ESKOM provided Gupta-owned Tegeta Resources with another R1.6bn in guarantees, enabling it to purchase the operations of Optimum Holdings and forcing out global commodities trader Glencore.
Eskom previously denied assisting the Gupta family with the transaction. Without external help, Tegeta would never have been able to pay the R2.7bn asking price.
Anoj Singh, Eskom chief financial officer, admitted for the first time on Wednesday that he had personally signed a letter committing Eskom to guaranteeing and standing surety for R1.6bn on behalf of Tegeta in December 2015.
“The guarantee was issued and cancelled, fortunately. The guarantee was contemplated and then put in place. It then expired. It was not utilised. There was a guarantee,” Singh said.
Sitting next to him, Zethembe Khoza — the current acting chairman and chairman of the board tender committee at the time — first claimed not to “recall the guarantee”. When pressed for a decisive answer, Khoza said: “It is the first time I’m hearing of it here.”
Tegeta is owned by the Gupta family, which has been accused of illegally capturing crucial personnel and sectors of the state. The revelation of a guarantee comes on top of a discount on a R2.1bn fine levied on Glencore-owned Optimum, which was dropped by 88.3% once Tegeta had acquired the company in 2016. The controversial transaction put more than 2,000 jobs at Optimum at risk as Glencore had placed the unprofitable coal mining operation in business rescue.
This was after Eskom had sued Optimum for the penalty, under the pretence of recovering fines for what the utility said was unsuitable coal.
At the time, Tegeta was running short of funds to pay for its controversial R2.7bn pursuit of Optimum, even after Eskom had given it a R659m advance payment, which former public protector Thuli Madonsela said: “may not be in line with the Public Finance Management Act”. The Treasury later found the advance to have been illegally used to assist with the acquisition.
In addition to Singh’s admission to have offered the guarantee for the purchase price, Business Day can now reveal that Singh was accompanied by Eric Wood, CEO of Trillian, on the teleconference call when finalising the negotiations with Absa on Eskom standing surety.
Trillian is owned by Gupta ally Salim Essa.
This took place on the afternoon of December 27 2015. A few hours earlier, in the early hours of the Sunday morning, Singh had called the bank as the business rescue practitioners of Optimum needed surety that the Guptas had access to the settlement consideration.
Leaked e-mail correspondence from the Gupta family and their associates show this was at about the same time the Guptas were putting pressure on Eskom executives to approve the guarantee so that the transaction could go ahead.
Madonsela also found that former Eskom CE Brian Molefe had visited the Guptas at their compound and had made many telephone calls to members of the family. The deal went through in April 2016.
In her report on state capture, Madonsela had this to say of Eskom’s endeavours to help the Gupta family push through its acquisition: “It appears that the conduct of Eskom was solely to the benefit of Tegeta…. This may constitute a contravention of section 50(2) of the PFMA [Public Finance Management Act] in that they acted solely for the benefit of one company.”
Eskom also admitted on Wednesday to paying consulting company Trillian R495m, without having had any contract, or without any apparent work having been carried out by the start-up. This dwarfs the R266m reported by advocate Geoff Bludlender two weeks ago and the R400m estimate given to Business Day by Eskom chairman Zethembe Khoza recently.
The leaked email correspondence also shows Singh stayed at the luxurious Oberoi Hotel in Dubai. The expenses were paid by the Guptas. Singh declined to comment on this revelation, saying that he would soon “tell all.”
Eskom has declined to take any action against Singh or any member of the executive implicated in any of the wrongdoing.