Sikonathi Mantshantsha Deputy editor: Financial Mail
Picture: REUTERS
Picture: REUTERS

Eskom has stymied all requests for the notorious Dentons report for two years.

After being misled by SA’s electricity parastatal about the status of the probe, the Financial Mail today publishes the unsanitised version of one of the earliest versions of the Dentons report.

Eskom has chosen not to provide this sort of transparency, but we believe it is fundamental for the South African public to judge for itself the evidence detailing the near-meltdown of the electricity parastatal.

Two weeks ago, Eskom finally yielded to pressure to release the report — for which it paid more than R20m — but disappointingly, it released a heavily redacted version.

The public deserves to know what caused Eskom’s near-collapse at a time when it had run out of money to pay staff, continue operating and build power stations.

The fact that Eskom has chosen not to adopt an approach of full transparency only strengthens our conviction that there ought to be a full and transparent judicial commission of inquiry into what went wrong, and how to fix Eskom. Employees, directors and suppliers accused of corruption should be given an opportunity to defend themselves, but must ultimately be held to account.

Eskom’s board should also be held accountable.

The document you will read here is the second Dentons report prepared for the board. An earlier “interim report”, which contained far more explosive details — including, allegedly, names of executives and directors implicated in corrupt deals — was destroyed by the board under a formal resolution adopted on August 14 2015.

Two weeks ago, Eskom chairperson Ben Ngubane admitted that Eskom had done little to investigate these allegations. In this respect, the board should be held accountable not only for doing nothing to probe these claims of corruption, but also for destroying this evidence.

This is critical, as many of those accused of enriching themselves at the taxpayers expense are still working at Eskom.

“We had to make a trade-off. We could choose whether to continue with a prolonged investigation into a company that was already depressed, which would demoralise staff, or we could fix what was wrong with Eskom,” Ngubane said. Rather, he said, the board chose to fix Eskom, “and that is why we today have electricity”.

But in the 304 pages disclosed today, Dentons reports how senior managers and directors of the electricity supplier set themselves up to do business with the utility.

It includes the following findings:

• Eskom wasted about R200m over two years by failing to negotiate proper discounts with diesel suppliers. The company paid billions to companies without having received proper invoices, in many instances paying for services without evidence of having received the supplies for which it was paying.

• Eskom contributed to its own financial problems, and contravened the Public Finance Management Act, by failing to put proper controls in place.

• It consistently overpaid for diesel, coal, logistics and other contracts. This made its financial position worse, which was used to justify electricity price increases and further bailouts by the taxpayer.

• Senior executives handpicked suppliers they wished to negotiate with, which meant that other, more capable and more cost-effective contractors were excluded.

• Eskom employees diverted business opportunities to themselves, at the expense of the utility. This meant that staff were not focused on fixing the organisation, but on feathering their own nests.

These are just some of the allegations contained in this version of the report, which, as we have explained, was already sanitised from the earlier “interim report”. But even these were kept hidden from the public for two years.

The background to this investigation needs to be explained.

In the three years to mid-2015, Eskom implemented daily load shedding The country was in darkness, and business and the mines were told to slash electricity demand by about 20%. Foreign investors pulled the plug on big projects.

Eskom then collected a R23bn bailout from the government, plus another R60bn loan, which was converted into equity — which means it was effectively written off.

The taxpayer was the ultimate loser. Evidently, this is why Eskom would rather the public had no insight into this report.

Read the report here:

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