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Treasury report into Tegeta urges: Probe Gupta allies

National Treasury says Eskom’s former chief executive Brian Molefe, along with suspended chief financial officer Anoj Singh and former acting boss Matshela Koko, must be investigated for corruption.

This recommendation is contained in an explosive report, finalised earlier this month, which references the #GuptaLeaks extensively.

This is the first time that the email tranche – which has revealed how the Gupta family has captured various arms of state and siphoned off billions of rands from state-owned companies – has been given official weight by government.

The finalised report deals with the coal supply contracts that Eskom handed to Tegeta Exploration and Resources, a mining company owned by the Guptas and President Jacob Zuma’s son, Duduzane.

Treasury commissioned the report to investigate whether Eskom followed proper tender processes when awarding the contracts to Tegeta.

But the report – which has been sent to Parliament’s standing committee on public accounts (Scopa) as well as the Hawks – features an expanded set of recommendations.

These include the need to probe whether Singh – who, like Molefe, previously occupied the same position at Transnet – received any “gratuities” for “facilitating the appointment of suppliers for the locomotive tender at Transnet”.

The tender in question was to supply 1 064 locomotives issued by Transnet in 2014.

In June, amaBhungane reported that the state-owned rail company entered into kickback agreements totalling R5.3bn with the Chinese manufacturer that became Transnet’s favourite locomotive supplier, enabling a Gupta front company to pocket R10m from each R50m locomotive Transnet bought.

The Treasury report also recommends that the Office of the Chief Procurement Officer “appoint a forensic audit firm and report the matter to law enforcement agencies” to investigate whether:

– Tegeta or its associates offered any “gratification” to Singh, Koko or any other government official to improperly influence decisions, and whether these amounted to an abuse of power and a violation of the Prevention and Combating of Corrupt Activities Act (PCCA).

– Tegeta received any confidential information from Singh, Koko or any other official.

– Tegeta was involved in organised crime.

– Singh and Koko received any gratification by accepting lavish trips to Dubai paid for by the Guptas, as alleged in the #GuptaLeaks, and whether this amounted to corruption.

– Singh received any gratification for facilitating the appointment of global consultancy McKinsey and contracts with the Gupta-linked Trillian Capital Partners or Regiments Capital at Eskom and Transnet [which allegedly funnelled hundreds of millions of rands to Gupta front companies], and whether this constituted corruption and an abuse of power.

– Eskom’s fuel sourcing head Ayanda Nteta or any other executive received any gratifications for changing the conditions of the Tegeta coal supply agreement, as alleged in the #GuptaLeaks.

– Eskom wasted money by overpaying Tegeta in contracts with its Optimum Coal Mine and Brakfontein Colliery, and by how much.

The report also asks the chief procurement officer and law enforcement agencies to investigate why Eskom, through Molefe, “gave an assurance” that Tegeta’s Brakfontein Colliery “supplies and continues to supply” good quality coal despite evidence to the contrary, and whether this constituted abuse of authority and a contravention of the PCCA.

On Friday, Treasury’s political head, Finance Minister Malusi Gigaba, said he was worried about the Guptas’ influence and reports that they exploited their friendship with Zuma to secure contracts with state-owned companies.

Gigaba was once close to the Guptas and, during his previous tenure as public enterprises minister, restructured boards of state-owned companies with Gupta allies, allowing them access to lucrative contracts.

“Like all South Africans, I am very worried about them and I think we need to establish fact from allegation,” Gigaba told Cape Talk.

“The allegations are quite damaging to investor perceptions, as well as ratings agencies, of the governance of our state-owned companies.”

On Thursday, The Times reported that Eskom suspended Singh after an urgent intervention by Gigaba and Public Enterprises Minister Lynne Brown – after the Development Bank of SA reportedly threatened to recall a R15bn loan if Singh and other Eskom officials responsible for the utility’s qualified audit opinion were not taken to task.

In April, City Press reported on a draft of the same Treasury report which found that in August 2016, officials shot down Eskom’s request to expand the Brakfontein Colliery’s 10-year coal-supply contract by another R2.94bn.

This constituted a 77% increase from the company’s original agreement to supply coal to the Majuba power station in Mpumalanga, and would have increased the contract’s value from R4bn to R7bn.

That same month, Treasury further barred Eskom from extending Optimum Coal Mine’s two-month contract to supply Mpumalanga’s Arnot power station for a further six months without going to tender.

The initial contract was worth R235m and the contract’s expansion would have increased that figure by R855m to total more than R1bn.

However, the finalised report extensively quotes a Daily Maverick report, published on June 9, which revealed how many trips Koko and Singh had taken to Dubai at the Guptas’ expense, and how Singh “stayed in the luxury Oberoi Hotel, enjoyed spa treatments and was chauffeured around in a limo – all paid for by the Guptas’ Sahara Computers”.

The article detailed how Koko allegedly sent secret information about Optimum Coal, then owned by Glencore, to one of the Gupta brothers.

It also alleged that Koko strengthened the Guptas’ hand in their battle to buy the mine by sending a “vitriolic” letter to the business rescue practitioners in charge of Optimum, in which he threatened to review all of Glencore’s other contracts with Eskom.

The Treasury report further states that, in the light of this, a “forensic audit and criminal investigation must establish” whether any “illegal, dishonest or unauthorised … selling of information” or any other contravention of the PCCAA had taken place in “contracts that were concluded in Eskom and Transnet”.

What they say

Scopa chairperson Themba Godi said the committee had not yet received the report because Parliament was currently on recess.

“But I have no reason to doubt whoever claims to have sent it. We will be back next week and we will deal with the report,” he said.

Treasury spokesperson Yolisa Tyantsi said: “The report is a follow-up to the first, now inclusive of the #GuptaLeaks’ perspective.

“The report extends its finding to go beyond Eskom and include Transnet since the leaks reveal some form of relationship at the time.”

Eskom spokesperson Khulu Phasiwe said: “Messrs Koko and Singh are currently on special leave, pending investigations by the Eskom board.

“Moreover, Eskom welcomes the proposed investigations by the Hawks, Special Investigating Unit (SIU), Public Protector and Parliament.

“These probes, including the ongoing investigation that was launched by the National Treasury in July 2015, will help us to get to the bottom of these allegations.”

Tumbling dominoes

Eskom, South Africa’s largest state-owned company, is now facing a leadership crisis.

Singh’s suspension follows last month’s resignation of board chair Ben Ngubane and Brown’s rescission of Molefe’s reappointment as chief executive two months ago.

Eskom suspended Koko in April, following revelations that a company in which his stepdaughter, Koketso Choma, was a director received Eskom tenders worth more than R1 billion.

Last week, Brown asked Zuma to issue a proclamation for the SIU to probe corruption at Eskom.

The public enterprises portfolio committee in Parliament has also launched its own state capture investigation.

This week, the committee was preparing its own inquiry into state capture, set to get under way next week.

It heard submissions from the Organisation Undoing Tax Abuse and the SA Council of Churches.

MPs heard about the creation of a mafia-like system, allowing for the seizure and control of state-owned companies to siphon off billions of rands into a few influential pockets.

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