How Eskom officials 'fooled the system' to pay R659m for Gupta coal

The Zondo commission of inquiry has heard how Eskom officials were rushed to make a R659m prepayment to Gupta-owned Tegeta Exploration and Resources.
The Zondo commission of inquiry has heard how Eskom officials were rushed to make a R659m prepayment to Gupta-owned Tegeta Exploration and Resources.
Image: SANDILE NDLOVU

Senior Eskom officials were "fooling the system" when a R659m prepayment was issued to the Gupta-owned Tegeta Exploration and Resources in 2016.

According to Snehal Nagar‚ who oversees the financials in the utility's primary energy division‚ his team was given about an hour-and-a-half to push through a controversial half-a-billion rand payment to the Guptas on April 13 2016.

Testifying at the state capture inquiry on Tuesday‚ Nagar described how Eskom deviated from standard processes to make the prepayment for coal.

Nagar said he received an email from the head of his division‚ Ayanda Ntetha‚ on April 12 which included a pro forma invoice (a preliminary bill of sale) for R659m worth of coal from the Gupta company.

The next day‚ he received a call from Maya Bhana-Naidoo who was a general manager in the office of then CFO Anoj Singh. He alleged that Bhana-Naidoo said the payment needed to made by 2pm that day.

"Everyone needed to be on board to effect this payment and Bhana-Naidoo said she would chat to everyone to make sure they were on board‚" he said.

Nagar spent most of his testimony describing the standard process of procuring goods‚ further highlighting where Eskom deviated from the process on this transaction.

He said the system had to be "fooled" in order to create and settle an order as if the utility had received the coal.

Naidoo's team acted on the payment after receiving a mail from Bhana-Naidoo on April 13 at 12.38pm. The e-mail instructed that the payment be made by 2pm that day and included documentation outlining a decision by Eskom's board at a meeting the night before to approve the deal.

"What the team did was they amended a purchase order of the Brakfontein contract to reflect an order of R659m. The payment to Tegeta was effected on the Brakfontein contract‚" Nagar said.

He said subsequent to that‚ the correct process was followed and the transaction to Brakfontein was reversed and effected on Tegeta.

At the time of the prepayment‚ the Guptas were actively lobbying for the purchase of Optimum Coal Holdings from mining giant Glencore. Tegeta needed about R650m to buy Optimum and Eskom agreed to give Tegeta R659m as prepayment for coal‚ their reason being that Tegeta needed money upfront to meet production requirements.

But the leaked "Gupta e-mails" and an investigation by the National Treasury revealed that the money may have been used by Tegeta to buy Optimum.

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