‘I have been caught in the crossfire' - Matshela Koko

24 January 2018 - 15:17 By Linda Ensor
Matshela Koko appeared on Wednesday before the parliamentary inquiry into state capture being conducted by the public enterprises portfolio committee.
Matshela Koko appeared on Wednesday before the parliamentary inquiry into state capture being conducted by the public enterprises portfolio committee.
Image: Esa Alexander

Eskom’s head of generation‚ Matshela Koko‚ was the second senior executive in as many days to protest his innocence in Parliament of any involvement in the state capture of the utility.

Koko appeared on Wednesday before the parliamentary inquiry into state capture being conducted by the public enterprises portfolio committee. He testified about the purchase of Optimum Coal Mine by the Gupta-owned Tegeta Exploration and Resources from Glencore‚ the R659m prepayment that Eskom paid to Tegeta for coal supplies and corporate governance at the company.

Koko denied being part of an alleged strategy to use Eskom’s resources to build up Tegeta as a significant coal company‚ and denied being involved in corruption.

"In any organisation‚ and possibly more so in an organisation of Eskom’s size‚ extent and geographical reach‚ policies and procedures that seek to achieve sound corporate governance can be undermined and circumvented by dishonest and corrupt officials at various levels within the organisation. Such conduct also occurs at Eskom and has‚ unfortunately‚ occurred also at senior levels of management within Eskom‚" Koko told MPs.

"I have‚ throughout my career‚ strived to comply and enforce compliance with Eskom’s policies and procedures and have resisted attempts — for example by a previous chairman of the board‚ Mr Zola Tsotsi — to pursue avenues that do not accord with Eskom’s internal rules. I continue to subscribe to best practice corporate governance‚" he said.

He criticised what he said were "the many falsehoods and misleading reports published about me that are‚ on my reading‚ part of a frenzied campaign calculated to break Eskom and to discredit the government. I have been caught in the crossfire and‚ arising from the simple magnitude of the campaign‚ have been unable to defend myself against it. It has all been very‚ very hurtful."

Koko said that it was his attempts to root out corruption in the Medupi and Kusile projects that led to allegations of wrongdoing on his part.

He described the background to the purchase by Tegeta of Optimum in December 2015‚ emphasising that this was in the best interests of Eskom as it secured coal supplies to the Hendrina power station. "Eskom exhibited a determination to maximise its economic benefits from any deal to be struck‚" Koko stressed.

"The benefits derived from the overall deal arose from Eskom’s insistence that Optimum continue to deliver coal to it at R150 per tonne until December 2018‚" he said. This deal was struck in the context of Glencore’s demands that the price be doubled to R300 per tonne in order to ensure the continued operations of Optimum.

If not‚ the company warned‚ Optimum would have to be put into liquidation. Koko said Eskom’s stance was that it was "not going to succumb to Glencore’s strong-arm tactics".

He said Optimum’s business rescue practitioners had introduced Gupta-owned Oakbay to Eskom as a potential buyer of Optimum via its subsidiary Tegeta.

"The narrative that has been spun by the media and others is that Optimum was driven into business rescue by Eskom with the intention to enable Tegeta to acquire Optimum Coal Holding’s assets‚ and that when Tegeta by April 2015 fell short in putting up the money‚ Eskom made a prepayment to Tegeta to enable it to make payment‚" Koko said.

"Eskom then‚ moreover‚ in 2017 knocked down its penalty claim from R2.18bn to less than R600m further to assist Tegeta‚ all as part of an overall strategy to establish Tegeta as a substantial player in the coal mining sector. I deny that any such overall strategy ever existed‚" Koko said.

He also noted that it was a suggestion of the Department of Mineral Resources‚ under Minister Mosebenzi Zwane‚ that Eskom make a substantial prepayment to the buyers of the Optimum Coal Holdings mines for future coal supplies.

"My belief at the time was that‚ if that was what was going to be required to save the situation‚ that was what had to be done‚ taking into account that prepayments for coal to be supplied in the future (albeit not to the extent that the department had suggested) was not out of the ordinary in Eskom’s operations‚" Koko said.

He stressed that prepayments to secure coal supplies were accepted Eskom policy.

Eskom made a R659m prepayment to Tegeta in April 2016 in order to secure coal supplies to Arnot power station‚ which was experiencing a coal supply shortage. The alternative to buy diesel for the open cycle gas turbines would have been much more expensive.

Koko rejected allegations made before the committee by an Eskom director that he "habitually acted in a dictatorial manner" towards staff.

He dismissed as "lies" the claims made by suspended head of legal compliance Suzanne Daniels that he was central to payments to Trillian‚ saying that on more than one occasion he had declined to approve such payments. It was "pure fabrication" that he was responsible for these payments‚ he said.

Koko also denied having lied on TV programme Carte Blanche in June 2016 about the prepayment for coal to Tegeta. He said he was asked whether Eskom had prepaid Optimum for coal and had responded that it did not.

"That response was quite correct. Eskom did not prepay Optimum for coal. The agreement that the BTC approved on April 11 2016 was for prepayment for coal to Tegeta‚ which was an entity distinct from Optimum‚ for coal that Tegeta was able to secure and source from Optimum."

- BusinessLIVE

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