Energy15.01.2025

Prepaid electricity system breach and R238,000 for a mop — major corruption at Eskom

While state-owned power utility Eskom has been weeding out corrupt elements within the organization, it continues to unearth new ways criminals are robbing the company and stealing from legitimate customers.

Most recently, Eskom disclosed that it suspected insiders were involved in a breach of its online vending system, allowing electricity thieves to generate illegal prepaid electricity tokens in bulk.

Eskom appointed an external IT company to conduct a forensic probe into the breach and to make recommendations on fixing the system’s vulnerabilities.

The utility first implemented the online vending system (OVS) in 2008 to combat “ghost” vending of electricity vouchers. These tokens were sold through offline electricity credit dispensing units that were stolen or lost.

The OVS facilitates prepaid electricity sales through digital channels, including banking apps, remote terminals such as ATMs, and other vending stations.

“The system vends electricity tokens from the main Eskom central server through approved national vending agents using a secure backend in real-time,” the power utility explained in its 2024 integrated report.

“The system should not permit any external vending channel to vend a token if the vending agent cannot communicate with the Eskom server or cannot be authenticated via the secure protocol.”

Eskom explained that tokens are encrypted as soon as they are generated before being stored in the OVS database and sent to the customer via the vending agent.

“Once the customer enters the token, the prepaid meter decodes the 20-digit token using the Standard Transfer Specifications security protocol,” said Eskom.

The meter should only accept the token if it was correctly generated by its system, which is only possible if you have the necessary private encryption keys.

For this reason, Eskom strongly suspects that some of its own staff had successfully colluded with illicit operators and compromised the OVS to help create and sell fraudulent prepaid electricity tokens.

Eskom suspecting that an inside job was likely behind the availability of illegal prepaid electricity adds to a list of corrupt activities perpetrated by staff over the years. Some examples are listed below.

  • Eskom paid R80,000 for a pair of knee guards that cost R320 at Builders Warehouse at the time.
  • Eskom paid R200,000 for a wooden-handled mop which costs less than R100 at most stores.
  • Eskom paid R940,000 for an oil storage container that could have been bought for R80,000.
  • Eskom paid a company R600,000 to fix 12 grass trimmers. The power utility could have bought 12 new grass trimmers for R114,000.
  • Eskom paid R26 per single one-ply toilet paper roll, which was R3.99 at Checkers at the time.
  • Eskom paid R51 per black refuse bag, which was R2.99 at Checkers at the time.
  • Eskom paid R21 for a litre of milk, which cost R12.49 at Checkers at the time.
  • A buyer at Kendal Powers Station placed an order to refurbish two compressors for R368,550. The price of two new compressors would have been R112,000.

Eskom has cracked down heavily on corruption in recent years, leading to several arrests and prosecutions.

In 2023, an employee was arrested for allegedly colluding with a service provider to inflate tender prices at Kriel power station.

Last year, a sub-contractor was sentenced to four years in prison for attempting to extort a bribe from a truck driver delivering coal to Camden power station.

In December, Eskom stated in its integrated report for the year ended 31 March 2024 that it appointed an independent legal firm to investigate allegations of corruption and other criminal activities brought by former CEO André de Ruyter.

Part of their task was to obtain the private intelligence dossiers resulting from De Ruyter’s investigation.

Eskom said it did not have access to the information gathered through the investigation De Ruyter commissioned.

The investigation was also aimed at assisting the Eskom Board in addressing matters arising from allegations made in the dossiers and De Ruyter’s book.

“Despite the lack of evidence presented in the dossiers, the legal firm is consolidating the findings to aid in identifying matters for further investigation,” Eskom said.

In addition to the independent investigation, Eskom has also conducted hundreds of other forensic investigations into crime at the company.

“Regrettably, our forensic investigations have revealed themes similar to those of previous years,” it said.

This includes procurement and recruitment irregularities, failure to declare conflicts of interest and other corrupt and fraudulent activities.

“Noncompliance with Eskom’s well-documented policies and procedures, as well as lack of management supervision and monitoring, remain a concern,” it said.

Over the last year, 167 employees were recommended for disciplinary action and 30 suppliers were recommended for review.

Additionally, 330 cumulative cases of fraud and corruption were registered with the South African Police Service.

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