South Africa

State Capture: In Parliament, Mosilo Mothepu lifts the lid on the machinations of State Capture at Eskom

By Marianne Merten 1 November 2017

Whistle-blower Mosilo Mothepu was commended on Tuesday by MPs for her courage and bravery for speaking out as Parliament’s Eskom State Capture inquiry inched forward. But the brutal fact is that for the past 16 months she’s been unemployed – corporate South Africa has kept its distance because of a possible trial after her erstwhile employer Trillian laid criminal charges that the Hawks have actively investigated. Referring to such “difficult conversations” in several interviews with prospective employers, Mothepu told MPs: “I’m deemed a political risk, apparently.” By MARIANNE MERTEN.

In June 2016 Mosilo Mothepu resigned as CEO and executive director at Trillian Financial Advisory, one of the companies under the Gupta-linked Trillian Capital Partners that is connected to international consultancy McKinsey in a series of questionable dealings at Eskom and Transnet. That McKinsey was paid just over R1-billion, and Trillian R565-million, by Eskom without work being done first emerged in the amaBhungane and Scorpio #GuptaLeaks, but has been confirmed on public record by both firms amid assertions of no wrongdoing.

Trillian Capital Partners and its group of companies was established on 1 March 2016 after Eric Wood and Salim Essa, widely publicly identified as a Gupta business associate, acquired Regiments Capital. Mothepu, who had worked there first from 2007 to 2010 and again from June 2015, together with colleagues, was transferred to Trillian. The plan was for Regiments Capital to cede its various public sector contracts, although that was not formally done, MPs heard: “Trillian had taken the public sector contracts without the cession being approved.” This is the subject of a court battle.

Trillian has been involved not only at Eskom and Transnet, about whose ballooning irregular expenditure in the 2016/17 financial year the Auditor-General recently told Parliament’s finance committee, but also SA Express, which could not file its 2016/17 annual financial statements by the statutory 30 September deadline due to financial troubles, and Denel, which is disputing the Auditor-General’s “technically incorrect” verdict on its financial statements.

In September 2016 Mothepu went to then Public Protector Thuli Madonsela to disclose to the State of Capture probe a series of dealings. This disclosure was leaked – this triggered the Budlender inquiry by then Trillian Capital Partners non-executive chairman Tokyo Sexwale – that led Trillian to lay criminal charges, including corruption, fraud and cyber crime, against Mothepu. While the case was taken to the Hawks at rapid speed, MPs heard that it has been for some time before the National Prosecuting Authority (NPA) for a decision on whether to prosecute or not.

Aside from the criminal charges, Trillian has also brought two labour matters against Mothepu for breach of confidentiality and to recoup bonuses. In July 2016 she had taken Trillian to the Commission for Conciliation, Arbitration and Mediation (CCMA) for constructive dismissal.

On Tuesday it emerged that Mothepu’s costs of defending these legal battle are carried in part by the Legal Resources Centre (LRC) and in part by a Paris-based non-governmental organisation that supports whistle-blowers worldwide.

I’m not employed. It’s been quite difficult… It’s been 16 months, but I’m hopeful someone will take a chance,” she told MPs. “I never wanted to be in the media. I wanted to be a private person working with constitutionally empowered bodies. I am here because I want to tell the truth.”

And although the Hawks speedily investigated the criminal charges Trillian laid against her, Mothepu told MPs: “I have been waiting for the Hawks to come and ask me questions… I’ll be happy to assist them.”

What would be her message to honest public servants, asked ANC MP Pravin Gordhan, who also urged his fellow MPs on the public enterprises committee: “We should appeal to the corporate sector not to discriminate against honesty.”

It was a question towards the end of a four-and-a-half-hour appearance before the public enterprises committee inquiry that Mothepu, who had answered clearly and concisely, again answered directly. “I would say they have to resist if now they are being given an unlawful instruction by a superior. The fact you don’t have the courage to say ‘no’ breeds the cancer,” she replied. “It comes at a great personal cost… I will not romanticise. I am sure there are many public servants who said ‘no’ and who now find themselves on suspension or on the sidelines. But it must be done to stop the cancer from infecting the whole body.”

There were moments during the hours-long uninterrupted testimony to MPs when her voice quavered, be it from emotion or the stress of testifying in public. And it was in public, despite the ban on any photographs or video of her. A group of school children briefly sat in the upstairs public gallery, as did a group of visitors brought there by an opposition MP. The ban on any visuals of Mothepu is one of the security measures, alongside physical protection, the public enterprises Eskom State Capture inquiry is taking amid reports of threats.

But Mothepu’s testimony and willingness to answer questions on why it took so long to raise the red flag has helped to firmly move State Capture from those wanting to deflect such claims into the official reality of a parliamentary inquiry. It is now more difficult to say, “We didn’t know.” Perhaps avoiding that was at least part of the motivation of a group of ANC MPs who in a recent caucus tried, unsuccessfully, to stop this inquiry, as well as others by, for example, the trade and industry committee into the localisation of Transnet’s locomotive tender involving a Chinese company and financing.

Much of the details that emerged in Tuesday’s parliamentary Eskom inquiry have been exposed by Daily Maverick’s Scorpio investigative team and amaBhungane in a six-part series on the McKinsey Dossier.

Read them:

The McKinsey Dossier, Part 1 – How McKinsey and Trillian ripped R1.6bn from Eskom – and planned to take R7.8bn more

The McKinsey Dossier, Part 2 – Contract to pay McKinsey and Trillian R1.6bn ‘invalid’

The McKinsey Dossier, Part 3 – Eskom tells McKinsey and Trillian to #PayBackTheMoney

The McKinsey Dossier, Part 4 – Bending over backwards for Trillian

The McKinsey Dossier, Part 5 – How Transnet cash stuffed Gupta letterboxes

The McKinsey Dossier, Part 6 – Five strikes and you’re IN

But what emerged more clearly on Tuesday is a specific way of doing business, using a financial advisory company focused on the public sector and SoEs, particularly Eskom and Transnet, which both were headed by Brian Molefe and Anoj Singh as top executive and financial executives.

The role of key individuals parachuted into position with a specific brief to facilitate contracting also emerged. When Mothepu asked how Essa, one of two key people who brought the public sector contracts to Trillian, would do this, she was told “he is industrious”. And apparently he is also well connected, knowing at least one person on SoE boards or in their executive ranks, MPs heard.

Not only did Wood know six weeks before the December 2015 sacking of then Finance Minister Nhlanhla Nene, he emailed her “a document of initiatives the new minister (Des van Rooyen) was going to implement and the potential fees that Regiments was going to earn”. After Nene was sacked, Mothepu’s colleague Mohammed Bobat was appointed as ministerial adviser to the newly, albeit short-lived, finance minister Des van Rooyen. “(Bobat’s) role, essentially, was to channel all the work from state-owned companies or National Treasury to Trillian,” she said. When Van Rooyen was moved to the co-operative governance portfolio, Bobat accompanied him. On Friday the inquiry will hear from a witness who will describe meetings with Bobat to prepare proposals with insider knowledge to clinch contracts.

This is not the first time MPs hear such details. In the first inquiry hearing on 18 October, former Eskom CEO Brian Dames cautiously outlined how running interference unfolded following the 2010 appointment of a new board. And he described his anger at being called to a meeting at Sahara House, named after a Gupta company, in Midrand by Siyabonga Mahlangu, the adviser to then Public Enterprises Minister Malusi Gigaba, to discuss, among other matters, coal contracts and the New Age newspaper’s business breakfasts. “I think there were influences from outside of Eskom, specific people for specific purposes,” said Dames.

In the course of this type of doing business, on Tuesday it emerged how a memory stick with information on the Eskom turnaround strategy, its corporate plan and minutes of board meetings also ended up with Wood at one stage.

Central to this business model with access to inside information are multimillion-rand payments without contract for what amounted to little more than writing up a proposal in what was dubbed “balance sheet optimisation” and “cash unlocking initiatives”.

While Tuesday’s focus was on Eskom and Transnet, such contract-less operations also happen elsewhere among SoEs. Parliament’s watchdog on public spending, the Standing Committee on Public Accounts (Scopa), in late August heard SAA also operated overwhelmingly on letters of appointment, rather than signed contracts, amid widespread use of the apartheid hangover of evergreen contracts, or the effective extension of a contract upon expiry.

Finance Minister Malusi Gigaba in last week’s Medium-Term Budget Policy Statement (MTBPS) described Eskom as a “significant risk to the entire economy” although not once mentioning State Capture. It is an indication of how far the SoE has destabilised from its positive international credit rating just five years ago.

The negative impact of State Capture, due to the hundreds of millions of rand guzzled by SoEs, on the lives of ordinary South Africans has been clear. And on Tuesday MPs were on the same page. Or as EFF Chief Whip Floyd Shivambu put it in calling for the committee to present an interim report to the House before Parliament breaks for its year-end recess at the end of November: “We are in a deeper crisis than we imagined. (We are) looking at an industrial scale.”

Tuesday’s section of the inquiry, which several MPs indicated would continue well into next year, comes against the backdrop of a joint finance and trade and industry committee initiative for transformation of financial services, and Gigaba’s own punting of financial sector transformation.

But the shadow of State Capture hangs over such efforts. Or as Mothepu told MPs: “I was excited to be part of a black management team to transform financial advisory services… I was essentially used for something perverse.” DM

Photo: Photo by Zach Guinta on Unsplash

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