Eskom plans to take action against Koko

The board of Eskom will on Tuesday announce disciplinary measures against its former acting CE in a bid by the power utility to clean up its corruption-tainted image.

The disciplinary measures stem from an investigation into allegations of conflict of interest involving hundreds of millions or rand on the part of Matshela Koko. The investigation found substantial evidence of wrongdoing and irregularities in contracts involving a company in which Koko’s stepdaughter has an interest.

The utility will also begin a process to investigate chief financial officer Anoj Singh.

Eskom met law firm Cliffe Dekker Hofmeyr last week to finalise preparations for the disciplinary action. Charges will be formally put to Koko this week, said acting chairman Zethembe Khoza on Monday.

In May Eskom instructed Cliffe Dekker to conduct the investigation into irregular contracts, from which Impulse International scored contracts worth hundreds of millions from a division headed by Koko since 2014. Cliffe Dekker roped in auditing firm Nkonki to conduct a forensic investigation into Koko.

The investigation looked at the period in which Koko’s stepdaughter, Koketso Choma, was a director at Impulse and owned up to 35% of the shares in the supplier company.

In December, Koko became acting Eskom CE after the tearful departure of Brian Molefe, who left after being implicated in alleged irregular dealings with the Gupta family, whose companies supplied coal to Eskom. Koko has been on leave since May, pending the finalisation and outcome of the investigation into his conduct.

"The chairperson of the audit committee is now busy finalising the charges and we would hope to finalise the matter before the end of the month," said Khoza on Monday.

He has been acting chairman since the unceremonious departure of Ben Ngubane, who resigned in June after the board’s mishandling of Molefe’s departure and numerous allegations of corruption at Eskom.

In its report on Koko, Cliffe Dekker found that Eskom paid Impulse more than R390m for 10 contracts awarded by his division since July 2014.

The company sought the advice of a senior counsel, who recommended Eskom put Koko through a disciplinary process on at least six charges.

These will include Koko’s failure to declare his conflict of interest involving Choma’s direct shareholding in Impulse and his failure to follow up whether Choma did indeed "relinquish" her shares after Koko allegedly instructed her to do so. Choma transferred the shares into the Mokoni Trust for her personal benefit.

"There are sufficient anomalies in the explanation actually given by Koko and further many unanswered questions from the explanations given by Koko, [wife Mosima] Koko, Choma and [Impulse CEO Pragasen] Pather for Eskom simply to be satisfied that the matter can be closed," said Cliffe Dekker in the final report dated June 23, seen by Business Day.

"There are sufficient issues which arise which would warrant disciplinary proceedings to be instituted against Koko.

"This would be in the interests of both Koko and Eskom since, through the interrogative process of a disciplinary proceeding ... [so that] the anomalies and unanswered question can be fully canvassed," said Cliffe Dekker in the report.

Cliffe Dekker also warned that the disciplinary proceedings "may well exacerbate Eskom’s concerns and illustrate that the anomalies are real ... and that there are no satisfactory answers to the unanswered questions. This could then lead to Eskom taking further action against Koko, depending on the outcome of and recommendations made through the disciplinary proceedings".

As if to stress the serious nature of the charges against Koko, Nkonki followed its report with another one, adding more potential charges against Koko.

In a letter to Cliffe Dekker, dated June 26, Nkonki adds that it had found there were further "matters of concern" that arose during its investigation and asks that Eskom be informed.

These included whistleblower allegations that Impulse was paid for services it had not rendered to Eskom.

It was also awarded contracts without having been appointed a vendor, that other potential competitors "were technically restricted" and that Eskom violated its own and statutory policies in paying Impulse on six occasions without it having submitted relevant documentation such as tax clearance or BEE certificates.

Neither was there any tender for the work, nor quotations. Eskom had also not issued any purchase order for the invoice to be paid.

Nkonki said: "The whistleblower stated that the omission of each item as listed in the summary was a violation of Eskom procedure and that possible payment occurred against quotations opposed to invoices."

This points to the possibility that criminal proceedings may also be instituted against Koko, who has in the past found himself on the wrong side of the law or employment contract.

About four years ago, Koko was found guilty of a serious offence, whose nature is known to Business Day, but was only suspended for 14 days.

In 2017 National Treasury found Eskom had irregularly paid about R700m to a company owned by the Gupta family, in contravention of the Public Finance Management Act. Koko had authorised the payment, and then lied about it when confronted by current affairs show Carte Blanche.

Former public protector Thuli Madonsela also highlighted this payment, together with other billions in payments, as having been made illegally to benefit the Gupta family to acquire a company that supplied Eskom with coal.

The tackling of Koko is only Eskom’s first step in attempting to clean up its image.

The utility will refer the allegations against Singh for discussion at the board, Khoza said.

Singh has also been the subject of serious allegations of irregular conduct that may include fraud and corruption.

Last week advocate Geoff Bludlender found that Eskom had over the past two years paid Gupta-linked consulting firm Trillian more than R266m without the firm having tendered for or conducted work for Eskom.

Khoza on Monday put the figure closer to R400m. "We have already asked the interim CEO [Johnny Dladla] to look into verifying whether Eskom received any value for this," said Khoza.

The payments to Trillian came as a result of a relationship the Gupta-linked company had with global consultancy McKinsey, which last week suspended partner Vikas Sagar, its executive accused of conspiring with Eskom’s Singh to divert the payments to Trillian.

McKinsey denies it ever had a contractual relationship with Trillian and terminated discussions with the politically connected start-up ahead of Vikas’s letter authorising Eskom to divert payments to Trillian.

In the face of the allegations, Singh remains intact in his position in charge of Eskom’s finances, and was to have presented the company's financial report on Tuesday. However, on Monday Eskom postponed the presentation because of "unforseen circumstances". 

Singh’s name also features prominently in the former public protector’s investigation report into state capture for his work while still in charge of the finances of Transnet.

Together with Koko’s, Singh’s name also appears numerous times on leaked e-mails of the Gupta family.

The controversial family, accused of illegally capturing key elements of the state, last year paid for the holidays of both men and their hospitality in Dubai. Both Koko and Singh have declined to comment on this.