The Eskom manager given the job of buying more than R10-billion of emergency coal during the 2008 power crisis negotiated several “irregular” contracts – including one with a friend – and resigned shortly after an investigation was launched.
This is one of several claims in yet another explosive Eskom report, this one by auditing firm Deloitte, which investigated alleged dodgy dealings within the power utility during the blackout period.
That report prompted an investigation by the police’s Special Investigating Unit and was given to President Jacob Zuma in 2014.
Both reports point to the possibility of criminal activity related to the emergency procurement of “blackout” coal under the watch of lead procurement negotiator Koos Jordaan.
Eskom this week said it had implemented all the recommendations of the Deloitte report.
“Consistent with this, Koos Jordaan is no longer part of Eskom consequent on the Deloitte investigation. Eskom and the Special Investigating Unit are in contact with regard to the processing of the report.”
News of the blackout investigation emerged only days after the emergence of a 2015 report by law firm Dentons, which also raised concerns about Eskom management, in particular that senior executives might have benefited from contracts and had paid up to 200% more than necessary for coal.
All of this adds impetus to calls for an independent commission of inquiry into the company’s affairs.
The Deloitte investigation – the report of which was submitted to Eskom in May 2011 – looked specifically at emergency procurement contracts concluded in 2008 by Eskom’s primary energy division.
The report details numerous irregularities and strengthens speculation that the blackout emergency, which cost South Africa an estimated R300-billion, was engineered to benefit favoured companies.
“It would appear that Mr Jordaan, and other Eskom employees, circumvented the prescribed Eskom tender policy and procedure by appointing suppliers under the emergency mandate when, in fact, these services did not relate to the emergency period and should have been dealt with under the normal Eskom procurement policies and procedures,” the report said.
“From the interviews conducted, it appears that the 2008 emergency was not managed in the best interest of Eskom and resulted in fruitless and wasteful expenditure being incurred.”
Elsewhere, the report draws attention to a specific supply contract that was awarded to Isambane, the main shareholder of which is Koos Reinecke, a personal friend of Jordaan.
Isambane was appointed “outside of a normal Eskom tender process”, the report said.
The company was not registered – as is required – on the Eskom coal and vendor database. Eskom paid Isambane more than R800-million for coal and coal blending, authorised three advance payments worth R75-million, and sold the company equipment with which to do the job.
Isambane charged R39.73 a ton for processing, far exceeding the budgeted R27, the report said. “Of further concern is the obvious relationship between Mr Reinecke, from Isambane, and Mr Jordaan. With reference to the interviews conducted, Isambane was appointed as a result of the intervention of Mr Jordaan and at a stage that they were not conducting the business of scalping and blending of coal,” the report continued.
A criminal case was opened against Jordaan – this has been confirmed by the police.
Criminal dockets are normally submitted to the National Prosecuting Authority for a decision on whether to prosecute but the NPA’s Gauteng spokesman said there was no trace of such a docket.
Jordaan, now a senior executive of a private coal company, said he had done nothing wrong. Allegations in the Deloitte report were unproved, he said.
“I have nothing to hide. I did best ... my utmost best. I think I did a very good job.
“I concluded not a single transaction on my own. Everything was done in formal structures and formal committees. Nobody received any advantage whatsoever. There was sign-off by all relevant parties and everything was done by the book.”
Jordaan denied any personal gain as a result of his role in emergency procurement, and said his purchases of several farms – flagged in the Deloitte report – were paid for with his and his wife’s money. “I am still buying farms. I have been investigated – that I know of – and I was summoned for many things, but nothing came of it because nothing was found to be irregular. There is no proof in any of them,” Jordaan said.
Reinecke this week also denied knowledge of an investigation into the Isambane contracts, which he said spanned three years.
“Nobody ever contacted me with regard to my contracts with Eskom,” he said.
The SIU unit report into various allegations against Eskom, including those related to emergency coal procurement, was submitted to the Presidency in 2014.
It was based on 163 interviews and 276 affidavits. It went so far as to say that the power-supply crisis “was created by Eskom itself, not any external factor”.
A former head of the unit, Willie Hofmeyr, confirmed it had helped Eskom investigate various matters.
Bobby Jordan reports for The Times
Eskom’s blackouts were a get-rich scheme
This is one of several claims in yet another explosive Eskom report, this one by auditing firm Deloitte, which investigated alleged dodgy dealings within the power utility during the blackout period.
That report prompted an investigation by the police’s Special Investigating Unit and was given to President Jacob Zuma in 2014.
Both reports point to the possibility of criminal activity related to the emergency procurement of “blackout” coal under the watch of lead procurement negotiator Koos Jordaan.
Eskom this week said it had implemented all the recommendations of the Deloitte report.
“Consistent with this, Koos Jordaan is no longer part of Eskom consequent on the Deloitte investigation. Eskom and the Special Investigating Unit are in contact with regard to the processing of the report.”
News of the blackout investigation emerged only days after the emergence of a 2015 report by law firm Dentons, which also raised concerns about Eskom management, in particular that senior executives might have benefited from contracts and had paid up to 200% more than necessary for coal.
All of this adds impetus to calls for an independent commission of inquiry into the company’s affairs.
The Deloitte investigation – the report of which was submitted to Eskom in May 2011 – looked specifically at emergency procurement contracts concluded in 2008 by Eskom’s primary energy division.
The report details numerous irregularities and strengthens speculation that the blackout emergency, which cost South Africa an estimated R300-billion, was engineered to benefit favoured companies.
“It would appear that Mr Jordaan, and other Eskom employees, circumvented the prescribed Eskom tender policy and procedure by appointing suppliers under the emergency mandate when, in fact, these services did not relate to the emergency period and should have been dealt with under the normal Eskom procurement policies and procedures,” the report said.
“From the interviews conducted, it appears that the 2008 emergency was not managed in the best interest of Eskom and resulted in fruitless and wasteful expenditure being incurred.”
Elsewhere, the report draws attention to a specific supply contract that was awarded to Isambane, the main shareholder of which is Koos Reinecke, a personal friend of Jordaan.
Isambane was appointed “outside of a normal Eskom tender process”, the report said.
The company was not registered – as is required – on the Eskom coal and vendor database. Eskom paid Isambane more than R800-million for coal and coal blending, authorised three advance payments worth R75-million, and sold the company equipment with which to do the job.
Isambane charged R39.73 a ton for processing, far exceeding the budgeted R27, the report said. “Of further concern is the obvious relationship between Mr Reinecke, from Isambane, and Mr Jordaan. With reference to the interviews conducted, Isambane was appointed as a result of the intervention of Mr Jordaan and at a stage that they were not conducting the business of scalping and blending of coal,” the report continued.
A criminal case was opened against Jordaan – this has been confirmed by the police.
Criminal dockets are normally submitted to the National Prosecuting Authority for a decision on whether to prosecute but the NPA’s Gauteng spokesman said there was no trace of such a docket.
Jordaan, now a senior executive of a private coal company, said he had done nothing wrong. Allegations in the Deloitte report were unproved, he said.
“I have nothing to hide. I did best ... my utmost best. I think I did a very good job.
“I concluded not a single transaction on my own. Everything was done in formal structures and formal committees. Nobody received any advantage whatsoever. There was sign-off by all relevant parties and everything was done by the book.”
Jordaan denied any personal gain as a result of his role in emergency procurement, and said his purchases of several farms – flagged in the Deloitte report – were paid for with his and his wife’s money. “I am still buying farms. I have been investigated – that I know of – and I was summoned for many things, but nothing came of it because nothing was found to be irregular. There is no proof in any of them,” Jordaan said.
Reinecke this week also denied knowledge of an investigation into the Isambane contracts, which he said spanned three years.
“Nobody ever contacted me with regard to my contracts with Eskom,” he said.
The SIU unit report into various allegations against Eskom, including those related to emergency coal procurement, was submitted to the Presidency in 2014.
It was based on 163 interviews and 276 affidavits. It went so far as to say that the power-supply crisis “was created by Eskom itself, not any external factor”.
A former head of the unit, Willie Hofmeyr, confirmed it had helped Eskom investigate various matters.
Bobby Jordan reports for The Times
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