Eskom treasurer spills the beans on China loan

Eskom treasurer spills the beans on China loan

Eskom treasurer Andre Pillay has told the commission of inquiry into state capture how the power utility allegedly signed an irregular R25 billion loan from Hong Kong-based company Huarong Energy Africa. 


Andre Pillay
State Capture Commission

Pillay was the latest witness from the power utility to appear before the commission.


He said Rajeev Thomas, who was apparently an associate of former public enterprises minister Lynne Brown, was the first to approach Eskom with Huarong's offer.


At the time, Eskom’s debt stood at R340 billion, which constituted 45% of the government guarantees. 


"There was nothing at the initial experience that raised alarm bells, it seemed like a legitimate proposal. They seemed like business people that had previous dealings with Eskom,” said Pillay.


He became suspicious when former chairman Zethembe Khoza, who was just an ordinary board member, got involved. 


Pillay told the commission while his team tried to follow the correct procedure of soliciting other funding, there was pressure to sign the Huarong deal, despite the fact that Eskom could not afford the facility fee.


The board instructed Eskom not to sign but to rather continue with negotiations. 


He said at some point, Khoza said the board would approve it regardless.


At the same time consulting firm Mckinsey and its subsidiary Trillian was introduced to the power utility, purportedly to assist Pillay and his team with a corporate funding plan.


This was usually a function of Treasury, said Pillay. 


"From my own experience being in the organization, there was an impression created that we were not capable to do this and outside help would be brought in. I also understood that these were people who assisted Mr. Anoj Singh, the former CFO at Transnet. We were never sat down and formally informed that Mckinsey and Trillian were going to assist us."


He said Singh seemed determined to sign the Huarong deal.


It was eventually approved by former interim chief executive Sean Maritz in 2016 after Singh had left the company.


"When I asked him why he did that, he said the minister had told him to and he was under pressure from the new board chairman, Khoza, to approve it."


He said McKinsey was paid R30 million for a corporate funding plan his team drafted, while Trillian was paid close to R4 million for advice on a contract his team was already working on.

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