R659m Eskom scam: Tegeta’s Gupta conspicuously left out of Zondo’s recommended prosecution

The fourth volume of the State Capture report addresses the irregular supply of coal to Eskom from Tegeta’s Brakfontein Colliery, which cost the power utility some R659 million in 2016.

But something doesn’t add up.

The power utility’s penchant for corrupt contracts – such as the Tegeta deal – is primarily the reason why South Africa constantly battles stockpile shortages.

Tegeta’s history with Eskom

Eskom’s link to Gupta-owned Tegeta

In 2013, Eskom signed several coal-supply agreements with Tegeta as part of the power utility’s medium-term coal procurement mandate.

Also Read: Eskom settles penalty with Gupta-owned Tegeta

Apart from Eskom’s irregular advance payments to Tegeta, the agreements, in turn, enabled Tegeta to dictate highly favourable terms and extensions for its coal-supply contracts.

Tegeta also illegally acquired Optimum Coal Mine (OCM), and the pre-payment for coal supplies that followed was a sham.

“This is confirmed by the findings of a cash flow analysis which shows that the R659 million was paid towards the acquisition price of OCH by Tegeta, as was the R1.68 billion guarantee used to prove OCH bankers that Tegeta was good for the acquisition price”.

R659m deal not made in Eskom’s best interest

In 2019, Eskom’s Head of Finance in the Primary Energy, Snehal Nagar, said he received an email on 12 April 2016 to facilitate the R659 million payment to Tegeta.

Nagar said he could not recall the discussion with Ntetha and the prepayment to the Gupta-linked company.

He found it suspicious that he was instructed to pay a pro forma invoice – also dated 12 April 2016 – as it was not company practice.

Thus, Zondo’s report now states the context, timing and urgency of these deals “demonstrate the R659 million payment and the R1.68 billion guarantee were not made for the purpose of furthering the interests of Eskom”.

“These were made with the single purpose of ensuring the Guptas’ deal in terms of which they acquired the Glencore coal interests did not fall through for want of finance on the part of the Guptas”.

ALSO READ: Eskom took only 3 hours to illegally pay Tegeta R659m

Tegeta deal compromised coal stockpile

The Tegeta deal with the Guptas severely compromised South Africa’s ability to provide power and led to a spike in additional costs when Eskom used more expensive forms of power generation.

The corruption doesn’t end there.

Back in 2018, Eskom executive Abram Masango was suspended for the allegations of impropriety related to the Kusile power station.

Eskom’s contract with the Gupta-owned Tegeta mine – totalling a whopping R3.7bn – was declared unlawful Special Investigating Unit (SIU) in 2020.

Zondo’s recommendation

Zondo said several parties “are implicated in wrongdoing regarding the Brakfontein Coal Supply Agreement” and the Tegeta deal in his report.

They are: Matshela Koko, Vusi Mboweni, Ayanda Nteta, Ravindra Nath of Tegeta, Jacques Roux of Tegeta, and Tony Gupta of Tegeta.

These individuals breached Eskom’s policies by facilitating the Tegeta deal, by abusing their power and influence.

Their actions empowered the Gupta family to “unduly benefit in the retention of the Brakfontein Coal Supply Agreement with Tegeta” and caused financial prejudice and loss to Eskom.

Criminal prosecution for Tegeta fraud

It is, therefore, recommended that the National Prosecuting Authority “consider the criminal prosecution of Koko, Mboweni, Nteta, and Roux.

Since Eskom is a public entity listed under the Public Finance Management Act, the Eskom officials “have prima facie acted in breach of section 57 of the PFMA in that they failed to safeguard the financial interests of Eskom and failed to take effective and appropriate steps to prevent irregular expenditure”.

While it may be pointed out that Tony Gupta is not held liable under the PFMA act, neither is Roux, Tegeta’s special adviser.

Tony Gupta’s part

Tony Gupta is conspicuously left out of Zondo’s recommendations pertaining to Tegeta’s deals. Mention is only made of Gupta’s bribe to former Deputy Finance Minister, Mcebisi Jonas.

As for Jonas’ bribe, Gupta offered millions of Rands to Jonas, on condition he agree to work with the Gupta family in the capacity of finance minister.

Zondo, therefore, recommends the “NPA give consideration to instituting criminal charges against Rajesh Tony Gupta for bribery/corruption […]”.