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Cape Town - The Organisation Undoing Tax Abuse (OUTA) claimed to show in documents presented to parliamentary representatives on Wednesday how Eskom has been captured.
OUTA said the aim of the document as a whole is to convince MPs to vote with their conscience when they consider the possible removal of President Jacob Zuma from office.
Regarding Eskom, OUTA pointed out that former minister of public enterprises Barbara Hogan advised the Public Protector that Zuma took a special interest in appointments to the board of Eskom, for example.
It named Eskom’s award of an estimated R11.7bn worth of coal supply contracts at what it called inflated prices to Tegeta Exploration and Resources between 2015 and 2016 as an example.
Oakbay Investments, the holding company for the Gupta family's businesses in South Africa, holds a 34.5% stake in Tegeta, while Zuma's son Duduzane’s Mabengela Investments holds a 28.5% stake, according to OUTA documents.
Eskom’s conclusion of a R43m contract with the Guptas’ media company TNA in October 2014 was used as another example.
"These contracts have been facilitated by Ministers (Malusi) Gigaba and (Lynne) Brown’s appointment of Gupta-linked individuals to the board of Eskom," stated the document.
"While the dispute over Optimum Coal was taking place, and Eskom was supposed to be at arm’s length with the Guptas and Tegeta, Mr Richard Seleke was used as a conduit to leak confidential Eskom documents to Tony Gupta."
OUTA describes Seleke as Mosebenzi Zwane's director general in the Free State Department of Economic Development prior to Zwane’s appointment as Minister of Mineral Resources (and who had no legitimate role whatsoever in relation to the Optimum Coal dispute).
OUTA claims to show that Seleke used his infoportal email to act as a conduit for Matshela Koko, the then Eskom group executive: technical and commercial, "unlawfully to share confidential Eskom documents with the Gupta family so as to advantage Tegeta in its attempts to purchase the Optimum coal mine from Glencore".
On August 7 2015 Koko forwarded to Seleke a letter that the business rescue practitioners for Optimum Coal Holdings (Optimum) had sent to Eskom. Seleke, in turn, forwarded this letter to a Gupta employee, Ashu Chawla.
On November 4 2015, Koko forwarded to Seleke a privileged legal opinion that Eskom had received from senior counsel advising on Eskom’s rights in terms of its coal supply agreement with Optimum. Seleke, in turn, forwarded this letter to wdrsa1@gmail.com, an email address used by Tony Gupta.
Seleke’s collusion with Koko to provide improper assistance to the Gupta family in relation to Eskom matters was not confined to the Tegeta/Optimum case, according to OUTA.
On November 4 2015 Koko forwarded to Seleke a letter from Just Coal complaining about Eskom’s cancellation of their contract to provide coal for various Eskom power stations including Rotran, Matla and Arnot.
"The cancellation of the Just Coal’s coal supply contract would provide an opening for the Guptas to profit by concluding a replacement coal supply contract with Eskom through Tegeta. In this context, Mr Koko’s email stated '[p]lease give the Boss. The fight begins'," explained OUTA.
It said Seleke had no difficulty in identifying who “the Boss” was as he immediately forwarded Koko’s email to Tony Gupta at his wdrsa1@gmail.com email address.
Gigaba appointed Colin Matjila to the board of Eskom in June 2011 and as acting CEO on April 1 2014. OUTA claimed to show this was after his CV was sent to Tony Gupta on March 22 2014 and Tony Gupta forwarded it to Duduzane Zuma on March 23 2014.
On April 30 2014, within a month of being appointed CEO, Matjila was responsible for approving Eskom’s R43m contract to sponsor the “business breakfasts” of the Guptas’ New Age. OUTA claims this approval was done in an irregular manner.
Brian Molefe
As for former Eskom CEO Brian Molefe, the OUTA document refers to the Public Protector's State of Capture investigation in which cellphone records of certain individuals - including Molefe - were analysed to establish their relationship with the Gupta family and their business associates.
In respect of Molefe’s tenure as CEO of Eskom, the Public Protector found that during the period August 2015 to April 2016 he regularly made and received calls to and from Ajay Gupta and made frequent visits to the Saxonwold area where the Gupta home is situated.
Brown transferred Molefe and Anoj Singh from Transnet to Eskom after she was appointed minister. In April 2015, Brown appointed Molefe as acting CEO of Eskom and in August 2015 she appointed Singh as acting CFO at Eskom. Both appointments were made permanent in October 2015.
Singh, for instance, stayed in the Oberoi Hotel in Dubai from December 17 to 24 2015. The bill was sent to the Guptas' Sahara Computers. This trip started two days after Tegeta obtained Optimum.
Optimum Coal
The OUTA document claimed that under their management, Eskom abused its position to force Glencore’s sale of the Optimum Coal Mine (OCM) to Tegeta and then allow Tegeta to profit from lucrative coal supply contracts with Eskom.
OUTA said this was done by, among others, cancelling the cooperation agreement Eskom’s procurement officers and tender board committee had negotiated with Glencore in respect of its coal supply to Hendrina power station. The board referred the matter to then acting CEO Molefe, who refused to approve the negotiated terms and cancelled the agreement.
A fine of more than R2bn was levied on Glencore and the matter was referred to arbitration, with a summons for the same penalty amount issued on the same day.
"As the Public Protector noted, 'it is unclear as to why Eskom proceeded to refer a matter to arbitration and issue a summons on the same day. It can only be inferred that Eskom wished to exert pressure on OCH/OCM'," stated OUTA.
Eskom refused to re-negotiate terms with OCM and, seeking to enforce the penalty levied against OCM, the business rescue practitioners had no option but to look for possible entities to purchase OCM, according to OUTA.
Eskom refused to consent to the sale of OCM to another purchaser (Pembani) and Tegeta emerged as the only remaining entity that wished to make the purchase. Eskom forced the sale of all shares held by Optimum, as Eskom refused to consent to a standalone transaction with OCM being the only entity sold.
Then lucrative contracts were concluded to supply coal to Arnot power station with coal from OCM. This essentially increased the financial stability of OCM and decreased Tegeta’s obligations of post-commencement finance to OCM, according to OUTA.
Prepayment
A pre-payment to Tegeta in the amount of R586m was authorised by Eskom for the purchase of coal from Tegeta and delivery by OCM to Arnot power station. The pre-payment was approved by a committee of Eskom representatives at a meeting held at 21:00 on April 11 2016.
OUTA pointed out that this was the very same day on which Tegeta’s request for about R600m of bridging finance for the purchase of all shares in OCH was made to, and rejected by, the Loan Consortium of Banks and the day before payment fell due.
In the wake of Molefe’s resignation following the release of the Public Protector’s State of Capture report in November 2016, Brown approved the board’s recommendation to appoint Koko as acting CEO of Eskom.
As group executive of generation - that is responsible for securing coal for power stations - Koko had approved Eskom’s controversial pre-payment of R586m to Tegeta, which facilitated Tegeta’s purchase of Optimum Mine.
Koko was flown to Dubai and accommodated at the Oberoi hotel at the Guptas' expense.
Brown and the Eskom board
Shortly after her appointment as minister in May 2014, Brown recommended the appointment of a new Eskom board to Cabinet. Cabinet confirmed the appointments in line with Brown’s recommendation on December 2014.
OUTA claimed these appointments included numerous individuals who had personal or business relationships with the Gupta family and their close business associates.
Dr Ben Ngubane, who Brown also appointed as chair of the Eskom Board, served as a co-director of the natural resources exploration company Gade Oil and Gas from May 2013 to November 2014. His co-director, Salim Essa, is one of the Guptas' closest business associates.
Eskom has paid Trillian Capital Partners over R400m for management consulting and advisory services. Trillian Capital is 60% owned by Trillian Holdings, a company in which Essa has a majority stake and is the sole director. Trillian Capital is one of the companies that contributed to Tegeta’s price of Optimum Coal Mine.
Mark Pamensky, for instance, sat on the board of the Guptas' Oakbay Resources and Energy until May 2017. He also served as a director on the boards of numerous other companies in which the Guptas hold a stake, including Shiva Uranium, Yellow Star Trading 1099 and BIT Information Technology.
Pamensky also has direct business interests in Oakbay and Shiva Uranium and is a known friend of Essa, stated OUTA.
Another appointee at the time, Viroshni Naidoo, is the wife of Kuben Moodley and a friend and business associate of the Guptas and Essa. Moodley is a director of Albatime, which contributed to Tegeta’s purchase of OCM. Moodley also served as a co-director with Pamensky of BIT Information Technology.
Romeo Khumalo was a co-director with Essa at Ujiri Mining Technologies until Essa resigned in August 2015. Nazia Carrim is married to a first cousin of Essa, and Mariam Cassim is a former employee of the Guptas' Sahara Computers company.
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