Don’t let those big refunds buy the corrupt out of jail

Now you’ve got the money, pursue the criminal charges

11/12/2020 15:50:49


Don't let those big refunds buy the corrupt out of jail


Today we learned that global company ABB tried to buy its way out of trouble with a paltry R25m offer to Eskom but ended up signing an agreement this morning to repay R1.56 billion, within two weeks. Eskom and the SIU have cancelled that ABB contract, but can’t fire ABB as its systems are now embedded in the almost-complete Kusile power station.

On Wednesday we heard that another international, McKinsey, has promised to repay about R650m to Transnet and SAA. On Thursday, McKinsey officials were at the State Capture Commission ducking responsibility.

Friday’s deal was three-way, involving Eskom, ABB and the Special Investigating Unit, while the McKinsey offer was to the State Capture Commission and apparently didn’t include aggrieved party Transnet. Neither repayment is for all the money received, but relates to clearly corrupt sections or contracts. The Eskom-ABB deal includes interest, costs associated with the irregular award and a profit element, while the Transnet-SAA-McKinsey deal does not include interest (and OUTA’s own investigations calculated a significantly larger amount due to Transnet).

These deals are, to a certain extent, the very powerful and rich buying themselves out of trouble, a trouble that shows that those companies have rot embedded in them.

But they do show us hope: the law-enforcement and SOE teams taking on the state capture giants are making headway. Minister of Public Enterprises Pravin Gordhan said today that these irregular deals in state-owned entities could run into tens of billions of rand. We wish those law-enforcement teams success, and a much bigger share of the national Budget.

We are watching for the criminal charges, and expect to see these brought against individuals linked to both Eskom and ABB.

If there is enough evidence to require ABB to sign over R1.56bn in clearly illegal payments and to force it to finish its Kusile work without making any further profit, there must be evidence to support criminal charges. We are encouraged by advocate Andy Mothibi’s promise to pursue these matters, but we want to see this sooner rather than later.

We also remind them that restitution includes information on what went wrong, how it was set up and concealed, and details of the money flows.

It has taken years to get to the Eskom repayment, and ABB management cannot pretend it did not know what was going on. While Eskom and the SIU declined to name the Eskom executives and officials involved, there are strong expectations that former Eskom executive Matshela Koko is in the running, along with his stepdaughter whose unqualified business Impulse International benefitted as an ABB subcontractor. Questions were raised in the media about the ABB contract as soon as it was signed in 2015, and two years later the media exposed the Impulse connection.

How will this change the way business is done in South Africa? It seems it is not as easy as blacklisting and blocking these corrupt companies, as some have embedded themselves in our state structures. However, this does not grant them the privilege of secrecy.

We want National Treasury to maintain a public list of companies implicated in corrupt behaviour and, where it is not possible to block them from current and future deals, then requiring additional checks on every one of their contracts. Some of these businesses have been shameless and deserve liquidation. Those that survive may not deny their heritage and must make restitution and work to earn back public trust.

We want SARS to double check the tax payments of all those company directors and officials.

We want the public kept up to date – as we were this week – on the efforts to claw back the money.

We want, one day, to see these recoveries knock a little off the price of electricity.

But most of all, we want the ringleaders in jail.


A soundclip with comment from Advocate Stefanie Fick, OUTA Executive Director: Accountability Division, is here.