Eskom’s Shweni admits to misleading Reserve Bank

Faced with a barrage of questions during cross-examination by Deputy Chief Justice Raymond Zondo and senior counsel Thandi Norman, Eskom executive Sincedile Shweni yesterday conceded to misleading the SA Reserve Bank when he applied to the bank in July 2017 for an exchange control approval.

In granting the approval in the following month, little did the central bank officials know that Eskom, which sought permission to enter into an asset financing agreement, was getting entangled with a dodgy South African-based Huarong Energy Africa (HEA) and a British Virgin Islands-registered shell company Ideva.

Ideva was used by Huarong as a vehicle to receive the R25 billion long-term loan the power utility required to fund a project to improve its infrastructure.

Exposed as a “shoe company” without a proper management structure and trading record, with audited financial statements reflecting zero revenue, Norman told the Commission of Inquiry into State Capture that she found it “puzzling” for Eskom to enter into such a huge transaction.

The signing of a Huarong-Ideva transaction was pushed by former Eskom chief financial officer Anoj Singh and then interim CEO Sean Maritz. It’s been proven that this was done without due diligence being followed, adherence to legal advice, policy, or the Public Finance Management Act.

In approving the transaction, which Huarong-Ideva later revoked due to Eskom’s failure in meeting set conditions, it granted the approval subject to:

• No upfront payment of commitment fees arising out of administration fees, be paid to the lender;
• Fees be paid from SA once the loan funds proceeds have been received and converted into rands – provided such fees did not exceed 5%of the principal sum.

“When, in the application for Sarb approval, you left concerns about Ideva out, was that not misleading?” asked Norman.

Shweni replied: “I did not think about it at the time. I didn’t want to stand on the way of the transaction or appear to be frustrating the process …”

Zondo said: “You were aware of the many factors that would have made the [SA] Reserve Bank not to approve the application. But you failed to give those to them.”

Responded Shweni: “That was an error of professional judgment not to lay the factors bare.”

The hearings continue today.

– brians@citizen.co.za

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