South Africa

PARLIAMENT: Scopa to investigate claims of nepotism and irregularity against Eskom CEO – made by suspended procurement chief

Eskom CEO, André de Ruyter. (Photos: Gallo Images / Phil Magakoe and Freddy Mavunda | Leila Dougan)

Eskom’s messy management wrangling burst into the open at Wednesday’s meeting of Parliament’s spending watchdog, Scopa. Whether it’s part of the pushback against cleaning up the troubled power utility or maladministration, it is now the subject of a committee investigation.

Eskom’s suspended chief procurement officer (CPO), Solly Tshitangano, has been central to the scuppering of the past two meetings between the power utility and the parliamentary spending watchdog, the Standing Committee on Public Accounts (Scopa). 

Lawmakers twice decided that without Tshitangano they could not fully interrogate Eskom procurement deviations — the subject of a meeting on 23 February and again on Wednesday. 

Then, on the eve of Wednesday’s Scopa meeting, came Tshitangano’s correspondence claiming nepotism, irregular decision-making and contract manipulation by Eskom CEO André de Ruyter, addressed to Public Enterprises Director-General Kgathatso Tlhakudi, and copied to all Scopa members, the Auditor-General, the State Capture Commission and the National Treasury. 

MPs took seriously the correspondence dated 1 March 2021, also seen by Daily Maverick

Scopa’s chairperson, IFP MP Mkhuleko Hlengwa, pointed out that the allegations were raised 13 months ago, and that the letter now saddled the committee with the allegations against the Eskom CEO that needed to be raised fairly to everyone.

“I do not consider the letter of the CPO a response to the resignation, because the issues have been raised before [suspension]. He will have the opportunity to raise the issues,” said Hlengwa. “A committee investigative process must ensue… [to] substantially look at these matters.” 

And that was that.  

Public Enterprises Minister Pravin Gordhan argued that because “special arrangements” had been made to attend the meeting, it should go ahead with De Ruyter answering questions on deviations that Tshitangano had signed off on, and the annual report. But MPs had decided otherwise.  

Or, as EFF MP Veronica Mente put it, “By all means, they must continue with their disciplinary case; all we want to hear is the CPO taking us through the letters bearing his own signature.”

ANC MP Nokuzola Tolashe pointed out, “We adjourned last week on the decision the CPO should be here. No one indicated then he might not be here.” 

Parliamentary hackles had already been raised last week because MPs had to ask about Tshitangano’s whereabouts, and were then told about sick leave and a suspension. That suspension for non-performance had been confirmed a day before the Scopa meeting in an official Eskom statement. 

On Wednesday all that was left for Gordhan to say was, “None of what anyone is saying means aspersions are cast on the integrity of the board or the CEO at this time.” 

Tshitangano’s claims against “De Ruyter and his loyalists”, as he puts it, are explosive. 

“DG, when Andre de Ruyter appointed his former colleague, Werner Moulton [sic] without following any due process, no one wants to call this conduct nepotism. Why is there no willingness to investigate this conduct? Why a deafening silence from the Department of Public Enterprises?” he wrote on 1 March 2021 in correspondence seen by Daily Maverick

This was contrasted with probes into the contract obtained by the daughter of then still top Eskom executive Matshela Koko, and into the appointment of a company owned by then tax boss Tom Moyane’s son. 

Tshitangano also claims De Ruyter sidestepped the Audit and Risk Committee over the appointments of the internal audit and IT heads and on 31 August 2020 changed procurement delegations to below R10-million and six months’ duration. Claims included the manipulation of contracts to meet cost-saving targets. 

When Daily Maverick telephoned Tshitangano to ask whether he’d brief the Scopa investigation, he declined to say anything. Apparently, speaking to the media could incur further disciplinary charges. 

Eskom spokesperson Sikonathi Mantshantsha said, “There is no formal complaint from anyone for anything about Andre de Ruyter.” 

The HR process requires forms to be completed with the grievances, which are then handled by the human resources department. That process is now under way. 

It’s understood that at least one aspect of Tshitangano’s precautionary suspension for non-performance relates to failure to meet cost-savings targets. Those are integral to managing Eskom’s debt of R488-billion, as sales of electricity drop against the backdrop of rising tariffs. 

Mantshantsha also dismissed claims of irregularity in the appointment of Werner Mouton, who, like De Ruyter, comes from Sasol. 

Mouton was hired in May 2020 as general manager for fuel sourcing after engagements between Tshitangano and De Ruyter during which the procurement boss indicated inadequate technical capacity in his division. However, his initial three-month contract reporting to the generation division boss has been extended repeatedly to July 2021. 

And this is where the kernels of a backstory can be found — oil contracts. 

It goes right back to Tshitangano’s first email of 1 April 2020 to raise issues with Eskom board chairperson Malegapuru Makgoba — with the subject line “Fuel Oil Tender 4786 Cancellation”. 

It’s on public record that Eskom started a review of various contracts in March 2020, conducted forensic investigations that found overpricing and irregular relationships with the power utility’s procurement division and since mid-2020 has tried to shed some of those oil contracts. 

This included a R14-billion contract with three suppliers, Econ Oil, FFS Refiners and Sasol, known as CORP 4786. 

Econ Oil, which has a R5.2-billion stake in this contract, has taken Eskom to court and in November 2020 an independent adjudicator found the contract to be valid. Econ Oil boss Nothemba Mlonzi took legal action in August 2020 and, according to the Mail & Guardian, also laid defamation charges against Eskom and its CEO. 

Gordhan is on public record, repeatedly, about the pushback under way in various state-owned entities where the State Capture taps are being closed. While prosecutions and arrests have been slow to take off, two Eskom senior managers, France Hlakudi and Abram Masango, are on trial for corruption, fraud and other charges, and also face tax evasion trials. 

The 2021 twist to this saga is that in late February Eskom’s Supplier Review Committee was going through various contracts, including this one. 

“The Supply Review Committee of Eskom met to review the position of all companies against which there’s reasonable suspension — and against whom there is evidence. Amongst those companies is Econ Oil,” Mantshantsha told Daily Maverick

Despite three extensions for Econ Oil to provide reasons why it should not be removed, the company did not do so. Instead, it went to court. 

Its interdict application was dismissed on the Monday before the Thursday 25 February 2021 Supplier Review Committee meeting. The outcome of that contract and supplier review is not yet known.

When approached for comment, Econ Oil, in writing, directed Daily Maverick to lawyer Peter Tshisevhe, who responded in an email that the interdict did not succeed because the judge disagreed it was urgent. 

“The adjudicator’s findings on the validity of the contract remain binding. Eskom is abusing its powers by refusing to honour the contract,” said Tshisevhe. He added that the Supplier Review Committee was “another unlawful attempt” by Eskom to escape its obligations by predetermination. 

“As soon as this predetermined outcome is given to our client [Econ Oil], we shall be launching review proceedings against the unlawfully constituted supplier review committee and its unlawful decision.” 

So, whichever way the Eskom Supplier Review Committee decisions go, it’s not the end of the matter. 

Gordhan is on public record, repeatedly, about the pushback under way in various state-owned entities where the State Capture taps are being closed. While prosecutions and arrests have been slow to take off, two Eskom senior managers, France Hlakudi and Abram Masango, are on trial for corruption, fraud and other charges, and also face tax evasion trials. 

In South Africa’s fractured body politic and increasing political noise, for Eskom the pushback against efforts to right the power utility is real.

Or as Mantshantsha put it: “There are vested interests, which stand to lose, so the pushback is immense. Allegations are thrown left, right and centre against the executive management.” DM

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