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De Ruyter ‘misled’ Eskom board to cancel R5.2bn tender

Eskom head Andre de Ruyter

Eskom head Andre de Ruyter

Published Oct 5, 2020

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Cape Town - Eskom head Andre de Ruyter is alleged to have misled the board, leading to the cancellation of a R5.2bn fuel oil contract.

De Ruyter is accused of deliberately misleading the parastatal’s board in a March 25 meeting, which led to the cancellation of a R5.2 billion fuel oil contract with black-owned company Econ Oil & Energy Ltd.

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In May last year Eskom issued an invitation for the supply of heavy fuel oil to its power stations for a period of five years.

The board had five months later approved awards to contract three suppliers that included Econ, Sasol and FFS Refiners at a budget of R14bn.

But just nine days into his appointment, De Ruyter was reported to have gone to the board to ask them to cancel Econ’s contract. This led to a public spat with a board member, accusing De Ruyter of inducing the Eskom board to cancel a tender.

Econ, owned by attorney, former acting judge and businesswoman Nothemba Mlonzi, has supplied Eskom with fuel since 2003.

The cancellation followed allegations that the tender awarded to the company had irregularities. An Eskom statement said the company had inflated prices when lower priced alternatives were evident.

De Ruyter is said to have advanced another plethora of reasons why he wanted the board to cancel the tender.

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One of them being allegations of corruption against the company, and that the board had adopted a new strategy on January 30, 2019, to procure fuel oil only from refineries.

He further raised issues of exclusion of “BP and Engen” in the contract, “because of poor negotiations or that their prices were not understood…”

A forensic investigation by Advocate Wim Trengove was instituted following accusations by board member Sifiso Dabengwa. He had raised concerns about De Ruyter’s sudden decision and about the information that was provided by management to the board which led to the cancellation of the tender.

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A day after the Trengove report was released to the board, who accepted the outcome on July 20, Dabengwa resigned, expressing his disappointment in the report which had overlooked irregularities in the cancellation, clearing De Ruyter’s name from any misconduct.

Dabengwa said while most of the board members had decided to accept the report, he did not agree with its findings as it failed to address the core issues of his complaint.

“De Ruyter’s allegations were provided as the motivation for the cancellation and were intended to induce and influence the board’s decision.

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“The issue was the absence of any proven evidence and relevance of these allegations to the particular tender under consideration. This was not dealt with appropriately in the report.”

The report, which Independent Media’s Special Investigation Unit has seen, did not present much evidence to prove De Ruyter’s innocence. It also did not provide evidence of Econ’s corruption, as he had claimed.

Trengove found Dabengwa’s accusations against De Ruyter to be completely “baseless and irresponsible”, concluding that De Ruyter did not mislead the board.

While FFS declined Eskom’s contract, Econ and Sasol’s alleged collusion resulted in only one tender (Econ’s) contract being cancelled.

FFS chairperson Mkhuseli Faku questioned why De Ruyter did not influence the board to cancel Sasol’s contract also despite pointing out the colluding issue.

“This was wrong. To add, we will not be used by Eskom and will not be part of their (Eskom’s) corruption,” Faku said.

Dabengwa and three other board members had opposed the decision to cancel Econ’s contract and had presented several arguments providing counter evidence against De Ruyter, the report confirmed.

Professor Mangalo, another board member who objected to the cancellation, had stated that a memorandum was handed to members to agree with De Ruyter’s decision.

“It is my view that cancelling the contract based on unproven allegations or irregularity and or fraud – which allegations have never been subjected to scrutiny before any competent authority (either internal or external to Eskom) – does not amount to a proper exercise of fiduciary duties and the duty of care, skill and diligence applicable in common law and in terms of Section 76(3) of the Companies Act, 2008.”

Trengove stated that De Ruyter made a weak case with unproven allegations but did not suggest that it was in any way improper.

Approached for comment, Eskom spokesperson Sikonathi Mantshantsha would only say: “Eskom has commenced a process to legally cancel the tender with reference number CORP 4786 in its entirety. This has been caused by evidence of irregularities uncovered in the tender process, which include price inflation and other illegal activity, whose evidence will be ventilated in a competent court of law.”

Econ representative Tinyiko Mabasa said: “At this stage, we will not comment on the matter.”

Debangwa did not want to be drawn on the matter but released a statement: “The investigation report (Trengrove’s) was a white-wash and was unfortunately accepted by the board with no relevant evidence.”

From the above summary, especially from the members of the board who held a different view, it is clear that De Ruyter misled the board to induce them to cancel the contract, explained a source at Eskom.

“With all the burning issues at Eskom, this cancellation was initiated by De Ruyter, nine days into office, meaning he joined Eskom with a mandate on this matter,” said the source.

SPECIAL INVESTIGATIONS UNIT

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