29/09/2017 07:00 SAST | Updated 02/10/2017 08:32 SAST

Eskom Ignored Advice That McKinsey Deal Was Illegal

A new report says Eskom ignored advice four times, that its deal with McKinsey and Trillian was illegal.

Mike Hutchings / Reuters
Pylons carry electricity from a sub-station of state power utility Eskom outside Cape Town in this picture taken March 20, 2016. REUTERS/Mike Hutchings

A report by Eskom's legal team has revealed that Eskom ignored advice that it should not go ahead with contracts with McKinsey and Trillian, Eyewitness News (EWN) reported on Friday.

Eskom reportedly ignored advice four times in the space of two years that it should not go ahead with the McKinsey contract. In the R1.6 billion contract, Gupta-linked firm Trillian was hired as a subcontractor but reportedly did no work, despite being paid millions.

This week, a whistleblower alleged that Trillian's role was to act as a gatekeeper, securing meetings and contracts for international consultancy firms like McKinsey.

According to EWN, a 29-page report was handed to Public Enterprises Minister Lynn Brown in September, which shows how Eskom ignore the advice.

Eskom was reportedly first warned two years ago that its contract with McKinsey was illegal.

Similar advice from Eskom's own lawyers, external lawyers, consulting firm Oliver Wyman and law firm Cliff Dekker Hofmeyer was reportedly also ignored.

According to the report, Eskom chief financial officer Anoj Singh and two other officials, Prish Govender and Edwin Mabelane went ahead with the McKinsey contract despite the advice, and despite the fact that no contract was in place.

All three have been suspended.