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Eskom and SIU sue former executives for funds lost to corruption

Eskom and the Special Investigating Unit (SIU) have issued summons in the North Gauteng High Court to recover funds from former Eskom executives, former board members, members of the Gupta family and their associates, and others.

According to Eskom, the funds were lost in a concerted effort corruptly to divert financial resources from the power company, to improperly and illegally benefit the Gupta family and entities controlled by the said family and their associates during their 2015-16 acquisition of the operations of Optimum Coal Holdings Limited (OCH).

“This delictual claim for damages that Eskom suffered relates to the recovery of approximately R3.8 billion ($233 million) in funds illegally diverted from Eskom to help the Gupta family and its associates to acquire the operations of OCH, which owned the Optimum Coal Mining (Pty) Ltd that supplied the Hendrina power station with coal. The further delictual claim for damages pertains to the payments that were unlawfully made to Trillian by Eskom executives,” stated the power utility in a press release.

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The defendants are former Eskom employees Brian Molefe (Group Chief Executive Officer); Anoj Singh (Chief Financial Officer); Matshela Moses Koko (Group Executive: Generation and former Acting Group Chief Executive Officer); as well as Suzanne Margaret Daniels (Company Secretary and Group Legal Head).

Koko took to social media to lash back at Eskom’s summons.

Eskom also seeks damages against non-executive directors Baldwin Ben Ngubane (Board Chairman); Chwayita Mabude (Board Member); Mark Vivian Pamensky (Board Member); Mosebenzi Zwane (former government minister of Mineral Resources); Salim Aziz Essa; Rajesh Tony Gupta; Atul Gupta and Ajay Gupta (collectively referred to as the “Gupta Brothers”).

Meanwhile, the department of public enterprises has expressed support for Eskom and SIU efforts to recoup the funds.

Eskom further stated that: “All of the former executives and board members breached their fiduciary duty of care and good faith to Eskom, and acted in a concerted State Capture effort with the Gupta Brothers, Mosebenzi Zwane and Salim Aziz Essa to illegally divert funds from Eskom.

“The Gupta brothers owned the majority shares in entities (Oakbay Investments Limited and Fidelity Enterprises Limited) that in turn owned the majority shares in Tegeta Resources & Exploration. The Gupta Brothers are currently fugitives from justice in South Africa and are based in Dubai; as well as Salim Aziz Essa, who is also a fugitive from justice in South Africa and based in Dubai.

“These 12 defendants acted in a concerted effort whose objective was the corrupt, alternatively irregular, diversion of resources from Eskom. As a result of their actions in the acquisition of OCH during this period, Eskom suffered at least R3.8 billion in losses which it is legally obliged and morally burdened to recover, together with the interest thereon.”

Having studied the summons issued by Eskom and the SIU jointly, independent power and mining expert Ted Blom, speaking with ESI Africa, commented: “It is with great concern that I observe that the summons attempts to deal with a multitude of events covering activities at Transnet, McKinsey and Eskom all in one document.”

He added: “Besides the difficulty of dealing with a multitude of issues in one trial, the summons also extends to a multitude of defendants who were not all party to all the misdemeanours at all the companies. While justice in the state capture matters are overdue, I am very unsure that this matter can be successfully ventilated in court in its current format.”

Story updated on 7 August 2020

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.