‘Conflict of interest fuels further corrupt activities’: Inside SIU’s investigations at Eskom

Conflicts of interest among Eskom employees continue to be an issue plaguing the power utility, according to the Special Investigating Unit (SIU).

On Wednesday, SIU officials briefed Parliament’s Standing Committee on Public Accounts (Scopa) about its investigations into Eskom.

The probe spanned from January 2003 to December 2022.

SIU investigations into Eskom

Viven Govender, chief forensic investigator at the SIU, told Members of Parliament (MPs) that the unit found 5 464 Eskom employees had failed to comply with the declaration of interest (DOI) policy by not completing the required forms.

Disciplinary proceedings were initiated against 3 875 Eskom employees, while 1 075 left the company through resignation, retirement, and other means.

Govender also noted that some Eskom employees were potentially linked to entities serving as the power utility’s vendors, contractors, or suppliers, thereby creating a conflict of interest.

It was revealed that 334 Eskom employees, including three executives and seven senior managers, had interests in companies.

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As a result, the SIU made 194 disciplinary action referrals to Eskom and 14 referrals to the National Prosecuting Authority (NPA).

These referrals led to three employees being arrested.

One of them, Thandi Ruth Magagula, was found guilty of seven counts of corruption and two counts of fraud.

“Through the departmental processes, that person was also issued with a period of suspension without pay,” Govender said.

Magagula, a safety risk manager at Eskom, was sentenced to a R50 000 fine or two years’ imprisonment in October last year.

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Another case involves Nontuthubo Surprise Mahweliri, a former maintenance manager at Eskom’s Hendrina Power Station in Mpumalanga, who is set to go on trial on 18 May this year.

Mahweliri was dismissed by Eskom in August last year, according to Govender.

Additionally, former Eskom senior technician Nkhetheni Percy Ramaru is scheduled to go on trial from 1 April.

“That person received a final written warning,” Govender stated.

More cases are being prepared for referral to the NPA.

“We are also tracking outstanding cases at the NPA,” he added.

Eskom employees fired

Govender further informed the parliamentary committee that an external service provider conducted an audit that flagged several senior Eskom employees.

“Thirty-four of these matters have been referred to the SIU for further investigation.

“[Of that total], we made 11 disciplinary action referrals. Twenty-one of these matters have been closed without further investigation, and two are still under investigation.”

Conflicts of interest have led to 29 Eskom employees being suspended without pay, 26 receiving a written warning valid for six months, 25 resigning, and 20 being found not guilty.

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Additionally, 19 Eskom employees received final written warnings valid for 12 months, 12 were fired, six retired, four had their cases withdrawn, three passed away, two received a separation package, and one was rehired.

SIU head Andy Mothibi emphasised that conflict of interest issues extend beyond Eskom and affect various government operations.

“The conflict of interest creates a base on which further corrupt activities would occur,” he said.

However, Mothibi noted a decline in such cases at Eskom following the SIU’s investigations.

SIU on Eskom’s coal supply tenders

The SIU investigated allegations that senior Eskom executives colluded with state capture actors to facilitate a prepayment agreement with Tegeta, allowing it to acquire Optimum Coal Mine from Glencore.

The prepayment represented an advance payment for future coal supply to the Hendrina Power Station.

Govender stated that the SIU found the contract was unlawfully awarded and later terminated when Tegeta was placed under business rescue.

“As both Tegeta and Optimum were under business rescue, Eskom was unlikely to recover its claim against them.”

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He added that civil proceedings have been instituted by the SIU and Eskom against former Eskom employees, board members, and private individuals to recover R3.8 billion in losses.

Another unlawful contract, worth R3.7 billion for coal supply to the Majuba Power Station, was set aside by a court in 2020.

Govender indicated that the SIU estimated future savings from the cancelled tender at R2.6 billion.

“The SIU and Eskom are contemplating pursuing the business rescue practitioners for appropriate relief due to damages suffered by Eskom as a result of poor quality coal supplied by Tegeta Brakfontein.”

A related criminal matter is being handled by the NPA.

Build projects and engineering consulting services

Among the 30 build projects at the Kusile, Medupi, and Ingula power stations, the SIU focused on cases involving ABB and former Eskom CEO Matshela Koko as well as former senior executive France Hlakudi, who is on trial in connection to a R745 million fraud and corruption case.

Govender said that although the R2.5 billion contract was set aside in April 2024, the SIU found evidence of a corrupt relationship between ABB and Eskom executives.

The SIU also examined two contracts — one worth R41.5 million at Matla Power Station and another worth R41.8 million at Majuba Power Station — awarded to Impulse International.

It was alleged that Eskom employees received kickbacks from the contractor.

“Evidence was found of a corrupt relationship between Impulse and Eskom officials and their family members,” Govender said.

Security and fuel oil supply contracts

Regarding security contracts, the SIU identified three contracts awarded on an emergency basis, including one given to Fidelity Security Services in 2022, which remains under investigation.

“Eskom employees were deliberately creating emergencies. In one case, Eskom employees were planning to declare an emergency seven days in advance. Significantly, an emergency must be declared within 48 hours.”

Govender also noted that the appointed companies lacked the capacity to fulfill their contracts and subcontracted 90% of the work to third parties.

“It is unclear how these companies, which lacked capacity, were identified.”

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Additionally, Eskom employees contacted intermediaries before approaching service providers for quotations.

“The intermediaries then invoiced and were paid a facilitation fee by the Eskom supplier. Eskom employees also persisted with the emergencies even after the alleged threats had dissipated.”

As a result, five disciplinary action referrals were made to Eskom, and three referrals were made to the NPA.

The SIU investigated claims that Econ Oil overcharged Eskom by R1.2 billion.

Govender said Eskom has taken Econ Oil to the Dispute Adjudication Board (DAB) to recover the overcharged funds, and the matter is ongoing.

“It is unlikely that the SIU will become involved in the matter as it appears that the case is quite advanced at the DAB and pleadings have closed. There are no outcomes to date.”

Mothibi also highlighted that Eskom employees were exploiting procurement processes for transactions below R1 million, with some purchases even occurring after hours.

“It was done as part of the modus operandi and we traced monies to quite a number of them who have benefitted,” he said.