Culture of corruption still bedevils Eskom, says De Ruyter

A residue of corruption remains at power utility Eskom as it tries to claw its way back from the damage caused by state capture, CEO André de Ruyter says.

Eskom has uncovered active syndicates which operate at the utility’s power stations, resulting in it procuring equipment at inflated prices, which impacts on its balance sheet, De Ruyter said.

As an example of the petty corruption, Eskom paid R80,000 for one knee guard, which retailed for R90. Corruption permeated the organisation “because it is deemed to be OK”, De Ruyter said. 

Eskom, which supplies 90% of the country’s power, is struggling under a R400bn debt burden, making it unable to afford to adequately repair and maintain its ageing power stations.

De Ruyter said he had received emails from suppliers saying middle men were at times adding 30% to invoices on equipment that was being delivered by original manufacturers.

“This is not the way to build an entrepreneurial company at Eskom,” he said.

“If you look at what we have been able to achieve due to the interventions from the presidential crisis climate committee, we are now able to buy directly from OEMs (original equipment manufacturers),” he said, referring to steps taken get rid of corrupt practices. 

De Ruyter was speaking at an event organised by News24 on Thursday.

The state capture commission of inquiry found that Eskom entered into irregular contracts worth R15m with companies linked to the Gupta family. The Guptas used their influence over former president Jacob Zuma to remove executives who resisted capture of the utility and installed individuals who diverted funds from Eskom in favour of the controversial family, the commission found. 

Among its recommendations, the commission said the state should look into the establishment of an independent anti-corruption agency that is free from political oversight as part of a “national commitment to eliminate corruption in public life and in the procurement of goods and services”.

The commission also highlighted the weaknesses of a decentralised public procurement system, which it said reduces transparency and facilitates corruption. 

De Ruyter said that adding more controls could slow down Eskom’s public procurement of specialised equipment. But, he said, “as soon as you implement controls, inventive criminals very quickly find ways around it”.

maekot@businesslive.co.za