NEWS

State Capture Probe Chair Wants Deeper Investigation Into Eskom

"It was really shocking… it needs more than an inquiry. It needs a deeper investigation.”

20/10/2017 08:24 SAST | Updated 20/10/2017 08:25 SAST
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ANALYSIS

Two days of investigation this week into state capture at Eskom has left MPs shocked by the extent and scale of corruption at the power utility.

Parliament's public enterprises portfolio committee, under the acting chairmanship of ANC MP Zukiswa Rantho, has started on a months-long inquiry into alleged corruption and maladministration at Eskom and two other state-owned companies, Transnet and Denel.

The inquiry got underway on Tuesday this week, with a submission from Professor Anton Eberhard of UCT's Graduate School of Business, who has co-authored a booklet on alleged instances of government failure and capture at Eskom.

Eberhard pulled no punches when he suggested "rent-seeking and corruption" at the power utility were partly responsible for the massive increase in electricity tariffs over the past decade.

"Burgeoning costs, arguably driven by rent-seeking and corruption, have resulted in electricity tariffs increasing by more than 400 percent [over this period]. The effects of this on the South African economy and prospects for economic development and transformation are huge, and reinforce the urgent need for governance and structural reforms at the utility," he told the inquiry.

On Wednesday, MPs heard further evidence from former Eskom CEO Brian Dames, who resigned and left the utility in March 2014, as well as from former Eskom employee and consultant Ted Blom, who is now with the Organisation Undoing Tax Abuse (Outa).

Bloomberg via Getty Images
Brian Dames.

Speaking to HuffPost on Thursday, Rantho said Blom's testimony especially had rattled members of her committee.

"I don't think they were so shocked by what they heard from Mr Dames; the information that was more shocking was the information that came from Mr Blom. It was really shocking... it needs more than an inquiry. It needs a deeper investigation," she said.

READ: State Capture Inquiry Cheat Sheet: The Key Questions, Witnesses and Issues

Among other things, Blom told MPs that gross corruption and maladministration at Eskom could be traced back 16 years, and included hundreds of billions of rands loaned to the utility that were unaccounted for; hundreds of thousands of tons of "missing" coal; and, at least 1000 cases of alleged tender corruption, some involving "kickbacks" to Eskom executives.

Burgeoning costs, arguably driven by rent-seeking and corruption, have resulted in electricity tariffs increasing by more than 400 percent.

He assured MPs he could provide a very large amount of documentary and other evidence to substantiate his allegations.

Among those outraged by his revelations was DA MP Natasha Mazzone, who is also her party's shadow minister for public enterprises.

"We have become immune to the word million because we are now used to billions. The rot at Eskom is unbelievable; billions have been stolen," she said on Wednesday.

On Thursday, responding to a question on how her committee planned to handle the already rapidly-accumulating mountain of evidence, Rantho suggested it might be necessary to appoint a separate commission.

"I don't think we will be able to mine down into what he [Blom] has given us yesterday. It has to go to a further body... that is more focused on it. Remember, we are a committee of Parliament; MPs do not just focus on the inquiry.

"So it needs a department, or body of government, that will [focus] on what Mr Blom presented to us yesterday, and... take it forward and investigate if all the allegations that he has put down are true allegations."

"I think the committee will recommend for a special commission that will focus especially on Eskom, and then, when we carry on with the other entities, that body will feed in to that."

We have become immune to the word million because we are now used to billions. The rot at Eskom is unbelievable; billions have been stolen.

Rantho said her committee would spend the rest of this year dealing with Eskom matters.

"I think we will be busy with Eskom until the end of the year, until Parliament rises. After that, we will take on the other two entities [Transnet and Denel]."

Earlier this week, Rantho said she expected the full state capture inquiry would run up to July next year, though she anticipated that recommendations on Eskom would be forwarded to the National Assembly at the end of this year.

The inquiry is set to resume on Friday this week.

Who will appear before it, and when, remains deliberately vague. At least four of the about 40 witnesses expected to appear have received death threats. Citing security concerns, the committee is not revealing who will appear before it on any day.

It is much speculated that President Jacob Zuma's son Duduzane and the Gupta brothers, Ajay and Atul, will also be called on to testify.

Among those expected to testify, possibly as early as next week, is former Eskom CEO Brian Molefe.

MPs are eager to probe his controversial pension payout and subsequent re-appointment, as well as coal contracts Eskom entered into, and the way the utility appoints and remunerates board members and executive management.

Others expected to be called in the coming weeks include former Eskom chair Ben Ngubane, former CEO Tshediso Matona, former chairman Zola Tsotsi, former executive for group capital Dan Marokane, and current chief financial officer Anoj Singh.

It is much speculated that President Jacob Zuma's son Duduzane and the Gupta brothers, Ajay and Atul, will also be called on to testify.

Rantho has said the inquiry would extend to the leaked Gupta emails, which allegedly implicate a number of state officials, including Eskom executives. The committee has the power to subpoena, if necessary, those it wants to interrogate.

The alleged "capture" of Eskom and other state-owned company business by the Guptas has incensed South Africans, to the extent that many within the ruling party and elsewhere are scrambling to disassociate themselves.

On Wednesday this week, Mineral Resources Minister Mosebenzi Zwane came under fire in a parliamentary committee from opposition MPs over state capture allegations and his relationship with the controversial family.

Siphiwe Sibeko / Reuters
Mineral Resources Minister Mosebenzi Zwane.

And while he angrily denied doing them any favours, he reportedly dodged further questions by claiming Madonsela's State of Capture Report was before the courts and therefore sub judice.

The parliamentary probe into state capture takes place against the backdrop of former Public Protector Thuli Madonsela's "State of Capture" report, made public in November last year. The report analysed alleged systemic corruption being perpetrated through state-owned companies, and -- fuelled by further allegations over the past 11 months -- sparked a national outcry from opposition political parties, civil society, business leaders, the public, and from within the ranks of the governing party itself.

Blom told MPs that gross corruption and maladministration at Eskom could be traced back 16 years, and included hundreds of billions of rands loaned to the utility that was unaccounted for.

Eskom is by far South Africa's largest state-owned company, with annual revenues three times that of Transnet, and six times that of SAA. The utility provides more than 90 percent of the country's electricity, has assets valued at R710-billion, and a capital spending programme of about R350-billion over the next five years.

On Thursday, it was reported that the Gupta family's financial dealings are a matter of interest to the FBI (Federal Bureau of Investigation), as well as UK-based investigators.

According to the Financial Times, the FBI is looking into the activities of the Gupta brothers' nephews, Ashish and Amol, who are directors of a US-based company.

The UK authorities are reported to be looking into the family's financial dealings through banks "such as HSBC and Standard Chartered".