South Africa

ANTI-CORRUPTION PROBE

Eskom still investigating R400m Tutuka tender, 19 months after whistle-blower complaint

Eskom still investigating R400m Tutuka tender, 19 months after whistle-blower complaint
Eskom's Tutuka coal-fired power station in Mpumalanga, South Africa, on 23 December 2019. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

In January 2022, a whistle-blower expressed concerns over a R400-million tender to rehabilitate the Tutuka Power Station in Mpumalanga. Now 19 months later, Eskom’s forensic and anti-corruption unit is still examining the allegations.

On 13 December 2021, Eskom advertised a tender for the R400-million renovation of the electrostatic precipitators (ESPs) at two units at Tutuka Power Station in Mpumalanga.

ESP is a type of filter installed in coal-fired power plants that uses static electricity to remove soot and ash from exhaust fumes. It is also a common air pollution control device. 

The refurbishment of the ESPs at Tutuka is critical to reducing the health impact of particulate emissions on neighbouring communities and ensuring compliance with the Department of Forestry, Fisheries and the Environment’s minimum emission standards.

In January 2022, a whistle-blower alerted Eskom’s forensic unit that J&C Engineering, which was awarded the tender in July 2022, allegedly had access to confidential bid documents prior to the issuing of the tender, advertised with the tender number MWP1067PS.

The anonymous whistle-blower’s claims, which Daily Maverick has seen, particularly related to an Excel file named “copy of ESP Spares Pricing Schedule”, which contained a worksheet titled “price list”. 

The author of the spreadsheet was listed as Martin Quari, an employee at J&C. It was created on 28 June 2021, six months before the tender went out, and was purportedly modified by Tshogarebone Thobejane, an employee at Eskom, on 13 December 2021, the day the tender was advertised.

The whistle-blower was perplexed and raised concerns on 13 January 2022. Eighteen months later, Eskom’s internal probe is ongoing and J&C Engineering’s contract is still in place. 

Replying to questions from Daily Maverick, Eskom’s media desk said it expects the investigation to be concluded within four months. 

If Eskom’s probe finds irregularities in the contract, the case will be referred to the Special Investigating Unit (SIU). Following the investigation, the case could be referred to the Special Tribunal for a decision on whether to declare the contract unlawful and set it aside. 

The Eskom media desk (which wanted its answers to Daily Maverick’s questions attributed to the media desk rather than a specific spokesperson) confirmed that if the contract is set aside, Tutuka will not be able to comply with the particulate matter limit prescribed in the minimum emission standards as required by 2025, and will not be able to operate its units until they are compliant.

Regarding the work under way to refurbish the two ESPs, Eskom said work has been completed at Tutuka’s Unit 6 and work will begin at Unit 5 during a scheduled outage in September 2023.

Whistle-blower claims

The whistle-blower said it was “highly irregular” that Eskom had apparently used a document in a tender advertisement that was originally created by an outside contractor.

Emails between the whistle-blower and Eskom, which Daily Maverick has also seen, revealed that on 9 March 2022, Eskom informed the whistle-blower that it had a large backlog of reported cases awaiting preliminary investigations.

On 22 June 2022, a month before the tender was awarded, Eskom’s forensic and anti-corruption department informed the whistle-blower that upon conclusion of the preliminary investigation, an “Advocate Harmse” would provide feedback. 

No feedback was provided and the whistle-blower’s last attempt to get answers was made in an email to Eskom on 27 July 2022: “The allegation was raised to you (Eskom) on 13 January 2022. We are six months down the line from the date of the matter being raised, and the last response from you stated that the investigation had not been conducted yet. I find it unacceptable that such serious allegations are not addressed prior to contract award.

“I find it negligent and a failure of your fiduciary duty as a state-owned company. This matter should be escalated to the SIU as there is potentially cited illicit behaviour.”

Eskom’s response

The Eskom media desk told Daily Maverick a preliminary investigation was concluded and the incident was assigned to an investigator in September 2022. It said the investigation should be finalised within the next four months. 

Eskom further confirmed the tender was awarded to J&C Engineering on 14 July 2022, adding that “the procurement department only became aware of the allegations levelled against J&C after the award of the contract and tendering process was completed at that time. The outcome of the forensic investigation is still pending.

“If our investigation uncovers fruitless and wasteful expenditure, Eskom will initiate proceedings to recover losses. We will engage with law enforcement agencies if any criminality is uncovered.”

J&C Engineering reply

J&C Engineering managing director Joe Peel insisted that at no stage had the company or any of its directors or employees been privy to tender documents prior to the publication of Eskom tenders.

“We have never had any involvement in any irregularity to the tender. It appears that one or more of Eskom’s staff, who took part in completing the tender documents, made use of, and substantially altered over a period of time of more than a year, an Excel spreadsheet previously provided in good faith by our Mr Quari to Eskom during October 2020.

“This was well before the tender was even formulated by Eskom and published to potential tenderers. In short, a quotation supplied by us in October 2020, in good faith, was then used by Eskom, in amended form and unbeknown to us, to formulate its tender, more than a year later.”

Peel said that to prepare the quotation, J&C’s Quari extracted the items reflected in the Eskom enquiry document and prepared an Excel spreadsheet titled, “Spares List 26.10.2020”, which was created by Quari on 12 October 2020. The quotation was submitted on 16 November 2020.

Peel further claims that after submitting the quotation, Quari was in contact with several Eskom employees who asked for various details and clarifications.

“All the above exchanges took place as part of bona fide negotiations with Eskom and at no stage constituted a situation where Eskom was sharing with J&C Engineering any sensitive information or helping us or preferring us in any future anything.

“We were unwittingly assisting Eskom in formulating its tender. We then heard nothing further until Eskom published the official tender on 13 December 2021,” Peel stated.

He reiterated: “We are not responsible for Eskom having left Mr Quari’s name on the document, which they ultimately used as part of the tender documents. Such a spreadsheet is, however, a document essentially developed by Eskom employees, using our initial quote, and also thereafter amended by other parties with Eskom, in a material manner, as well.

“It is in no manner or form our document. If anything, the fact that Eskom left our name on the spreadsheet with Mr Quari reflected as the author, after amending it in various respects over a substantially long period, and adopting the format (but not our data) as its own, could have caused us harm rather than helping us, to the extent that certain of our quoted amounts were, effectively, declared by Eskom to all tenderers, by failing to delete certain details which we had provided,” Peel said.

Daily Maverick asked Eskom about Peel’s claim that Eskom staff had used and modified the company’s spreadsheets without informing them.

The power utility’s media desk said: “The matter is currently under investigation by Eskom’s Assurance and Forensic Department, therefore Eskom is not in a position to respond at this stage.”

Tutuka – one of the worst 

In March 2023, former Eskom CEO André de Ruyter said that Tutuka is one of the power utility’s six worst performing plants, with an energy availability factor of between 15% and 17%.

On 24 January 2023, Parliament’s watchdog, the Standing Committee on Public Accounts (Scopa), heard that Tutuka’s station manager has to wear a bulletproof vest and needs armed guards. In June 2023, Scopa members met the power station’s managers to discuss the plan to close the Tutuka power facility in the near future.

On the possible closure of Tutuka, Eskom told Daily Maverick: “The current status according to Eskom is the current shutdown plan has Tutuka shutting down by the end of 2030, subject to the National Energy Regulator of South Africa and other approvals. However, this is currently being re-evaluated.”

Read more in Daily Maverick: Where are Mpumalanga’s new energy projects?

The rot at Eskom is extensive

In March 2023, it was reported that the police are currently investigating 131 Eskom-related cases, while the Hawks have 83 cases across six provinces, with 18 of those in court. DM

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Comments - Please in order to comment.

  • Alley Cat says:

    Whilst I do not support corruption in any way, Mr Peel’s response sounds plausible. It is very common that clients’ will approach a supplier for a preliminary or budget quote prior to releasing an RFQ (Request For Quotation). This is used for them to apply for a capital budget so that when the RFQ is issued, they have sufficient budget to execute the tender. It is sometimes advantageous for the bidder who submits the budget quote as he then has advance knowledge of the potential RFQ in terms of size and scope, but I see no foul play in what is common practice, both in the public and private sector. The fact that Mr Martin Quari’s name was left on the list is an oversight on Eskom’s part and in my opinion does not imply any level of corruption, unless I am missing something?

    • Hidden Name says:

      I think whats actually awful in this case is that so far down the line Eskom has no meaning results of its “investigation”. No opinion on the actual process – too many unknowns, but no result after reporting potential wrong doing in more than 18 months? Big flipping problem there.

    • Leon Schipper says:

      Agreed. The preliminary budget quotation does not automatically indicate possible corruption. It would only be foul play if the initial budget quotation process was used to frame the tender specification documents in terms that favour J&C while excluding competitors. This would render the tender process mere window dressing. Revealing J&C’s prices to other tenderers most certainly does J&C more harm than good.

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