R1 billion stolen from Eskom every month is probably underestimated — De Ruyter

The former head of South Africa’s state power utility said he probably underestimated when he put the amount of money that’s being stolen from the company at R1-billion-rand-a-month.

Ex-chief executive officer Andre de Ruyter also said internal resistance to measures he implemented to try and curb corruption at Eskom Holdings SOC Ltd. is hampering the effort.

His comments were contained in a written submission to lawmakers, seen by Bloomberg, that he is scheduled to deliver virtually on Wednesday.

De Ruyter stepped down as CEO on Feb. 22 — more than a month before his scheduled March 31 departure date — after censuring the government over corruption at Eskom and accusing senior members of the governing African National Congress of stealing from the utility.

The amount that’s being stolen is probably higher than 1 billion rand, he said.

“This is, if anything, a conservative estimate and is based on my assessment of the losses suffered by Eskom that have come to my attention,” De Ruyter said.

He didn’t immediately reply to a call and a text message requesting comment.

Debt-strapped Eskom is currently implementing daily blackouts because its dilapidated power plants are unable to supply enough electricity to meet demand and it doesn’t have the money to invest in capital equipment.

It’s been given a 254 billion rand debt-relief package under strict conditions that the bailout is only used to repay loans and settle interest payments, meaning it has to find money to repair its plants elsewhere.

Sabotage, Cartels

The submission to parliament’s Standing Committee on Public Accounts airs claims that De Ruyter first made in a television interview in February.

Lawmakers plan to interview him about corruption, theft, maladministration, sabotage, lack of consequence management, cartels and other financial irregularities at Eskom.

At the time that he first made the allegations, his linking of theft at Eskom to unidentified government officials struck a nerve within the ANC.

Even Public Enterprises Minister Pravin Gordhan, who has political oversight of Eskom and stood by De Ruyter’s campaign to fight graft during his three-year tenure, criticised the former executive for not spending enough time repairing the utility’s coal stations.

De Ruyter declined to identify those who he had connected to graft at the utility in the submission, citing constraints including material and documentation that remain in the possession of Eskom. He also said that divulging sources would compromise their identity and safety.

De Ruyter referred the committee to the Hawks, a police unit that investigates high-profile crimes, to better determine the detail that could be provided by various investigations.

Fraud and corruption in the procurement process has reached considerable levels at Eskom and De Ruyter said measures taken under his leadership to eliminate the practices made only temporary progress.

“The implementation of enhanced controls, and procurement and inventory management processes have slowed down this type of crime, but internal resistance and non-compliance have hamstrung efforts,” he said.

The graft takes various forms at Eskom, including the “ghost delivery” of spare parts for equipment that’s recorded throughout receiving processes, but not physically present, De Ruyter explained.

Organised groups that mainly focus on crimes related to coal supply are associated with specific power stations and have their own identities including the Presidential, Mesh-Kings, Legendaries and Chief Cartels, he said, citing the findings of an investigation.

“The cartel leader or his subordinates will approach a specific end-user, who could be an Eskom engineer or manager at a power station to begin the illicit process,” De Ruyter said.

In the weeks following the initial allegations made by the former CEO, the government urged him to report the information to law enforcement agencies.

De Ruyter said he’d taken a number of steps to inform the authorities, including a meeting on June 4 last year, with the national police commissioner and representatives of the state security agency.

In the following month, Gordhan and National Security Adviser Sydney Mufamadi were also briefed, he said.

Eskom said by email it would respond to a request for comment later.

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R1 billion stolen from Eskom every month is probably underestimated — De Ruyter