Deputy Chief Justice Raymond Zondo, who chairs the Commission of Inquiry into State Capture. Picture: Karen Sandison/African News Agency (ANA)

Johannesburg - The Zondo commission has heard how Gupta-linked coal company Tegeta was not in a financial position to be awarded an R4 billion coal contract by Eskom

Daniel Mashigo, the acting general manager for the primary division at Eskom, told the commission that based on the financial assessment that was done on Tegeta, it was clear that the contract should not have been awarded. 

Tegeta, a Gupta-linked which owned mining coal company Optimum, had signed an over R4 billion contract to supply Eskom with coal. Advocate Kate Hofmeyr, for the commission's legal team, said evidence has shown how the signing of this contract was rushed and Eskom staff were told to get it done within a day. 

Hofmeyr said the contract was signed but only a year later was a financial assessment on Tegeta was conducted. This was the same assessment that was usually conducted before a contract is awarded. Mashigo said the fact that this assessment was conducted after the contract was awarded showed that there was a rush and it was unusual. 

Mashigo took the commission through the financial assessment which showed that Tegeta had cash flow issues and that it could run into trouble without any financial backing. 

"90% of the decision is based on the viability of the business and 10% on the functioning component. When we produce our submission report there is a paragraph that talks to the financial assessment. We would not award the contract in the first place before this is done. I see no other purpose this assessment was done after the contract was awarded unless it was just to tick a box," said Mashigo. 

In 2015, Eskom was beginning to notice issues with the quality of coal it received from Tegeta's Brakfontein coal mine. There were also concerns that this poor quality supply could be affecting the power supply. 

An Eskom team was put in place and a witness, Mark van der Riet, was one of Eskom's employees who was assigned to a special team to investigate the coal supply matter. 

Van der Reit died last year days after he had provided the Zondo commission with a signed statement. 

Hofmeyr read van der Reit's statement. He specialised in coal supply and had worked at Eskom for 30 years. 

Van der Riet wrote that a decision was taken that Eskom employees would observe the testing of coal supplies from Brakfontein which were done by Siboniswe Laboratories. Those tests showed that supplies from Brakfontein had failed 15 out of 30 samples.  

Van der Reit wrote that Tegeta had started raising issues that the officials at Siboniswe, an accredited laboratory, had demanded bribes. 

So a decision was taken for the samples to be tested by the South African Bureau of Standards (SAB). It was decided that van der Reit would attend the testing and ensure that samples were clean, but days before the testing he got a call from former executive Matshela Koko who told him not to attend the sampling.

Van der Riet raised his concerns with Koko. 

The sampling went ahead without Eskom officials present and the Brakfontein coal sample passed the test above expectations. 

Van der Riet then continued with his investigation and disregarded the test supplied from SAB as no Eskom employee was present when the testing took place. 

"He had started to compile a report in preparation to submit to Eskom, but was unable to do so because he was suspended the following week for 32 months," Hofmeyr said. 

"For the next two years, Eskom lost his services, but he was exonerated later and was reinstated back at work on 1 May 2018."

Mashigo said the absence of van der Riet for all those months had an effect on the division as he was never replaced until his return. 

Even with the poor quality of coal, Eskom officials had approached National Treasury in an effort to increase the amount of money paid to Tegeta. National Treasury refused to offer money as it raised concerns about the poor coal quality supplied by the Tegeta. 

Mashigo also said that the supply of coal by Tegeta decreased over time and the last time the company supplied coal was in March 2018, six years before the contract was meant to end.

Eskom fined Tageta for the lack of coal supply and those fines amounted to R500 million. 

Mashigo has concluded his testimony and a witness is expected to testify on Wednesday.