Eskom’s R1.5 billion recovery a hollow victory

Eskom’s announced recovery of R1.5 billion from a contractor who received irregular payments may be a hollow victory, since this money is a mere drop in the ocean of the power utility’s approximately R400 billion lost to malfeasance and corruption.

In a joint briefing by the Special Investigating Unit (SIU), Eskom, as well as Public Enterprise Minister Pravin Gordhan and Justice Minister Ronald Lamola, SIU head Andy Mothibi revealed that ABB South Africa, formerly ASEA Brown Boveri, has reached an agreement with the investigating unit to repay R1.5 billion to Eskom for an overpayment on a contract awarded for work on the Kusile power station project.

The utility said it also plans to recover nearly R4 billion from the controversial Gupta family.

READ MORE: ABB to pay back R1.5 billion to Eskom for overpayment on unlawful contract

Nothing to write home about

At least one expert, who is very familiar with the levels of malfeasance at the national power utility, however believes the planned recovery was nothing to “sing and dance about”.

This amount represented just a small fraction of the total amount recoverable by Eskom, said energy expert Ted Blom. He said based on information received, Eskom could recover R400 billion in irregular tender payments.

“There are at least R400 billion worth of mis-expenditure or over-expenditure, or malfeasance or corruption. R1.5 billion which was voluntarily admitted by ABB is a victory, but I personally wouldn’t have made a big song and dance about it. But I wouldn’t call it a major victory… The admission sat on their laps,” said Blom.

While Eskom and Gordhan stated they would be pursuing irregular tenders including claiming R3.8 billion from the Gupta family, rooting out corruption was unlikely as Eskom was too large, Blom said.

“I think it’s a pipe dream to think corruption at Eskom is going to stop immediately. It has 450 depots – not just head office.”

The National Prosecuting Authority (NPA) is also investigating the alleged corruption at the state-owned enterprise.

Criminal investigation ongoing

Eskom CEO Andre De Ruyter said the agreement was signed on Friday morning between Eskom, ABB and SIU and would receive the proceeds before the end of the year.

The claim originated from a tender of control and instrumentational work at the Kusile power station, which was awarded in 2015 for 2.214 billion, making it R324 million more than the price offered by the lowest bidder.

“To date on this contract, Eskom has paid to ABB some R3.1 billion. The settlement amount is made up of irregular variation orders to the amount of R800 million; costs associated with the irregular award of the contract due to collusion with certain Eskom officials is R250 million; interest on the money that was paid over irregularly to ABB of R380 million and a profit element that accrued to ABB of R160 million. That adds up to the total settlement amount of R1.557 billion that ABB has committed in terms of the settlement agreement to repay.”

ABB was among four other contractors named by Eskom to have benefited from overpayments. The other companies were Tenova Mining & Minerals, Tubular Construction and Stefanutti Stocks.

De Ruyter said there was a further R3 billion to recover from Kusile contractors alone.

SIU’s Mothibi highlighted that the implicated Eskom officials had earlier resigned. However, civil action would be pursued against them.

“The criminal investigation is ongoing… In this investigation itself, the information is that there haven’t been any arrests yet. That investigation is ongoing.

– rorisangk@citizen.co.za

For more news your way, download The Citizen’s app for iOS and Android.