Trillian thwarts recovery of Eskom State Capture loot – again

Regiments director and later Trillian Capital Partners chief executive Eric Wood.

Eskom has accused Trillian Capital Partners of obstructing efforts to claw back unlawful payments and now wants the Gupta-linked company to put up security as it seeks to challenge a recent High Court order that it pays back public funds.

Trillian Capital Partners is allegedly litigating lavishly while its bank accounts are empty – and the last man standing, CEO, Eric Wood, no longer has a single property registered to his name.

The now-defunct company has applied for leave to appeal, in its entirety, a High Court ruling ordering it to repay Eskom its portion of R1.7-billion in unlawful payments emanating from State Capture-linked deals.

This move by the company effectively suspends the execution of Eskom’s much-heralded 18 June 2019 victory for repayment – thereby delaying recovery of R600-million in taxpayers’ money.

But Eskom, which is scheduled to release its annual results next week, and is amid an extraordinary R59-billion government bailout, is not taking this one lying down.

It wants Trillian to open its books, to provide full particulars of income, property, bank accounts, money held on its behalf in trust accounts or by pay agents, and all other assets, with the necessary supporting documents, including verified bank statements.

At the very least, Eskom wants Trillian to put up security for nearly R600-million by paying it into a ring-fenced attorneys’ trust account until such time as all appeals are completed.

Eskom should not have to engage in a lengthy and costly appeal process with Trillian, without any assurance that Trillian can satisfy the court order.”

That is, in part, because the company is embroiled in litigation or other State Capture controversies to the tune of about R1-billion, including the Eskom claim.

Transnet has issued summons against two subsidiaries, Trillian Asset Management and Trillian Financial Advisory, for a total of R134-million, while the company is also a respondent in a R239-million lawsuit brought against Regiments Capital by the Transnet Second Defined Benefit Fund (TSDBF) against Regiments Capital following a series of controversial interest rate swaps. Both matters are pending.

Furthermore, the company’s sole representative, Wood, is engaged in complex litigation involving his former partners at Regiments Capital after a fallout triggered by a Gupta bid to buy Regiments in 2015.

Added to this is a punitive cost order of R1.2-million that Eskom obtained against Trillian in March 2019.

These arguments all form part of Eskom’s response to Trillian’s application for leave to appeal the June court order.

A full Bench of the High Court ruled in Eskom’s favour when it declared, as unlawful and invalid, a series of decisions that led to the payments to McKinsey & Co and Trillian. The global consultancy firm has paid back its portion of just close to R1-billion less VAT.

Eskom has confirmed that it is opposing the appeal application and having filed an enforcement application which it wants the court to hear simultaneously in order to safeguard the cash.

Trillian has until 30 July 2019 to file responding papers in the counter application.

In its papers for leave to appeal, Trillian argues that:

  • The Pretoria High Court had erred in its findings that there was a corrupt relationship between Trillian and Eskom officials and ought to have referred the case for oral evidence;
  • The initial court had “misconstrued” evidence, including a finding that a R30-million payment by Eskom to the company was “somehow inexplicable”;
  • It erred in finding that Trillian only had two employees and that the company had done no billable work for the fees paid; and,
  • It ought to have found that payments were made to Trillian as a “subcontractor” to McKinsey.

Trillian also argues that the Court erred by finding that the only “challenge mounted with vigour” is that Eskom’s case was based on “hearsay”.

On this basis, the company argues, the matter ought to have been referred to oral evidence not only to disprove hearsay evidence but also to resolve disputes of fact around McKinsey’s denial that it had had a subcontracting agreement with Trillian that obliged Eskom to pay the local company.

McKinsey had initially intended to partner with Trillian for the Eskom deals but no contract was ultimately entered into after it failed the international firm’s due diligence.

But, Eskom maintains that Trillian has to date offered no meaningful response to allegations of corruption. Nor did it dispute that a corrupt relationship existed between some of the parastatal’s officials and Gupta kingpin, Salim Essa, who previously held a 60% stake in Trillian.

In court papers, Eskom charges that the appeal attempt has no prospect of success and that is nothing but a tactic to delay coughing up.

The parastatal seeks an order that its original court order in respect of the repayment of R595-million remains operational pending final determination of all applications for leave to appeal as well as appeals.

This is due to concerns that Trillian’s appeals efforts may run for several years.

If this counter-application is not granted, Eskom’s ability to recover the unlawful payments to Trillian will likely be delayed for at last another two to three years while Trillian exhausts all appeal options,” Hadebe says.

The June court order stated that the rule of law and the public good demanded that Trillian pays up.

Eskom fears dissipation of assets

Delaying the execution of that order would result in Trillian continuing to dissipate its assets, income and property, which result in a hollow judgment for the parastatal and prejudicing the taxpayer, Eskom says in its court papers.

Eskom “reasonably” believes that Trillian indeed has assets in the country or abroad.

This is evident from the fact that Trillian has been able to litigate on a lavish scale in this matter and in others, employing large teams of lawyers. As a result, it is necessary for Eskom to make efforts to recover these assets without delay before these assets are further dissipated or hidden.

The Trillian group of companies do not own any immovable properties and Mr Wood himself appears to have divested himself of all immovable property.

Mr Wood, as the sole director of the Trillian companies, does not have any property registered in his name. He sold the only property which was registered in his name on 16 October 2108.”

Thus far, Eskom states, Trillian has given no indication that it will be able to satisfy any debt judgment and its court bid poses no harm to the company.

The company is effectively defunct and there is no prospect that it will ever conduct business in SA given the “indelible stain of unlawful and criminal conduct that marks its operations” and the further legal and criminal proceedings that are likely to follow, Eskom says.

The National Prosecuting Authority, also cited as a party in the ongoing litigation between Eskom and Trillian, in 2018 abandoned asset forfeiture proceedings against the company. That was to allow Eskom to pursue the now successful review application after a court-appointed curator confirmed it had not located recoverable assets.

Hadebe, in his affidavit, says Eskom would suffer irreparable harm otherwise and that exceptional circumstances exist for an order in respect of the parastatal’s counter-application.

The South African economy is estimated to have lost more than R100-billion to State Capture activities.

The initial court had acknowledged that the rule of law and the public interest demand that there be swift, effective remedies where evidence of maladministration and corruption is brought to light,” Hadebe said.

This is such a case. The Full Court has already held that this matter is sufficiently exceptional, that the only just and equitable order is that Trillian be required to pay back every cent of public money that it unlawfully received from Eskom.”

While but a drop in the ocean for Eskom which has forecast a nearly R20-billion loss in the 2019/2020 financial year, the power utility wants its money from Trillian to help repair its balance sheet and to recoup the losses from almost a decade of mismanagement.

It says it is bringing the counter-application to demonstrate to the South African public and the international investors that it is succeeding in addressing the corruption and mismanagement of the past.

The money held by Trillian is public money and it has no entitlement to retain it for a day longer,” Eskom says.

The court had previously found that Trillian’s opposition to Eskom’s review application was a further attempt to “obstruct and delay” finalisation of the case.

The order read: “In conclusion, an overall assessment of objective evidence presented by both Eskom and Trillian draws one to the inescapable conclusion that the issues raised by Trillian as disputes of fact are in essence fictitious issues of fact which are aimed at delaying the hearing of the matter.” DM

* Trillian has until Tuesday, July 30 2019 to file its response.


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