The police are investigating allegations that the leaders of one of the country’s largest unlisted construction companies conspired with Eskom officials to oust international power giant Alstom from a contract at Kusile and paid a bribe of R20 million in the process.
The allegations against Tubular Construction Projects (TCP), part of the Tubular Holdings Group, include the manipulation of tender processes to initially decrease the contract value to fall within the influence of their friend at Eskom and, recently, almost doubling it to more than R 1 billion.
Eskom senior manager France Hlakudi, whom suspended Eskom interim Group CEO Matshela Koko, wanted summarily removed from Kusile, is said to have played a key role in the scheme and to have received R20 million from Tubular and its subsidiary Abeyla Trading since 2015.
Hlakudi manages contracts at Medupi and Kusile and is still in that position, Eskom confirmed. (See his response below)
Multiple documents Moneyweb has seen suggest there is a basis for the allegations.
Koko is currently defending himself on six charges in a disciplinary hearing. One of these relates to his instruction on February 1 to remove Hlakudi from Kusile.
Read more on the Koko hearing:
He is accused of undermining the authority of members of Eskom’s executive team while he was interim Group chief executive of Eskom. The disciplinary hearing has been told that this refers to the fact that he sent the instruction directly to Frans Sithole, then project manager at Kusile and bypassed Sithole’s boss Abram Masango, who was, at that stage, head of group capital. Eskom’s new-build projects resort under the group capital division.
Forensic investigator Annemari Krügel earlier testified at Koko’s hearing that Koko told her in confidence why he wanted Hlakudi and someone else removed and that Koko would testify to the matter. Hlakudi was expected to testify, but wanted to be accompanied by his legal representative. The hearing has since been postponed to later this month after Eskom appointed a new evidence leader.
Koko has argued, through his counsel, that he had the necessary authority to give the instruction but neither Hlakudi nor Koko himself have so far testified.
The allegations were first made in an anonymous letter early in September this year to the interim chairman of the Eskom board, Zethembe Khoza. The writer stated that he decided to communicate directly with Khoza because he didn’t trust then interim Group CEO Johnny Dladla, as he was close to Masango, who was protecting Hlakudi.
Dladla was removed from the position early in October. Eskom said it “has decided to rotate current executives in this role to ensure exposure”.
Eskom spokesperson Khulu Phasiwe has confirmed that Eskom’s Assurance and Forensic Division is also investigating the matter. Moneyweb has established that the police docket is currently at the NPA and sources close to the matter have confirmed that arrests are imminent.
The allegations in the anonymous letter and other supporting documents paint the following picture:
Eskom awarded a contract for the supply and installation of air cooled condensers (ACCs) for all six generating units at Kusile to Alstom. Alstom subcontracted DB Thermal then part of SPX Technology, which in turn subcontracted Tubular for the erection of the units.
Tubular developed financial problems and its agent, Mike Lomas, a former Group Five CEO who retired in 2007, devised and implemented a plan for Eskom to contract directly with Tubular for the erection and installation of the ACCs for units 4-6 to the exclusion of SPX and Alstom.
This was allegedly done with the assistance of Eskom’s Hlakudi. On September 2 2015 Hlakudi, who was Eskom’s lead negotiator with Tubular, notified the company that Eskom would indeed negotiate with it for a new, direct contract.
On the same day R400 000 was allegedly paid by a representative of Tubular into the account of Hlakudi Translation and Interpretation CC, a closed corporation with Hlakudi as the sole member. The CC’s registered address is a previous home address of Hlakudi.
Eskom “descoped” the agreements with Alstom and SPX for the same works and paid them for lost profits. The allegation is made that the terms were prejudicial to Eskom and contrary to legal advice, but Eskom denied this to Moneyweb.
According to the allegations Tubular calculated its tender price at more than R1.5 billion. Such a high value would however require Eskom board approval and the company allegedly lowered it to R708 million to ensure it remains within the band of the tender committee that Hlakudi could influence. He prepared submissions for the committee.
Lomas, Tubular CEO Anthony Trindade and Hlakudi allegedly agreed to make up the difference through false claims and variation orders.
Eskom confirmed to Moneyweb that the contract value was increased to R1.2 billion in July this year, “following the Eskom governance processes”.
Since 2015 Tubular allegedly paid R20 million to Hlakudi Translation and Interpretation.
The further allegation is made that part of the initial R400 000 payment was used to develop a business property in Lichtenburg jointly-owned by Eskom’s Masondo and family members of Sithole. Moneyweb’s research shows that they do own a business property in Lichtenburg, but no improvements have been done on it.
Moneyweb put the allegations to Lomas, Trindade and Hlakudi. By deadline only Hlakudi had responded.
Hlakudi responded as follows:
“I refer to your emails of 2 and 3 November 2017 regarding the article which you intend publishing. My response to your article appears below. In the interests of fairness and transparency, I request that you publish my full response. As you are aware, I am expected to testify in Mr M Koko’s disciplinary hearing. Furthermore, according to media reports, Eskom intends conducting an investigation into the allegations referred to in your article and the police are also investigating the matter.
In the circumstances, it would be inappropriate, if not improper, to deal with the allegations in any detail at this stage, save for pointing out that your article has a number of factual inaccuracies and that I strongly deny all allegations of impropriety levelled against me.
The allegations are false and defamatory. I am taking legal advice regarding my rights and the institution of legal action. You will no doubt ask yourself why these allegations and alleged documentary evidence emerges at this point in time. Clearly, they are part of a desperate and transparent attempt to divert attention from the real issues at hand and to preempt the evidence that will be led against Mr Koko at his disciplinary hearing. Unfortunately, your intended publication will serve these ulterior motives. I will prove, at the appropriate time and in the appropriate forum, that these allegations are false and that I did not act unlawfully or improperly in any manner.”
– France Hlakudi