Welcome to Eskom, ‘SA’s largest organised crime network’

“Congratulations, you are now the head of the largest organised crime syndicate in South Africa,” forensic investigator Ben Theron told newly appointed Eskom CEO André de Ruyter in 2020.

De Ruyter was to learn the truth of this statement soon enough.

“If pushed, I would probably venture that around two stages of load shedding could be ascribed to sabotage, theft and corruption,” writes De Ruyter in his recently released book, Truth to Power: My Three Years Inside Eskom.

In several interviews, he claims this costs Eskom at least R1 billion a month.

One such example of sabotage was the November 2021 toppling of an electricity pylon carrying power to a coal conveyor belt at Lethabo Power Station in Sasolburg.

Quick rescue work by Eskom’s distribution team averted plunging the country into three additional stages of load shedding.

Things appear to have improved since then as Electricity Minister Kgosientsho Ramokgopa has since declared Lethabo the country’s best performing power station.

ALSO READ: BLSA defends decision to support De Ruyter’s criminal investigations

Political plot hatched

Around this time, De Ruyter said he received intelligence of a plot to destabilise Eskom and force the country into Stage 6 load shedding, a plan allegedly concocted by a group of Eskom workers in the generation division and some power station managers.

Its aim – to embarrass President Cyril Ramaphosa ahead of the ANC elective conference, and to advance the interests of the Radical Economic Transformation faction to keep the corruption gravy train running at full steam.

Private investigators were brought in and it didn’t take them long to make bombshell discoveries: no fewer than four criminal syndicates were targeting Eskom.

There was the so-called Presidential Cartel, focused on Matla Power Station outside Kriel. The Mesh-Kings Cartel operated out of Witbank, with Duvha under its control. The Legendaries Cartel had control over Tutuka Power Station and was based in Standerton. The Chief Cartel operated out of Newcastle, exercising domain over Majuba, with a focus on coal supply by road.

The different cartels, with close ties to politically connected individuals, kept to their designated crime areas.

To succeed, they had to infiltrate relevant departments and involve key individuals at Eskom, which could be an engineer, manager and notably, a procurement official. This made it easy to initiate fake orders, generate fake invoices, and then – with the help of corrupt security guards – sign off non-existent deliveries.

ALSO READ: Seven takeaways from André de Ruyter’s book

Sabotage, corruption and flashy cars 

Some of the intelligence came from union members and loyal Eskom staff who claimed that instructions to deliberately trip power station units had come from Megawatt Park (Eskom’s head office).

The role of law enforcement in this is also suspect. In one case a driver was caught transporting stolen coal at Camden Power Station. Handed over to the police at Belfast in Mpumalanga, he was released on the instruction of the local public prosecutor.

In other cases, Eskom employees and contractors caught stealing were handed over to police for arrest and prosecution, only for the dockets to go missing or the suspects to be released on bail of as little as R500.

De Ruyter was astonished at the number of Range Rovers, BMWs, Mercs and the odd Porsche heading for the Megawatt Park exit at 15:30 each day.

There were other signs of wealth acquired from sources outside Eskom. What do you do with R100 000 in illicit cash? You go to the Louis Vuitton shop, he says. There were also Eskom managers who were gifted cattle farms, registered in the names of cousins and other relatives.

With an annual procurement bill north of R140 billion, not to mention capex of R35 billion a year, Eskom was a prime target for state capture.

One clear example of this is the alleged 2015 purchase of Optimum Coal from Glencore by the Guptas using prepayments of more than R2 billion from Eskom. This was allegedly a sham by the Gupta’s Tegeta company to use Eskom money to pay for the purchase of Optimum.

ALSO READ: When it comes to the power crisis, Eskom’s cheek knows no bounds

Toilet rolls, mops and bags – for a price

Such misgovernance had become the norm, to the point where Eskom was paying R26 for a R5 toilet roll, or R51 for a R2.99 black refuse bag.

Some sharp intervention narrowly prevented the utility from paying R238 000 for a mop.

Chief procurement officer Solly Tshitangano was allegedly clearly out of his depth as less than 35% of items had been purchased according to contract terms, claims De Ruyter. That meant you could type in pretty much any price you wanted on those items purchased outside of contract. De Ruyter managed to get this figure up to 95% during his brief tenure.

There were far bigger pickings than overpriced mops and toilet rolls. For the big payday, you had to be dabbling in oil procurement.

De Ruyter details one contract with a company called Econ Oil to supply R9 billion in fuel over five years – half the organisation’s total oil budget of R18 billion. When he started to investigate, he found a company that had no product of its own but was merely a go-between connecting Eskom to suppliers for a margin.

ALSO READ: ‘He thinks we’re fools’: Gordhan says De Ruyter not ‘poor little guy’ and should show remorse for Eskom failings

A greasy business

Legal firm Bowmans was asked to conduct an investigation and found explosive information about links between Econ Oil and Eskom senior procurement official Thandi Marah, who was an active director in no fewer than 33 companies, with her husband and brother directors of more than a dozen more companies.

It won another five-year contract in 2012 to supply oil to 14 power stations, and was found to have overcharged by R1.2 billion.

The actual overcharge may be much larger, says De Ruyter. Marah was suspended in December 2018 but never charged. Board members and the chief procurement officer Tshitangano continued to defend the Econ Oil contract, despite the obvious red flags.

Tshitangano turned out to be a noisy troublemaker, accusing De Ruyter of racism, but was suspended over the Econ Oil matter in 2021.

ALSO READ: De Ruyter’s claims in his book ‘Truth to Power’ must be tested

‘Tenderpreneur tax’

A whistleblower alerted De Ruyter to sub-standard scrapers being used to clean dirt from boilers at Tutuka Power Station that had cost 15 000MWh of generation capacity due to breakages.

That set off a forensic inquiry and confessions from two Eskom employees and a supplier. It’s reckoned R1.3 billion had vanished into thin air at Tutuka through false accounting and missing stock.

The ‘tenderpreneur tax’ – demanding Eskom source local goods to support emerging entrepreneurs – has the perverse effect of costing SA two and a half times more per kilometre of transmission line than NamPower in Namibia.

The strictures of the Preferential Procurement Policy Framework Act (PPPFA), intended to divvy up tenders to groups previously marginalised, has created an army of go-betweens that add little or no value – of which Econ Oil is but one example.

It’s also an excuse to inflate invoices in unrestrained grift, so bearings costing R110 000 are sold to Eskom for R400 000, or a compressor refurbishing that should cost R40 000 being charged to Eskom for R370 000.

There’s far more of this in De Ruyter’s book.

It’s an infuriating and chilling but necessary read to understand what’s going on at Eskom and elsewhere in the country.

De Ruyter clearly had no idea what he was stepping into when he took the helm at Eskom in 2020. This story leaves the reader with a foreboding sense that the country may be irredeemably lost, but for the many excellent and loyal staff and whistleblowers who helped him and his team uncover just how deep the rot runs.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.