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Treasury, Eskom in public spat over Gupta company

Treasury says Eskom is lying when it claims it’s been cooperating with the review into its deals with Tegeta.

FILE: Eskom's head office at Megawatt Park. Picture: Reinart Toerien/EWN

JOHANNESBURG - The National Treasury and Eskom appear to be embroiled in a public conflict over a Gupta-owned company this morning, with Eskom accusing the Treasury of playing political games while the Treasury says Eskom is lying.

Yesterday, the Treasury said Eskom was resisting its attempts to review contracts signed with the Gupta-owned company Tegeta before Eskom claimed the finance ministry was playing politics.

Then, on eNCA last night, the Treasury's head of procurement Kenneth Brown said Eskom was simply lying.

The Treasury says Eskom is not telling the truth when it claims it's been cooperating fully with its review of these Tegeta contracts.

But Eskom's executive for generation Matshela Koko says it's the Treasury who are playing politics.

"The game here is the perceptions and the narrative out there that says everybody who does business with the Tegeta company is corrupt and National Treasury is here to save South Africa. That's the gaming I'm talking about."

He also says Eskom has been cooperating and that they are flabbergasted by this accusation.

ESKOM DIDN'T KEEP ITS PROMISE

The National Treasury said Eskom has not done what it promised to do, when it said it would hand over certain information to allow the finance ministry to complete its review of these contracts with Tegeta.

Eskom has previously denied claims that proper procedures were not followed when signing this contract with the Gupta-owned company.

Now, the utility's Khulu Phasiwe said they deny this accusation from the Treasury.

"We insist that we are cooperating with the National Treasury, and we do have documentary proof to show that we have been providing them with the information they were requesting."

At the same time, Eskom group executive Matshela Koko says the power utility is shocked by the recent claim.

"We are very surprised that National Treasury has come out in the manner they have, which is very unfortunate. We received the report from National Treasury on 12 April.

"The report was very clear that they want the board to approve all the requests that they are requesting from us, and we have cooperated, we have engaged with them and done everything that we had to do."

ZUMA FUELLING THE TENSIONS

Analysts say President Jacob Zuma's team and the Treasury under Finance Minister Pravin Gordhan have disagreed about government spending at state companies and the tussle between Treasury and Eskom signalled a prolonged dispute.

In a statement, the Treasury accused executives at Eskom, including Chief Executive Officer Brian Molefe, of resisting attempts to investigate coal contracts between the utility and Tegeta, a company controlled by the Gupta family.

The Treasury said Eskom had blocked its probe since April.

"The National Treasury would like to categorically state that its efforts have met resistance," it said in a statement.

Eskom denied preventing the investigation into its deals with Gupta-controlled Tegeta Exploration & Resources Ltd. and said that it was "shocked and perplexed" by the statement issued by the Treasury.

The Gupta family, which is being investigated by the anti-corruption watchdog on suspicion of influencing government appointments, announced on Saturday that it planned to dispose of its South African businesses before the end of the year.

The Guptas, a family of Indian-born businessmen who moved to South Africa in the early 1990s, have denied trying to influence political appointments or using their ties to Zuma for advancing their business interests, saying they are the victims of a plot. Zuma has also denied any wrongdoing.

Eskom said in a statement over the weekend the Treasury had not issued any conclusive findings against it on any of the utility's coal contracts‚ and that it was cooperating with the Treasury on its investigations of the contracts.

The Sunday Times reported that the Treasury's investigation had revealed that Eskom paid more than R130 million to a mining company owned by the Gupta family for coal the power utility could not use.

The Treasury said on Monday it had sent a report to Eskom's Chief Executive Officer Brian Molefe and board chairperson Ben Ngubane for their comment and requested a list of payments made to Tegeta, both of which the utility ignored.

The Treasury said Gordhan escalated the matter to Ngubane, raising concerns about advance payments made to Tegeta, but this also failed to bear fruit.

Eskom said it had received the Treasury's lengthy report in April and had requested for additional time to issue its reply and would do so by the end of September after a board meeting.

FRUSTRATION

On Thursday, the presidency defended a new plan to give Zuma supervision over state-owned firms after Gordhan's allies said this would limit the finance minister's control.

Such firms include Eskom and the South African Airways, which has announced plans to raise R16 billion for working capital and debt repayment.

A Zuma-backed plan to build a series of nuclear power plants, at a cost of as much as $60 billion, has caused tension with the Treasury for months. The presidency has said that Zuma was not warring with Gordhan.

Gordhan said on Wednesday he had done nothing wrong by setting up the surveillance unit at the tax service and declined to obey a police summons linked to the probe, setting the stage for a drawn-out confrontation between him and authorities.

"This is almost a public justification of Gordhan's frustration over the running of state owned firms," said Daniel Silke, a director at Political Futures Consultancy, referring to the statement issued by the Treasury on Eskom.

The ructions in government have weakened the rand and bonds in an economy teetering on recession, but the central bank said it will not respond to short term market volatility triggered by news of possible charges against Gordhan.

Additional information by Reuters

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