Gupta mining company Tegeta, in which Duduzane Zuma held a 28.5% stake, will likely have to pay hundreds of millions of rands for illegally profiting from a R3.7bn Eskom deal that has now been set aside.
In a victory on Friday for the Special Investigating Unit (SIU), the Pretoria high court ruled that a multibillion-rand contract between Tegeta and Eskom was unlawful. The deal was struck in 2015 by now disgraced former Eskom CEO Matshela Koko. It was intended to continue until 2025.
The head of the SIU, Andy Mothibi, said that after the ruling, it was "time to crack the whip". He said there were about 20 other "similar contracts" with Eskom that were under investigation. These were concluded on the same basis as the Tegeta deal, he said.
The SIU actions will further erode the Gupta business empire in SA.
The Tegeta deal forced Eskom to burn low-quality coal. The SIU said criminal charges and further civil claims would be brought against those responsible. Mothibi said investigators had found that Tegeta was paid at least R1.26bn by Eskom for the coal.
Mothibi and SIU spokesperson Kaizer Kganyago could not say how much they would recover from Tegeta because the amount was still being calculated. Both said they would begin attaching Tegeta's assets this week.
Investigators said they would try to recover hundreds of millions, but it was unclear whether Tegeta, which was placed inbusiness rescue in 2018, had sufficient assets.
However, one of the business rescue practitioners, Kurt Knoop, said Tegeta owned three major assets: the Optimum coal mine, the Koornfontein mines in Mpumalanga and the Optimum coal terminal at Richards Bay. It also owned a 20% stake in the Gupta uranium mine, Shiva.
"We would like to present [the amount] to the SIU special tribunal so that we can start attaching within the next few days," said Mothibi. Action would not be taken against the company alone, he said.
"We have various options. First we can go to the company itself, then we could go after the directors' assets and beyond."
Remaining directors include Gupta lieutenants Ronica Ragavan and Ashu Chawla.
Mothibi said that Eskom's leadership at the time of the contract was also under investigation for its role in the huge losses.
Tegeta bought the Optimum coal mine for R2bn after the Guptas and then mineral resources minister Mosebenzi Zwane strong- armed Glencore into selling it. The state capture inquiry heard that Eskom helped Tegeta afford the mine by unlawfully paying it R659m upfront for coal in 2016.
Yesterday, Tegeta's business rescue practitioners, Louis Klopper and Knoop, said it was unclear what would follow the termination of the R3.7bn contract.
Klopper said that because Tegeta provided services to Eskom, it could be months before investigators determined how much would need to be repaid. He said they did not oppose the SIU's application because it was their duty to report criminal activity and to help the SIU in its investigation.
However, Knoop said Tegeta's operations were not worth anything close to hundreds of millions of rands. He said if the company's assets were attached, it could halt its coal exports, its main source of revenue, which would be a blow to the company's creditors.
Eskom spokesperson Sikonathi Mant-shantsha said the contract's cancellation would have no impact on operations because Eskom had stopped working with Tegeta in late 2017.
He said that though Eskom was cautiously optimistic that some money would be recovered, Tegeta "is in business rescue and could enter liquidation, but it's rare for companies [being liquidated] to provide all of the money that is owed".
In court papers, the SIU said that Eskom's decision to award the contract to Tegeta exploited a medium-term coal procurement mandate to award the Gupta company coal supply agreements from 2013 to 2015. This allowed Tegeta to dictate the terms of its next contract, with a 10-year extension.
In his affidavit, SIU investigator Jason Schmidt said Tegeta had its contract extended despite Eskom rejecting 34% of its coal. "Tegeta delivered the lowest quality of coal, [yet] it demanded the highest [cost] rate."
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