Outa accuses Eskom consultants of ‘gambling’ with public money

19th October 2017

By: Kim Cloete

Creamer Media Correspondent

     

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The Organisation Undoing Tax Abuse (Outa) has alleged that Eskom consultants Trillian Capital Partners have been “dabbling” in derivatives and losing billions of rands in the process.

“Trillian has been dabbling in derivatives with our public money, racking up losses of R27-billion,” Outa spokesperson Ted Blom told Parliament’s Portfolio Committee on Public Enterprises on Wednesday.

“Trillian is taking our money and gambling with it. It’s making losses and commission at the same time of R4-billion,” Blom said, in what he termed as an ‘Eskom bombshell’ that he was outlining for the first time.

Blom was speaking during a Parliamentary inquiry into allegations of State capture at Eskom, Denel and Transnet.

The Eskom Inquiry Reference Book, released by research professor Anton Eberhard of the University of Cape Town, notes that Eskom paid Trillian almost R600-million for “consulting” work – unofficially contracted to McKinsey consultants and allegedly undertaken by other Gupta-connected companies – since early 2016. It says McKinsey has also scored big in these deals, netting R1.1-billion from Eskom over the same period.

In Outa’s submission, Blom said illicit deals were widespread at Eskom and that there was clear prima facie evidence that the tender for the Medupi power plant was manipulated.

He said Eskom “worked out how much profit they could make, and then worked backwards . . . to see how much they could pocket”.

Blom further claimed that Eskom had engineered and inflated its assets so that it could borrow more money.

“There is R480-billion debt in Eskom now. It has revalued its assets and borrowed every single penny it could,” said Blom, adding that this was “nothing short of manipulation”.

The nonprofit civil action organisation has produced a document asking the National Energy Regulator of South Africa (Nersa) to oppose Eskom’s request for a 19.9% increase in tariffs, and the price hike that would follow, from April 2018.

Outa says Eskom had participated in or allowed “the large-scale looting and mismanagement of its funds, to the direct detriment of South African taxpayers and electricity consumers”.

The organisation has called for Eskom to be unbundled and restructured “before it drags the South African economy down with it”. It has suggested splitting Eskom into a generation company and a distribution company.

Blom said corruption had been lurking for years and that it had been clear that the country was heading for load-shedding before it happened in 2008 and 2014. This sparked a doubling in the cost of coal. He said Eskom officials “paid way more for coal and pocketed the difference”.

Blom called for a forensic investigation into what he alleged was collusion between Eskom and Nersa.
 
“Somewhere, someone needs to explain why we are spending so much on electricity.” He described the increases over the past few years as “fallacious and corrupt”.

“One company has been allowed to wreck the economy. This committee needs to resolve to bring the crooks to book.”

Eskom’s capital budget is larger than any other government entity’s. Eskom’s new power stations, Medupi, Kusile and Ingula are several years late and more than 200% over budget, the committee has heard.

He said corruption was pervasive, both at the top and within the organisation, alleging corruption in everything from the Medupi and Kusile power stations to laundry and gardening tenders.

Edited by Creamer Media Reporter

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