Friday, 29 April 2022 11:25

Evidence proves Zuma was 'central' to Gupta capture of Eskom | State Capture Report.

By Lehlohonolo Lehana

The presidency has formally received the fourth part of the state capture inquiry report on Friday morning. 

The report was handed over to the Presidency by Commission Secretary Professor Itumeleng Mosala and the four volumes of the report cover the following:

  • State owned mining company Alexkor
  • The attempted capture of National Treasury and EOH Holdings company and the City of Johannesburg
  • The Free State government’s asbestos project
  • The R1 billion housing project in the Free State
  • Two volumes on the capture of state power utility Eskom

Chief Justice Raymond Zondo has found that the evidence led before the state capture commission of inquiry proves the Guptas executed a scheme to capture Eskom – and that they were aided by former president Jacob Zuma.

"Eskom entered into irregular contracts worth R14.7 billion mainly with entities linked to members of the Gupta family."

"The evidence proves a scheme by the Guptas to capture Eskom, install the Guptas' selected officials in strategic positions within Eskom as members of the board, the committees of the board and the executives and then divert Eskom's assets to the Guptas' financial advantage," Zondo found in the fourth part of his report.

"Central to the Guptas' scheme of state capture was president Zuma who the Guptas must have identified at a very early stage as somebody whose character was such that they could use him against the people of South Africa, his own country and his own government to advance their own business interests and president Zuma readily opened the doors for the Guptas to go into the SOEs and help themselves to the money and assets of the people of South Africa."

"When one has regard to all the evidence heard by the commission, it is quite clear that the Guptas were in control of the Eskom board. The president of the country, Zuma, and minister [Lynne} Brown were manipulating the situation at Eskom to advance the business interests of the Guptas."

The report found it was clear from quite early in his first term that Zuma "would do anything that the Guptas wanted him to do for them".

The report further says Eskom executives particularly Former CEO Matshela Koko, CFO Anoj Singh and former CEO Brian Molefe, "were integral component of the Gupta family's strategy to capture Eskom and have acted as they did for their personal interests, in order to secure employment positions and receive financial rewards or benefits from the Guptas".

Eskom, which supplies more than 90% of South Africa's electricity, is still struggling to repair the damage caused by the embezzlement of public funds. Weighed down by about R400 billion of debt and unable to afford to properly maintain its aged plants, it continues to subject the nation to rolling blackouts to prevent the grid from collapsing, curtailing economic growth and deterring investment.

Scores of witnesses who testified before the state capture commission over the past four years described how Eskom entered into deals secured with bribes and kickbacks, and bypassed procurement procedures. The primary beneficiaries were identified as the three Gupta brothers, who fled to Dubai shortly before the ruling party forced Zuma out of office in 2018 to stem a loss of electoral support.

The report of more than a thousand pages found that the executives were involved in a scheme designed to exploit Eskom and benefit Salim Essa’s company, Trillian and others.

"Salim Essa was, according to Mosilo Mothepu's evidence, a business development partner to Regiments. He secured government contracts for Regiments and, indeed, tried to do so in 2014 at Eskom, but fell short. The R30.6 million payment by Eskom in respect of the Corporate Plan followed Essa to Trillian. There was no justification for this payment, nor for the 'belief' that Regiments or Trillian was a BBBEE partner to McKinsey. This was corruption, plain and simple," said the report.

The report also found that both Koko and Singh engaged McKinsey and Trillian before the contract was finalised.

Singh, Edwin Mabelane and Prishotham Govender are responsible for allowing payment of invoices that should not have been paid; the payments were unlawful due to the flawed contracting process, and involved excessive overpayment to Trillian and McKinsey," said the report.

It added that Eskom later paid compensation of R1.6 billion to McKinsey and Trillian for the early termination of the contract.

The commission has recommended that legal action should be taken against members of the Eskom board in 2014 who took a decision to push out three executives.

This was against their fiduciary duty as Eskom was forced to pay the former executive millions.

The former executives were paid R18 million.

The commission recommended that Koko and Singh be investigated for their role in Eskom's deal with McKinsey and Gupta-linked Trillian.

Meanwhile Eskom welcomes the report issued by the Judicial commission of inquiry into Allegations of state capture, Fraud and Corruption (the Commission). Eskom has proactively set up a project team, supported by its internal and external lawyers, to ensure that the report is reviewed, understood and appropriate actions are taken to address recommendations made therein and to protect Eskom's interests. 

In his earlier reports, Zondo said state port and freight-rail operator Transnet signed dubious contracts worth R41.2 billion over almost a decade, making it the "primary site of state capture in financial terms." He also found the abuse of taxpayer funds was rife at state weapons company Denel, South African Airways and the national tax agency.

The commission has also recommended that the National Prosecuting Authority (NPA) lay criminal charges against businessman Edwin Sodi, one of the central figures in the R255 million Free State asbestos scandal.

In 2015, the Free State human settlements department had awarded the asbestos audit contract to Sodi's company, Blackhead Consulting, and Diamond Hill Trading, which was owned by Ignatius "Igo" Mpambani.

Mpambani was shot dead in Sandton in April 2018.

In the fourth part of his state capture report, Chief Justice Raymond Zondo said the Free State's handling of its housing project was a "dismal failure".

Zondo was referring to the Free State department of housing’s project to build thousands of low-cost (RDP) houses. R1.3 billion was set aside for this project, yet most of the houses were never built.

The state capture inquiry heard how the Free State's head of department for housing, Mpho 'Gift' Mokoena, and former housing MEC, Mosebenzi Zwane, were responsible for the province giving more than R500 million to contractors before any building of houses had started.

Chief justice Zondo presented the first part of the report to President Cyril Ramaphosa at the Union Buildings on January 4.

The presidency formally received the third part of the report on March 1.

On Thursday, the Pretoria high court granted a six-week extension for the final delivery of the report, giving the commission until June 15. This followed an urgent application heard unopposed on Thursday. 

The final instalment of the report was initially meant to be delivered at the end of April, but Zondo said in court papers the commission would not be able to deliver all the outstanding sections of the report by then.

Read the Full Reports here: State Capture Report Vol 4.