23/11/2017 06:36 SAST | Updated 23/11/2017 08:51 SAST

Eskom Makes A U-Turn On McKinsey Court Challenge

Sources say Eskom will no longer go to court to get McKinsey to pay back the money.

Siphiwe Sibeko / Reuters

Eskom will no longer go to court to recover R1.6-billion that was unlawfully paid to Gupta-linked firm Trillian, Business Day reported on Thursday.

McKinsey, which subcontracted Trillian, offered to repay the money whether or not it was ordered to do so by a court of law, but wanted Eskom to follow due process by approaching a court. Eskom first demanded that McKinsey repay it, but now appears to have changed its mind.

Eskom sources reportedly told Business Day that the power utility did not want its dirty linen aired in court after hearing testimony from suspended legal head at Eskom, Suzanne Daniels, at the Eskom state capture inquiry in Parliament last week.

Trillian was reportedly paid R600-million on the R1-billion Trillian contract despite having no contract in place with McKinsey or Eskom. Eskom also did not have the contract approved by Treasury as required by law.

Daniels was reportedly suspended after sending a letter of demand to Trillian and McKinsey demanding that they pay back the money to Eskom.

Eyewitness News reported that Daniels told the Parliamentary inquiry: "There's only one way to describe this to the people of South Africa: this was brazen theft."

She said the Eskom officials implicated were "Matshela Koko, Anoj Singh, Edwin Mabalane, Prish Govender and Charles Kalima."

Daniels also told the inquiry that she attended a meeting with Gupta associate Salim Essa and Duduzane Zuma, who wanted to discuss legal issues around former Eskom CEO Brian Molefe.

This week, Trillian told Business Day that it had not received any correspondence about the money since that letter on October 4.

Eskom spokesperson Dikatso Mothae told Business Day that the power utility had senior counsel looking at how to move forward on the claim, "to ensure that Eskom will not be worse off after the issuing of the claim."

McKinsey told Business Day: "We have asked Eskom four times to expedite proceedings before the high court but they have yet to do so. Regardless of the outcome of any court process, or if Eskom chooses not to pursue the matter, we will pay back the fees if not to Eskom then to South Africa -- meanwhile, the funds are in a ring-fenced account."