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McKinsey refutes Eskom statements over Trillian subcontract

McKinsey says it never entered into a contract with Trillian, because it was concerned about its ownership.

Zethembe Khoza interim board chairman of the Eskom board briefs media on 2016 results on 19 July 2017. Picture: Kgothatso Mogale/EWN

JOHANNESBURG – Consultancy firm McKinsey has refuted statements made by Eskom that it had subcontracted Gupta-linked company Trillian, saying it clarified this issue with the power utility last year.

On Wednesday, Eskom’s acting board chairperson Zethembe Khoza admitted that the utility paid Trillian almost R500 million despite Eskom denying this earlier this year.

Khoza says they had a contract with McKinsey who subcontracted Trillian to do consultancy work for them.

In May, Eskom insisted that it did not pay Gupta-linked company a cent because there was no contract in place.

“Therefore, if you were searching using the contract, you could not pick up any payment. I don’t know whether that one led to misleading the people that gave the information or not.”

However, McKinsey says that despite one of its partners writing a letter to Eskom to pay Trillian directly for services as a subcontractor, it has informed the utility that this was inaccurate.

McKinsey says it never entered into a contract with Trillian because it was concerned about its ownership.

Therefore all payments to Trillian were paid directly by Eskom and presumably governed by its own rules and processes.

WATCH: Eskom explains why it paid Trillian R500m

Eskom acting CEO Johnny Dladla said he’s asked for an independent review into the transactions made with Trillian.

Dladla, who's been in the acting position for just 21 days, says he’s focusing on governance and leadership at Eskom and wants answers about the power utility's alleged corrupt deals.

Eskom maintains it never entered into a contract with Trillian. It says its agreement was with McKinsey which then subcontracted Trillian to do work for Eskom.

In May this year, AmaBhungane revealed that Trillian invoiced Eskom for more than R400 million over a period of nine months, even though little or no work was done.

At the time, Eskom insisted that because it didn't have a contract in place with Trillian, it did not pay the company a cent.

On Wednesday, the newly appointed acting chair Zethembe Khoza and acting CEO Dladla admitted that Eskom did pay almost R500 million although it only had a contract with McKinsey.

Dladla says he wants a full investigation into the matter.

“I asked for that whole transaction to be reviewed because I’m asking myself questions as well. I’ve called in the main contractor, which was McKinsey, and suspended them while I’m doing this exercise.”

Meanwhile, Eskom says there's nothing to warrant suspending Anoj Singh. The CFO is, however, drafting a document to explain extravagant trips to Dubai that were allegedly funded by the Guptas.

FINANCIALLY STABLE

Eskom insists it is financially sound and stable and says it has been able to increase its revenue and cost savings.

The power utility released its annual financial results, showing a R1 billion net profit which is down from R5 billion in 2016.

The results were due to be released last week but auditors raised concerns.

Khoza says there is no impact on its financial agreements and therefore he's decided to release the results.

“The company has achieved above target financial performance over the past year despite a challenging external environment. The performance reflects a concrete effort by the business to improve efficiencies resulting in a cost reduction, increased border cross sales supported by improved plant performance.”

(Edited by Leeto M Khoza)