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Scorpio

Kusile Slush Fund: Stefanutti Stocks’ R2m ‘school donation’ benefited Eskom officials

Illustrative image | sources: South African currency (Photo: Adobestock) / Mokhine Secondary School (Photo: Google Maps) / Stefanutti Stocks logo

Construction giant Stefanutti Stocks paid R2m into an apparent slush fund that was used to enrich some of Eskom’s top officials at the Kusile power plant project. Similar payments from fellow Kusile contractor Tubular Construction in part led to the recent arrests of Tubular’s top executives and former Eskom official France Hlakudi. 

A significant portion of a R2-million “donation” from listed construction firm Stefanutti Stocks for a school project in Limpopo ended up benefitting Eskom officials at the problem-ridden Kusile power plant. 

Documents seen by Scorpio suggest that less than R400,000 went towards the school initiative, while the rest of the money helped bankroll the lavish lifestyles of the Eskom officials.

Stefanutti Stocks, which faces ongoing probes by the Hawks and the Special Investigating Unit (SIU), denies that the payments it made into the apparent slush fund were meant to benefit the Eskom employees.

When former Kusile contracts manager France Hlakudi in early 2016 asked Stefanutti Stocks to sponsor the completion of a new block of classrooms at his old high school in rural Limpopo, the construction firm was quick to say yes. 

Such projects were in line with Stefanutti Stocks’ “corporate social investment” (CSI) responsibilities, the JSE-listed company told investors in a recent Stock Exchange News Service (SENS) announcement. 

The SENS announcement was issued after Scorpio’s November 2019 exposé that revealed how Stefanutti Stocks, along with fellow Kusile contractors Tubular Construction, Tenova TAKRAF and Esor Construction, had paid altogether R75-million into the account of Babinatlou Business Services. Babinatlou’s sole director, Hudson Kgomoeswana, in turn forwarded most of these funds to Hlakudi and other Eskom officials.

Stefanutti Stocks, part of a consortium that clinched Kusile contracts valued at about R4-billion, first paid R1-million into the Babinatlou account in April 2016. It followed up with another R1-million deposit two months later. 

The firm remains adamant that the payments were solely meant for the completion of the block of classrooms. It has strongly denied that it intended bribing Hlakudi or other Eskom officials or that it had been aware that Babinatlou was effectively used as a slush fund for Hlakudi and some of his Kusile colleagues. 

In its response to earlier queries from Daily Maverick, Stefanutti Stocks went a step further — the company claimed it had gone to considerable lengths to ensure that the R2-million it made available to Babinatlou had been used for the classrooms project. This was repeated in the company’s recent SENS announcement.

“Insofar as Stefanutti Stocks has been able to ascertain, the monies it paid were utilised for their intended purpose,” reads the SENS notice.

But Stefanutti Stocks’ due diligence process evidently didn’t include a thorough examination of Babinatlou’s finances. 

Documents seen by Scorpio indicate that less than R400,000 of Stefanutti Stocks’ R2-million donation was used for its “intended purpose”, namely the completion of a block of four classrooms at the Mokhine Secondary School in Limpopo’s Sekhukhune district. The rest was either directly utilised for the benefit of Hlakudi and another former Eskom official or remains unaccounted for. 

The documents in question are in the possession of the Hawks and the SIU and form part of ongoing probes by the law enforcement entities.

The first R1-million from Stefanutti Stocks landed in the Babinatlou account on 5 April 2016. Only two days later, Kgomoeswana, or whoever was controlling the account, paid R303,000 to help settle the rental account for a house in the upmarket Mooikloof Estate in Pretoria where Hlakudi had been staying. 

On the same day, Babinatlou also paid R140,000 for the rental of a property occupied by Dianah Motlou, one of Hlakudi’s former Eskom colleagues.

A further R65,000 of the first R1-million Stefanutti Stocks paid into the Babinatlou account was used to cover expenses related to a poultry business Hlakudi had been running on the side. 

The documents also reveal that the R2-million from the construction firm was used to cover other expenses that were unrelated to the construction of a classroom block at a rural high school. These included payments for flights, accommodation and veterinary services. The latter may also be linked to Hlakudi’s chicken farming venture.

The documents, which include a bill of quantities for the classroom project, suggest Babinatlou used less than R400,000 for the school project that Stefanutti Stocks had supposedly signed up for.  

Apart from the aforementioned expenses that benefitted Hlakudi and Motlou, the remaining funds were apparently also used for dubious purposes. One document seen by Scorpio suggests Babinatlou splashed more than R260,000 on a “hand over function” for the new classrooms. 

Babinatlou also transferred a neat R200,000 to a person or entity only named as “H”, according to the documents.

Investigators from the Hawks and the SIU now need to determine whether Stefanutti Stocks wittingly greased the Eskom officials’ palms under the pretence of making a donation for an admirable cause, or whether the firm was taken for a ride by Hlakudi and Kgomoeswana. 

In a recent response to queries, Stefanutti Stocks reiterated that it paid the R2-million with the understanding that Babinatlou would use the funds for the sole purpose of completing the classrooms. The firm added that it had no knowledge of the fact that the money had been used for other purposes. 

“Stefanutti Stocks unfortunately does not have access to the referenced documentation and is accordingly not in a position to comment beyond the fact that on information it has available to it, the monies were utilised for their intended purpose. Nor, importantly, did Stefanutti Stocks at the relevant time have any reason to believe that the monies had been used for any other purpose,” the company said in an email. 

It confirmed that Hlakudi had made the suggestion of the school project. Hlakudi was in contact with Howard Jones, a former Stefanutti Stocks director who has since retired.

“Mr Hlakudi was well known to Mr Jones because he was Eskom’s principal point of contact for the purpose of the works being conducted by the Building Works JV [the Kusile joint venture headed by Stefanutti Stocks]. Mr Hlakudi shared with Mr Jones that he had in fact attended the Mokhine High School and accordingly being a past pupil at the school, he had a personal interest in assisting the school,” said Stefanutti Stocks. 

In its December SENS announcement, Stefanutti Stocks claimed it had been “unaware that Mr Kgomoeswana [Babinatlou’s director] may be linked to certain Eskom executives” at the time it committed to contributing the R2-million. 

The company sang a slightly different tune in its most recent responses to Scorpio. 

“Mr Hlakudi mentioned that the school project was being managed by Mr Hudson Kgomoeswana of Babinatlou Business Services CC and that Mr Kgomoeswana would be in contact to discuss the project in more detail,” the firm said. 

Asked whether it had been disingenuous when it told investors that it had been unaware of any links between Hlakudi and Kgomoeswana, the company stated: 

“Stefanutti Stocks stands by its position that at the time when Mr Hlakudi told Mr Jones that he would be contacted by Mr Kgomoeswana this did not cause Mr Jones to infer that there was any inappropriate linkage between Mr Kgomoeswana and Eskom executives.” 

Hlakudi and Kgomoeswana did not respond to queries. 

In response to earlier questions, Motlou indicated she would not comment on issues pertaining to Babinatlou because they formed part of an ongoing court case between her and Eskom.  

The dramatic December 2019 arrests of Hlakudi, Kgomoeswana and executives from Tubular Construction, another Eskom contractor at Kusile, were partly informed by some R6-million that Tubular had paid into the Babinatlou account. Hlakudi and Kgomoeswana, along with  Tubular’s CEO, Tony Trindade, and the company’s former chairperson, Mike Lomas, were charged with fraud, corruption and other alleged offences relating to the Babinatlou account and other transactions involving Tubular and Eskom officials.

Abram Masango, Eskom’s former group executive for capital projects, was also arrested and charged. DM

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