Huge revelation in dodgy Eskom security contract probe

The Special Investigating Unit (SIU) has completed its investigation into two security contracts awarded by Eskom on the basis of emergency and found that employees deliberately created emergencies to award contracts.

The SIU launched an investigation into an allegedly irregularly awarded security contract awarded to Fidelity ADT for services conducted between July and September 2022.

While the contract’s estimated budget was R500 million, Eskom said it spent only R250 million.

Through its investigation into the contract, the SIU identified two similar contracts, which it said are interrelated and can’t be investigated in isolation.

Presenting before the Standing Committee on Public Accounts, Viven Govender, a forensic investigation specialist at the SIU, said the investigation agency identified a trend of Eskom staff creating emergencies to procure services.

“When you identify an emergency, it could be something that has happened or something that is imminently about to happen,” said Govender.

“If something has happened, you’ll have to appoint someone immediately. When it comes to something that is foreseeable, that is imminently about to happen, that area of imminence should be within a period of 48 hours.”

He explained that if it’s beyond 48 hours, Eskom employees cannot invoke the provisions of an emergency and appoint a service provider.

“You may, however, use other confined processes such as the urgent procurement process,” said Govender.

The SIU’s investigation into two of three security contracts revealed that Eskom employees intentionally created emergencies to procure security services “on emergency”.

In one case, Eskom staff declared an emergency seven days in advance.

“Companies that were appointed did not have the capacity to undertake the work and render the service,” said Govender.

In many cases, these companies subcontracted 90% of the work to third-party providers.

“It is unclear how these companies were contracting and how they were identified when they didn’t have the capacity, especially when in one instance, this company didn’t do work for Eskom prior to that,” added Govender.

The SIU also found that Eskom employees had contracted intermediaries before contracting the actual service providers for quotation.

Questions over De Ruyter’s involvement

Reports of the alleged irregular contract first surfaced in May 2023, revealing that it was reportedly procured by De Ruyter and acting head of security Karen Pillay under emergency procurement processes.

The three-month deal was intended to provide security and collect intelligence on Eskom infrastructure nationwide.

Fidelity ADT was to supply Eskom with 400 armed guards, aerial surveillance, response services, and support, as well as armoured surveillance and response vehicles.

The procurement request also said Fidelity would provide specialised security guards and technology deployment for intelligence-led protection of Eskom assets and infrastructure.

At the time, Pillay said Eskom paid for Fidelity ADT’s services without informing state security entities as the power utility did not trust South Africa’s law enforcement agencies.

“These threats affect national security, and due to the fact that law enforcement may not be able to mobilise at such short notice, it is incumbent on Eskom as the asset owner to deploy additional security measures to secure all high-risk infrastructure,” added Pillay.

At the time, then-police minister Bheki Cele told MPs that Pillay was under investigation by the police. However, he didn’t elaborate on the nature of the investigation.

In early June 2023, The Association of Private Security Owners of South Africa (Tapsosa) demanded an inquiry into De Ruyter and Eskom’s tender process.

It alleged that the former CEO had ignored the usual tender process to approve the contract under the guise of emergency services procurement.

However, in a statement following Tapsosa’s request, Eskom said it spent only R250 million of the R500 million budgeted for the contract.

It also assured the public that it followed its Procurement Procedures and National Treasury directives for procuring services in an emergency.

“The placement of the security contract was necessitated by information received by management indicating that there was a potential serious security risk to Eskom’s operations and assets,” Eskom added.

Fidelity ADT weighed in on the allegations in late June 2023. CEO Wahl Bartmann confirmed that the company was awarded a three-month emergency contract with Eskom.

He explained that the contract was comprehensive and included land and air support, tactical intervention units, and crowd control.

He added that the contract’s total value was R250 million — not R500 million.

“During this period, Fidelity Services Group, together with other service providers, were already supplying other services to Eskom, in support of their National Wage dispute,” said Bartmann.

“Contrary to Media statements and reports, Fidelity Services Group was not requested, nor provided, any Intelligence services to Eskom.”

Head of security Pillay suspended

Eskom placed Pillay on precautionary suspension in late June 2023, while it investigated her involvement in awarding the contract.

The power utility had faced mounting pressure to suspend Pillay from its board.

“Eskom confirms that advocate Karen Pillay is placed on a precautionary suspension to allow space for the investigation on allegations levelled against her to continue unhindered,” it said.

The power utility didn’t specify which allegations were being probed.

“No further comments will be provided on this matter until the investigation is finalised,” it added.

The Organisation Undoing Tax Abuse (Outa) was quick to comment on the suspension, describing it as “excellent news”.

“Hopefully this leads to a full investigation that exposes the extent of the sabotage and rot in @Eskom_SA. And criminal charges against whoever is implicated,” it said.