Naidoo pushes limits of plausible deniability on Eskom board’s knowledge of Tegeta

Former Eskom board member Pat Naidoo on Wednesday claimed at the Zondo commission that he endorsed the utility’s R1.68-billion prepayment for coal to Optimum without knowing that it would pave the way for the mine passing from Glencore’s hands to those of the Gupta family.

He insisted that he was ignorant of the implications of the agreement submitted to the board despite it referring, in paragraph 2(1)(2), to the proposed owners.

The statement left Deputy Chief Justice Raymond Zondo, who had pointed out this particular paragraph, perplexed.

“But the words were staring you in the face,” he said to Naidoo, who was also a member of Eskom’s investment and finance committee.

“If you saw that, how could you and your committee think you were authorising pre-payment to Glencore?” Zondo asked.

Zondo said a further detail in that the black-economic-empowerment quotient of the contract would increase from 30% to 51%, should have alerted Naidoo, the committee and the board that a change in ownership was afoot.

Naidoo conceded only that the ownership of Optimum was “a greyish area” at that point, because Glencore had put it into business rescue, and at the same time demanded a higher price for its coal from Eskom, which dug in its heels on the issue.

His understanding was the prepayment arrangement would end put an end to the company’s financial woes, ensure Eskom of sustained coal supply to its Hendrina and Arnot plants, and prevent job losses. Moreover, the coal price would remain the same.

With this in view, he gave the nod for Eskom’s then new chief executive, Brian Molefe; the utility’s chief executive for generation, Matshela Koko; and chief financial officer Anoj Singh to proceed.

“The ownership of OCM [Optimum Coal Mine]  was still in the greyish area, but the contractual agreement is with Glencore not with anybody else,” Naidoo said. 

Naidoo and his 11 fellow board members approved the prepayment contract through a round-robin process on 9 December 2015. This paved the way for the acquisition of Optimum by Tegeta Exploration, which was part of the Gupta family’s business empire.

The submission to the board on the prepayment had been drafted by Koko — who had argued before the commission that it was the only viable option for Eskom at the time — and was finalised by Singh.

The R1.68-billion prepayment never reached Optimum, because Singh converted it to a guarantee to Tegeta the day after the board approved it.

Zondo asked whether the board, at subsequent meetings, asked for feedback on the prepayment, but Naidoo said to his mind there had been no need because the money was spent in full to buy coal that had been burnt to generate electricity.

Singh had also been instrumental in extending a R659-million advance to Tegeta in April 2016, after the company failed to secure R600-million from commercial banks to cover the outstanding amount it needed to buy the mine.

These machinations came to light during a parliamentary inquiry into Eskom, but evidence leaders at the Zondo commission have been seeking to establish the extent to which Eskom, its executives and directors had come under pressure from politically connected people to benefit Tegeta.

Former Eskom head of legal and compliance Suzanne Daniels has told the commission that she was present in late November 2015 when Koko met representatives of the Gupta family’s Oakbay, a representative from Glencore, and one of Optimum’s business rescue practitioners, and discussed the sale of the mine as well as Optimum Coal Holdings.

Daniels also claimed that executives of Regiments, also linked to the Guptas, had prior sight of the submission to the board and had imposed amendments that would benefit Tegeta.

Koko has strenuously denied her allegations and has accused the commission of bias against him.

Molefe has, in an extraordinary statement to the commission, claimed it was Glencore that had tried to bleed Eskom dry by seeking a vast increase in the price for coal from Optimum and had banked on its business links with Cyril Ramaphosa to succeed.

The president’s political foes in the ANC have seized on these claims to lay corruption charges against him.

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