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Stefanutti Stocks breaks silence on alleged payments to enrich Eskom officials

Says it has engaged with the authorities about its ‘slush fund’ contribution.

JSE-listed construction group Stefanutti Stocks has broken its silence on allegations that it, along with other companies, made payments to a slush fund to enrich top Eskom officials.

The exposé of the alleged slush fund payment was published by Scorpio, a sister publication of the Daily Maverick, on Thursday.

It alleges that R75 million was paid by Stefanutti and three other companies, including the local subsidiary of multinational Tenova Takraf, to Babinatlou Business Services.

R50m ‘channelled’ to three people

Scorpio claims that after receiving payments from the contractors, Babinatlou channelled at least R50 million towards a Kusile Power Station contracts manager and two of his former Eskom colleagues.

Read: The crisis at Kusile and Medupi continues …

Stefanutti Stocks said on Friday that it has engaged in an open and transparent manner with the Special Investigation Unit (SIU) and importantly, as part of its process of disclosure, has brought the payments made to Babinatlou to the attention of the SIU.

The group stressed that it takes its regulatory compliance obligations very seriously and hence its open approach to engagements with the SIU.

High school building project

It said payments totalling R2 million were, following a request from Babinatlou director Hudson Kgomoeswana, made as part of a Stefanutti Stocks corporate social investment initiative to fund the completion of a four-classroom block at Mokhine High School at Sekhukhune in the Limpopo Province.

The company highlighted a number of measures that it adopted to ensure that the monies “were indeed utilised for their intended purpose”.

These included establishing from the SA Revenue Service that Babinatlou was in good standing; securing a breakdown of the outstanding works required to complete the project; being sent photographs of the completed works; being invited to inspect the completed works; and engaging with the principal of the school, Mr MS Makgwale, who after completion of the school block, invited representatives from Stefanutti Stocks to attend the opening of the school.

The company stressed that at the time it was unaware that Babinatlou may have been utilised as a front for certain Eskom executives, or that Kgomoeswana may be linked to certain Eskom executives.

The group added that the payments to Babinatlou were made purely for the purpose indicated and not for any illicit purposes involving any Eskom executives and, to the extent Stefanutti Stocks has been able to ascertain, the monies the group paid were used for their intended purpose.

Irony

Allegations of payments into a slush fund designed to benefit Eskom executives are somewhat ironic, considering that Stefanutti refers to a “public sector power project” and unnamed loss-making contracts in its oil and gas and mechanical divisions as contributing to its operating loss of R973 million for the six months to August, from a R124.8 million profit in the previous corresponding period.

In an obvious reference to Eskom, Stefanutti said the client’s intractable approach on the public sector power project with respect to certification of applications for work done has led to an additional provision of R462 million being raised for potential unrecoverable measured works to completion.

This is in addition to the provision of R263 million raised in February this year.

Shares in Stefanutti Stocks plunged 58%, from 12c to 5c a share early on Thursday, after it released its financial results and Scorpio published its exposé.

It recovered to close unchanged at 12c. The share closed at the same level on Friday.

 

Stefanutti Stocks share price in the last six months

 

 

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Extortion is rife. Dig a little deeper and more rot will be exposed.

You want a certificate agreed or paid? You have to pay.

Agreed and it is shocking but I would have expected more ethics and backbone from a JSE listed co.The ANC BEE rot has destroyed the moral fabric of our society.Just a pity Big Biz never stood up to it but chose to serve Money.

Lulu, you are correct re big biz lacking ethics – this dirt is pervasive and has been around for a very long time. The story that Stefanutti Stocks thought it made legit contributions ito social responsibility initiatives is just that, as story. They knew then and they know now what they were doing.

The stories around Medupi and Kusile corruption are frightening. I’ve heard from contractors who had bosses that built their own private / blackmarket stores worth millions by over ordering supplies and then selling them off or using those stocks for their own use and for their friends.

This level of corruption and crooked dealing is not something that sprang up with the ANC govt, it has always been there. There was, during the pre-1994 talks, a preliminary investigation done into corruption under the previous govt and the report was damning in every respect – it showed massive high level corruption across a very broad front. Also, during this period dump trucks full of documents from various govt departments were hauled away to Iscor (and other) furnaces for incineration. Sadly, Madiba decided that the past was the past and he never authorised a full and formal Commission of Enquiry, as was recommended in the prelim report. The net result is that we never learnt the full truth and at the time it was probably not a bad idea to try and let bygones be bygones.

With hindsight and the clarity that 20/20 vision brings, the CoE should have been authorised as the public deserved to know what was going on. If this had been done, we would not be blinkered when we look at corruption, we would more fully realise it’s not a new thing.

As an aside, under the circumstances dealt with in this report, I place more blame on big biz than on the govt officials. They (biz biz) either invited the bribes to get the business or, just as bad, kept quiet when the bribes were demanded. We had, and still do have, a relatively new govt. Business has been around a lot longer and business should always always set the bar on what is acceptable.

Not to worry …… nothing will happen …… no one will be charged …..no one will appear in court ……. no one will go to jail.

In fact, you add this to your CV and get an Ambassadorship – eh Ebrahim.

Again, mean time shareholder value takes a dive,
Mr. Auditors and sundry bean counters, If asked to deliberately loose almost a Billion ZAR in 6 months, most would struggle, that’s close to 25% of T/O or over R160 Mil/month, please explain how at least some of this was not provided for 6 months back ? About time JSE start facings Realities as well in the reporting that’s goes on.

Blaming apartheid gov. for present corruption is an brain faht (sic).
This lot could offer an MBA in corruption, where the Nats never got past primary school.

Agree that the old govt (or colonialists, or whoever) should not be blamed. If my comment that has elicited your remark, then all I can suggest is that you re-read it. My point is that corruption is not new, it is not unique to the current SA govt, it is everywhere and has been so for a very, very long time.

Each generation of leaders (be they in the public or private sector) must take responsibility for their own behaviour. The only distinction that I draw is that leaders in the private sector should always take the lead in righting the ship.

The ANC is a corrupt organisation. It’s corrupt members protects each other.

Captains of industry must also be made to account. This is exactly what happened during the construction of the stadiums and road constructions leading up to the soccer world cup. No one was held accountable.

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