Eskom case against Guptas and former executives is a matter of ‘principle’

CEO says the utility can’t sit back and do nothing.
André de Ruyter says Eskom's R450bn debt is a ‘national problem’. Image: Moneyweb

The R3.8 billion claim Eskom has made against former executives including Brian Molefe and Matshela Koko, as well as former minister Mosebenzi Zwane and the Gupta brothers is a matter of principle, CEO André de Ruyter said on Tuesday. 

Last week the utility filed a 73-page summons at the High Court in Pretoria in which it spells out a case of a conspiracy to loot Eskom between the former executives, board members, Zwane and the Guptas and their associates in the purchase of Optimum Coal Mine in 2015. 

Eskom states that it incurred losses of R3.8 billion because of this conspiracy, which it intends to recover from the 12 defendants listed in the papers. 

Read: What Eskom wants from the ‘conspiracy’ to divert money for the Guptas

‘Strong case’

“We are working with, among others, the asset forfeiture unit, as well as our own legal advisors to prepare what is known as anti-dissipation orders and that tries to prevent people from spending ill-gotten gains before we can recover them,” said De Ruyter speaking to the Cape Town Press Club.

However, he said that while they want to preserve as much of the money as possible Eskom will probably not be able to reclaim the full R3.8 billion. 

“I suspect a significant amount of money has already been spent,” said De Ruyter. 

He said the utility could not afford to “sit back” and allow the alleged perpetrators to walk away without consequence.

“I think it’s also a matter of principle at stake here that we have to pursue and I am quite confident based on advice received from our lawyers that we have a strong case” 

Debt

The little that can be retrieved in the proceedings will assist the power utility which has a current debt burden of R450 billion.

It is also owed about R30 billion by South Africa’s municipalities, another cost it doesn’t see being paid in the near future.

Eskom has been approaching the courts to acquire attachment orders with regard to the assets of municipalities and recently the bank account of the Maluti-a-Phofung. 

De Ruyter said the challenge with municipal debt could largely be attributed to the inability of owing municipalities to collect debts, ensure meters are read, and bill correctly. 

Read: Refinancing of renewable IPPs won’t temper electricity tariffs

He said the utility is working with provinces and the Department of Cooperative Governance and Traditional Affairs to tackle the issue, which he said would be “resolved in time” with the requisite political will. 

In order to run a financially sustainable enterprise, Eskom’s objective is to have a significantly reduced debt balance of R200 billion with a cash balance of R30 billion and an Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin of 35%. 

De Ruyter said there is no “single silver bullet” to tackle the R450 billion debt. A number of things need to be done, such as addressing the cost of debt and the utility’s cost base. He added that Eskom was grateful for the financial padding from bailouts provided by the government which is why the recent court judgment reversing the energy regulator’s decision to treat the equity injection as revenue was significant. 

“But the debt does not go away by itself and this is still a conundrum that does not get resolved and it’s more than an Eskom issue – it is a national issue that we need to address.”

Private sector participation

Asked if he supports semi-privatisation of parts of Eskom, De Ruyter said private sector investment can be better encouraged through Eskom restructuring its operations. The utility is currently undergoing a divisonalisation of its generation, transmission and distribution operations with a final goal of unbundling. De Ruyter has previously said that the Eskom of the future will be more involved in transmission, allowing for a greater number of independent power producers in generation.

“We believe that this is an easier way for private sector involvement than trying to sell shares in an entity that has R450 billion of debt,” he said, adding that this is a policy question and not for Eskom to decide.

De Ruyter said Eskom had made good progress in its unbundling despite reports that the process is proceeding slowly.

Read: Eskom CEO on the need to restructure

According to the Road Map for Eskom in a Reformed Electricity Supply Industry, released by Public Enterprises Minister Pravin Gordhan last year, the utility’s transmission subsidiary would be legally separated by December 2021. The unbundling of the generation and distribution units would take place in December 2022.

De Ruyter previously told parliament that as a number of issues pertaining to Eskom’s legal separation are not in Eskom’s control these timelines were still to be confirmed and could be delayed by two years.

“We are working very hard to come up with an alternative plan to expedite and achieve essentially the same objective,” he said De Ruyter.

This plan will be presented to the board and the shareholder.

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A matter of principle!

Seriously – your ‘witch hunt’ is just that, very similar to the Zondo commission. Meaningless.

It is just a distraction for the public. You have far more serious issues to deal with right now. Do you really think you can spend even a spare minute on this futile exercise – or is Eskom so hopelessly lost, your time is better spent in endless lawyers meetings!

@Romulus, a witch hunt is when a corrupt mob goes after innocent scapegoats, at the instigation of a charismatic or powerful leader, in order to shed their own mutual complicity in some foul act.

Here, we have the rightful prosecution of corrupt individuals who used their political connections to steal from, and thus dis-empowered, the South African citizen.

DO you have any mental conception of justice at all ?

Finally, there is no more serious issue in South Africa than corruption, without resolving corruption we cannot resolve any of our other issues, and there is no future.

I firmly believe in justice for these 2 dozen or so individuals, the wheel is turning already.

However, i do not believe in injustice for 59 million in the process.

Eskom is the spine of RSA, it makes us strong or it cripples us.

There is another commodity boom coming, we missed the first one from 2000-2008 due to various infrastructure failures – Transnet ports and rail (Molefe/Gigaba/Gama) and then Eskom collapsed. With the state of RSA we cannot afford to miss the next one.

My point if poorly communicated, was beware the distraction – as a far greater looting has just started.

I agree Romulus, there are pressing issues but also do think they have to go after these crooks, we need to start sending out a message to thise who want to try this again, that there will be consequences. It is a futile exercise in retrieving the funds but there has to be consequences of some sort.

What a relief to see some sanity in the mad house! Wether this succeeds or not, the very fact that someone is prepared to put his money where his mouth is, is reason to celebrate!
You see what can happen when you put the right person in the job…not because of his race religion or creed…but because he knows what he is doing.
Keep up the good work Mr De Ruyter and thank you.

No. It is their fiduciary responsibility to prosecute all involved. Its the law.

Right thing to do. Let the law take its course.

The tax payer/country’s money was earmarked for Eskom to provide a service.

But, we have all heard it on the news for many years and will probably go on for another few decades without any results unfortunately.

R3.8Bil out of R450Bil debt???
That is like chasing your shadow at night.

Power both political and Electricity needs need to be decentralised, the behemoth organisation with dictate the lives of ordinary South Africans and business has lead to a life of regression.

When can the TAX payers go after the anc for the theft of R750,000,000,000.00 (Direct Value) (R1.5 Trillion real value) which as been stolen over the last 25 years ?

Any act against corruption is worthy of applause. Before you can go after those who have sabotaged the ship, you have to plug the holes to stop the leaking first. Act against those who are stealing from Eskom right now. Chancellor House and all those politically connected contractors and coal mines have torpedoed Eskom’s balance sheet. This communist monstrosity is sinking fast and it will take the ANC down with it.

Always hilarious to be lectured about principles by the unprincipled.

i would say start at eskom self –
– do a healthy trim on employees to bring the ratio of employees per Megawatt produced to the rest of world – salary and wages are surely one your big expenses on your income statement;
– get your money from the municipalities – how the hell did the outstanding amount get so high?
– why does eskom ever think of using diesel standby generators to use as semi-permanent generators at the highest cost per Kilowatt while they are in financial dire straights?
– can guarantee you – even if eskom’s debt of R450 billion is paid off today – by the end of the year there will be financial issues again and more excuses

This seems to be a civil case. It it is theft and racketeering should it not be a criminal case?

Have they laid criminal charges?

Lay criminal charges and get Afriform to prosecute.

Anything instituted by an SEO is pointless, just window dressing suposed to make some feel better.

Just like the Zondo Comedy show………….When it’s all over you will see 20 Series each with 15 episodes on SABC1 at 8.00pm nightly. voted funniest soapy in the world.

I doubt anything fruitful will come out of this exercise

Attorneys love this, book the hours, no result.

Maybe better to put pressure on the NPA, and on Gov. to prosecute those they can reach, and expedite the extradition process for those they cant.
( I hear Tannenbaum, Bobroff et al laughing in the background)
civil actions so late after the events (Pamensky 10+ years) wouldnt net R1 in R10 claimed. The money is gone.
But it feels good, doesnt it?

We have all been complaining for years about corruption and the fact that nothing is done about it. Now someone is at last taking some action and now we are negative again. I know that De Ruyter is also busy to look into a lot of other corrupt agreements, like fuel oil, coal and other long term contracts. Even if he has limited success, sending out the right message is making a huge difference. If other CEO’s of SOE’s and Municipal Managers will follow his example, it can start to swing the tide against corruption. Yes, it should be a criminal case, but then we will wait forever.
Well done Mr de Ruyter!

“which he said would be “resolved in time” with the requisite political will.”
Political will. . . what is that?

Political will is when politicians take a stance and stick to it. I had the privilege to work for a municipal council (ANC) which approved a written poliicy to disconnect illegal connections, disconnect legal connections of people who steal electricity and made them pay all costs plus a penalty before connecting them again. All these cases had to be reported to the council monthly and the ward councillor had to visit the perpetrators in his ward to to explain to them that their actions will not be tolerated. All councillors of all parties supported this policy. The result was that electricity losses were below the allowed national standardand their Eskom account is paid regularly. Without that political will, stopping illegal connections and electricity theft becomes almost impossible. It should be there on national and local government level. I hope Mr de Ruyter gets it from National level.

It was a sarcastic question auretha; we don’t have one in this country, unless if it’s wrt stealing funds from the fiscus.

throwing good money… after…. INTO a bucket with a bottomless stop… as the people with experience put it… eskom can scribble the figures on their stomachs… and wipe it…

I will add the following for clarity.

Go after the Gupta brothers by all means and try to extradite them from UAE/ India. However, in RSA people tend to forget that ministers and SOE executives are cadre deployments. They are insignificant ‘privates’, albeit with great lifestyles.

They did and do nothing without instruction and permission from their generals. They are easy to find, just follow the money. However, they remain faceless and nameless – why? We all assume we know the names but they remain untouchable.

Go after a general and convict one, i am definitely all in for that. I am not content with being thrown a bone, in the form of scape goats in lieu of a general (as then the problem remains), who will get nothing more than slaps on the wrist.

Not a single one of these individuals have been charged criminally, nevermind found guilty of wrongdoing. On what basis would they pay Eskom any money? This is a ridiculous attempt at grandstanding from a CEO way out of his depth. At least let the law take its course. The SIU has not even interviewed these people as yet, and they want R3.8 billion to be paid?

What clownery…

Auretha again with that mythical ANC run municipality, hitherto unnamed. One wonders why? I just saw a pig fly by in pursuit of a unicorn.

No need for pigs and unicorns. Everything I have said is true. As I have said, I have retired, but the people working there are still my friends, so no need to identify them. But I still have a copy of that policy, if you can read Afrikaans. Now you will really not believe me, but our meetings, minutes of meetings and policies were in Afrikaans! How is that for an ANC municipality?

Name the Municipality then, we are all waiting with bated breath.

End of comments.

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