R1.6-billion victory for Eskom in corruption investigation

Eskom has announced it has recovered R1.56 billion from ABB South Africa as a full settlement for a dispute over corrupt contracts awarded by the power utility.

The settlement relates to an overpayment dispute relating to a contract that was unlawfully awarded through corrupt means for work on the Kusile power station.

ABB was appointed to complete the installation of control and instrument system for the six units of the power plant.

Speaking at a media briefing on Friday 11 December, Eskom said that this settlement will be subject to a review of the High Court.

“This is the story of money that was stolen from the public through corrupt means, and this is a good day for Eskom and the public,” said Eskom board chairperson Malegapuru Makgopa.

This victory for Eskom was the product of an investigation undertaken by the special investigating unit (SIU), the Hawks, and various other entities – including the United States Federal Bureau of Investigation (FBI).

The investigation

The SIU has also conducted an investigation into the witnesses involved in the irregular contracts, many of which are in foreign jurisdictions.

During the course of the investigation, ABB approached the SIU with a settlement offer.

The settlement will be paid back to Eskom by ABB, following their agreement that the contract as acquired irregularly and on a corrupt basis.

Further to the collusion in awarding the contract, certain Eskom officials illegally and fraudulently induced Eskom to pay an estimated R800 million to ABB in illegal Variation Orders, the SIU said.

Civil litigation will also be taken against those parties involved by the SIU and Eskom.

“We are delighted at this settlement, which is an important vindication of the tireless efforts of the SIU investigators working in close co-operation with the Eskom and ABB teams,” said SIU head Andy Mothibi.

Mothibi said the SIU has identified those former Eskom executives that were responsible for the awarding of the corrupt contract.

“The investigation has shown that they have since left the organisation,” Mothibi said.

“But as I indicated to my colleagues, resignation only terminates the employer-employee relationship. We will pursue them if there is any indication they have caused damage to Eskom.”

CEO responds

Eskom CEO André De Ruyter said the company is very pleased with the recovery of funds.

“It is expected that Eskom will receive the proceeds of this payment before the end of the calendar year,” he said.

“In order to avoid lengthy and protracted litigation, Eskom and the SIU agreed that the settlement amount is a fair and reasonable reflection of the damages that Eskom, and by the way implication the people of South Africa, suffered as a result of this unlawful contract.”

De Ruyter said that Eskom will continue to work with ABB to complete the work on Kusile to prevent any further delays, with the proviso that ABB will take no profit from the endeavour.

“We are pleased with this outcome. It is the continuation of a long series of recoveries,” he said.

“As the management and board of Eskom, we are committed to pursuing those who sought to enrich themselves unlawfully at the expense of Eskom and the South African taxpayer.”

De Ruyter noted that the total amount paid to Eskom by ABB only accounts for 0.25% of the total Eskom debt, and will therefore not make a significant difference towards paying this off.

Now read: Eskom power system under severe pressure

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R1.6-billion victory for Eskom in corruption investigation