine was "doing 100% legal work".

Gupta family spokesman Gary Naidoo said the mine had stopped operating for the past nine months "while we are waiting for a decision on our water licence".

He denied Atul Gupta had applied pressure on Eskom's board to approve the coal contract.

"No member of the Gupta family has had any discussions around coal supplies with Mr Tsotsi or any other board member," he said.

"Despite the perceptions of 'the Guptas being well connected', the executives have failed to secure a supply contract over the past four years."

Eskom said it would "not make any public comments on this matter". Tsotsi declined to discuss the deal or reply to detailed questions sent by e-mail. "My response is that I have no comment on your allegations."