Criminal acts identified in an affidavit by Knorx Molelle of the NPA’s asset-forfeiture unit include payments made from fraudulent invoices with no services rendered. Picture: REUTERS
Criminal acts identified in an affidavit by Knorx Molelle of the NPA’s asset-forfeiture unit include payments made from fraudulent invoices with no services rendered. Picture: REUTERS

The National Prosecuting Authority (NPA) has thrown the book at global consultancy McKinsey, charging it had colluded with Gupta-linked Trillian and corrupt Eskom officials in the theft of R1.6bn from the power utility.

In an affidavit filed in the High Court in Pretoria in December and obtained on Tuesday, the NPA accused McKinsey of abusing its relationship with Eskom to create a "veil of legitimacy" that allowed Trillian to "unlawfully drain" R600m in six months from Eskom without a contract from the cash-strapped power utility.

Criminal acts identified in an affidavit by Knorx Molelle of the NPA’s asset-forfeiture unit included payments made from fraudulent invoices with no services rendered with the collusion of Eskom officials and "deliberate and fraudulent circumvention of Eskom’s supply chain management processes".

This is the first step in efforts to recover an estimated R50bn looted from public coffers by the Guptas and their associates. Molelle said on Tuesday it was one of six similar cases being prioritised, with another 11 in the pipeline being pursued by a team of 20 officials of the NPA’s specialised commercial crimes unit, the asset-forfeiture unit, the Treasury and the Financial Intelligence Centre.

Sources close to the investigation said members of the team had interacted with their counterparts in the United Arab Emirates to monitor assets belonging to the Guptas and their associates in Dubai to prepare for preservation orders.

"There’s an informal understanding to say: monitor [the assets] while we are still busy with our processes," said one.

A source close to the authorities in Dubai said these assets included properties, cash in a bonded warehouse in the adjacent emirate Sharjah and R1bn in bank accounts.

Asked to confirm this, NPA spokesman Luvuyo Mfaku said: "It’s difficult for us to talk on behalf of our counterparts in foreign jurisdictions….

"Where we have requested mutual legal assistance from our counterparts there are issues of confidentiality so we cannot comment on those issues." He said criminal investigation had not been finalised.

Tuesday’s action by the asset forfeiture unit is also the first time that the state has taken legal steps against those implicated in former public protector Thuli Madonsela’s state-capture investigation and in various media reports.

In his affidavit, Molelle said available evidence showed Eskom’s payments to Trillian and McKinsey amounted to the proceeds of crime, "namely fraud, theft, corruption and money laundering".

The same issues were flagged in several investigation reports seen by Business Day, including by law firm Bowmans and G9 Forensics, which recommended that Trillian be criminally charged. McKinsey and Trillian had hoped to make R9.3bn from Eskom over three years.

Eskom used the investigations to suspend key officials over the payments, including chief financial officer Anoj Singh and acting head of group capital Prish Govender.

The reports also recommended suspending former acting CEO Matshela Koko on the same grounds, but he was never charged.

Govender was cleared of all charges and reinstated in January.

The previous investigations stopped short of implicating McKinsey in criminal conduct. The consultancy denied wrongdoing but offered to pay back the money earned.

However, in his affidavit Molelle said that Eskom had paid Trillian R600m on "fraudulent" instructions by McKinsey "in circumstances [in which] both McKinsey and Eskom knew very well that Trillian had not rendered any services to Eskom. None whatsoever".

McKinsey’s February 9 letter to Govender, instructing Eskom to pay Trillian directly, resulted in the unlawful payment of R600m to the Gupta-linked company.

"I submit that it is evident that McKinsey’s letter to Eskom played an instrumental role in creating a veil of legitimacy in what was otherwise a nonexistent unlawful arrangement and essentially a sham," Molelle said.

McKinsey said on Tuesday it had not received any formal communication on the issue but reiterated that it would repay the R1.028bn it earned from Eskom "no matter what". "We are returning this money not because we have done anything wrong but because Eskom has told us they did not follow the appropriate process," spokesman Steve John said.

The firm had approached Eskom five times since October 2017 to ask that it bring the matter before a court, which could prescribe the repayment method.

"They have taken no action. We want this money to be transferred quickly so [that] it can be used for the benefit of the South African people," he said.

Trillian did not reply to a request for comment by Business Day on Tuesday.

It has previously denied any wrongdoing and has said that
it had only been paid for services rendered.

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