CAPE TOWN - Trillian and global consultancy McKinsey's clock is ticking as Eskom has demanded that they pay back the R1.6bn they received from an unlawful consultancy contract by Tuesday and warned of possible charges.
This comes after a letter of demand was sent to Trillian and McKinsey on October 4.
"To ensure that the money unlawfully paid to McKinsey and Trillian is safeguarded Eskom would like it to be returned to it as soon as possible, but by no later than October 10 2017," reads the letter of demand drafted by law firm Bowmans on behalf of Eskom.
In addition to this, Eskom has said it would seek a court order to set aside the contracts through which it paid the consulting firms.
"Eskom is prepared to entertain some form of escrow arrangement for this money pending the grant of the orders".
The demand letter states the following:
- The legal grounds on why it finds the contract and payments unlawful.
- The charges "against implicated parties" may include theft, fraud and corruption.
- That Eskom had not received permission from Treasury to deviate from its rules on fee calculations for consultants.
A Treasury instruction stipulated Eskom that should have paid McKinsey and Trillian an hourly rate. Instead the companies were paid a percentage of savings achieved, allowing fees to grow astronomically.
- McKinsey received two unlawful payments from this contract totaling R1.028bn and Trillian, "with the consent of both McKinsey and Trillian" received four payments totaling R564.6m.
- By signing the contract with McKinsey, Eskom’s chief procurement officer, Edwin Mabelane, had acted unlawfully, irrationally and in breach of the Public Finance Management Act "and or acted based on a material mistake of law or fact in the face of knowledge by all parties of the illegal nature of the contract", the letter says.
McKinsey and Trillian have allegedly requested a meeting with Eskom for Monday.
Asked about its contract being unlawful as it violated Treasury rules, spokesman Steve John said on Sunday that McKinsey was "informed by Eskom on February 5 2016 that it had received National Treasury approval. Eskom’s own documentary records support this fact".
Similarly, Eskom admitted in August that they had lied about payments of more than R1.5bn to Trillian Capital Holdings and McKinsey, reports Independent Media.
At the time of the payment, Eskom allegedly claimed that the payments were above board.
Yet, the unlawful payments were discovered by fellow global management consultancy Oliver Wyman who "concluded the payments were “based on prudent costs incurred and value created".
Eskom was later forced to concede that in fact Wyman had red-flagged the payments and recommended a legal review of the transactions.
- BUSINESS REPORT