Brown orders Eskom to take legal steps against companies in Gupta saga

Public Enterprises Minister Lynne Brown has instructed Eskom Holdings SOC Ltd. to begin legal action against companies including McKinsey & Co. over their involvement in disputed contracts at the country’s state-owned electricity company.

Brown ordered Eskom to start taking legal steps against consultancy firms McKinsey and Trillian Capital Partners Ltd., as well as suspended Acting Chief Executive Matshela Koko and Chief Financial Officer Anoj Singh, who is on special leave, her spokesman, Colin Cruywagen, said by phone Thursday. Three other senior managers may also face misconduct charges, Business Day reported Friday, without citing its sources.

McKinsey in July said it’s reviewing documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian, a company linked to the Guptas, made 1.6 billion rand ($120 million) in fees and expected to make another 7.8 billion rand, according to amaBhungane and Scorpio, two investigative journalism groups.

Singh was placed on leave in July after he was linked to a series of questionable deals involving the Gupta family, who are friends with President Jacob Zuma. Koko was suspended pending an investigation into contracts awarded to a company where his stepdaughter was a director. He had denied wrongdoing.

Eskom is spending tens of billions of dollars on new power plants that are years behind schedule and is at the center of allegations that the Guptas, who are in business with Zuma’s son, used their relationship with the president to win state business.

The company disclosed 3 billion rand of irregular expenditure in its financial results on July 20, a figure which its auditors said they couldn’t independently confirm. Zuma and the Guptas have denied wrongdoing.

South Africa’s biggest opposition party has already filed charges of fraud, racketeering and collusion against McKinsey and said it plans to approach the U.S. Department of Justice about the work the consultancy did for Eskom.

-Bloomberg