#StateCaptureInquiry: How Eskom flouted rules to push through Huarong deal

By Zintle Mahlati Time of article published Mar 4, 2019

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Johannesburg - An Eskom official has corroborated evidence heard by the Zondo commission that Eskom rules were flouted to push through a R25 billion loan facility agreement offered by a Chinese consortium. 

Eskom's corporate specialist at the treasury department, Sincedile Ebenezer Shweni, told the commission that he had reservations about how the deal with Huarong was dealt with. 

The deal was part of a R25 billion loan that Eskom would receive from Huarong Energy Africa, a Chinese and South African consortium.

The money was meant to enable Eskom to maintain its power stations.

The deal would have committed Eskom to pay about $19 million, which amounts to over R200 million, immediately after the deal was signed.  

Shweni said when the Eskom treasury department got the unsolicited proposal from Huarong the group did research on the company and to check out if there were no similar offers available. He said everyone thought it was a good proposal at the beginning. 

He said he started to notice suspicious steps being taken such as the proposal not being taken through the power utility's risk and liability asset committee. He said this was unusual because that committee was sharp and could analyse a proposal and figure out certain issues. Instead, Shweni said it was taken up towards a higher committee. 

He said because the proposal had former CFO Anoj Sign's signature, it then warranted the proposal being analysed a higher structure. 

He said he raised issues when dealing with a term sheet which treasury under Singh signed. Mshweni said he had issues with the large cancellation fee and long-term payment period. 

He confirmed that the proposal from Huarong was not taken to the power utility's legal team and the team only started being involved at a later stage. 

"The committee that was evaluating did not know how to deal with this because of the issue of the signed term sheet. Perhaps outside of the committee that was evaluating then you could say that Huarong got a head start compared to others. None of the others had their term sheets signed. None of the others had proposals or entities had visits that were paid (by Eskom officials)," said Mshweni. 

On Friday Eskom's treasurer, Andre Pillay told the commission how former Eskom interim CEO Sean Maritz pushed through the deal and signed it even with objections from the board. 

Pillay said Maritz signed it on the same day that the board had expressed its unease, and said he had received approval from the public enterprise's minister Lynne Brown. 

"Maritz returned from Cape Town and said he was prepared to sign. He had sent an email to the CFO asking why we were not signing the deal. He then signed a long term facility and not a short term facility.

"The $19.2 million was immediately payable. This was the contentious part of this deal. I had indicated to them that as a state-owned entity we cannot pay even before seeing anything," said Pillay. 

Pillay said the invoice was sent by Huarong after the deal was signed.

Maritz was suspended from Eskom in January 2018. He later resigned. He was also accused of signing off on a kickback deal and that matter is currently being investigated by the Special Investigative Unit. 

Last week, Eskom board chair Jabu Mabuza said Eskom would not pay back what Huarong claims the utility owes them.


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