Eskom held a media briefing on Friday in which it addressed its implication in former public protector, Thuli Madonsela’s State of Capture report. 

The report, released late on Wednesday afternoon, exposes the controversial relationship between the infamous Gupta family and several cabinet members, including Mineral Resources Minister Mosebenzi Zwane and Public Enterprises Minister Lynne Brown. It also shows the extent of the interaction between the Guptas and Eskom Chief Executive Brian Molefe.

The report also finds that President Jacob Zuma failed to investigate numerous claims of state capture.

Former public protector Thuli Madonsela detailed her findings in a 355 page “State of Capture” report.

Eskom helped Tegeta purchase Optimum Coal

A considerable portion of Madonsela’s report focuses on the “cosy relationship” between Molefe and the Gupta family, as well as the family’s purchase of the Optimum Coal Mine through Gupta-controlled Tegeta Exploration and Resources.

Madonsela’s report also suggests that Eskom intentionally pushed Optimum Coal, owned at the time by Glencore, into business rescue and financial distress when Eskom refused to renew its coal supply contract for the Hendrina mine.

“It appears that the conduct of Eskom was solely to the benefit of Tegeta, in that they forced the sale of OCH to Tegeta by stating that OCM (Optimum Coal Mine) could be sold alone,” the report says.

“Thereafter, they have allowed Tegeta to proceed with the sale of a portion of OCH in the form of the Optimum Coal Terminal. This may constitute a contravention of section 50(2) of the PFMA in that they acted solely for the benefit of one company,” it adds.

Eskom further assisted Tegeta’s purchase of Optimum by awarding the coal company the contract to supply a power station at Arnot, and with a prepayment of R659 million for the Arnot coal contract.

The prepayment was made on April 11. Later that night, Eskom held an emergency board tender committee meeting to approve the prepayment.

The report indicated that Tegeta’s conduct and misrepresentations made to the public about the prepayment could amount to fraud.

Eskom’s ties to the Guptas

The majority of Eskom’s board, who were appointed by Public Enterprises Minister Lynne Brown, was said to consist of people who had ties to the family, as well as to Zuma’s son, Duduzane Zuma.

The report also reveals that the energy utility’s board went to extreme lengths to assist the Guptas in their purchase of the Optimum Coal Mine.

In her report, Madonsela says that Minister Brown acted improperly as she failed to apply the basic principles of corporate governance when she appointed board members. Her lack of action when the above potential irregularities were brought to her attention is also highlighted in the report.

Molefe phone calls and home visits to Guptas

The report details Molefe’s phone records, which show that not only did he call Ajay Gupta 44 times over a six-month period, he also visited the Guptas’ Saxonwold home 19 times between August and November 2015.

Minister Zwane’s actions also questioned

The report reveals that Mineral Resources Minister Mosebenzi Zwane also played a part in enabling Tegeta’s purchase of Optimum. In December 2015, Zwane travelled with members from Tegeta to Glencore in Switzerland to negotiate the purchase.

In January he confirmed that he had travelled with the Tegeta delegation, but denied any personal benefit from the deal.

“If Minister Zwane travelled in his official capacity to support Tegeta’s bid to buy the mine, his conduct would give Tegeta an unfair advantage over other interested buyers,” the report says. “Further, it is potentially unlawful for the minister to use his official position of authority to unfairly and unduly influence a contract for a friend or, in this instance, his boss’s son at the expense of the state.”

Molefe and Ngubane respond to report

Eskom Chair Baldwin Ngubane pledged his support for Molefe and said that while the board welcomed the report, members were disappointed that Madonsela did not call them in for interviews as she had promised.

“We support our CEO and the executive for the good work they have done‚” Ngubane said during the presentation of Eskom’s financial results.

Molefe also commented on being implicated in the report and said that Eskom had given Madonsela about 130 files and had agreed on a date to meet to discuss them. However, he stated, she cancelled the meeting.

“My gripe with the situation is that the Public Protector never called me and the CFO to give our reasons for the events,” Molefe said. “I thought the Constitution gives us the right to be heard.”

He announced that another briefing would take place on Friday to respond to the “State of Capture report.

Conclusion of Madonsela’s report

Owing to lack of time and adequate resources available to her, the Public Protector recommended “the President to appoint, within 30 days, a commission of inquiry headed by a judge solely selected by the Chief Justice who shall provide one name to the President.” The work of this commission will be to investigate further the various findings in the “State of Capture” report, with a view to reaching a conclusion.