THE Special Investigating Unit (SIU) has recommended that ABB South Africa be blacklisted from further government work, after ABB agreed to repay Eskom R1.56bn on a contract awarded in 2015 for control and instrumentation at Kusile Power Station, which was associated with bribery and overpayments.
However, Eskom would have to apply to blacklist ABB SA, and Eskom’s group CE, Andre de Ruyter, said in a media briefing on the settlement on Friday that work on Kusile under this contract was currently about 90% complete.
To appoint a new contractor with different technology at this point would probably delay completion of Kusile by another four years. It would create a real risk of about R1bn of claims being filed by other contractors for standing time. This delay would also increase the risk of loadshedding.
Eskom has applied to National Treasury to continue working with ABB on the C&I contract, with the proviso that ABB will make no further profit on it.
ABB could also not be excluded from further Eskom work because it is a very large company that has supplied a number of systems to the utility, de Ruyter said.
“ABB is embedded in Eskom. We rely on them to service equipment, for backup and replacement. It is like deciding on one brand of computer, it becomes very difficult to switch away from it.
“These are practical and commercial considerations as we consider the consequences of this unlawful contract for future work by ABB. It is not an easy decision to make as we may compromise Eskom’s own systems.”
ABB International, which is headquartered in Zurich, Switzerland, confirmed in a statement it had reached a settlement with Eskom and the SIU “… relating to improper payments and other compliance issues it voluntarily disclosed”.
It would continue to co-operate with South Africa’s National Prosecuting Authority and the authorities in the US, Germany and Switzerland, it said.
Since new Eskom management was appointed to address problems at the financially strapped utility, it has opened over 100 criminal cases against its own employees and outsiders.
De Ruyter said another R3bn in irregular expenditure at Kusile was being investigated, and other contracts at Medupi would also be examined. Ultimate recoveries would “run into the tens of billions of rands,” minister of public enterprises Pravin Gordhan said.
ABB will pay the settlement amount to Eskom before the end of December. As it is equivalent to only 0.25% of Eskom’s total debt, it will merely help to ease the utility’s tight liquidity position, de Ruyter said.
Advocate Andy Mothibi, head of the SIU, said the criminal investigation into the ABB contract is continuing. He declined to name the implicated individuals. De Ruyter said one of the subcontractors involved was Impulse International, in which former Eskom CEO Matshela Koko’s stepdaughter held a significant interest.
De Ruyter said it was difficult to design a tender system that was completely criminal-proof. “The best defence at the end of the day is employees who are honest, loyal and committed. That is why rebuilding Eskom and its values and framework is a critical part of our turnaround. We are making good progress on it.”