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Cape Town –Trillian said it has proof the work it did with McKinsey for Eskom was above board, after the power utility revealed it was investigating a R495m payment to the Gupta-linked firm.
The importance of Eskom’s investigation into this contract relates to how Tegeta (owned by the Guptas and President Jacob Zuma’s son Duduzane) bought Optimum mine from Glencore for R2.15bn in 2016. Gupta associate Salim Essa has a 60% stake in Trillian.
The question that could face more scrutiny when Parliament begins its inquiry into Eskom in August is whether Eskom’s payment to Trillian was a proxy to give the Guptas extra cash to buy Optimum. Former public protector Thuli Madonsela said in her State of Capture report that Trillian contributed R235m to the purchase consideration for Optimum, but Trillian has denied this accusation.
Linking Trillian to the Guptas’ purchase of Optimum, AmaBhungane reported in May that “if Eskom’s prepayment to Tegeta was the first concrete example of Eskom helping the Guptas buy Optimum, the uncanny coincidence of timing and urgency suggests the first of the Trillian invoices must fall into the same category”.
Trillian says it has invoices for its Eskom work
Now, Trillian says it has proof the work for Eskom was legitimate and claims McKinsey even praised their work.
“Trillian … wishes to reiterate that it has only billed for work that it had completed and was entitled to,” it said in a statement on Friday. “To this end Trillian management and employees would be happy to meet with members of the media to provide further evidence of the work at Eskom should the client (Eskom) waive their rights of confidentiality.
“Trillian maintains that work was conducted for the invoices raised. Documentation proves that McKinsey were aware of and endorsed Trillian’s work throughout the implementation of the MSA (master service agreement) for which Trillian has billed,” it said.
Eskom interim chief executive Johnny Dladla told media on Wednesday that the state-owned firm is investigating a R1.4bn contract it awarded to McKinsey. The management consulting firm was paid R900m, while Trillian was paid R495m of the contract.
This followed Eskom’s previous denial that it had a contract with Trillian. Eskom spokesperson Khulu Phasiwe told Fin24 on May 18 that “we would like to state categorically that Eskom has no contracts in place with Trillian Capital Partners and/or associated companies”.
Then in June, an investigation by Advocate Geoff Budlender revealed that Eskom acquired the advisory services of McKinsey in September 2015 to the value of R1bn per year and subsequently subcontracted 30% of the services to Trillian.
The subcontracting of the services is believed to have been done in terms of the so-called supplier development programme, which requires international firms to enter into an agreement with local service providers, which in turn is supposed to gain experience and develop the necessary skills and benefit from part of the contract.
Explaining why the payment to Trillian was above board, Trillian said on Friday that two McKinsey directors, Dr Alexander Weiss and Vikas Sagar, were in talks with Eric Wood towards the latter part of 2015 about a partnership with Trillian.
Sagar has since taken a leave of absence so McKinsey’s investigation into the Eskom contract can be reviewed in “an open and transparent way”, the firm said in a statement on July 9.
Trillian earmarked as McKinsey’s supplier development partner
In December 2015, a mandate was approved by the Eskom board tender committee to conclude a risk-based contract, Trillian said on Friday.
“Key matters on the programme mechanics were raised which included amongst others: The alignment of the programme as the vehicle to deliver Eskom’s design to cost strategy and 10-year corporate plan, the development of the BBBEE partner as regards to the vision, aspirations, skill and competency matrix and overall plan for success over the contract duration.
“Due to the expertise within Trillian, it was earmarked as McKinsey’s supplier development partner.
“Trillian mobilised a team of consultants which included primarily technical expertise as well as back office support. The understanding as per the MSA and agreement with McKinsey was that Trillian would be required to provide support on all work-streams from the onset of the programme and over the course of the agreement would work to lead the streams.”
In proving its connection to McKinsey’s contract, Trillian said there was an agreement in February 2016 between these two contractors, whereby a Trillian team was dispatched to the Majuba Power Station to commence work on the generation piece of work.
“In various steering committee meetings (where McKinsey had prepared such steercom packs, the Trillian team was recognised as the supplier development partner,” it said. “The steering committee meetings were a requirement of the MSA between Eskom and McKinsey.
“On May 25, 2016, the McKinsey team wrote an email congratulating a Trillian engagement manager for ‘amazing turnaround and step change at the client in a short amount of time.’
“On June 28, 2016, McKinsey and Trillian continued to engage amongst the project teams on resources to be utilised across workstreams and again acknowledged the Trillian team specifically referring to the Trillian engagement manager as ‘the go-to guy also when it comes to sorting out issues workstream leads are having with managing their streams’.”
Eskom has been approached for comment following Trillian’s latest statement. Fin24 will update with any comment once received.
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