Eskom is going after former Eskom executives, board members, the Gupta brothers and their associates for aiding and abetting alleged corruption at the utility in the State Capture enterprise of the Gupta family.
A 73-page summons issued by the Special Investigating Unit (SIU) and the power utility lays out the “conspiracy” between these parties to divert resources from government institutions, mainly state-owned entities, to benefit the Gupta family and its businesses.
Eskom has listed 12 individuals from whom it intends to recoup R3.8 billion in losses that the utility experienced when the Gupta brothers made the controversial acquisition of Optimum Coal mine.
Among the respondents are:
- Former chief executive officers Brian Molefe and Matshela Koko
- Former chief financial officer Anoj Singh
- Former general manager for legal and compliance Suzanne Daniels, and
- Former mineral resources minister Mosebenzi Zwane.
The papers go on to list three former non-executive board members, including chair Ben Ngubane, Chwayita Mabude and Mark Pamensky.
These parties are said to have played a role in what Eskom describes as a “conspiracy” to “divert” resources from the utility to benefit the entities of the Gupta brothers Tony, Atul and Ajay, and their business associate Salim Essa. All four are listed as respondents referred to as “fugitives from justice” since they fled to Dubai after investigations into state capture were launched.
The case itself is about how the Gupta family’s Tegeta Exploration and Resources’s acquisition of Optimum Coal Mine – which supplied coal to Eskom’s Hendrina Power plant – was paved with underhanded tactics by the Eskom executives and board members as well as Zwane, which eventually forced Glencore into selling the mine in 2015.
Eskom went further by providing Tegeta with prepayments for coal and helping to raise money for the firm through guarantees.
Together in the crooked place
In making the case for the conspiracy between these parties, the papers make reference to the diversion of funds to benefit the Guptas that have been largely unveiled by investigative journalists in the past.
The connections are traced from the Free State government in 2012 through the Estina Dairy Farm project, and again in 2014 when the province’s money was laundered to a Gupta entity called Homix. Zwane, who was a member of the provincial legislature, was allegedly integral in enabling these transactions.
Molefe and Singh’s relationship with the Gupta brothers is traced back to when the two were executives at Transnet, where again they are accused of creating an enabling environment for the family to get kickbacks and launder money through procurement and advisory contracts.
Zwane, Singh and Koko are also said to have been beneficiaries of five-star trips abroad that were paid for in full or in part by Gupta entities before and after the purchase of Optimum.
According to the papers, Eskom incurred losses of over R581 000 and R662 000 when it had to pay back Absa Bank guarantees that it provided for the Guptas.
When Tegeta bought Optimum it took over a penalty of R2.1 billion that Eskom had slapped on Glencore for not fulfilling the coal quality standards in line with its supply agreement.
After the purchase Daniels, Singh and Koko are said to have reduced the penalty to R577 million “to further the interests of Tegeta in accordance with the conspiracy”.
In actual fact, Glencore had been given an inflated penalty as the justified penalty amounted to R1.1 billion the documents state. Eskom is suing for a further claim of R722 million which is the difference between the actual claim and the agreed settlement which was not paid in full by Optimum and Tegeta.
Eskom says it also lost a total of R2.4 billion because after Tegeta bought Optimum it had to “procure coal from sources either than [Optimum]” for Hendrina as the company refused or was unable to deliver adequate quantities in line with the coal sales agreement. A further R89 million claim is made for losses to Eskom for inadequate coal.
Lastly, Eskom wants to recoup R595 million with interest for an irregular consultancy contract with Trillian Capital Partners, another Gupta-linked company
The damages claims for Singh, Molefe, Koko and Daniels are for breach of their contractual duties for allegedly assisting with the diversion of funds, failing to disclose the existence of the conspiracy or their involvement in the conspiracy, and failing to prevent the actions of the co-conspirators.
Ngubane, Mabude and Pamensky are said to have been in breach of their fiduciary duties for the same reasons.
The claims above plus the cost of legal proceedings have been made to all defendants. They have been given 10 days to respond to the summons, which were issued on August 3.
An aggregate claim has been made to Tegeta and Optimum, but Eskom notes that the companies are currently in business rescue and it is unlikely that it will recover that money.