Eskom saga smells like a rat, but...
Nailing down the wrongdoing is made difficult because the alleged corruption within Eskom relied on a whole network of individuals all working hand in glove
A few chinks have appeared in the iron-clad defence by Eskom executives against allegations that they facilitated the capture of the utility by the Gupta family.
The chinks have largely to do with trips to Dubai and meetings with Gupta-associated businessmen. But so far, their defence has not been prised open sufficiently to demonstrate the details of how Eskom executives bent over backwards to accommodate Gupta-owned Tegeta, giving it a leg-up against rivals in the coal sector.
If there have been small incisions in the armour this has been because of the evidence provided by the leaked Gupta e-mails.
The executives who appeared this week before the parliamentary inquiry into state capture conducted by the portfolio committee of public enterprises — former chief financial officer Anoj Singh and group executive for generation Matshela Koko — sung from the same song sheet as their predecessors. These include former chief executive officer Brian Molefe and several board members.
It is not unreasonable to suppose that the key role-players in the alleged looting of the utility composed the song together.
Democratic Alliance spokesman on public enterprises Natasha Mazzone likened this system of defence to the “omertà”or wall of silence that the Italian mafia uses as a bulwark against disclosure.
The difficulty lies in being able to pinpoint a direct link between the big picture of state capture and the nitty gritty of each individual transaction which constitutes it. This has been immensely frustrating for committee members, who have resorted to appealing to the ethics and social conscience of the Eskom witnesses for them to come clean.
The persuasive narrative of how the Guptas got their claws into Eskom was first laid bare by former public protector Thuli Madonsela in her “State of Capture” report. The picture painted was that Eskom, with the assistance of Mosebenzi Zwane’s department of mineral resources, made life so difficult for Glencore that it decided to sell Optimum Coal. The Gupta-owned Tegeta then popped up with an offer to buy it.
But the only way the Guptas managed to find the money to buy Optimum was thanks to Eskom, which gave it a R1.6bn guarantee, and handed it a R659m “prepayment” for coal supplies. And the Gupta family benefited from Eskom in another way: Trillian Capital Partners, part-owned by the Gupta associate Salim Essa, scored R600m in consulting work at Eskom.
All this smells like a rat, but smelling one does not mean finding it. If one did not suspect the presence of a rat and was not trying to join the dots, the explanations given by the Eskom team for each of the individual transactions might on the surface seem plausible. There was no state capture, they argue, and decisions were taken in the best interests of the utility. Their argument goes that Eskom was in the midst of load-shedding and was facing an acute coal shortage which, if not solved urgently, would have required the purchase of hugely expensive diesel to run its open-cycle gas turbines. The Tegeta/Optimum deal offered the best way out.
But even if this scenario were true, the question still needs to be asked: were there other, better solutions that were deliberately overlooked? During the inquiry the African Christian Democratic Party’s Steve Swart has repeatedly described the way in which Eskom had created a coal shortage crisis in order to come up with the Tegeta solution. This was caused, he said, by Eskom terminating the contract with Mafube coal mine, which supplied Arnot power station. This created a coal shortage, which Optimum could fill with higher-priced coal.
The Mafube mine is owned jointly by Anglo American and Exxaro, and according to Swart, it produced the cheapest coal of all Eskom’s suppliers. “The emergency was self-created by Eskom,” Swart said, adding that while the strategy was brilliant, it was criminal and corrupt.
Nailing down the wrongdoing is also made difficult because the alleged corruption within Eskom relied on a whole network of individuals all working hand in glove. There are structures of decision making and delegations of authority within the organisation which make it possible to pass the buck.
“I was not the person who approved any transactions on my own but acted on the resolutions of the board of directors or its subcommittees,” Singh told MPs. The trouble was these structures were themselves compromised and packed with Gupta acolytes.
The final determination of state capture at Eskom and of those involved is likely to come down to a balance of probabilities. The credibility of the witnesses — several of whom have been found to have been evasive, misleading and obfuscating — will also be critical.