Johannesburg - Head of Finance at Eskom's primary energy division, Snehal Nagar, on Tuesday testified on how he was instructed to make a R659 million pre-payment for coal to Gupta's Tegeta Resources within three hours without following Eskom processes.
Nagar, a chartered accountant, told the state capture commission of inquiry that the Tegeta payment request from disgraced former CFO Anoj Singh was meant to ''fool the system'' as the Eskom system required that goods be received, in this case, coal, before any payment could be made.
According to documents before the commission, the Eskom tender board met on 11 April 2016 at 9pm to approve the Tegeta pre-payment.
The pro-forma invoice for R659 million was emailed to Nagar by Ayanda Nteta on 12 April to effect the payment. Meanwhile, the Tegeta board met the following day on 13 April to finalise the deal, the same day payment was made to the Gupta company.
Nagar said on the same day, he received a call from Maya Naidoo, who worked in the office of former CFO Anoj Singh, to forward payment to Tegeta within two to three hours, but did not explain what the money was for. At that time, he was not aware that the tender board agreed to pay Tegeta, or that the R659 million was a pre-payment, Nagar said.
"I requested her to formalise the instruction and send supporting documentation so that other legs such as Eskom treasury can be on board. There was no discussion on prepayment during that phone call... it was ''you need to make payment today''... the details of transactions only emerged much later."
Commission chairman Deputy Chief Justice Raymond Zondo asked Nagar if it was the norm at Eskom to make such a huge amount of payments urgently and within three hours.
Nagar told Zondo that it was the first time such an instruction was carried out without following processes. He explained the various different stages of managing payment requests and contracts, which takes longer and involves different people with documents scrutinised and certified.
Evidence leader Advocate Phillip Mokoena asked Nagar if Eskom had budgeted for the Tegeta payment.
Nagar replied: "We do not budget for prepayments... we budget to buy coal. These are not the same. In this case, you are almost fooling the system... It is outside the normal way of doing things. The system usually requires goods to be received prior to any payment being made."
Former Eskom head of generation signed off the R659 million to Tegeta with Singh as the witness. To comply with payment system requirements, an approval was sought. Nagar said the team amended a purchase order on the Brakfontein Colliery contract, another Gupta company.
"Payment was effected to Tegeta against the Brakfontein coal contract, after the payment was made, the correct process was followed, and the Brakfontein payment was reversed."
Zondo asked why was it seemed easier to utilise no other company but Brakfontein for the pre-payment. Nagar said Brakfontein was an easier contract to use as it was already in the system and supplying coal to Eskom, and there was no need for other people to be involved as is the case with a new contract.''
Nagar said the transaction was irregular, but that he and his team had to follow instructions from the ''highest office.'' A lot of people asked questions on the Tegeta payment and received vague answers, said Nagar.
"Not following instructions was unheard of at Eskom. The Tegeta pre-payment was certainly startling and intriguing but I think it was, at that time, all about 'let's carry out the instruction', we can worry about the story later," he said.
Nteta, who headed Eskom's fuel sourcing at its primary energy division at the time, was found to have worked alongside Makoko, Singh and other executives to aid and abet the Gupta family at the detriment of Eskom. The Fundudzi Forensic Services probe sanctioned by the National Treasury found that the R659 million payment to Tegeta was done so that the Guptas could meet a R2.1 billion deadline required to purchase Optimum Coal from Glencore. Guptas' Oakbay Investments was R600 million short and had unsuccessfully tried to source funding from banks and other lenders, and Eskom came to the rescue.
The state capture commission of inquiry continues to hear evidence on the corruption and the capture of Eskom, with some of its executives, the Gupta family, former president Jacob Zuma, some of his cabinet members and his son Duduzane at the centre of the ongoing state capture probe.