Eskom ignored warnings over McKinsey, Trillian contract at least 4 times

The report confirms that Eskom was first warned two years ago that its contract with McKinsey was illegal and would go against Treasury’s instructions to save costs.

FILE: Eskom's Megawatt Park offices in Sunninghill. Picture: EWN.

JOHANNESBURG - A damning report by Eskom’s own legal team has revealed that the utility deliberately ignored advice at least four times in two years not to go ahead with the McKinsey contract or pay Gupta-linked Trillian.

The 29-page report seen by Eyewitness News was handed to Public Enterprises Minister Lynne Brown earlier in September and lays bare the Eskom’s relationship with the consultancy firms.

It’s been widely reported that despite US firm Oliver Wyman having red flagged transactions with Trillian, Eskom lied by claiming that everything was in fact above board.

Now, according to its own report, Eskom admits that it ignored opinions as far back as 2015 about its controversial dealings with the firms.

The report confirms that Eskom was first warned two years ago that its contract with McKinsey was illegal and would go against Treasury’s instructions to save costs.

It now appears that advice from the utility’s own legal team, external lawyers, Oliver Wyman and Cliffe Dekker Hofmeyer was purposely disregarded.

CFO Anoj Singh and two other key players Prish Govender and Edwin Mabelane decided to go ahead with the McKinsey contract anyway, knowing that Trillian was “involved”.

Although there was no contract in place, it appears these individuals went out of their way to ensure the Gupta-linked company was paid.

The report also details four separate investigations that uncovered seemingly damning evidence against top Eskom management for seriously breaching the Public Finance Management Act and their fiduciary duties.

Singh was placed on special leave, while Govender and Mabelane were suspended. However, they were back on the job a few days later.

Acting chair Zethembe Khoza says they have all now been suspended.

But this still raises questions around whether Eskom is failing to take immediate and decisive action in light of concrete evidence.

ESKOM MISLEADING THE PUBLIC

The report also shows the utility is still misleading the public about its dealings with the Guptas in an effort to protect top management implicated in the Trillian scandal.

In July, Khoza admitted for the first time that it had in fact paid Trillian, but he defended the transaction by saying that Trillian was paid as a sub-contractor of consultancy firm McKinsey, a claim that has since been disputed.

Two months ago, Khoza was quick to make excuses about the Trillian payments when pushed to answer questions about Eskom’s lies.

“It was a sub-contractor of McKinsey, therefore if you were searching using 'contract' you could not pick up any payment.”

Eskom’s own report now confirms this was simply not true and that Trillian was loaded onto the payment system and paid directly on four separate occasions since last year.

Khoza either knew or ought to have known this, as the document shows he attended almost all board meetings about the McKinsey and Trillian contract, but he claims he was misled.

In December 2016, Eskom general manager Charles Kalima created a new contract on the system called “Trillian” and provided them with an invoice for R134 million.

Brown says she still hasn’t received the final version of the report.

Khoza revealed on Thursday that Singh, as well as Govender and Kalima, have now been suspended.

“Singh, Govender and Kalima have been resuspended. Singh was on special leave but the board has resolved to convert it into a suspension.”

Khoza also insists that there have been no attempts to “protect” anyone at Eskom.

(Edited by Zamangwane Shange)