Eskom blows R311m

20-03-2017
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Fin24
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Johannesburg - Public Enterprises Minister Lynne Brown is demanding answers from Eskom’s chairperson, Ben Ngubane, its board and acting CEO Matshela Koko about R310.8 million that was irregularly spent on an unapproved project.

Brown, according to a letter obtained by City Press, expresses a concern that Eskom went ahead with its Back to Basics (B2B) Programme, even though her predecessor, Malusi Gigaba, decided not to approve the programme in May 2014.

The programme aimed to improve Eskom’s business processes involving engineering reliability and maintenance of the power utility’s assets, information technology, quality assurance, and promoting the safe and healthy lifestyle of employees.

Eskom has spent R2.55 billion so far in the project – R310.8 million of which has been classified as irregular expenditure.

Eskom’s spokesperson, Khulu Phasiwe, confirmed receiving written questions from City Press on March 9, but has failed to respond despite a commitment to do so.

City Press has since attempted to contact Phasiwe and members of his communications team many times, which included sending numerous text messages and two follow-up emails on March 10 and March 13.

City Press made 22 calls to Phasiwe seeking answers to the questions. Calls were answered or left unanswered.

Brown’s letter, dated January 11, which was sent to Ngubane and copied to Koko, has still not been responded to – according to a source in Eskom’s management.

Brown is demanding to know what action the board has taken against the irregular expenditure.

“According to your letter, the board’s investment subcommittee has condoned the irregular expenditure amounting to R310 788 195 regarding the B2B Programme.

"As you are aware, section 51(1) of the PFMA [Public Finance Management Act] requires the board inter alia to take effective and appropriate steps to prevent irregular expenditure as well as disciplinary steps against any employee who makes or permits irregular expenditure,” the minister said.

She said that she requested full details on what action the board had taken regarding the irregular expenditure in line with the PFMA, and also an explanation on why Eskom had not responded to Gigaba’s letter about the B2B Programme sent a year before.

“Furthermore, Eskom must explain how the R2.55 billion was incurred given that my predecessor’s decision not to approve the B2B Programme was communicated to Eskom in May 2014, including the quantification of the benefits associated with components of the programme that have already been implemented,” Brown said.

A source – who declined to be named for fear of reprisals – told City Press that the programme had been implemented in a hurry and the necessary approvals were not obtained.

“The full programme was estimated at R2.55 billion, but only the engineering tools component, which cost R310.8 million, was implemented,” the source said.

Koko was divisional executive of group technology at the time the B2B Programme was first implemented and this puts the irregular expenditure at his doorstep.

Two companies – Accenture and EY – received contracts on an emergency basis to implement the engineering tools component of the programme.

“The original PFMA application made in July 2013 sought approval only for the engineering tools component of the B2B Programme … an application was not made for the full programme.

“Gigaba declined to approve the application, but the engineering tools component went ahead nevertheless, causing the R310.8 million irregular expenditure,” said the source.

Brown’s spokesperson, Colin Cruywagen, said the Eskom board was of the view that no disciplinary action was required because value for money was derived.

“The minister has written to the board to clarify certain issues before the PFMA withdrawal can be finalised and this includes steps taken to prevent wasteful expenditure, reasons disciplinary action was not taken and delays in responding to the minister’s initial request for a revised application,” Cruywagen said.

Koko is not new to controversy.

He admitted that Eskom had agreed to prepay R586 million to coal mining company Tegeta Exploration and Resources – owned by the Gupta family and President Jacob Zuma’s son Duduzane.

Koko signed the document.

The prepayment deal appeared to have been designed to rescue the Guptas.

It was signed just days before Tegeta unexpectedly came up with R2.15 billion in funding to buy the Optimum Coal Mine.

Tegeta was fingered in former public protector Thuli Madonsela’s State of Capture report, which prompted Brian Molefe to resign as Eskom CEO.

Eskom justified the prepayment on the basis that Eskom needed to urgently secure coal for Arnot Power Station to avoid load shedding.