Eskom Deceived Central Bank About China Huarong Loan, Probe Told

(Bloomberg) -- South Africa’s state power utility deliberately deceived the central bank to ensure it was granted permission to conclude a 25 billion-rand ($1.8-billion) loan agreement with China’s Huarong Energy Africa, according to a senior company official.

Eskom Holdings SOC Ltd. gave the South African Reserve Bank incomplete and inaccurate information about the loan, meaning it was unable to make a properly informed decision about whether to give it the go-ahead, Sincedile Shweni, a corporate specialist at the utility’s treasury department, told a judicial commission in Johannesburg on Monday. Had the correct information been supplied, the deal would have fallen through, he said.

The commission, headed by Deputy Chief Justice Raymond Zondo, was established to probe allegations that billions of rand of taxpayer funds was stolen from the government coffers by allies of former President Jacob Zuma with his tacit consent, with Eskom a prime target during the looting spree. Zuma has denied wrongdoing.

The loan agreement between Eskom and Huarong was signed by the utility’s then-acting Chief Executive Officer Sean Maritz and Huarong Energy Africa Chairman Jianbao Chen in October 2017. Maritz was suspended from his post in January 2018 and resigned two months later. Testimony before the commission has implicated Maritz in taking kickbacks on the deal, an allegation he denies.

Huarong’s offer of a loan was unsolicited and wasn’t processed by Eskom’s asset risk and liability committee, which would normally consider such proposals and critically analyse them, according to Shweni. The deal was instead referred to one of the utility’s more senior management structures, a “suspicious” deviation from the normal procedure, he said.

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