South Africa

POWER CRISIS

Zondo arrests: Four held over corruption at Eskom’s Kusile Power Station

Zondo arrests: Four held over corruption at Eskom’s Kusile Power Station
The entrance to Kusile coal-fired power station, operated by Eskom in Delmas, Mpumalanga. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Kusile was meant to be finished in 2014 with a budget of R81bn, but so far only four of the six planned units have achieved commercial operation, with R152bn already spent.

In a joint operation with the Hawks and the SA Revenue Service on Tuesday, the National Prosecuting Authority’s Investigating Directorate (ID) arrested two former Asea Brown Boveri employees and their wives in connection with Eskom contracts worth more than half a billion rand. 

Investigating Directorate (ID) national spokesperson Sindisiwe Seboka said: “Mohammed and Raeesa Mooidheen, who were arrested in Middelburg and appeared at the Randburg Magistrates’ Court, were granted bail of R50,000 and R30,000 each”, while “Vernon and Aradhna Pillay, who were arrested in Durban and appeared at the Durban Specialised Crimes Court, were granted R20,000 each.” 

The Mooidheens and Pillays are alleged to have defrauded Eskom through one of its contractors, Asea Brown Boveri (ABB), a Swiss automation firm. 

Business Maverick previously reported that ABB’s South African subsidiary was, in April 2015, awarded a contract for “control and instrumentation”  (C&I) work at Eskom’s beleaguered Kusile Power Station in Mpumalanga.  

At R2.24-billion, it was R324-million more than the lowest bidder, but ABB won the contract based on a promised ability to accelerate delivery. Eskom ended up paying ABB R3.1-billion. 

Read in Daily Maverick: ABB: SA subsidiary of Swiss automation firm to pay back R1.56bn to Eskom

Daily Maverick reported that the awarding of the contract to ABB was preceded by the termination, with effect from 17 April 2015, of the about R1-billion C&I works contract placed with the French multinational Alstom in 2011. 

In addition to payment for work already completed, Eskom had to pay a cancellation fee of some R40-million to Alstom to achieve a consensual termination agreement on a “cooperative walk-away basis”. Chris Yelland, energy analyst and managing director at EE Business Intelligence, wrote at the time: “The cancellation has delayed the Kusile project by about a year.” 

Kusile has faced massive cost overruns and delays. It was meant to be finished in 2014 with a budget of R81-billion, but so far only four of the six planned units have achieved commercial operation, with R152-billion already spent. 

Industrial-scale corruption

The expanded budget is more than R161-billion after completion, and the last unit is expected to be in commercial operation by the end of May 2024. 

The industrial-scale corruption that has taken place at the plant is one of the contributing factors that has seen South Africa remain in the grip of a crippling, years-long power crisis that has extended over multiple ANC-led government administrations. 

Mohammed Mooidheen and Vernon Pillay, the former ABB employees, are accused by the ID of using their influence in awarding more than R549.6-million of the Eskom-ABB contract, “for the benefit of [the company] Impulse [International] between the period 2015 to 2017”. 

News24 reported that this was at a time when former acting Eskom CEO Mathsela Koko’s stepdaughter, Koketso Choma, was a shareholder of Impulse.  

The Sunday Times also previously reported that in reports presented to the Special Investigating Unit, Koko allegedly guaranteed ABB future contracts worth R6.5-billion if it subcontracted work on Kusile to Impulse. 

“This is reportedly despite the fact that it was reported that Impulse did not actually qualify to do the work required. The accused are charged for corruption, fraud and money laundering,” the ID says. 

It went on to explain that the four are accused of “cashing in on gratifications estimated at R8.6-million, including cash and luxury cars, by inflating prices for Impulse, a subcontractor to ABB.” 

According to the charge sheet, between 28 October and 14 November 2016, the Pillays bought a Toyota Land Cruiser valued at more than R1.3-million while between 28 November 2016 and 4 January 2017, the Mooidheens bought a Golf 7 valued at R618,000 with money from Impulse and/or its subsidiaries. 

Days before buying the Golf, Mohammed and Raeesa Mooidheen bought a Mercedes-Benz valued at R930,000 with money provided by Impulse and/or its subsidiaries.

Investigating Directorate boss advocate Andrea Johnson said: “This is a clear demonstration of collaborative work between the ID, Hawks and SAPS and more seminal cases will be enrolled as we continue to reprioritise cases emanating from the Zondo Commission reports.”

The matter is expected to return to court on 14 October. DM

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