Eskom Inquiry: G9 Consulting Services
27 February 2018
Chairperson: Ms D Rantho (ANC)
G9 Consulting Services statement
Document awaited: Opening statement by Rajie Murugan – G9 Group [please email firstname.lastname@example.org if you have the document
G9 Consulting Services appeared at the Inquiry and spoke on the findings and recommendations of its investigation at Eskom. The G9 investigation dealt with Eskom payments made to McKinsey and Trillian, which received R1.6 billion in consultancy fees between April 2016 and February 2017.
G9 made it clear that although it was satisfied that the investigation can authoritatively and substantively arrive at findings, conclusions and recommendations which can be acted upon internally, criminal conduct by executives was not fully and satisfactorily investigated by G9. This was because G9 got too close to revealing corruption and money laundering, so the board panicked and stopped the investigation.
The investigation found that there was no credible contract between Trillian and Eskom because the contract contravened the PFMA. Legal opinion provided by Ledwaba Mazwai dealt with two critical aspects of the investigation which were the sole sourcing of McKinsey and the remuneration method applied to pay McKinsey. The legal opinion furnished by Ledwaba Mazwai was not sought by Eskom but provided by McKinsey to Eskom officials to support its position. The opinion stated that the remuneration and sole sourcing model would not contravene the PFMA. This went against the legal opinion provided by Adv Paul Kennedy SC, which advised that the executives were exposing themselves and Eskom to fruitless and wasteful expenditure – this was completely ignored. The senior Eskom officials – Mr Charles Kalima, Mr Prish Govender, Mr Edwin Mabelane – and by direct implication the Board Tender Committee (BTC) and the board – placed more weight on the McKinsey-provided opinion.
The investigation found that the BTC steering committee and other relevant structures were not signed, particularly those that had to do with Trillian and McKinsey agreements or contract negotiations. Senior executives denied any knowledge of Trillian being a 0% BBBEE company. Another witness confirmed that he provided advice to Mr Mabelane, Mr Govender and Mr Anoj Singh that the MSE project should not proceed without Treasury’s approval of a deviation in the remuneration model of the contract. Eskom did not seek Treasury approval for the MSE project, and the senior executives continued regardless.
The Board Tender Committee as the extension of the board was culpable; it cannot push that responsibility to the senior executives who were implicated, and vice versa. In six months, McKinsey claimed that it had saved Eskom R27 billion. Eskom today does not have money to pay its staff so the question is where this R27 billion that it supposedly saved. If this had been allowed to continue Eskom would have been in a much deeper hole. G9 reported that there was a lot of conflict of interest.
In a short period of six months, five Trillian invoices were received and paid: the first R26 million; the second R107 million; the third R99 million; the fourth R134 million and finally R154 million. The conduct and actions of one or more Trillian directors throughout the entire process presented prima facie evidence of possible criminal conduct of fraud and money laundering. It recommended that Eskom take civil action to recover the money from McKinsey and Trillian. The investigation can never be considered complete until Eskom considers the G9 recommendations.
Members asked who instructed the stopping of the investigation; if the G9 Report was taken on review by Eskom; was G9 aware of Adv McCapps Motimele’s opinion; which executives should be held liable and criminally charged; about Mr Mabelane’s explanation for the R104 million paid to Trillian; if it was the first time G9 came across contract maladministration at Eskom; if Trillian had a BBBEE certificate; about the three Dubai visitors; if Eskom gave an explanation for terminating the G9 contract and if G9 challenged this; if G9 wanted the Committee to assist in arranging an interview with Mr Singh to check if he had a case to answer to; if it is a norm in parastatals for large payments to be made in a day, or this was immediately flagged as unusual; the names of the individuals that were not interviewed by G9; if the Public Protector was consulted in obtaining evidence; if there was confirmation from the Public Protector that Trillian was an existing juristic person; who G9 reported to at Eskom; if G9 was paid; what else would have been covered if the investigation had continued; if G9 had done work for Eskom before, what was the nature of the work and when was it completed; and why did G9 just accept the termination of the contract.
The Chairperson stated that the G9 Group would report on the investigation it conducted at Eskom.
Adv Dumisa Ntsebeza, as legal representative for G9 and with permission from the Chairperson, made an opening statement. He referred to the former Yugoslav president Slobodan Milosevic who had died in his cell in The Hague whilst on trial. He introduced Mr Rajie Muragan as a South African isiZulu speaking Indian. He appreciated that in the Inquiry there are reports about other Indians, albeit naturalised ones. Mr Muragan remained very patriotic in discharging his duties at the International Criminal Tribunal investigating Milosevic at The Hague. Previously he joined the TRC from the SAPS.
Adv Ntsebeza implored Members to listen very careful at what will be presented. He trusts the presentation will be shocking and informative in its detail. He has worked in quite a few investigations at G9 about Eskom, but what struck him was how the Eskom leadership abruptly terminated this investigation at the critical point of the investigation. If the investigation would have continued, shocking exposure of criminal activities at Eskom would have come to fruition.
Lastly, he stated that he received a call from the current Eskom CEO, advising him that G9 should tell the Members (of Parliament) the entire truth of what had transpired at Eskom.
The Chairperson led Mr Murugan in taking the oath.
Briefing by G9 Consulting Services on Eskom
Mr Rajie Murugan, Managing Director at G9 Group, stated that G9 was deeply honoured to be present and finally present the correct version of the report. He read his statement. He took Members through certain sections of the G9 interim report because the document was very thick to go through it page by page:
On page 8 on Scope of work as allocated to G9 Forensic which was to investigate allegations, inter alia, of financial and procurement irregularities against senior persons in Eskom or any other persons that contravened the relevant legislation. This stemmed from an anonymous complaint – a whistleblower. The complaint was as follows: “A supplier known as Trillian submitted an invoice that was paid in one day, and the complainant wishes to know how an invoice was paid within in one day not within 30 days. The complainant stated that the invoice amounted to R152.6 million. The invoice was for management consulting services for an Eskom initiative. The complainant stated that the invoice was loaded on an instruction from Mr Charles Kalima, a senior procurement manager at Eskom, and that Mr Edwin Mabelane was also involved as a senior executive manager. The complainant further stated that the information stated here is all they have and it was sent to them by mistake.”
On page 13: Staff Cooperation, some members of staff were calculatedly evasive in their responses, particularly those in senior decision making positions but G9 found those in lower level management more cooperative and forthcoming with the information requested.
On page 16: Methodology involved interviewing witnesses about the allegations and analysing policies, legislation and the Constitution which were consulted to ensure implicated individuals adhered to their prescripts. Upon analysis, the relevant legislative pieces were neglected and ignored by implicated individuals.
On page 21: Eskom Procurement Policy: everything that Eskom board members was called to do in Trillian and McKinsey dealings were supposed to conduct those dealings in accordance with Eskom’s policy but failed to do so.
On page 27: Factual Findings: “although we are satisfied that the investigation can authoritatively and substantively arrive at findings, conclusions and recommendations which can be acted upon internally. the allegations and widespread reporting which points to criminal conduct by executives was not fully and satisfactory investigated by G9 without the clear mandate of the board.”
On page 30: The Public Protector’s Report was looked at where relevant to Trillian and those portions were incorporated into the findings. “Mr Moodley is the sole director of the entity (Trillian) and was the Special Advisor of the Minister of Mineral Resources. Mr Moodley was married to Ms Viroshini Naidoo, who was previously an employee of Trillian but now sat on the Eskom Board.” The relevance of this was to ascertain if there was a conflict of interest in awarding the Trillian contract. G9 did not make an adverse finding on Ms Naidoo at this interim stage because G9 did not get that far with the investigation.
G9 also consulted the Budlender Report and considered some of the findings made by Adv Budlender. His findings provided insight and in some cases incontrovertible evidence. Of interest to G9 in the Budlender Report was the structure of Trillian and related entities.
There were suggestions from the Budlender Report that the Chief Executive Officer, probably Ms Bianca Smith and by implication Dr Wood, were both providing these services on behalf of Regiments Capital. This does not seem to be accurate or true if one believes the version of Mr Niven Pillay, Regiments Capital CEO. According to investigations and other information, Regiments Capital had no business relationship with McKinsey at Eskom at the time. This might be a matter of legal technicalities but Trillian was standing on its own at Eskom when it was busy with the Eskom corporate plan from September 2015 until March 2016.
On page 42: Legal Opinion provided by Ledwaba Mazwai related to two critical positions of the investigation on the sole sourcing of McKinsey and the remuneration methods applied to pay McKinsey. The legal opinion furnished by Ledwaba Mazwai was not sought by Eskom, but was provided by McKinsey to Eskom officials to support its position. These very senior Eskom officials Mr Kalima, Mr Govender, Mr Mabelane, and by direct implication the BTC as well as the board, placed more weight on that opinion which suggested that the remuneration and sole sourcing model would not contravene the PFMA and other relevant legislation. This went against paragraph 11 outlined by the legal opinion provided by Adv Paul Kennedy SC.
Adv Paul Kennedy Senior Counsel was briefed by Eskom through Mchunu Attorneys to determine if the fee structure between McKinsey and Eskom was lawful. One subject matter was: Supply Chain Management practice guidelines on cost containment measures issued by the Accountant General). The opinion was, there is doubt if National Treasury practice note No SCM 3 was repealed expressly. The practice note has at least impliedly been repealed and been superceded by the instruction. One course at least in theory available to Eskom is to negotiate with McKinsey and to pay remuneration according to those prescribed typically hourly rates. However, if that is not an option, it would be possible for Eskom to apply for a deviation from clause 4.2 of the instruction to permit the sort of remuneration method to be negotiated to McKinsey.
Adv Kennedy advised Eskom, Mr Mabelane, Mr Govender and by extension Mr Singh, that the model would offend the Treasury instruction. Although, G9 have not received the version of Mr Singh, it is evident that these discussions were brought to his attention. Mr Mabelane signed the letter of acceptance with McKinsey on 17 December 2015, two weeks after receiving Kennedy’s opinion. By allowing the legal opinion by Adv Kennedy to be superceded, he was potentially exposing himself and Eskom to fruitless and wasteful expenditure in terms of Section 45(c) of the PFMA. He bound Eskom to a contract that was in contravention of the PFMA and other internal policies. There were no minutes furnished from the SteerCo which authorised such acceptance to take place. Although, the BTC delegated the authority to the Chief Procurement Officer, one would assume that acceptance and approval would come out of the SteerCo not the negotiating team. Therefore, it was clear that as suggested in the report, the necessary legal and financial standards were sought and applied, leaving the opinion of Adv Kennedy blatantly ignored.
One of the witnesses (Commodity Manager for Professional Services at McKinsey) furnished a sworn affidavit detailing that she was a custodian of a master file at McKinsey (MSE contract between Eskom and McKinsey) that kept all transactions and documentation regarding the contract. However, this was not the case with this agreement; she could not even get the service letter of agreement to file it. She provided several addendums to support her affidavit. She stressed the difficulty in obtaining the required documentation so that it can be filed.
The second witness stated that on 12 August 2015, the Acting General Manager requested an invoice to be created for payment to Trillian Capital. There was no documentation provided by the general manager at all to support the purchase order. The witness requested the supporting documents several times but they never came forth.
Mr Muragan stated that throughout the investigation, it was found that minutes of SteerCo and other relevant structures were not signed, particularly those that had to do with Trillian and McKinsey agreements or contract negotiations.
On page 59, another witness (General Manager at McKinsey) confirmed that she gave the instruction to the two juniors because she was under intense pressure from Mr Mabelane. She realised that supporting documentation was not complete for the two invoices, the payments were irregular and out of concern she contacted Mr Govender in an effort to obtain legitimate supporting documentation. She spoke to Mr Mabelane several times. At a later stage, Mr Mabelane contacted her again to create an invoice of R130 million, but she refused to do so. In her affidavit, she made it clear that Mr Mabelane and his team should be held liable, and in hindsight she wished she would have acted boldly against such practices.
Mr Muragan stated that Trillian had a zero percentage of BBBEE, but senior executives denied any knowledge of Trillian being a zero percentage BBBEE company. Another witness confirmed that he provided advice to Mr Mabelane, Mr Govender and Mr Singh that the MSE project should not proceed without Treasury approval of the deviation in the remuneration model of the contract. There was no communication from Eskom seeking approval to provide a green light to the MSE project, but those senior executives continued regardless.
On page 58, another senior witness at Eskom (Ms Ntombizodwa Mokoatle) has made documents available as well as audio format files with regards to the MSE project. She said in her statement that although she participated in the negotiations with McKinsey, she was never comfortable with some of the decisions that were taken, in particular the remuneration model. She said this was a key and critical requirement i.e. adhering to Treasury regulations. However, she was then moved to another department before the negotiations could be concluded.
Another witness (Business Partner at Transmission and Sustainability) in her affidavit stated that she came into the project to manage the sale of the Eskom Finance Company (EFC). She indicated that Trillian was working on the research on the EFC. She had several meetings with two officials from Trillian. It was likely that Trillian was providing a service on the EFC for possibly a month before she entered the project. She has consistently been managing consultants and by her calculation Trillian could have invoiced in the region of R3 million for its services. Mr Murugan confirm that the evidence suggested that Trillian was paid R49 million for that piece of work that would have lasted for about two or three months which was completely inconsistent with any product that Eskom received.
Mr Mabelane was informed of his rights when G9 interviewed him, because there could be findings against him. Mr Govender was also interviewed and he confirmed that he was the project leader but he was not there during the discussion and inception phase of the project. He became the lead negotiator and managed the contract after the discussions had commenced. He confirmed that all legal and policy requirements were adhered to by the team and that Treasury approval for deviation had been sought and received. In his last interview he indicated that the approval was not a requirement and that he and the team wished to confirm if practice no. 3 of 2003 was valid.
Mr Muragan stated that senior executives employed tactics to avoid the questions as the interviews went on, and stories started changing as well when evidence was coming forth. Mr Govender confirmed that he had signed the invoices, and he was acting on the letter from McKinsey which was signed in respect of the first corporate contract. When McKinsey provided Mr Govender with the letter, it was only for the corporate plan.
The letter referred to a contract dated 29 September 2016, and that permission was only for that contract and could have been juxtaposed or pushed into the MSE contract. Therefore, it was clear to G9 that even on the corporate plan contract, they were totally independent of each other at Eskom. Trillian worked directly under the Office of the Chief Financial Officer, Mr Anoj Singh, and most of the work was managed by Mr Govender. That payment of R107 million was irregular, and Eskom senior executives jumped into boxes that where convenient for them and they always found a way to make these illegal payments. In the MSE contract with McKinsey, it was a risk-based model and they would have only been paid out of the savings. For this portion of the work in the MSE contract, McKinsey/Trillian were paid an amount of R104 million out of the CFO budget.
Mr Muragan stated that it should be clear that the report was compiled before some of the evidence that has surfaced in this Committee came out. With regards to the factual findings of the report on the sole sourcing justification, there could not have been any justification for McKinsey to be used as a sole sourcing company. G9 believed that in terms of being highly irresponsible and reckless, if not criminal, McKinsey got into Eskom and did forgo the standards of any multinational company operating in South Africa as far as governance was concerned. On page 73, it simply did not make sense how Trillian was incorporated into the McKinsey contract. It appears that McKinsey was quite happy with its 70% as the 30% was given to Trillian.
On page 85, there was a culture at Eskom – although it is now changing – of the need to follow a tick box process. The BTC as the extension of the board was culpable; it cannot push that responsibility to the senior executives who were implicated and vice versa. In the short six months, McKinsey claimed that it saved Eskom R27 billion, as a consequence, McKinsey should have been paid R2.7 billion. Eskom today, does not have money to pay its staff so the question is, where is this R27 billion that it supposedly saved Eskom. If this was allowed to continue, Eskom would have been in a much deeper hole, and 10 years down the line Eskom would have owed McKinsey nothing short of R15 billion.
Speaking of conflicts of interest in the report, there was plenty of that at Eskom that includes senior officials at Eskom.
Listening to the SteerCo recordings, the discussions were patently clear that Mr Mabelane spoke about the unsigned contract, saying that although it was never signed, Eskom and McKinsey proceeded on the basis of mutual understanding and cooperation. Most of the officials have confirmed that they have neither seen a signed MSE contract, or knew that it had existed. Mr Govender was surprised in the first interview that the service level agreement (SLA) was signed and he indicated that he never knew that it was concluded (signed). He was aware of the letter of acceptance of December 2015.
Mr Muragan said this was the case with everyone else except Mr Mabelabe, there is a distinct possibility that this was signed after the project was concluded. Taking note of this, the strong conclusion was that there is a significant high probability that Mr Mabelane and McKinsey signed the contract after 5 July when the contract was attracting media buzz. This was confirmed by the audio recording of a meeting. This was also supported by pieces of evidence including a letter from McKinsey sent to Mr Singh on 30 March 2016 which stated:
“We acknowledge that the draft of the service level agreement between Eskom and McKinsey entails the requirement of outsourcing a percentage of the total consulting fee to supplier development partner.” So the question G9 asked was why McKinsey was talking about a draft if the SLA had been signed in January already.
On page 88, by Feb/March 2016 McKinsey indicated to Mr Singh that it had no contractual arrangement with Trillian, the relationship was terminated which at that stage could have only been unofficial or by mutual understanding. This was fact; McKinsey did inform Mr Singh that there was no relationship even at SteerCo meetings. Mr Singh and others chose to ignore that and still allowed Trillian to be illegally paid by Eskom.
On page 93: Payments to Trillian, the first invoice paid to Trillian was in April 2016 soon after it was registered as a vendor on the system. The documents to Eskom showed black ownership and the first payment already paid for the corporate plan, and it still needs to be determined if the second invoice relates to extraneous payments outside of the MSA. The periods of the two invoices overlapped substantially, so having those invoices overlap means hundreds of millions of payments were made for two separate projects at the same time.
On page 94, Trillian was paid illegally and unlawfully R49.8 million for purportedly assisting in the EFC project. Trillian was also paid R5 million regarding raising capital. G9 confirmed that the (online vending solution) project that was supposed to be initiated for Eskom to get upfront payments for prepaid electricity, never got off the ground, and very little or nothing was done on it. For this project Trillian was paid R30 million. The next one was a country research on the sub-Saharan Africa region which was to present export opportunities – invoice was R10.4 million, and private sector participation amounted to R12 million.
On page 95, Eskom paid individuals that were supposedly Trillian employees but G9 is aware that most of those employees were also Regiments employees at the time. This was indeed in contravention of the Companies Act. Dr Wood was paid R5 million as an individual for six months’ work, and the rest of the individuals were paid in the range of millions.
On page 97, the R134 million paid in December was very peculiar and it will be investigated and the evidence will be handed to the Hawks. Mr Mabelane and others took a submission to the board and said that Trillian should be paid an upfront amount of R134 million. Mr Mabelane then wrote to Trillian to Dr Wood to say “please invoice us the R134 million.”
On page 99, in a short period of six months, five invoices were made. Te first amounted to R26 million; the second one was R107 million; third invoice was R99 million; fourth invoice was R134 million and finally R154 million. G9 believed in light of its findings that for the R154 million invoice paid to Trillian, Trillian had no basis to benefit from gain share, because they were not involved in the project anymore, apart from being illegally involved, in assisting McKinsey in most of these work streams so why should they gain from the percentages that McKinsey was paid.
On page 128 Recommendations against Trillian, Mr Muragan stated that the conduct and actions of one or more directors of Trillian throughout the entire process, before, during and after the engagement present prima facie evidence of possible criminal conduct of fraud and money laundering. To this end, the investigation can never be considered complete until Eskom considers the recommendations made by G9.
It is G9’s opinion that Mr Singh is interviewed in the case of Trillian. His evidence would place G9 in a better position to determine if he has or has no case to answer to. Trillian provided a significant portion of its services to his office. He is best placed to explain several of the transactions and payments. Mr Muragan stated that Mr Singh has a case to answer both criminally and in terms of the PFMA. Recommendations were made against other staff members as well. The BTC needs to be investigated for its culpability. G9 does not suggest that it is criminal at this stage but it is clear that there were PFMA transgressions.
Questions by Members
The Chairperson stated that the document in front of Members was readable, so Members should get thorough and get detailed report from it. She thanked Mr Muragan. Adv Ntuthuzelo Vanara could ask questions, if he had any. In addition, she would like every South African to know who Trillian is. She had reservation about its existence, suggesting that it could be a pseudo company that was made up to solicit Eskom funds.
Ms N Mazzone (DA) stated that the G9 Report should be on public record because previously people have testified about the squashing of reports, such as the PWC and Dentons Reports which suffered the same consequences. Eskom had tried to say that the reports contradicted each other and thus a review had to be done. Thus she wanted to know who requested the report, and who instructed the investigation to be stopped and whether the report was taken on review.
Mr Muragan replied that it was the former Eskom Board Chairperson, Mr Zethembe Khoza, who stopped the investigation. He misled many people about the G9 Report and tried to bring the integrity of G9 into question. He furnished information that was not substantiated, saying that the report was ‘not worth the paper it is written on’. Mr Khoza made statements such as ‘people get killed for conducting these types of investigations’ and asked intimidatingly, ‘who G9 was’. Mr Khoza also suggested that G9 were "agents" planted at Eskom. Therefore, Mr Khoza must take full responsibility for stopping the investigation and squashing it. He virtually threatened the company.
Ms Mazzone stated that she was reliably told that Sean Maritz wrote a letter to G9 requesting G9 to withdraw its recommendations, she asked if he indeed received the letter.
Mr Muragan replied he did not receive any letter from Mr Maritz. G9 had requested to meet with the Eskom board before Sean Maritz was appointed. G9 had a meeting with Mr Maritz, and in that meeting Mr Maritz virtually dismissed the report saying that before he entertained G9, he wanted to know if G9 had gone against Eskom’s instructions about continuing with the report and investigation. So in awe at the meeting, Mr Muragan wondered how Mr Maritz would have known that the investigation was terminated, because at the time G9 was meeting with him, the investigation had already been terminated by Eskom. So the G9 delegation suspected that he was told by Mr Khoza that the report must be squashed.
Ms Mazzone referred to Adv McCaps Motimele SC report that had been circulating in the public domain. She asked if G9 was aware of this opinion that was sought from the advocate.
Mr Muragan replied that G9 heard that through the grapevine. G9 was surprised about what came back from the senior counsel but Adv Motimele never called G9 to explain its findings or consulted with G9. G9 was given to understand that the Motimele report suited Eskom.
Ms Mazzone stated that clearly the best way to get an opinion was to get two advocates to read the same document. She found it highly disturbing. With that being said, all the information needed is included in the G9 Report. She said people need to face criminal charges and the Committee will make its own recommendations in light of the G9 Report. The report furnished by G9 would be consulted. As far as holding people liable for fruitless and wasteful expenditure at Eskom, she asked Mr Muragan in his personal experience, which executives should be held liable for criminal charges.
Mr Muragan replied that in terms of the PFMA, all the members of the board, and senior executives are clearly guided on how the handle these matters through the legislative pieces. However, in his opinion, he said Mr Anoj Singh should be held liable for such contravention of the legislation.
Mr S Swart (ACDP) said he was shocked when Singh said, while being questioned by this Committee, that G9 had withdrawn its report. Clearly, he misled Parliament and he lied under oath and the Committee accepts what has been said by G9 because it has no reason to lie. He expressed gratitude for the information shared on Trillian’s conduct of business with Eskom. The report was very helpful and it followed the pattern seen before in the Dentons Report and other credible reports. He suggested there were other reasons why the contract was terminated by Eskom and the investigation discontinued.
He pointed to page 83 and said McKinsey compromised its own governance by looting Eskom finances – he shared the sense of outrage on the R54 million paid without any work done by Trillian. The Committee will continue its work to get to the bottom of things and for people to answer for their misconduct. G9 was to make a presentation on 30 August 2017 to the Audit and Risk Committee with interim board members in attendance. He lamented that the board members knew what had been said but they spun a completely different story of what had happened when they came before this Inquiry.
He agreed with the assertion about Mr Khoza. The Eskom board came before this Committee and said it was very keen to recover the funds from Trillian and McKinsey. However, in January 2018 there was a turnabout with Mr Sean Maritz stating that there was nothing wrong with the contracts.
Mr Muragan replied that in terms of the recovery of the funds, the payments were still being legitimised by Eskom and McKinsey amidst the findings of the report. In his opinion, these crooks knew that if the money is paid back by McKinsey, there would be pressure for Trillian to pay back as well. He had reservations about recovering the money from Trillian – he had utterly no confidence in Trillian.
Mr Swart asked for confirmation if the information on page 129 was part of the G9 Report or if it was sourced from other reports such as the Public Protector Report as referenced earlier on.
Mr Muragan replied that 90% of the report was furnished to the Eskom board, and the board did deliberate on it. He confirmed that information stemmed from G9’s investigation.
Mr Swart said that there was no contract between Trillian and McKinsey, as well as Trillian and Eskom. It had been made clear that some money was already laundered outside the country. The Public Protector Report referred to the Hawks, but there was no action instituted whatsoever. The only action was now seen in January 2018. He asked if this was not a matter of great concern.
Mr Muragan emphatically replied that the board members and senior executives had a fiduciary duty to follow up on the allegations, but nothing was done. Instead, there were countless attempts to sideline the report and dismiss it.
Mr Swart stated that the Eskom board was in breach of the Companies Act, PFMA and Corruption Act by not following up on the allegations and instituting criminal charges against the implicated persons and companies. Their fiduciary duties were grossly breached. On page 129, he asked to contextualise what was meant by Eskom instituting a civil action – was this made recently or when the former board was effective?
Mr Muragan replied that all information presented to the Committee was already in the report at the time it was furnished to the board; if anything has been included it would have been minor details. He recommends strongly that the board follows the money and attempts to recover it.
Mr Swart said once the money is recovered, it does not go to Eskom but to the Criminal Asset Recovery Account, should it be recovered. G9 came with an excellent investigation but all the information that was provided was ignored or neglected by Eskom whilst it continued to lose billions of rands. He thanked Mr Muragan and G9 for the work done.
Mr R Tseli (ANC) stated that G9 raised a number of issues about Mr Singh confirmed by other witnesses who have come before the Inquiry. He asked if G9 wanted to pursue another interview with Mr Singh over and above the current findings.
Mr Muragan replied that once the report was almost finalised, the ball had changed, G9 wanted to see at the time when he was still an employee at Eskom if he would collaborate and furnish the required information. That bridge was crossed a long time ago, but now G9 did not desire to speak to him.
Mr Tseli asked about Mr Mabelane’s explanation about the R104 million paid to Trillian when he was interviewed.
Mr Muragan advised that he could not explicitly outline what he was told by Mr Mabelane because some people were efficient in telling stories. However, Mr Mabelane acknowledged the letter he wrote to Trillian detailing the R104 million that was paid and he didn’t seem to be shook by that at all, that is, the manner in which the transaction was handled. Mr Mabelane never provided legitimate responses.
Mr Tseli asked if it was the first time G9 came across maladministration of contracts at Eskom. Was this the first G9 had come across such an activity and what was irregular about it?
Mr Muragan replied that it was not the first time G9 had come across such at Eskom. What raised serious concerns was a situation where Eskom entered into a contract that was going to run into the billions being concluded through e-mail communication. One would expect that such a hefty deal would be discussed and concluded in person.
Mr Tseli wanted to know if Trillian had a Broad-Based Black Economic Empowerment (BBBEE) certificate. Secondly, how would G9 arrive at the conclusion that it was not a BBBEE company if there was no supporting document stating otherwise.
Mr Muragan replied that G9 has not done any investigation to check if that has changed or not. Most of those companies that were supposedly BBBEE registered were not, and this is a document that provides evidence that at the time it had a 0% BBBEE certification.
Mr Tseli asked for more details on the three Dubai visitors.
Mr Muragan said those visitors were brought to the office by Bianca to assist Trillian at Eskom and G9 had no knowledge of who they were. Trillian brought in a lot of consultants from India and Dubai; those visitors would be taken to power stations and other Eskom sites.
Mr Tseli stated that some of the people interviewed said that Eskom was advised that the agreement between Eskom and McKinsey was not lawful and illegally concluded – due processes as prescribed in the PFMA and other relevant legislation prescripts were not adhered to. If there was no way a legal person can provide legal advice without any supporting document, in the course of G9 conducting the investigation was it able to find supporting documentation to corroborate the legal opinion.
Mr Muragan put it simply that McKinsey knew that it was an Eskom problem; it had nothing to do with adherence to the PFMA as its business is outside the scope of the PFMA. G9 was not able to find the supporting documentation to corroborate Eskom’s legal opinions.
Mr Tseli referred to the termination of the investigation and said surely there were terms and conditions. When the investigation was terminated, what was the explanation given? Did G9 try to challenge it?
Mr Muragan replied that one could potentially challenge things like these, but sometimes as a company you just have to follow the client’s wishes and G9 had a good relationship with Eskom, and the instruction came from the highest office. So G9 decided to adhere to the instruction.
Mr Tseli asked if G9 wanted to interview Mr Singh as part of its terminated contract with Eskom or to have the Committee assist G9 to arrange an interview with Mr Singh to check if he has a case to answer to.
Mr Muragan replied that G9 would like the Committee to assist it to continue the investigation as initially planned.
Mr M Dlamini (EFF) asked G9 if it was a norm in the parastatal for large payments to be made in a day, or was this immediately flagged as something unusual.
Mr Muragan replied that in terms of accounts payable standards, the payments should be paid within 14 days for small or BBBEE certified businesses, and the norm is usually 30 days payment for other businesses. Shockingly, people felt that it was not a norm, but it could be done. However, G9 felt it was questionable.
Mr Dlamini asked about the names of the individuals that were not interviewed as outlined on page 28 of the report.
Mr Muragan replied that the list of the names was available. When Ms Naidoo was interviewed, G9 could not draw any substantive conclusions from the interview because she would not say anything of substance. The investigation officers were just merely given the round around.
Mr Dlamini asked if the Office of the Public Protector was consulted in obtaining evidence and conducting the investigation. He asked if there was confirmation from the Public Protector that Trillian was indeed an existing juristic person.
Mr Muragan emphasized the point that time was very limited whilst the broadness of the work continued to stretch out. Therefore, not much work could be done. However, G9 was confident about the work that it has done this far, because the information in the report was the result of thorough investigation. He was satisfied that a different pathway was now underway to rectify and hold people into account.
Mr Dlamini asked about the conflict of interest of Ms Naidoo whose husband was the executive in the implicated Trillian company. According to the mandate or the terms and conditions of the G9 contract with Eskom, who was G9 supposed to report to? Lastly, was the contract valid and was G9 paid?
Mr Muragan replied that Mrs Moodley’s possible conflict of interest was not investigated. The G9 head of forensics would report to the executive, Mr Johnny Dladla. Eskom was invoiced in September and payment was received within two weeks.
Mr N Singh (IFP) stated that if G9 had more time, what else would have been covered? There is no prima facie evidence in the report as it stands to pursue charges against some of the executives. So has G9 done any work for Eskom before? If so, what was the nature of the work and when was it completed? Lastly, why did G9 just accept the termination of the contract?
Mr Muragan replied that Adv Ntsebeza assisted through the Dentons report. If you are investigating medium management and juniors, everything is fine but if you ever dare to touch the executives or board members one gets in trouble. What has come up in the last three weeks was a different turn-around on governance issues at Eskom. G9 has done some work before on fraud at Eskom. It was indeed clear that G9 would have uncovered more criminal activities such as fraud and money laundering relating to Trillian had the investigation not been stopped. G9 wrote to Eskom and held meetings and tabled its concerns about the termination of the contract. The organisation tried to encourage Eskom Board to do the right thing, but all those efforts fell on deaf ears.
Mr Singh thanked G9 for its investigation and report. He stated that it would be very helpful to the Committee in continuing to carry out its mandate.
Mr E Marais (DA) asked if there was anything the Committee could do to the advantage of taxpayers’ money about the issues raised in the G9 Report. He suggested that G9 should be contracted to continue with the work to assist the Hawks because the Hawks may be under-capacitated.
Mr Muragan replied that G9 has not come before the Committee to promote itself to do more or carry on with the investigation. However, the skills and knowledge to advance the case and have people arrested are already robust in the organisation. If Eskom contracts G9 to assist the Hawks, G9 is ready to serve Eskom and assist the country to hold those accountable.
The Chairperson thanked G9 for its efforts and declared the meeting adjourned.