B-BBEE commission refers findings on irregular Eskom-China deal

Two years after the Broad-Based Black Economic Empowerment (B-BBEE) Commission first received an anonymous complaint alleging that the tender process for the boiler at the Duvha power station in Mpumalanga did not comply with the requirements of the B-BBEE Act, the commission has referred its findings into the irregular awarding of the tender to the minister of public enterprises and director-general of National Treasury.

According to the Government News Agency, the commission received the complaint on May 25, 2017, alerting them to the fact that the tender was awarded to Dongfang Electric Corporation Limited.

The referral of the findings comes after the commission launched an investigation into Eskom’s awarding of the tender to a Chinese-owned entity that did not meet the B-BBEE requirements.

“Upon investigation, it was found that Eskom Holdings SOC Limited failed to comply with section 10 (1) (b) of the B-BBEE Act in awarding of the tender to Dongfang Electric Corporation Limited, an entity with 0% black ownership when the tender required at least B-BBEE Level 4,” said the commission on Wednesday.

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The commission – which is an entity of the department of trade and industry (dti) – has recommended that Eskom cancel the contract and conduct an independent audit of all its contracts above R1 billion from 2014 to check compliance with B-BBEE requirements.

The B-BBEE Act was amended in 2013 specifically to make it mandatory in section 10 for organs of state and public entities to implement the B-BBEE Act, and not only when they chose to do so.

“Therefore, in addition to the recommended contract cancellation and the independent audit by Eskom Holdings SOC Limited, we recommended investigations in respect of officials that were involved in this tender process so that decisive action can be taken to prevent this in future. Of concern also is the possibility that this tender process may have been deliberately compromised to favour a specific entity,” added the commission.

Meanwhile, the power utility, which has lent its cooperation in the matter, has agreed to implement the commission’s recommendations.

“The commission has since referred the findings in this matter to the minister of public enterprises and the director-general of National Treasury for further consideration, in line with the recommendations. The success of the B-BBEE Act also depends on the state implementing it properly and consistently, and this must be carefully monitored,” concluded the commission.

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