State capture inquiry hears how Eskom processes were flouted for Tegeta prepayment

An Eskom employee who has been at the employ of the power utility from 2004, Snehal Nagar, told the commission of inquiry how processes were flouted so the entity could make a prepayment of R659 million to Gupta-linked Tegeta on the same day it became clear that the Gupta-affiliated company was short of that same sum to purchase the Optimum coal mine.

The advance payment was for coal which the power utility had not received at the time the payment was made.

Nagar said on April 12, 2016, he received an e-mail from Ayanda Ntetha requesting that the R659 million, as he and Ntetha had discussed, should be paid to Tegeta. However, Nagar said he could not recall the discussion with Ntetha and the prepayment to the Gupta-linked company.

“In the context of what we do, the R659 million is not necessarily a high figure, what would have stuck out is the prepayment, which is unusual,” Nagar said.

He said a pro forma invoice also dated April 12, 2016, was attached to the e-mail from Ntetha, adding that Eskom did “not make any payments on a pro forma invoice”.

Nagar further said that there was “no contract underpinning” the pro forma invoice and that the email from Ntetha did not include any supporting documents regarding the prepayment to Tegeta.

On April 13, 2016, at around 10 am and 11 am, Nagar said while he was driving to meet a client in Pretoria, he received a phone call from Maya Naidoo who worked at the office of the then Eskom CFO Anoj Singh.

Naidoo instructed “us” to make a payment approved by the board tender committee of R659 million and indicated payment should be made by 2pm, Nagar said.

He said he then requested Naidoo to formalise the instruction and send the necessary supporting documents around the payment and that they a had discussion on whether all the relevant stakeholders necessary to process the payment had been notified.

“Miss Naidoo said she would chat with whoever she had to talk to,” Nagar said.

He added that during the phone call, Naidoo did not give him any reasons why the payment had to be processed urgently and that “we didn’t get into the details of the transaction itself”. Nagar said the details of the transaction unfolded later.

He said between the period of 2004 and 2015 while at Eskom he had never encountered a payment which had to be made with such urgency, in particular, considering that the coal had not been received by the power utility.

Nagar then detailed the process which should have been followed before an agreement was entered into with Tegeta and the process which should have been followed thereafter but was not.

Nagar told the commission that Eskom does not “budget for a prepayment but we budget to buy coal, there was a budget to buy the coal,” in response to a question whether budget had been allocated for the prepayment.

Nagar’s testimony continues:

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