Guptas catapulted Molefe, Singh into Eskom to take over SA’s coal mining assets

The Guptas were instrumental in having Brian Molefe and Anoj Singh appointed as CEO and CFO of Eskom respectively.

This paved the way for the Guptas to take over Glencore’s coal mining assets in South Africa, according to the fourth Zondo Report.

Assisting the Guptas was then minister of public enterprises Lynne Brown, as well as the compliant remnant of the Eskom board that hadn’t been axed.

Dr Ben Ngubane, “who was also doing whatever the Guptas wanted him to do”, was appointed Eskom chair. Then-President Jacob Zuma “was their man”.

To recap, those who resisted wrongdoing – former Eskom CEO Tshediso Matona and board members Tsholofelo Molefe and Dan Marokane – had been axed.

The acquisition of Optimum by the Guptas

The Guptas had their sights on Optimum Coal Holdings from July 2015.

A dispute had earlier arisen between Eskom and Optimum Coal Mine (OCM), which was owned by Optimum Coal Holdings (OCH), in regard to the quality of the coal supplied to the Hendrina Power Station.

Negotiations to resolve the dispute commenced, but were terminated after Molefe was appointed acting group CEO of Eskom on April 20 2015.

Molefe was instrumental in devising a R2.17 billion penalty to be paid by OCM, which had the effect of forcing OCM and OCH into business rescue on August 4 2015.

Mosebenzi Zwane was appointed minister of mineral resources with effect from September 23 2015, replacing Ngoako Ramatlhodi, who had stood up to the Guptas.

Zwane, who had no previous experience in mining, and was tainted with dismal performance in the Free State, soon applied his power.

Ajay Gupta had made an offer to purchase OCH in November 2015, for R1 billion, which was rejected by Glencore.

On the same day, on the instructions of Zwane, the Department of Mineral Resources (DMR) suspended the operations of Glencore’s Koornfontein mine, and a couple of days later, the operations of Wonderfontein Colliery, Tweefontein Opencast Mine and Goedgevonden Colliery.

In this period, Eskom also withheld payments of approximately R92 million to OCM. Eskom only paid this in June 2016, after Tegeta (a subsidiary of Oakbay) had become the owner of the mine.

Zwane travelled to Zurich in December 2015 to urge Glencore CEO Ivan Glasenberg to sell the Optimum coal mine to the Guptas.

Zwane, Salim Essa, Tony Gupta, Glasenberg and Clinton Ephron of Glencore attended a meeting with Glasenberg. Zwane introduced Essa to Glasenberg as his advisor.

Glasenberg and the Guptas, on behalf of Tegeta Exploration and Resources, reached an agreed sale price of R2.15 billion for the mine and other assets of OCH, with Glencore agreeing to put in R400 million to settle the consortium of banks’ debt.

R1.68bn guarantee

The Eskom board approved a guarantee of R1.68 billion for the future supply of coal from OCM. The terms of the guarantee were emailed to former Eskom CEO Matshela Koko by “Business Man”, who is thought to be Essa.

External parties such as former Trillian boss Eric Wood, former Trillian employee Mohamed Bobat, former Oakbay Investments CEO Nazeem Howa and “Business Man”/Essa assisted Singh in answering queries from board members.

On the basis of the R1.68 billion guarantee, the Bank of Baroda provided a letter of comfort that Tegeta would be in a position to pay the acquisition price of R2.15 billion.

Eskom assisted Tegeta by giving it short-term supply contracts, and also agreed to pay Tegeta weekly instead of monthly.

R659m prepayment to Tegeta

In April 2016, Eskom made a R659 million prepayment to Tegeta.

In triggering the prepayment, the responsible Eskom officials skipped governance processes, bypassed mid-level managers, and fed false information into Eskom’s financial management system.

Eskom’s prepayment enabled Tegeta to have sufficient funds to make full payment of the purchase price on April 14 2016, and R2.1 billion was paid from the company’s Bank of Baroda account to Werksmans Attorneys to purchase OCH.

Once Tegeta owned OCM, the R2.17 billion penalties that Eskom had strenuously demanded from Glencore, were settled for R577 million, of which Tegeta was only required to pay some R255 million.

R1.8bn came from criminal sources

Bank account records show that Tegeta only had R100 million of the over R2 billion required before funds flowed in April 2016 from a number of sources.

Paul Holden of Shadow Worlds, testifying at the Zondo Commission, identified R1.8 billion to have come from criminal sources and the theft of state funds through state capture, including:

• The R659 million payment to Tegeta by Eskom on April 13 2016;
• The payment of R68 million from Eskom on April 13 2016 pursuant to coal supply contracts awarded to Tegeta by Eskom;
• A loan of R158.5 million from the Gupta’s Oakbay Investments;
• A loan of R104.5 million from Albatime on April 14 2016, which in turn originated from contract work that Regiments Capital had undertaken at Transnet;
• A loan of R152 million from Trillian Management Consulting on April 14 2016, which, in turn, had originated from contract work that Regiments had undertaken at Transnet; and
• A loan of R842.2 million from Centaur Mining, a Gupta enterprise company.

In a nutshell, substantial moneys were misappropriated from Eskom to enable the Guptas to purchase Glencore’s SA coal interests.

The Guptas’ acquisition of OCH and OCM would not have been possible without the active support of Zuma, Brown, Zwane, Molefe, Singh, Koko and several accomplices.

This article first appeared on Moneyweb – published by Barbara Curson – and was republished with permission. Read the original article here.