Coal call: how Eskom rushed through unlawful R659m to Guptas
It took just over an hour to shift R659m to the family, while staff were too fearful to speak out, Zondo hears
This was the time needed for the Gupta family to score more than half-a-billion rand from a cash-strapped Eskom in 2016.
The money, R659m from Eskom’s coal-procurement budget, is alleged to have been used to subsidise the Guptas’ purchase of Optimum Coal Holdings from multinational mining giant Glencore.
Although details of the deal have since been revealed in the media, it was at the state capture inquiry on Tuesday that South Africans heard the extent to which internal standard procedures were flouted at Eskom to make it happen.
Testifying before deputy chief justice Raymond Zondo, the utility’s Snehal Nagar described the pressure his team was put under to push through a dodgy prepayment to the Gupta-owned Tegeta Exploration and Resources on April 13 2016.
Asked why he went through with it knowing that something was fishy, Nagar, who is in charge of financials in Eskom’s primary energy division, described a culture of fear in the parastatal where staff were fired for not following the instructions of higher management.
He detailed what should have happened in normal circumstances.
First, a purchase acquisition is raised to make a formal request for goods. This request is then forwarded to that person’s manager for approval before it is sent to a management accountant who verifies the details and checks the availability of funds for the goods. The request is then sent to a procurement manager who allocates it to a buyer.
All of this, according to Nagar, is done before a contract between Eskom and a supplier is drafted.
Once complete, the contract is taken to a tender committee for approval before funds are allocated.
This process was not followed when it came to Tegeta. Instead, Nagar said he received an e-mail from the head of his division, Ayanda Ntetha, on April 12 which included a pro forma invoice (a preliminary bill of sale) for R659m worth of coal from Tegeta.
The next day, he allegedly received a call from Maya Bhana-Naidoo, who was a general manager in the office of then CFO Anoj Singh. He claimed Naidoo said the payment needed to made by 2pm that day.
“Everyone needed to be on board to effect this payment. Naidoo said she would chat to everyone to make sure they were on board,” he said.
Nagar’s team acted on the payment after receiving an e-mail from Naidoo on April 13 at 12.38pm. The e-mail instructed that the payment must be made by 2pm that day, and included documentation outlining a decision by Eskom’s board tender committee at a meeting the night before to approve the deal. The committee’s meeting came hours after the banks refused to give Tegeta a R600m bridging loan to buy Optimum.
“What the team did was they amended a purchase order of the Brakfontein (a mine owned by Tegeta) contract to reflect an order of R659m. The payment to Tegeta was effected on the Brakfontein contract,” Nagar said.
Subsequent to that, the correct process had been followed and the transaction to Brakfontein reversed and effected on Tegeta. It was former Eskom CFO Anoj Singh and former acting CEO Matshela Koko who eventually signed off on the deal, he said.
“The highest office instructed us to do something. There’s a fine line, I don’t know the context of the instruction ... Not doing this is also insubordination,” Nagar said.
The state capture inquiry will continue on Friday with testimony from one of Nagar’s colleagues, Gert Opperman.