Picture: Bheki Radebe/African News Agency/ANA

Cape Town - Former Eskom CEO Matshela Koko obstructed coal testing that would have compromised the contract Tegeta Exploration cinched with the power utility, according to a forensic report released by National Treasury on Friday.

The report by Fundudzi Forensic Investigation Services details how Eskom executives flouted company policy and public finance rules to favour Tegeta, part of the Gupta family's business empire and concludes that Koko and three other Eskom officials should be held accountable for irregular and unauthorised expenditure.

It gives a blow-by-blow account of wrangling over coal quality from the Brakfontein colliery from where Tegeta was contracted to supply coal to Majuba power plant, and finds that Eskom proceeded to give "Tegeta preferential treatment by continuing with the evaluation of the unsolicited bid even after the Brakfontein coal tests failed to meet specifications".  

The investigators note with wry surprise that at one point, when coal samples were found not to be up to scratch, Tegeta sought to extract an incentive for delivering coal that would meet requirements.

Koko eventually very briefly suspended the coal supply agreement (CSA) with Tegeta but the report finds that this appeared to have been a ruse.

"It appears that the suspension of the CSA was a smoke-screen in that Tegeta issued a request to supply an additional 200,000 tonnes of coal whilst they were on suspension. Subsequent to their request, Koko uplifted the suspension of Tegeta’s CSA.

The report finds that the initial negotiation of the contract was largely left in the hands of Ayanda Nteta, the former acting head of fuel sourcing, and said Vusi Mboweni, the senior general manager of Eskom's primary fuel section, testified that the attempts to persuade the company to enter into the deal included various meetings with the Gupta family, who are suspected of syphoning billions of rands from state-owned enterprises in the so-called state capture scandal, at the behest of Koko.
 
The findings contradict claims by various senior officials that an advance of R659 million for coal supplies -- which enabled Tegeta to come up the cash to buy the Optimum coal mine -- was an eleventh-hour agreement.

Several senior managers, including Koko, appeared to have known about the arrangement from at least April 8, 2016, six days before it was inked on April 14.

Of the basis for signing on Tegeta as a supplier, the investigators conclude: "We could not find any evidence that a financial modelling and evaluation process was followed or a clear commercial motivation for entering into the contract on the commercial terms provided."

Tegeta subsequently persuaded Eskom to extend the lifespan of the contract from five to ten years and the report finds that this constituted unauthorised and irregular expenditure. It says Koko, Nteta, former acting chief procurement officer for group commercial Edwin Mabelane, and Mboweni should be held to account for the irregular and unauthorised expenditure. 

"There is no evidence that Eskom executives who concluded the coal supply agreement between Eskom and Tegeta obtained approval to procure beyond the lifespan of the medium-term mandate," the investigators say, before recommending that their report be handed to the Directorate for Priority Crime Investigation (Hawks) for investigations into whether criminal charges should follow.

The report also notes concern that there were discrepancies in invoicing that suggests that Tegeta may have been paid for more than the coal quantities they actually delivered during 2015, but says not all outstanding documentation was received by the time it was written. 

African News Agency (ANA)