STATE CAPTURE: ABB to pay back R1.56bn to Eskom

The SA branch of the international automation firm ABB was ordered to pay R1.56-billion to Eskom to settle an overpayment dispute relating to a contract unlawfully and corruptly awarded for work at the Kusile Power Station. Eskom says the Specialised Investigating Unit (SIU) were probing companies who were alleged to have received overpayments of R4 billion at the utility’s Kusile power station project.

An investigation involving the Special Investigating Unit (SIU), the Hawks and Eskom crossed several jurisdictions, and the US Securities and Exchange Commission, the FBI and the US Department of Justice were involved and kept informed of the process, said Advocate Andy Mothibi, head of the SIU, at a press briefing held last Friday.

Eskom said the contracts implicated by the R4-billion overpayment include Asea Brown Boveri (ABB) South Africa (R1 billion), Tenova Mining and Minerals (R735 million), Tubular Construction (R1 billion), and Stefanutti Stocks (R1 billion).

The contract between ABB and Eskom was signed on Friday 11 December and follows from the commitment last week by global firm McKinsey to pay back R650-million worth of ill-gotten gains relating to Transnet and SAA contracts (this is in addition to the R1-billion worth of consulting fees it offered to repay in 2017), and the R150-million Deloitte agreed to repay following an irregular procurement process. Eskom has also issued PwC with a R95-million letter of demand relating to consulting fees incurred in 2017 and it has launched civil claims to recover R3.8-billion from the Gupta family and their associates.

The ABB contract for control and instrumentation work at Kusile was awarded on 29 April 2015. At R2.24-billion, it was R324-million more than the lowest bidder but ABB won the contract based on a promised ability to accelerate delivery. “As subsequent events have shown, this was not the case,” says Eskom’s CEO, Andre De Ruyter. Eskom eventually paid ABB R3.1-billion.

“We accept that ABB has performed work for which we received value,” says De Ruyter, “so we have not claimed back the value of the entire contract.”

Of Eskom’s total debt of about R480-billion, this is about 0.25% and will not make difference. Nevertheless “it is helpful in easing our liquidity constraints, that is all,” says De Ruyter. ABB will pay back the money within two weeks.

 “This is a small contribution to the [Eskom] debt pot, but the message to firms that have been involved in corruption is that now is the time to approach the SIU and make a voluntary disclosure,” said Minister of Public Enterprises Pravin Gordhan. “If not, at some point,” he says “you will face the music!”

Companies that may have enabled state capture should not only pay back the fees they earned from suspect contracts plus interest, but should also have to pay “reparations” for the damage they caused to SA’s economy, according to economist Dr Iraj Abedian, the founder and chief executive of Pan-African Investment and Research Services. Abedian says that private sector groups that got entangled in the state capture project get off too easily when they volunteer to pay back fees.

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