Deloitte South Africa confirms the withdrawal of two top executives
JOHANNESBURG - Two Deloitte South Africa executives have stepped down shortly after the company agreed to a pay Eskom R150 million to end a dispute over improperly awarded consulting contracts and an internal investigation found no evidence of state capture or corruption
The group confirmed on Thursday that Thiru Pillay, the managing director for Deloitte Africa’s advisory arm, and Shamal Sivasanker, Deloitte Africa’s leader on infrastructure and power and the lead consultant on the Eskom contract quit at the end last month.
“Following the resolution of the Eskom matter. Deloitte confirms that the directors decided to withdraw from the firm effective 31 March 2020,” Deloitte said. “They acknowledged that the events related to the Eskom matter occurred on their watch.”
Eskom took legal action against the auditing firm last year to recoup more than R207m in fees that it paid the company.
Former Eskom chairman Jabu Mabuza previously blamed Deloitte for engaging in activities that were unfair, inequitable, non-transparent and noncompetitive. Mabuza accused the company of using off-the-record briefings with Eskom officials to submit proposals.
"Deloitte was granted contracts even though its pricing was way above their competitors, and getting the scope of these contracts modified to just under the ceiling price which required the approval of the provincial Treasury as stated in Eskom’s cost-containment procedures," Mabuza said.
Mabuza said it was disheartening to see how the processes were subverted, adding that proposals were submitted even before the tender process started.
"Deloitte was granted contracts when their prices were five times higher than those of their competitors. In one of the tenders, Deloitte's price was R79 million versus just under R16 million and R9 million from two competitors, and in the second tender, Deloitte's price was R88.8 million versus R14.5 million, R13.25 million and R6.59 million from three competitors," Mabuza said.
Eskom, the ailing electricity producer accused Deloitte of securing two tenders and other work “improperly” in 2016.
The consulting firm last month said it would repay an R150m to Eskom, representing a portion of the original fees invoiced.
“The settlement amount was determined after extensive negotiation between the parties in order to avoid protracted and costly litigation,” said the company said in a joint statement with Eskom last month.
It said that the parties had further agreed that investigations completed by Eskom and Deloitte showed no evidence of state capture or corruption and that Eskom benefited from the services that Deloitte Consulting rendered during the period of engagement, and Eskom continues to benefit from these services.
“There were technical irregularities within the procurement process, and Deloitte Consulting accepts that it participated in this irregular procurement process, and Deloitte Consulting is entitled to compensation for the value it delivered to Eskom,” the parties said in the statement.
On Thursday, Deloitte said Pillay and Sivasanker quit as the Eskom audit took place under their watch.
“Taking accountability is in line with our firm’s values,” Deloitte said. “Investigations completed by Eskom and Deloitte showed no evidence of state capture or corruption.