The Special Investigations Unit (SIU) has launched a far-reaching investigation into corruption within Eskom, uncovering alarming schemes where employees manipulated procurement processes to divert over R1 billion. The investigation focuses on identifying and addressing the systemic corruption that has plagued South Africa’s power utility, targeting numerous malpractices that have compromised Eskom’s operations for years.
Advocate Andy Mothibi, head of the SIU, recently addressed the Standing Committee on Public Accounts (Scopa), underscoring the urgent need for enhanced scrutiny and transparency within Eskom. His statements echoed concerns raised by the Auditor-General, who had previously pointed out Eskom’s inefficiencies in governance, citing fruitless and wasteful expenditure, criminal conduct, and a lack of consequence management. These issues have inflated the primary energy cost, ultimately affecting the tariffs paid by consumers.
Mothibi detailed the investigative steps being taken by the SIU, including imaging over 500 laptops of Eskom employees as part of an exhaustive effort to ensure accountability. He noted that while it was crucial to vet officials when hiring, it was not enough to prevent corruption from festering. The SIU has already collaborated with the South African Revenue Service (SARS), which is investigating the tax affairs of vendors and Eskom employees involved in the fraudulent activities. Over 530 laptops have been imaged in this effort, allowing investigators to gain access to critical information.
The scope of the investigation spans nearly two decades, focusing on projects dating back to 2003, including the infamous Medupi, Kusile, and Ingula build projects. These projects are estimated to have suffered losses amounting to a staggering R200 billion. The SIU has made significant progress in identifying how Eskom employees and vendors engaged in corrupt activities that have directly harmed the power utility and the nation at large. This includes schemes that involved funneling funds into smaller contract categories to bypass stringent oversight, with transactions often taking place after hours, suggesting a deliberate and coordinated effort to defraud the system.
Among the shocking findings, the SIU discovered that 334 Eskom employees had financial ties to vendors, and a further 5,464 employees failed to declare any conflicts of interest. Some of the malpractices were conducted after hours, not in the interest of completing work but as part of an orchestrated scheme to defraud Eskom. The investigation also uncovered three distinct groups of vendors involved in these practices, with estimated losses totaling over R3.5 billion. These vendors exploited the Request for Quotation (RFQ) process to perpetrate fraud, impacting multiple power stations across the country.
In a particularly troubling discovery, the investigation has linked senior Eskom employees to operations connected to state capture. One of the key findings was related to a contentious coal supply agreement with Tegeta for the Majuba Power Station, valued at R3.7 billion. This agreement has been flagged for its dubious nature and lack of proper oversight. Additionally, the investigation uncovered serious issues with cloud computing and software licensing contracts, where mismanagement led to the awarding of R1.2 billion in contracts to SAP, a matter which was later dismissed by the Special Tribunal.
The SIU also raised concerns over emergency security contracts at Eskom, where the lack of proper protocols led to the awarding of contracts without sufficient vetting. Many of these contracts were subcontracted to third parties without the necessary capacity to deliver the services, raising further alarms about Eskom’s internal controls.
Through this thorough investigation, the SIU aims to bring those responsible for the rampant corruption at Eskom to justice, while highlighting the importance of transparency, accountability, and enhanced governance within the utility. The findings point to a deeply entrenched culture of corruption that has drained resources from Eskom and, by extension, the South African public. With the investigation ongoing, the SIU’s efforts may play a key role in uncovering more details and ensuring that those responsible are held accountable.
