How managers in the dock allegedly defrauded Eskom of R745m | Fin24
 
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How managers in the dock allegedly defrauded Eskom of R745m

Dec 19 2019 21:10
Londiwe Buthelezi

It was an elaborate scheme that, according to the state, saw Eskom lose R745m when it terminated a lawful contract at a power station in favour of companies that allegedly paid bribes to senior managers.

France Hlakudi and Abram Masango, two former senior managers at the power utility that the state is accusing of pocketing R30m each in bribes, were granted R300 000 bail on Thursday.  They were arrested on Thursday morning following an investigation by the Hawks. 

Alongside them in the dock in the Johannesburg Magistrate Court were Antonio Jose da Costa Trindade and Maphoko Hudson Kgomoeswana, two representatives of the companies that allegedly paid them bribes to push aside Alstom from a contract it won in 2007. They also stand accused of defrauding the parastatal, and were also granted bail of the same amount. The four men said they could not afford R300 000. 

The accused did not plead on Thursday, as they only received the charge sheet in court. 

During their bail hearing on Thursday afternoon, prosecution told the court that the four men, together with a British national, Michael Harry Lomas who’s believed to currently be in the UK, collaborated to misrepresent facts to the Eskom board which resulted in the booting of Alstom from a tender that involved building of two air cooled condensers at Kusile power station in Mpumalanga. 

The state has laid corruption and fraud charges against the five individuals as well as eight companies linked to them. Hlakudi was a senior manager of capital projects at Eskom at the time, while Masango occupied the position of group executive responsible for the building of Kusile.

Kusile, when complete, is set to become the fourth-largest coal-fired power station in the world. Still under construction, it has repeatedly been delayed and costs are running billions of rands over budget.

The Hawks on Thursday said that the initial contract estimate for air cooled condensers for all the units at Kusile, awarded to Alstom, was R1.5bn. The firm delegated some of its work to sub-contractors including Tubular Construction Projects (TPC), the company in which Trindade is a director and shareholder. But the delegation of work to contractors caused some instabilities in the construction of Kusile, which is when Hlakudi and Masango got involved.

The prosecution alleged that the pair then misrepresented facts to the power utility, and lied about obtaining a legal opinion that the parastatal should “de-scope” Alstom in favour of Tubular Construction Projects.

“They argued that this would minimize costs and stability-related risks and that there would be monetary and milestone benefits…The de-scoping of the air cooled condenser units 4 to 6 from Alstom to TPC in fact held no benefit to Eskom, it increased its project and financial risks substantially and was financially prejudicial to Eskom,” said the Hawks in a statement on Thursday afternoon. 

In exchange for pushing aside Alstom from some of the condenser units, the state alleged that Lomas and Trindade - through their companies which include Tubular Construction Projects - paid a R30m cash as a “gratification” to both men.  

The cost of the contract with TPC was initially R710m, but was later modified and increased to R1.2bn. The prosecutor on Thursday said in court that Eskom "lost R745m". 

The Hawks said they had traced multiple payments to their accounts from different companies owned and/or managed by Trindade and Lomas, and presented a spreadsheet of evidence to this effect to the National Prosecuting Authority. The state also charged some of Trindade’s companies with money laundering for redirecting payments to the Eskom pair between various subsidiaries.

The case was postponed to 25 May 2020 to allow the state enough time to find Lomas, who is currently out of the country.

Eskom, meanwhile, issued a statement saying it will continue working with law enforcement agencies to root out corruption in the company but wishes to not comment further on the matter at this stage.

eskom  |  abram masango  |  france hlakudi  |  corruption
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