Techint Unit Found Payments of ‘Concern’ in Eskom Contract

(Bloomberg) -- Tenova SpA, a unit of the Italian billionaire Paolo Rocca’s Techint Group, has appointed legal and forensic-accountancy firms to assess its dealings with South Africa’s Eskom Holdings SOC Ltd. after identifying payments that caused the company “concern.”

A contract between the mining and manufacturing-services provider and state-owned Eskom is one of a number of agreements, including ones frm Alstom SA and WSP Global Inc., that are being scrutinized by South Africa’s Special Investigating Unit. Tenova was hired in 2010 to carry out work on Eskom’s Kusile power plant, which it handled through a division called Tenova Mining and Minerals South Africa.

“In 2018, group internal audit processes identified certain payments made by TMMSA within the context of the Kusile project as a potential source of concern,” Tenova said in an emailed response to questions. The company has reported its findings to South African authorities and hired ENSafrica, the continent’s largest law firm, and accountants at Crowe Financial to help with investigations.

Eskom, a utility that supplies almost all of South Africa’s electricity, has been beset by corruption scandals that have played a part in saddling the company with about 454 billion rand ($27 billion) in debt. The group can’t meet its operating costs and poor plant maintenance has resulted in regular nationwide power cuts, stalling the economy.

In 2010, Tenova and Eskom signed a 962 million-rand contract with an expected duration of just over six years, according to documents submitted by Eskom to state investigators. A decade and three modifications later, the work still hasn’t been completed and is estimated to cost 1.9 billion rand.

“All the revisions made to the scope and price of the contract with Eskom were legitimate,” Tenova said.

(An earlier version of this story corrected the spelling of Rocca’s first name.)

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