Eskom officials facing charges of fraud and corruption are alleged to have colluded with the power utility's contractors to supply furniture, crockery and cutlery costing R22m to the now-abandoned R840m Wilge Residential Development project near Kusile power station.
One of the suppliers is alleged to have arrived in a minibus taxi to deliver some of the goods that had been ordered — and arrived with no invoice book, creating suspicion and triggering an investigation into the contract.
A whistle-blower who worked at Eskom's group capital department, led at the time by senior executive Abram Masango, raised the alarm after witnessing the taxi incident.
Masango and another former executive, France Hlakudi, are facing charges of corruption and are accused of receiving R30m each in gratifications from Eskom contractors. Their co-accused, businessman Maphoko Kgomoeswana and his company, Babinatlou Business Services, is accused of facilitating the bribes. All have indicated that they will plead not guilty to the charges.
A draft forensic report on the abandoned development, which was intended to house Kusile workers, states that the cost to supply and deliver furniture to the Wilge complex escalated from R17m to R22m.
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The report by law firm Bowmans, which is contained in files obtained by the Global Initiative Against Transnational Organised Crime, says a company called Moremantsa was appointed in late 2013 as the preferred supplier of the household goods. At the time, the contractor building the complex had stopped working on it, causing delays in the project's completion.
“During interviews both [procurement managers] indicated that they were placed under pressure by Masango to ensure that everything required to ensure immediate occupation of the flats, like furniture, kitchen equipment and crockery and cutlery, was on hand, hence the procurement of furniture, kitchen equipment, crockery and cutlery.”
The report adds: “There was no urgency for the supply of these goods as the project had stalled. As a result Eskom had to incur further costs to store them.”
The Sunday Times was told that the items remain in storage, further racking up bills for Eskom.
Eskom budgeted R160m for the housing project in 2012, but CEO Andre de Ruyter, told parliament in February that it had spent R840m on the blocks of flats, which remain incomplete with “uninhabitable” units. Eskom is now trying to sell the development to the department of human settlements.
Eskom is also reported to have spent over R1bn renting accommodation for the workers it had planned to house in the complex.
The Bowmans investigators looking into the utility's spending spree on furniture and household goods discovered shocking markups on the prices of furniture procured by Moremantsa. In one example, Eskom ended up paying R18,400 each for two simple pool tables that usually go for R3,500 apiece.
Moremantsa did not respond to requests for comment.
“The pool table supplied, a Shoot Pool Table Eclipse MK II, was advertised at R3,499.00 on March 18 2013 at Makro, whereas Moremantsa supplied the very same pool table at R18,400.00 per table. The mark-up being approximately 425%," the report states.
Also on the shopping list were 1,350 study desks marked up by more than 480%.
“Moremantsa supplied a 120cm two-drawer desk ... at R2,900 per desk. A current advert for a 120cm two-drawer Wenge desk reflects the price as R499, a mark-up of approximately 482%. However, 1,350 units were supplied at a profit of R2,401 per unit, aggregating a total profit of R3,241,350,” states the Bowmans report.
“The above is a random sample of some of the items supplied and shows a pattern of excessive price inflation,” says the report.
As well as the price gouging on the furniture and the storage costs incurred unnecessarily, Eskom officials involved in the project heaped on even more costs, ordering kitchen equipment, cutlery and crockery worth R4.8m from companies including Mbanga Trading, Makasani Engineering Projects and Jwayelani Trading Projects. The companies could not be reached for comment.
The Bowmans investigators found connections between the directors of those companies and two senior Eskom procurement advisers.
The report states that one of the procurement advisers was a business partner of Moremantsa's owner.
Eskom said it fired its facilities general manager in charge of buying the furniture after a disciplinary hearing, another implicated employee is undergoing disciplinary action, and it “has initiated a legal process to recover monies from concerned parties”.
Masango's lawyer, Nicqui Galaktiou, said her client has never had sight of Bowmans' draft report and had only been alerted to it through the media.
"[He] is therefore not in a position to respond to the questions/allegations. We can confirm that Mr Masango has never been questioned nor interviewed about these allegations by either law enforcement or Bowmans, notwithstanding that the 'draft progress report' has been prepared by Bowmans,” she said.
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