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Leak of draft report on Gupta-owned Tegeta an 'outrage' - Eskom

Apr 21 2017 15:41
Liesl Peyper

Cape Town – Eskom expressed shock and outrage over a leaked draft report about irregularities in its coal-supply contract with the Gupta-owned Tegeta Exploration and Resources in a statement on Thursday. 

The power utility said it seems very convenient and coincidental that National Treasury’s draft report on Eskom’s appointment of Tegeta Exploration and Resources was leaked to the media a day before its comments were due.

Tegeta – a company owned by the controversial Gupta family and President Jacob Zuma’s son Duduzane – scored coal-supply contracts from Eskom to the value of R4bn. 

National Treasury has been at loggerheads with Eskom over the Tegeta deal ever since its investigations of contracts with the power utility.

READ: Concern about lack of disclosure of Eskom, Tegeta arbitration details 

BusinessLive reported on Friday that National Treasury wants Eskom to convert the payment of R659m to Tegeta into a loan with interest, as there is no evidence that Tegeta used the funds to finance equipment for its mining operations. This emerged from a draft report BusinessLive has seen. It pointed out though that the leaked report didn’t come from National Treasury. 

Eskom said in a statement issued late on Thursday after being approached for comment that it was “shocked to learn of a further leak of the draft report to the media”.   

The power utility in its statement “pleads” with South Africans and others who may come across the draft report to exercise caution. It said the contents of the report have not been finalised and they are “speculative” to say the least, as Eskom has yet to respond. 

“Consequently, the contents in the draft report do not contain remedial actions, which are final,” Eskom said. 

According to BusinessLive, National Treasury said in the draft report that the R659m prepayment to Tegeta should be declared irregular expenditure and that Eskom should be investigated for failure to prevent irregular, fruitless and wasteful expenditure. 

The interest payable on the amount should be determined by an auditing firm appointed by National Treasury, to be recovered from either Tegeta or relevant Eskom officials. 

READ: Eskom mum on 'invalid' R4bn Gupta-linked deal - report 

National Treasury acting chief procurement officer Schalk Human, who signed off on the draft report, said former Eskom CEO Brian Molefe may have misled National Treasury when he gave written assurances in August 2016 that the coal procured from Tegeta complied with all Eskom’s standards and requirements. 

Eskom and Tegeta reportedly received the draft report two weeks ago and have until Friday to comment on the findings. 

The power utility has maintained that it is satisfied with the coal-supply contract with Tegeta and the quality of the coal supplied.

A report by PwC late in 2015, however, which had reportedly been kept under wraps by Molefe and Eskom chairperson Ben Ngubane, revealed among other things that the Tegeta contract was entered into without having vital combustion tests on its coal and that Tegeta repeatedly failed to meet monthly supply targets, according to a report in the Sunday Times.
 
David Maynier, Democratic Alliance spokesperson on finance, said in a statement National Treasury’s treatment of the Tegeta/Eskom matter will be the first big test for Finance Minister Malusi Gigaba. 

READ: Eskom hits back at Treasury over coal deals 

He quoted from a letter dated June 23 2016, in which Tegeta accused National Treasury of trying to “defame” the business and threatened legal action.
 
Maynier said this shows that Eskom and Tegeta clearly have something to hide. 

The handling of the final report will be the first test of the minister’s willingness to stand up to his political master, Jacob Zuma, and his most important "clients" - the Guptas, Maynier said. 

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