Eskom gave Tegeta prepayment on day Optimum purchase price was due, inquiry hears

A business rescue practitioner on Wednesday told the parliamentary inquiry into Eskom that the power utility agreed to pay Tegeta almost R600-million in advance for coal on the same day it became clear that the Gupta-affiliated company was short of that same sum to purchase the Optimum coal mine.

“I think the timing looked suspicious, it certainly did not look fantastic,” Piers Marsden told Parliament’s committee on public enterprises of the meeting at which Eskom agreed to the advance payment.

Marsden said on April 11 last year, just two days before Tegeta was due to pay R2.15-billion for the Optimum coal mine, he was contacted by the former CEO of the Guptas’s Oakbay company, Nazeem Howa.

Howa said Tegeta was R600-million short and asked him to source funding from a consortium of banks, who declined. 

However, the money was paid on April 14.

Marsden blew the whistle in July after watching an episode of Carte Blanche in which the now suspended acting CEO of Eskom Matshela Koko revealed that the company paid Tegeta R586-million in advance for coal supplies.

He said he contacted the Hawks, or Directorate for Priority Crime Investigation, and deposed two affidavits, but it was only last week Thursday that he was again contacted by the elite police unit and told a new investigating officer had been assigned to the case.

“I hope to see him in the next couple of days,” he said, after expressing frustration that it took so long for the investigation to proceed.

Marsden also told the inquiry that Eskom had taken a particularly hard line towards negotiations with Glencore, describing his experience of Eskom management after Brian Molefe became CEO in 2015 as a “hornet’s nest”.

It was clear that Eskom would not accept a deal that did not involve a change of shareholder and was adamant that a fine it had imposed of R2.1-billion for poor coal quality needed to be honoured. But he believed it was an issue that could have been arbitrated and the fine could have been reduced.

“Glencore would have had the stomach to fight,” he said.

Under questioning from evidence leader Nthuthuzelo Vanara, Marsden said at the time of negotiations Eskom’s stance passed “commercial muster” but the picture grew murky as months passed and more facts came to light. 

After the mine was sold to Tegeta, it transpired that the fine was slashed to less than a quarter and the company finally had to pay R500-million this year.

Economic Freedom Fighters chief whip Floyd Shivambu said the Gupta family and Duduzane Zuma, a partner in Tegeta, continued to profit from the deal to this day though they had nominally sold the company.

“They sell Tegeta to themselves, to a shelf company in Dubai, and they continue to supply coal to Eskom. … Tegeta is still the beneficiary of-millions.”

He then called for Parliament to intervene immediately and not wait to conclude the inquiry into state capture at Eskom, which was in part prompted by former Public Protector Thuli’s Madonsela’s report “State of Capture”. Madonsela found that Eskom went to suspicious lengths to ensure the Optimum mine went to Tegeta.

Shivambu said ordinary people, and the national economy, would suffer for the deal because Eskom was demanding a 20 percent increase in electricity tariffs to ease its financial woes.

“Can Parliament not take an immediate resolution to halt some of the ongoing crime? The implications is on ordinary people who are now going to be forced to pay 20 percent more for electricity because of mismanagement at Eskom. We have to do something, I don’t think our hands are completely tied.”

He said the inquiry should table a preliminary report as early as next week, or else “we are going to collapse South Africa, we are going to collapse the entire fiscus on our watch.”

The inquiry will continue on Friday.