Eskom paid R2 billion for work that was never done – Report

A preliminary forensic report has claimed that over R2 billion was stolen from Eskom through a network of ghost service suppliers and well-placed officials, according to City Press.

The money was allegedly funnelled via fraudulent transactions over the last three years, involving a number of companies invoicing Eskom for work that was never carried out.

The report was compiled by forensic investigators from Seekers Finders Forensic Auditors and Risk Services after a whistle-blower alleged that prominent Eskom employees were colluding with service providers to generate the fraudulent invoices.

At least three Eskom officials have been implicated in the irregularities, in addition to prominent Mpumalanga businessman Jerry Zitha, owner of engineering company Mfondo Trading.

Zitha allegedly got orders from Eskom for which he was supposed to render services through various companies under his control.

While the companies were paid for services which included labour for coal outage plans and refurbishing of injectors, no work had been done in this regard.

The report has been handed over to the Special Investigating Unit (SIU), which has confirmed it is investigating certain issues contained therein.

“The report has been reviewed by the SIU’s assessment committee and the Eskom investigation team. Limited areas that fall within the SIU’s current mandate were identified from the report,” SIU spokesperson Kaizer Kganyago told City Press.

Chief Procurement Officer suspended

News of the report comes days after Eskom CEO André de Ruyter confirmed that the utility’s Chief Procurement Officer Solly Tshitangano had been suspended for bad performance and would be subjected to disciplinary action.

De Ruyter said that Tshitango was tasked with cutting Eskom’s annual expenditure in its procurement division by at least 4% but had failed to do so.

Eskom spends around R140 billion per year on foods and services, which De Ruyter said was more than the utility should be paying.

“R2 billion savings is not a lot, it’s about 4% of R140 billion. That is exceptionally modest, but Solly has not delivered what was asked of him,” De Ruyter told News24.

De Ruyter added that the utility would have paid R238,000 for a wooden mop without his intervention.

He further claimed that Eskom had previously been paying R28 for a roll of single-ply toilet paper and R56 for a 2L milk bottle.

Tshitango had also failed to pitch up for board subcommittee meetings, and several other meetings with De Ruyter, Eskom’s human resources executives, people management, and the company’s CFO.

Tshitango has accused De Ruyter and Eskom’s legal head of racism by stating they had used “the colour of their skin to undermine his authority”.

Eskom taking charge at municipalities

Eskom’s financial struggles have been further exacerbated by numerous municipalities not paying for the electricity which the utility has supplied to them.

In an interview with the Free Market Foundation last week, De Ruyter said non-paying municipalities were a major problem with the money owed to Eskom ballooning to R36 billion.

The top 10 municipalities owed Eskom around 70% of the R36 billion, while the top 20 makes up 85% of the debt.

De Ruyter said that Eskom was trialling a more productive solution called “active partnering”.

What this means, in simple terms, is that Eskom takes over from the municipality to manage everything related to the supply of electricity.

Eskom acts as the agent for the municipality to maintain the electricity infrastructure, install prepaid meters, do the billing, and collect payments.

What is particularly important, De Ruyter said, is that the money is paid into an Eskom bank account instead of a municipal account. This stops municipal workers from misappropriating the funds.

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Eskom paid R2 billion for work that was never done – Report