Former Eskom boss drafted R43m Gupta contract 'under duress'

30 October 2019 - 17:24 By AMIL UMRAW
Eskom sponsored New Age 'business breakfasts' in a three-year deal that cost millions, the state capture inquiry heard on Wednesday.
Eskom sponsored New Age 'business breakfasts' in a three-year deal that cost millions, the state capture inquiry heard on Wednesday.
Image: Times Media

Former Eskom corporate affairs boss Chose Cheou told the state capture inquiry on Wednesday that he drafted a R43m contract between the power utility and Gupta-owned newspaper The New Age (TNA) under duress.

Cheou, who has been implicated in previous testimony as a key figure in pushing sponsorship and advertising agreements for The New Age, told the commission that he became uncomfortable with Eskom's relationship with TNA by the end of 2012 - more than a year before a R43.2m deal was signed.

The contract bound Eskom to a three-year sponsorship agreement, in which the utility would bankroll one of TNA's controversial business breakfasts every month for 36 months, at a cost of R1.2m per session.

It was Collin Matjila, who was appointed as Eskom's chief executive in 2014, who signed the contract on behalf of the power utility.

AmaBhungane previously reported that leaked emails from within the Gupta empire revealed that their associate Salim Essa circulated Matjila’s CV to Rajesh Gupta and his nephew Srikant Singhala, son of Atul Gupta, before Matjila was appointed to the position.

A review by auditing firm Sizwe Ntsaluba Gobodo (SNG) found that Matjila had exceeded his authority in signing the deal.

After Matjila took office, Cheou said he was made to report to Eskom's former group executive of enterprise development, Erica Johnson. He claimed Matjila told Johnson that he "would want us to sponsor the breakfasts and he would want a long-term contract of about three years [with TNA].

"At the time when we were totally refusing to deal with the business breakfasts, one of the pressures was that if ever these breakfasts had to be engaged into, it would have to be in the office of the chief executive officer," said Cheou.

"What we also wanted to do, because we were worried, we wanted to change the process of sponsorship so that you will still have to come to the sponsorship committee, but exco [Eskom's executive committee] must also approve.

"Johnson was informed by Matjila that 'You will have to put together a proposal for us to sponsor a breakfast.' Johnson came to me and said, 'I did tell [Matjila] that these business breakfasts were not good for our reputation.' I worked with my team to put together the source document."

The evidence leader at the state capture inquiry, advocate Kate Hofmeyr, asked Cheou why he did not convey to Johnson that he was uncomfortable in drafting the deal.  

"She was uncomfortable herself. She was aware I was uncomfortable," he responded.  

In two previous contracts dating back to 2012, Eskom sponsored TNA's business breakfasts at R1m per session. Hofmeyr asked why the price had jumped in 2014 to R1.2m per session. Cheou replied, much to commission chair Raymond Zondo's dismay, that TNA agreed to drop their price if Eskom increased the length of the contract and the amount of sessions it would sponsor.

"It’s like they [TNA] are dictating terms to you. But you are Eskom. They are the ones that need you, but here now they talk about lowering their amount and you are celebrating. It seems like you were [under] some kind of hold," suggested Zondo.

"That was the situation," confirmed Cheou.

The commission has now turned its focus on to how Eskom and Transnet entered into lucrative contracts with TNA.

According to Hofmeyr, Eskom forked out R59.6m between 2011 and 2017 to TNA for advertising and sponsorships. During the same period, she said, Transnet spent R147m.

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