Citizen reporter
3 minute read
19 Dec 2019
11:30 am

Former Eskom managers arrested for alleged R745m in fraud and corruption at Kusile

Citizen reporter

The Hawks say investigations began when suspicions were raised about the construction of two large projects at the Medupi and Kusile power stations. 

Tubular Technical Construction is still on site at Kusile Power Station, despite there being an application for the provisional liquidation of its main shareholder, September 2018. Picture: Moneyweb

The police announced on Thursday that former Eskom senior managers have been arrested for alleged fraud and corruption amounting to R745 million at Kusile Power Station.

Daily Maverick have named the two senior managers who were nabbed as Abram Masango, the former group executive for capital projects, and France Hlakudi, the former contracts manager for Kusile.

“The charges partly stem from alleged kickbacks of more than R30 million that Tubular Construction CEO Tony Trindade and the company’s former chairperson, Mike Lomas, funnelled to Masango and Hlakudi,” according to investigative journalist Pieter-Louis Myburgh.

It reportedly related to a R1.2 billion contract Tubular Construction won for Kusile.

“Trindade and Lomas will also be charged over the matter,” added Myburgh.

Hawks spokesperson Brigadier Hangwani Mulaudzi said two former Eskom senior managers, two business directors and seven companies are expected to appear in the Johannesburg Regional Court on Thursday for alleged fraud, corruption, and money laundering.

“The suspects were arrested early this morning in Mpumalanga, Limpopo, and Gauteng by the Hawks Serious Commercial Crime Investigation team in collaboration with the National Prosecuting Authority’s Investigative Directorate,” Mulaudzi said.

He said investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations.

“This revealed that there was apparent gross manipulation of contractual agreements between contractors, Eskom employees and third parties at Kusile power station.

“In-depth investigations pointed to the fact that the contract was manipulated in a number of ways including, amongst others, manipulation of the Eskom’s procurement system by officials who occupied senior management positions, descoping of the contract at Kusile without justification and with conflict of interest by Eskom employees.”

He said that in June 2015, Eskom’s Kusile Project management team submitted a request to the Eskom Procurement Committee for a mandate to negotiate and conclude a contract with one of the companies.

“The contract was approved in 2015 for R745 million to build two Air Cooled Condensers (ACC) units at Kusile power station. It is alleged that from February 2015 to July 2017, the appointed companies, other related entities and individuals shared approximately R30 million amongst themselves.”

In November, Myburgh published an article in Daily Maverick detailing an alleged slush fund corruption scandal involving Eskom executives and at least four contractors.

The scandal involved contracts worth a combined R10 billion resulting in an estimated R75 million being lost due to irregular activities.

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The construction of Kusile is five years past its original completion date and an estimated R80 billion over budget.

Hitachi Power Africa, a subsidiary of Hitachi, was also found by the US Securities and Exchange Commission to have made US$6 million in corrupt payments to a front company for the African National Congress in relation to a boiler contract for Kusile and Medupi.

Hitachi agreed to pay US$19 million to settle the charges. 

In a statement, Eskom said they were working with law enforcement to root out corruption and malfeasance and the arrests were a culmination of investigations that had been under way for some time.

“Whilst we observe the legal principle of presumption of innocence, Eskom will leave no stone unturned in ensuring that perpetrators of corruption and malfeasance are brought to book.”

(Compiled by Makhosandile Zulu)

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