FORMER South African mines minister, Mosebenzi Zwane, is one of a group of 12 against which Eskom and the Government’s Special Investing Unit (SIU) have issued a summons related to fraud totalling R3.8bn.
The funds relate to the acquisition of Optimum Coal Holdings (OCH) which Eskom said in an announcement today involved the corrupt cooperation of former Eskom CEO, Brian Molefe, his CFO at the time, Anoj Singh and five other board members including former chairman, Ben Ngubane and Matshela Koko, head of generation at the time of the alleged fraud.
The summons in the North Gauteng High Court to recover the funds also has at its centre Rajesh, Atul and Ajay Gupta whose Oakbay Resources, once a JSE-listed company bought OCH through its subsidiary, Tegeta Resources & Exploration (Tegeta).
The summons comes three years after the South African government referred the coal deal to the SIU and some four years after Molefe quit Eskom. The SIU falls under the oversight of the Department of Justice and Constitutional Development.
The other defendants in the matter are Suzanne Daniels, the former company secretary of Eskom and its top lawyer, as well as board members Chwayita Mabude and Mark Pamensky. Salim Essa, a business associate of the Guptas, is also named in the summons. The Gupta brothers and Essa, described by Eskom as “… fugitives from justice in South Africa”, are thought to be based in Dubai.
“All of the former executives and board members breached their fiduciary duty of care and good faith to Eskom, and acted in a concerted State Capture effort with the Gupta Brothers, Mosebenzi Zwane and Salim Aziz Essa to illegally divert funds from Eskom,” said Eskom in a statement today.
The purchase of OCH by Tegeta came after its assets – the Optimum and Koornfontein coal mines – were placed in business rescue by former owner Glencore. The Swiss mining and trading group failed to renew a coal sales agreement (CSA) between Optimum Coal Mine and Eskom. Molefe refused to agree to a new CSA between Eskom and Glencore and he slapped a R2bn penalty on Glencore for its alleged non-compliance as part of the bargain.
After OCH’s assets languished in business rescue, Tegeta beat other bidders to the mines but not before Eskom made a pre-payment totalling R659m to Tegeta for yet-to-be-delivered coal. Singh said it was standard practice to secure coal supply in this way, but it’s understood the money was to assist Tegeta in its purchase. The OCH assets were placed back into business rescue after Oakbay’s banks froze the company’s accounts.
“These 12 defendants acted in a concerted effort whose objective was the corrupt, alternatively irregular, diversion of resources from Eskom,” said Eskom. “As a result of their actions in the acquisition of OCH during this period, Eskom suffered at least R3.8bn in losses which it is legally obliged and morally burdened to recover, together with the interest thereon,” it said.
Optimum Coal Mine, which once supplied 6.5 million tons a year of thermal coal to Eskom’s Hendrina power station, remains in business rescue after attempts to sell the mine to a list of potential buyers fell through.