Moneyweb
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3 minute read
22 Aug 2020
11:05 am

Why former Eskom and Transnet CFO Anoj Singh was stripped of Saica membership

Moneyweb

The former Eskom and Transnet CFO was found guilty of improper conduct and gross negligence, among other charges.

Anoj Singh. Picture: Moneyweb

Anoj Singh, the former chief financial officer of Eskom and Transnet, has been barred from South African Institute of Chartered Accountants (Saica) membership in a decision handed down on August 14, 2020 by the disciplinary committee of Saica.

Singh will also be required to make a contribution of 50% of the institute’s costs.

Singh’s attorney had informed Saica that he would not participate, and Singh did not attend the proceedings which commenced on November 13, 2019.

Singh’s charges related to:

  • The acquisition by Transnet of 1,064 diesel and electric locomotives at an ultimate cost of R54.5 billion during his time as CFO of Transnet (2012–2015).
  • The authorisation of payments of substantial sums to various service providers during his time as CFO of Eskom (2015–2016).

Charges relating to the 1 064 locomotive deal

The cost of the 1,064 (465 diesel and 599 electric) new locomotives was R38.6 billion per a detailed business case that had been prepared. No notice was given that this cost excluded forex hedging, forex escalation, other price escalation and borrowing costs.

On March 17, 2014 a contract was concluded with four bidders, and the total cost of acquisition had jumped from R38.6 billion to R54.5 billion.

Singh was found guilty of improper conduct, conducting himself in grossly negligent way, in breach of the institute’s code of conduct for the following reasons:

  • He failed to ensure that the business case accurately stated that the initial costs of R38.6 billion would include additional costs such as forex hedging, forex escalation and other price escalations.
  • He incorrectly attributed the increase in costs to a number of factors including forex and escalation costs. “The reasons advanced for the increase were thus misleading and negligently made.”
  • He altered the hurdle rate from 18.56% to a lower rate of 15.2% to ensure that the more expensive locomotives would still be profitable to Transnet.
  • He misled the board in indicating a cost saving, when there wasn’t one. He therefore was also in breach of the institute’s code of conduct.
  • Singh, together with two others, motivated for the splitting of the award to two bidders for diesel and another two bidders for electric locomotives, leading to an increase in costs, and in contravention of procurement processes. 

Eskom-related charges

Singh was charged with gross negligence, improper conduct, breaching the code of professional conduct, and bringing the profession of accountancy into disrepute:

The institute relied on documentary evidence to consider the charges against Singh:

  • The approval of irregular payments to McKinsey: Singh joined Eskom after McKinsey was appointed, and the charged were dropped.
  • Singh approved substantial irregular payments to Trillion despite the fact that they had no employees and couldn’t provide any services: There was no contract between Eskom and Trillion, invoices were sent by Trillion to Singh’s email address for approval.
  • Singh approved the payment of a performance guarantee of R1.68 billion to Tegeta, and the advance of R659 million to Tegeta for the purchase of the Optimum Mine.

Singh was found not guilty in regard to his improper relationship with the Guptas, who had paid for his travelling expenses, as the trips took place before Singh joined Eskom.

Singh’s conduct at Transnet and at Eskom “resulted in these public institutions suffering substantial financial prejudice”.

“The institute demands of its chartered accountants that they exercise not only due diligence and care but that they demonstrate objectivity and integrity in their professional conduct. Mr Singh regrettably did not adhere to these standards.”

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