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Eskom contracts swapped for party funding, probe finds

Bowmans’s report finds there to be ‘a reasonable basis to suspect that Econ Oil’s conduct breached internal Eskom policies’.
President Cyril Ramaphosa witnessing the symbolic handover of the Certification of Commercial Operation of Unit 2 on November 26, 2019, during his visit to Eskom’s Medupi Power Station in Lephalale. Image: GCIS

An oil blending and storage company secured deals to supply South Africa’s state power utility with fuel oil worth more than R15 billion at inflated prices by paying inducements, including donations to the ruling party, a forensic investigation has found.

Econ Oil & Energy allegedly won the contracts with the help of Thandi Marah, then senior manager of business enablement at Eskom Holdings, who interfered in the tender processes, said legal firm Bowmans, which Eskom commissioned to conduct the probe. A copy of its final report dated October 12 last year was seen by Bloomberg and confirmed by Eskom.

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Read:
This is how Eskom throttles the economy
Allegations, accusations and disinformation – just what Eskom doesn’t need

In return Nothemba Mlonzi, Econ Oil’s sole director, made payments requested by Marah, including a R100 000 contribution to the ruling African National Congress’s 2014 election campaign, Bowmans said. A separate presentation made in February by Nerina Otto, Eskom’s Acting Group Executive for Legal and Compliance, the authenticity of which was also confirmed by Eskom, made the same finding and alleges that Econ Oil overcharged the utility by R1.2 billion between 2012 and 2016.

“Bowmans provided Eskom with a report that found there to be ‘a reasonable basis to suspect that Econ Oil’s conduct breached internal Eskom policies,’ and that a corrupt relationship existed between Econ Oil and an Eskom senior manager,” the utility said in a response to queries.

Eskom has been at the heart of a judicial probe into allegations of widespread looting of South African state-owned companies, mainly by people linked to the ANC. The company is struggling to service its R464 billion debt and has subjected the country to intermittent power outages since late 2005 because it hasn’t properly maintained its plants, stifling economic growth and investment in industrial and mining projects.

The finalisation of the Bowmans probe followed Eskom’s decision in July last year to cancel a contract that would have seen it continue to buy fuel from Econ Oil. Marah was suspended in December 2018 and took early retirement at the end of January 2019, according to the utility.

Marah said she wasn’t aware of the Bowmans report and declined to comment further. Bowmans didn’t respond to questions and Mlonzi wouldn’t immediately comment.

Pule Mabe, a spokesman for the ANC, didn’t answer calls to his mobile phone or respond to a text message. Bowmans identified the ANC’s Liliesleaf branch in Johannesburg as the recipient of the donation. Marah was deputy chairwoman of the branch in 2014, according to Pat Sibiya, who served as its secretary at the time and said he couldn’t immediately recall the payment. Sibiya’s name wasn’t mentioned in the report or in Otto’s presentation and he said he wasn’t involved in fund raising.

Allegations denied

Otto said in her presentation that Mlonzi denied the allegations in a response she made to Eskom on February 24 and undertook to prepare a sworn affidavit to give her side of the story. The affidavit has yet to be submitted.

“Eskom has for a number of years been plagued by corruption, poor governance and unlawful contracts concluded to the detriment of Eskom and, by necessary implication, South Africa,” Andre de Ruyter, the utility’s group chief executive, said in a March 29 affidavit to a parliamentary committee.

De Ruyter gave the dispute with Econ Oil as an example, and disclosed that Eskom has taken action against several other suppliers, service providers and 12 individuals, including former executives, who overcharged or defrauded the utility.

Bowman’s report alleges that Mlonzi and Marah pressured Eskom staff to disclose other fuel suppliers’ prices to Econ Oil ahead of the conclusion of tenders.

It also details a request Marah made to Mlonzi to make a payment to a women’s charity, and says Mlonzi paid for Marah and other Eskom staff to attend an ANC fund-raising dinner, where the price of a table ranged from R150 000 to R700 000.

Eskom said it has temporarily suspended Econ Oil as a supplier to allow it to make further responses over the next six months. If Eskom decides not to lift the suspension, it will deregister Econ Oil from its supplier database for 10 years and notify the National Treasury so it can “blacklist Econ Oil from contracting with other organs of state,” the utility said.

An attempt by Econ Oil to interdict Eskom from removing the company from its supplier database failed in court on February 23, according to Otto’s presentation.

© 2021 Bloomberg

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The anc must just disband.

Just go home now!!!!!

And then we face a 15% price increase AND told not to retrench staff as input costs rise way above inflation!!

This gets to the heart of the demise of a once prosperous country.
The ANC are a bunch of thieves, always have been and always will be.
If SA Inc is to survive the ANC must be dissolved.

This kind of thinking is just so devoid of any depth it is heartbreaking. The ANC is a lifeless thing on paper. If you disband it do you think the corrupt members simply disappear too? It is the people that make it bad and they are going nowhere.

The ANC represents the mental capacity of their average supporter. The ANC won’t survive for 6 months in a country where the average IQ is above 80.

Did anybody expect anything else when ANC cadres sticky fingers are involved ?

Surely the biggest can of worms in the universe is being slowly opened.

So bad, one wonders of it will actually survive.

No wonder they are wanting to get rid of Andre, he has the can opener in his hand.

The brazenness of this corruption is quite astonishing. And appears to be the tip of the iceberg.

It would be equally interesting to discover whether the plague of load shedding wasn’t deliberately engineered by those like Econ Oil who had contracts to supply diesel. I understand that just one if the diesel powered gas turbines consumes about 250000 liters of diesel per hour. Nice if you have a contract to supply diesel and at inflated prices.

These people need to be charged with treason.

Just shows how the ANC has founded itself, and this is supposedly a party for the poor

Correct! I think the ANC is a party for the Party! It cares nought for anything or anyone else.

So Andre isn’t racist & diesel contracts were hiked & kickbacks paid.
Common sense really.
Recipients ANC subsidiaries. Go figure…

The party for thieves, the party for incompetents, and the party who doesn’t care about the poor. The only party I would be excited about would be a farewell party for the ANC in government

Now watch influential and learned journalists like Grootes, Bruce and Haffajee bewildered and indignant at the results of their campaigning for the governing party.

Absolutely scandalous.

And Mr Kieswetter wants more money ..to fund this theft for the ANC crime syndicate.

What has the public enterprises minister to say about this? Get out of your SAA A 350 Jamnadas and say something.

A true failed state. Mrs Thatcher said 30 years ago that the ANC is incapable of running a country. Was she incorrect?

The public enterprises minister is the very man who allowed this type of grotesque plunder to become everyday reality, first as SARS boss and then as finance minister. Gordhan allowed for more money being wasted and stolen than the Guptas could ever hope for.

She was absolutely spot on, they cannot run a single thing in South Africa ever since, it is just detoriating day by day year by year South Africa is sinking. We cannot reliy on one or 2 solid instutions we a solid contribution from everyone. This party ANC is the biggest failure to SA when I graduate next year I’ll do an entire thesis of A failed state as per the Ruling party. It is utterly disgusting that I pay all kinds of taxes get zeros worth.

I wonder if cancelling this contract forms part of the racism allegations ?

As with the Bosasa stories, the corrupt payments referred to above seem small in relation to the heist of R1.2bn – these are the tip of the iceberg of course. By the way, are you onto this one, Mr Kieswetter ?

…and no one is in jail…

Surely someone should be arrested for this by now??????

Oh, we have a police department (ANC officials) investigating ANC officials…. Everyone has a get out of jail for free card 🙂

It’s a scam a day at Eskam! And they have the audacity to increase the tariffs year after year (obviously to cover the losses from their “scam-a-day” enterprises) at rates well above inflation.
And note that no one has been held accountable (i.e. jailed) at Eskam and no one has lost their jobs. Also, none of the 50% excess staff have been retrenched. Indeed, I’m waiting on all these comradaes to go on strike for a 15% pay increase. They’ll argue that Eskam has received 15% increased revenue due to the tariff increase and thus can well afford pay increases.

It is for reasons like in this article that i say the terms audit, accountability, responsibility, etc, etc are just thrown around and used in political speeches and promises, whilst absolutely nothing is done to apply these standards by the exact same people preaching these standards must be practiced – just a cheap and easy used farce and nothing more

The ANC is selling it’s soul cheaply. If you are going to sell the country down the drain at least get value for the misery you are inflicting on our children and grandchildren. A R15 B contract including R1.2 B overcharge in 4 years for a miserly R100 000 plus R700 K for a dinner table ? That’s way too cheap IMHO. I suggest they put these Pretoria Handshakes out to tender in future. I would have doubled the kickback for that contract at minimum, no question (once again tongue in left cheek, firmly).

Bloomberg, your reporting is thorough – what a pleasure to read a sensible story.

Despite the content being abhorrent citizens are only shocked when the ANC suddenly does something honourable: the norm is afterall theft, corruption and misguided policies – especially economic policy!

Louise, when last did the ANC shock us…………….????

If all the sectors of society (big business,banks, civil society, academia, sports and entertainment figures and religious bodies) called for a tax boycott unless the ANC steps down from all levels of government. This will definitely work. It might seem impossible but the same was said about the apartheid government. We cannot be defeatist about this, let’s put aside whatever differences we have to bring down the ANC because the country is on the verge of complete ruin. For the sake of anything you care about let’s start an actual anti-ANC campaign regardless of the level of influence, position and money you have in every community or country you live in. Please folks let’s do this.

“De Ruyter added that the utility would have paid R238,000 for a wooden mop without his intervention.

He further claimed that Eskom had previously been paying R28 for a roll of single-ply toilet paper and R56 for a 2 litre bottle of milk”.

Wondering which of Marah’s comrades scored on this outrageous abuse and fraud….or maybe she “just cannot recall”?

Fire her buttt and prosectute!

End of comments.

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