Police Arrest Former Eskom Managers for Alleged Fraud, Graft
South African Police Arrest Ex-Eskom Managers Over Alleged Fraud
South African police arrested two former senior managers at the state electricity company and two other suspects over allegations of fraud, corruption and money laundering at the Kusile power plant.
Abram Masango, the former head of group capital at Eskom Holdings SOC Ltd. and France Hlakudi, a former senior manager for group capital at the utility appeared in court on Thursday, according to Hangwani Mulaudzi, a spokesman for the Hawks’ Serious Commercial Crime Investigation team, a special unit of the police. Tony Trindade, chief executive officer of Tubular Construction Project (Pty) Ltd. and Hudson Kgomoeswana are also among the accused.
The four were granted bail of 300,000 rand ($21,000) each, according to TimesLive, the online portal of the Tiso Blackstar Group of publications.
Thursday’s arrests are the first by judicial authorities carrying out President Cyril Ramaphosa’s pledge to end corruption that’s stalled growth in Africa’s biggest economy. The debt-laden utility has turned to the government for bailouts to remain solvent as it confronts massive cost overruns at two partially completed plants -- Kusile and Medupi -- and its other aging facilities struggle to produce enough power to meet demand.
“Investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations,” according to a joint statement by the Hawks and and the National Prosecuting Authority. “There was apparent gross manipulation of contractual agreements between contractors, Eskom employees and third parties at Kusile.”
‘Conflict of Interest’
The suspects are being investigated for alleged fraud, money laundering and corruption. Kusile, Eskom’s newest facility, remains under construction after years of delays and cost overruns.
The investigations found that contracts were manipulated by senior managers through Eskom’s procurement system, “descoping of the contract at Kusile without justification and with conflict of interest by Eskom employees,” the agencies said.
A contract for 745 million rand ($52 million) was approved in 2015 for the construction of two air-cooled condenser units at Kusile and “it’s alleged that the appointed companies, other related entities and individuals shared approximately 30 million rand amongst themselves,” they said.
The government’s Special Investigating Unit said in a statement that it’s busy with a “much wider” probe that involves four main contractors and numerous sub-contractors at Kusile. The SIU said that it found through its own investigation that some companies were “used as conduits for corrupt payments” to Eskom managers.
--With assistance from Jacqueline Mackenzie.
To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net
To contact the editors responsible for this story: Gordon Bell at gbell16@bloomberg.net, Hilton Shone, Jacqueline Mackenzie
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