Hawks probe cash shuffle at Eskom

Maintenance funds 'looted' in dodgy tenders

24 March 2019 - 00:06 By GRAEME HOSKEN


The Hawks are probing how Eskom funds earmarked for crucial maintenance of power plants were diverted to the Kusile power station project and other capital expenditure programmes - where they were allegedly looted through dodgy tenders.
Lack of maintenance on power plants since the Soccer World Cup in 2010 is a key factor in the debilitating rolling blackouts that have hammered the economy.
Earlier this week public enterprises minister Pravin Gordhan said funding for maintenance began vanishing five years ago.
Diverting funds requires support from the Eskom board, but Ben Ngubane, who was Eskom board chair between 2015 and 2017, this week told the Sunday Times that "as far as I know" money was not diverted from the maintenance budget to other divisions.
"Maintenance budgets were properly used. Proof of this is that there was no load-shedding when I was there."
However, minutes from an Eskom board meeting in November 2015, chaired by Ngubane, reveal that several transfers between divisions, totalling R313m, were approved.
The minutes read: "To affect the transfer of funds/cashflows between divisions the following is required: A letter to be signed between the two respective group executives agreeing to the transfer of funds/cashflows; and any further agreement/conditions regarding the transfer of funds/cashflow and associated risks to be stipulated in the letter and managed by the divisions."
At the time of the meeting, key positions at Eskom were held by people who were later linked to state capture: Brian Molefe was CEO, Anoj Singh was CFO, Mark Pamensky was on the board and Lynne Brown was minister of public enterprises.
Hawks spokesperson Brig Hangwani Mulaudzi said officers from the Priority Crimes Specialised Investigation Unit with expertise in tracing money flows, both corporate and international, were involved in the Eskom investigation. "They are part of a larger team investigating alleged looting at Eskom."
He declined to elaborate on the investigation.
However, a source close to the Hawks' investigation said it was being expanded, with detectives looking into where the money for Eskom's capital procurement processes came from.
"Detectives are looking at why billions of rands were allegedly moved from maintenance budgets to capital expenditure programme budgets and who signed off on these movements," he said.
Eskom's acting head of generation, Andrew Etzinger, said board approval had to be obtained to move money between budgets.
"It's not a case of no budget having been available but rather it's been a case where a particular focus was on projects which were prioritised, such as Kusile and Medupi power stations.
"When it comes to load-shedding, it's because of a number of maintenance issues and failures at power stations, especially over the past three years when it was not done properly."
A former Eskom legal officer with knowledge of board decisions said money was allegedly stolen through dodgy procurement processes linked to the construction of the Medupi, Kusile and Ingula power plants.
"Money was moved because of so-called capital shortfalls. The decision was [that] more money was needed for Kusile, Medupi and Ingula. These decisions, which Treasury and energy and public enterprises ministers needed to be informed of, were signed off by the board."
Former Eskom board chair Zola Tsotsi, who served directly before Ngubane, said any disappearance of money from the maintenance budget would be concerning "and highly strange".
"Interfering with a budget would be an unusual thing to do because a budget's intention is to ensure programmes, like maintenance, are not affected. If there are to be changes then there must be fundamentally good reasons for this."
Ngubane told the Sunday Times that all documents he had signed while chair had been vetted by the board's legal compliance officer and unit.
"Every document signed was legally sound … As far as I know all the money was properly used. Anyone talking of money not being used properly is talking nonsense. As far as I know there was no such a thing as taking money from one budget, such as maintenance, to another. That never came to the board. I don't think this ever happened," he said.
"Build projects like Kusile, Medupi and Ingula, which are sound projects, had their own specific budgets, which were untouchable. Maintenance budgets were properly used.
"The real reason for the Eskom crisis is because of the loss of skilled engineers."
Ngubane said the Medupi, Kusile and Ingula power stations were properly constructed. "Anyone who says they are not doesn't know how to run these or any other power station."
Molefe said he was not aware of any pressure to reduce maintenance.
"I was not involved in awarding or renewing tenders. We stopped load-shedding in August 2015 … through the implementation of a maintenance strategy called Tetris. I do not know the current cause of load-shedding."
Jannie Rossouw, an economics professor at Wits University, said moving money between budgets had to follow strict government financial regulations.
"It would have to be done through the board and senior executives. If money was moved outside of the legislative framework, Eskom would have to press charges."

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