Eskom was the 'main stage in the theatre of corruption', says Mabuza

22nd February 2019

By: African News Agency

  

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Eskom chairperson Jabu Mabuza told the Zondo Inquiry on Friday that the current board of directors discovered that the power utility was "the main stage in the theatre of corruption" when it was appointed in January 2018.

Asked by evidence leader Vincent Maleka to detail the state of affairs when he arrived at Eskom, Mabuza detailed a raft of problems that were plaguing the power utility, including graft, malfeasance, and low morale among staff members. 

"Eskom was once in the top five utilities in the world. You've got to see it in that context. Indeed, it was the main theatre where corruption, state capture was taking place. Morale was low, people were not proud to be associated with the organisation," Mabuza said.

"The funders of Eskom had actually drawn a line on the sand that we are not putting any cent more on Eskom under that current leadership.

"The JSE had indicated it will de-list Eskom bonds if it did not release its financials. Auditors could not sign on books as going concern unless we raised R20-billion to address the liquidity crisis."

Explaining the power utility's liquidity crisis, Mabuza said Eskom had a state guarantee of about R350-billion when he arrived and about R100-billion in unused guarantees for capital projects. 

Mabuza said it was not true that Eskom did not suffer any loses in providing the Gupta family's coal miner, Tegeta Exploration and Resources, with a R600 million prepayment to purchase Optimum Coal Mine from Glencore. 

He said Eskom was paying about R600 000 quarterly to the banks to service the guarantee.

"I don't know what that was in that board's head to do so. I don't think this board would have agreed to provide a guarantee to a supplier. It's incorrect to say Eskom did not suffer because the guarantee has lapsed. Eskom has definitely suffered, at least from reputation," Mabuza said. 

"It's called corruption. The name is corruption, but the game is procurement. But the guarantee is quite specific. The guarantee is for capital projects."

Mabuza said if Eskom were to default on any of its guarantees, that would have a "knock-on and fatal effect on the sovereign", but said luckily Eskom has not defaulted on any or one of its debt covenants.

Maleka also raised concern about the Eskom board failing to implement remedial action against eight former executives implicated in irregular expenditure flagged in the 2017 report by National Treasury.

The executives were fingered in relation to the R600-million prepayment to Tegeta, which was owned by the Gupta family.

But Mabuza said he only became aware of the Treasury report on Tegeta around November 2018, adding that despite that, Eskom was dealing with these matters either through its internal disciplinary processes or pursing them on a criminal level or in civil proceedings.

"Matshela Koko's disciplinary deals with, among others, issues of these contracts. It's a matter of course that he has since resigned barely hours before the disciplinary hearing," Mabuza said. 

"We have laid criminal charges, we have handed over to both the Hawks and the Special investigating Unit. We will start pursuing those civil claims."

Mabuza continues to testify after a lunch break adjournment.

Edited by African News Agency

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