Eskom moves to address allegations on Gupta influence

Eskom moves to address allegations on Gupta influence

Eskom on Tuesday moved to clarify various allegations about bad governance, interference and mismanagement at the state-owned power utility.

Ajay and Atul Gupta_gallo
File photo: Gallo Images

This came as Eskom was under criticism about the alleged influence of the Gupta family - which is being investigated for alleged "state capture" by the ruling African National Congress - on lucrative Eskom coal-supply contracts, and the recent resignation of two board members last week.

Eskom, in a lengthy statement on Tuesday, said the allegations of state capture which had dominated news headlines had led to everyone who worked for state-owned companies being presumed guilty until proven otherwise.

Eskom took issue with last month's Mail and Guardian's article titled "The Gupta-owned state enterprises", which alleged that the Gupta family and its closest allies was able to exercise extraordinary influence over Eskom and related government policy.

Eskom said this was a desperate effort to vilify all the recently appointed board members and executives of state-owned enterprises, even though there was no evidence of wrongdoing on their part.

The power utility said some of the media articles and the intention behind them were incorrect, mischievous and misleading, and were written in a way to justify the allegations despite lack of evidence to substantiate the claims.

Eskom said that as a results of unfavourable media reporting, the effect had been that the professional integrity of board members had been adversely affected, as well as their business dealings outside of Eskom.

"In the absence of concrete evidence of wrongdoing, this, surely, is unfair. They too, need to be protected by the constitution and be presumed innocent until proven guilty," Eskom said.

"The negative publicity is affecting the morale of Eskom employees and its directors. In this month alone, Eskom has lost two Board members who had made valuable contributions to the Board and its activities."

Eskom also had some words for its former chairman, Zola Tsotsi, who had made allegations that he was kicked out of the power utility after he refused to bow to the politically connected Gupta family's demands.

"If the recent comments attributed to former Eskom chairman Zola Tsotsi are correct that some of the senior managers within the company are corrupt, then we urge Mr Tsotsi to report the matter to the law enforcement agencies as required by section 34 of the Prevention and Combating of Corrupt Activities Act," Eskom said.

Eskom chairperson Ben Ngubane also thanked Romeo Khumalo who resigned from the Board last week "due to time constraints" and "to give undivided attention to their other business commitments and projects".

Independent non-executive director, Mariam Cassim, also resigned, along with Khumalo.

"Mr Khumalo and Ms Cassim have served diligently and honestly on the main board and as members of sub-committees. We wish them both all the best in their endeavours," Ngubane said.

Eskom concluded by addressing "the perennial issue" of the Hendrina coal contract.

Until recently, Glencore was the owner of the Optimum Coal Mine and had a long-term contract to supply coal to Hendrina power station until 2018.

Optimum was placed in business rescue proceedings late last year after Glencore said its contract to supply coal to Eskom was unviable, leading to the operation's sale by Glencore to Tegeta Exploration and Resources, a Gupta family-owned company, for R2.15-billion.

According to Eskom it had refused to renegotiate the contract after Optimum was bought by Tegeta, saying it would hold Tegeta to the same arrangement under a contract that runs until 2018.

It also fined Optimum R2 billion over the quality of the coal it was supplying.

During the business rescue process, Eskom emphasised that it didn't matter who Glencore and/or the business rescuers would sell the mine to, all Eskom was interested in was to ensure that key certain aspects remained valid and unchanged.

The agreements that Eskom wanted to remain unchanged were the price per tonne at R150, the agreed volumes or quantity of coal per annum, the agreed quality of coal, and the R2 billion penalty imposed on Optimum would remain in force and payable, including that the contract remained valid until 2018.

"None of these conditions have changed," Eskom said in their statement on Tuesday.

Eskom added that of critical importance was to note that it had issued summons against Optimum for failing to supply coal that met the quality specifications of the Hendrina power station.

"Once the business rescue process has been finalised, the legal proceedings will continue to run their course."

As far as Arnot power station coal supply was concerned, Eskom said Optimum and six other companies had been supplying coal to that station in the normal course of business since January.

This followed the expiry of Exxaro's contract in December last year.

Eskom said a new long-term contract would be signed with the winning bidder or bidders in due course. - ANA

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