Eskom inquiry: Matshela Koko

Public Enterprises

24 January 2018

Chairperson: Ms D Rantho (ANC)

Audio
Eskom Inquiry: Mr Matshela Koko 4
Eskom Inquiry: Mr Matshela Koko 5
Eskom Inquiry: Mr Matshela Koko 6
Eskom Inquiry: Mr Matshela Koko 1
Eskom Inquiry: Mr Matshela Koko 3
Eskom Inquiry: Mr Matshela Koko 2
Eskom Inquiry: Mr Matshela Koko 7

Documents
Submission by Mr Matshela Koko
Submission by Mr Matshela Koko Annexure 1
Submission by Mr Matshela Koko Annexure 2‚Äč

Meeting Summary

Mr Matshela Koko, Eskom Group Executive: Generation at Eskom and former Acting CEO, has worked for Eskom for 23 years although he has been on suspension a number of times and came close to being fired in 2011. He was put on special leave in May 2017 and later suspended but returned to his position on 8 January 2018, after a disciplinary hearing. This absence allowed him to plead ignorance in response to a number of questions, stating that he was not there.

Mr Koko was asked several times about his visit to Hotel Oberoi In Dubai from 3 to 5 January 2016. He was adamant that he had paid for the hotel accommodation himself and that he had not met anyone linked to the Guptas while there. However, the Committee had emails which showed that his accommodation had been arranged and paid for by Mr Ashu Chawla of Sahara Computers. Evidence held by the Committee also showed that he and Mr Chawla were both booked in the hotel on the same dates. The hotel had supplied full details of his stay there. The Chairperson challenged him to prove that he had, indeed, booked and paid for himself and that the evidence held by the Committee was not factual. It was revealed that a Committee Member had requested documents relevant to the hotel stay via the Promotion of Access to Information Act (PAIA) so that the emails could be forensically audited. It was vital for the Public Enterprises Committee to know for sure that the email addresses involved in the correspondence were legitimate, especially the alleged correspondence between himself and the Director-General of Department of Public Enterprises, Mr David Seleke. An email sent from Mr Koko’s private email address to the private email address of the Director-General of the Department of Public Enterprises asked the DG to forward the email to “the Boss” and commented that “the fight begins.” The email was forwarded to Tony Gupta’s email address.

A Committee Member noted that prior to his visit to Dubai, he had been on holiday with his wife and stepdaughters in Bali. The MP could not understand how Mr Koko could spend leisure time with his stepdaughter but be unaware that she was doing business with Eskom in the amount of R1 billion. Mr Koki assured the Committee that he had had no involvement with the contracts she had obtained from Eskom and that he had been exonerated at a disciplinary hearing.

The reduction of the R2.1 billion penalty that Optimum Coal Mine was facing at the time it was up for sale, for not meeting contractual obligations, was explored. Optimum queried the penalty, but Eskom was not prepared to discuss a reduction. As Mr Koko explained, technically, Eskom was correct in that the amount of the penalty could only be reduced in arbitration as that was the conflict resolution mechanism built into the contract. Committee Members were surprised that Pembani walked away from the deal because of the enormous penalty when Eskom avowed it would not reduce the penalty. Tegeta was not intimidated by the potential of paying out R2.1 billion, and, after arbitration, the penalty was drastically reduced.

The matter of Tegeta Exploration and Resources and how it was allocated coal contracts by Eskom, as well as receiving prepayment for coal contracts, was discussed in great detail. The Committee explained this focus by noting that coal featured heavily in state capture. The Evidence Leader spent much time establishing, with Mr Koko, a timeline of events for the Tegeta contracts and the Eskom Request for Proposals from mines to supply coal to Eskom. It was alleged that not only did a 40-year old contract come to an end at the time that Tegeta was seeking a contract, but that several contracts, which supplied large amounts of coal to Eskom and were due to run until 2023, were abruptly cancelled by Eskom, including a contract with Mafube Mine which was supplying coal to Arnot Power Station, at the lowest price of all Eskom contracts, via a conveyor belt. Eskom had put out a Request for Proposals (RFP) to replace an expired 40-year old contract but years after it was issued in August 2015, the matter had not been concluded and Mr Koko was unable to confirm whether, to date, the matter had been concluded and a contract awarded. When the short-term contracts were awarded to Tegeta, not only was the coal more expensive per ton, but coal had to be transported 60km to the power station.

Evidence was led that, not only was the need for coal from Tegeta created by Eskom cancelling contracts, but the excessive stockpiles, rapidly diminishing consumer demand for electricity, and a system of swing contracts suggested that perhaps there had not even been a need for the coal supplied by Tegeta. In addition, a more efficient system of maintenance vastly improved performance. Several Committee Members said they suspected that Eskom may have falsely created an apparent demand for coal which led to Tegeta receiving contracts because an emergency had been declared for the acquisition of coal.

Contracts to Tegeta grew rapidly from 150 000 tons to 1 500 000 tons. Eskom was prevented from extending the term of the contract and the volume to 2 500 000 tons by Treasury requirements. Initially Tegeta did not own a coal mine but was awarded contracts because it was a beneficiator of coal. This meant that Tegeta washed and sorted the coal that was mined at Optimum Mine. Mr Koko was responsible for a submission to the Eskom Board Tender Committee to extend Tegeta’s contract. The extended contract would have been to the value of R1.68 billion for 2.5 million tons of coal. The submission also proposed a prepayment for this contract. Prior to this meeting, the Head of Primary Energy, Ms Nteta, had sent an email to Tegeta noting that the negotiations had been concluded and that the Board Tender Committee would be approving this that evening. In the email, Ayanda Nteta stated, “We are now ready, at your request, to start giving over the product.” Mr Koko’s explanation for the conclusion of negotiations with the supplier, Tegeta, before the matter was presented to the Board Tender Committee, was that the Head of Procurement had to prepare a structured proposal for the Committee meeting. The proposed contract was approved by the Tender Committee but when submitted to National Treasury, Eskom was instructed to go out on closed tender for the contract. Although Tegeta, therefore, never received the contract, the company was able to obtain the necessary finance from ABSA Bank. As the guarantor, Eskom was responsible for bank charges and various other costs in relation to this arrangement but, as Mr Koko confirmed, Eskom derived no benefit at all from the deal.

Equally enlightening was correspondence produced by Mr Koko showing that it was the Department of Mineral Resources that initially suggested a prepayment to Tegeta. Although making prepayments was a fairly common way of doing business with Eskom, the Eskom policy stated that prepayments could only be made where the supplier would use the prepayment to invest in capital projects. According to Mr Koko, he had not asked Tegeta what the company would be using the prepayment for, nor had he asked any of the other companies that previously received prepayments, despite the policy requirements.

A Committee Member noted that the BEE certificate submitted by the CEO of Tegeta stated that Tegeta was an exempted micro enterprise in terms of the BEE scorecard. At the time an enterprise qualified for BEE compliance exemption by virtue of having an annual turnover of less than R10 million. The BEE certificate was issued on 12 February 2015. Mr Koko was asked whether he thought that Tegeta’s annual turnover would have been greater than R10 million at the time. Mr Koko informed the Committee that he had never dealt with such matters but admitted that from what he knew, the contracts of Tegeta would be worth more than R10 million per year.

Other intrigues in the coal business explored by the Committee included the suspension of four scientists/technicians who had asserted that the coal from Brakfontein Collier, the first mine owned by the Gupta family, did not meet the standards for the supply of coal to Eskom. Following reports by the scientists of substandard coal, Mr Koko suspended the contract with Brakfontein Colliery but following pressure from the colliery, he sent samples to the South African Bureau of Standards for testing. Those tests determined that sulphur levels were acceptable, and the contract was reinstated. However, according to Mr Koko, the scientists refused to accept those test results and, as a result, he suspended the four scientists. The Committee wanted to know why the four employees remained on suspension two years after the incident and had never been subjected to a disciplinary hearing or given the opportunity to explain their actions. Mr Koko explained that although he had suspended them, he had, soon after, been suspended himself and had not been able to pursue the matter of a disciplinary hearing for them.

The Committee attempted to get to the bottom of the meeting at Melrose Arch as testified by Ms Daniels. It was noted that Salim Essa’s office was also in Melrose Arch and that Mr Koko had not specifically denied the meeting in writing in his submission, although he had refuted evidence led by other Eskom players, such as Ms Venete Klein. It was suggested that Mr Abram Masango, who was allegedly also at the meeting, might appear before the Committee. However, nothing could dissuade Mr Koko from his testimony that the meeting had been between himself and Ms Daniels only. Adv Vanara promised to do an assessment of the credibility of witnesses.

Mr Koko denied knowing, or meeting, any of the Gupta brothers but he had met Mr Nazeem Howa, Ashu Chawla, and Salim Essa, and had been to Mr Essa’s office in Melrose Arch.

Questions were raised about a Carte Blanche interview in which Mr Koko had been accused of lying to the presenter about the prepayment agreement signed by Mr Koko and submitted to the Eskom Board Tender Committee. The interview was shown to the Committee on the request of Mr Koko, after which he explained that the interviewer had asked if he had signed a document arranging for a prepayment to Optimum, which he had naturally denied, because the prepayment was actually in the name of Tegeta, and not that of the mine from which the coal was obtained, i.e. Optimum Mine. The Committee had to admit that technically, and in terms of semantics, he had not lied. When asked why he had not explained the technical error made by the interviewer, he stated that he thought he had explained it to her quite clearly after the interview and therefore was shocked at the voice-over that accused him of lying.

A Committee Member asked Mr Koko to tell the Committee what he had done well in his time as an executive at Eskom that he was particularly proud of. He was also asked to give the Committee some examples of the unlawful orders that Mr Tsotsi had given him and that had led to his suspension in 2015. Mr Koko was asked to explain to the Committee the circumstances of the allegations made by Mzilikazi wa Afrika that Mr Koko had attempted to give him a bag of money in the middle of the night. Mr Koko assured the Committee that the allegation was false and that he had opened a police case against the journalist.

A Committee Member noted that Finance Minister Gigaba had asked Mr Koko and Mr Anoj Singh to resign. He noted that Mr Anoj Singh had resigned. Mr Koko responded that his lawyer had written to Eskom stating that he was not an Eskom executive who was under suspicion of corruption as he had been suspended but subsequently cleared of any wrong doing. He did not intend to resign.

The Chairperson warned Mr Koko to look at the authenticity of the Gupta Leak emails as they were going to be the subject of the Commission of Inquiry and he should not relax and dismiss what the Members had said. She pointed to the matter of his stepdaughter and noted that certain people wanted to take the case forward and that he should be aware of that.

Meeting report

The Chairperson welcomed everyone, especially those who had left the Chamber at 2am that morning after the hearing with Mr Anoj Singh. She welcomed Mr Matshela Moses Koko and his legal team for his first appearance in the inquiry. She suspected that Mr Koko would be back again for another matter but that was her own suspicion, and not a decision of the Committee. The Committee was asked to prepare itself for a long day again. She could not say how long the inquiry would take but she would ensure short breaks every two hours. She explained that the legal team was not expected to interact with the Committee.

The Chairperson read the oath.

Mr Matshela Koko swore to tell the truth.

Chairperson: Mr Koko, I am giving you 20 minutes to read your statement. It is up to you whether you use the full 20 minutes or less. Thereafter, Adv Vanara will lead the hearing.

Mr Koko: Hon Rantho, I have observed and watched on TV. It is my first time, so I am not familiar with what is happening here. I am advised by my counsel, based on the Powers and Privileges and Immunities of Parliament and Provincial Legislatures, Act 4 of 2004, in relation to Chapter 15 of it, to request that I be appraised on your role, what to expect, what to expect from the Members, and what to expect from Adv Vanara.

Chairperson: What you are expected to do now is to give us the presentation that we have in front of us. The documents that you have sent to us, you summarise them. You don’t go line by line, you summarise them for us and then Adv Vanara will lead the questions, based on the evidence that you have given us or on the presentation that you have given us and other information that he has collected. The same applies to us. We will, after him, asked questions directly to you on the evidence that you have given us and the supplementary information that we have received about any activities regarding your work in Eskom. Is that maybe clearer to you?

Witness: Mr Matshela Koko, Group Executive: Generation, Eskom
Mr Koko: Thank you Ms Rantho. My name is Matshela Moses Koko and I work for Eskom. I am the Group Executive for Generation in Eskom. I have been working for Eskom for 23 years.

Mr Koko proceeded to make his submission (see document).

After his oral submission, the Chairperson requested the additional material, not included in the original written submission, be submitted to the Committee.

Chairperson: Adv Vanara, you may lead the evidence.

Adv Vanara: Mr Koko, you served in Eskom during Mr Dames' stay as CEO. Is that correct?

Mr Koko: That is correct.

Adv Vanara: During the time, did you face any misconduct that related to the use of Eskom’s facility to download material?

Mr Koko: That is correct.

Adv Vanara: And what was the outcome of that process?

Mr Koko: I was suspended for two weeks.

Adv Vanara: There was an expenditure because of that transaction.

Mr Koko: I am not aware of that.

Adv Vanara: In respect of the quantification of the amount that the organization would have suffered because of the transaction, that is what I mean.

Mr Koko: I am not aware of that.

Adv Vanara: Are you at liberty to tell the Committee what the nature of that transaction was?

Mr Koko: Yes, I am. I travelled with a colleague of mine. I lost the memory stick and the 3G card which was later found to have visited prohibited sites. I did not fight hard because it was my card that I was supposed to keep safe and I did not keep safe. And I conceded to that.

Adv Vanara: I do accept that, because it was issued to you by Eskom and this internet activity did take place and you took responsibility. Is that what you are saying?

Mr Koko: Yes, that is what I am saying.

Adv Vanara: Downloading of that material. That is the point that I was making about the cost. It was not my intention to get into the details. What I want to find out: clearly, there is a cost for Eskom in respect of that downloading.

Mr Koko: That was not put to me. I am not aware of it. I don’t know anything about it. I conceded to my 3G card disappearing which later was traced to having visited sites that were not supposed to have been visited. Because I was issued the card by Eskom, and I was supposed to keep safe, but did not keep it safe, I conceded that.

Adv Vanara: What you can also confirm, is that there was no compensation order once you were found guilty after your admission, given the context that you presented and that you admitted to. You did not pay Eskom anything in relation to that?

Mr Koko: I was not aware of costs. They were not put to me.

Adv Vanara: That is consistent with the version that I have. You didn’t pay anything. Around January 2015, did you pay a visit to Dubai and, if so, who was responsible for the expenses of that?

Mr Koko: I was In Dubai in January 2016 for 4th and 5th. Now, I was not asked to prepare on this one, but I will answer as much as I can. If you go to Eskom records, on 10 December 2015, I took leave. On 23 December, six members of my family, my three daughters, my wife, my son and I went to Bali and we flew through Doha and when we returned three of my daughters came back through Doha. My wife, my son and I flew via Dubai. I am happy to present my passports for all the six members of my family. I did direct payments myself. If you bother to contact the hotel, you will find it such.

Adv Vanara: That is the January stay?

Mr Koko: The January stay.

Adv Vanara: Sahara Computers did not pay? You confirm you paid from your account.

Mr Koko: Sahara did not pay for my travels at all.

Adv Vanara: Let’s talk about the suspensions. It is yourself, Mr Matona, Ms Molefe and Dan Marokane in April 2015.

Mr Koko: 11 March 2015.

Adv Vanara: I think it is probably also because of the advice that you gleaned from your legal representative, that, over and above the submissions pointing to the specific areas that the Committee requested you to clarify, you did go over and above to deal with other issues raised during the proceedings that impacted on you. Is that a correct observation?

Mr Koko: Yes, it is.

Adv Vanara: Out of the four executives that were suspended, you remain the only one standing. Have you explained why you came back? You would recall that there is testimony before the Committee that the names for the suspension and the list of officials to be suspended, originated from a meeting that was called by the former chairperson of the SAA Board, Ms Dudu Myeni at the President’s Durban residence. Did you find that in the transcript or were you aware of that testimony?

Mr Koko: I am aware of the testimony.

Adv Vanara: Yes, you might have had issues with Mr Tsotsi, but clearly Mr Tsotsi was carrying a mandate, and instruction from Durban. Now, if we have that evidence, and we have your evidence that says Mr Tsotsi suspended you because of the illicit things that he wanted you to do and if indeed you said, “No,” you did the correct thing and there was no reason for you to be suspended. How do we contrast that? That it was Mr Tsotsi’s idea to suspend you, when we have evidence that the idea of the suspension was not Mr Tsotsi’s idea.

Mr Koko: That assumes that Mr Tsotsi is correct about the meeting at Nkandla but which I cannot confirm. What I do know, is why I was suspended by Mr Tsotsi. Not only did he suspend me for the reasons that I have put to the Committee as to why I was suspended, but it is Ms Klein’s testimony as well that once we were suspended, it is Mr Tsotsi who proposed to Mr Malesela Sekhasimbe, whom I suspended, be unsuspended and made the Group Acting Chief Executive.

Adv Vanara: Still on the suspension. There is evidence here of Ms Daniels stating that on the eve of your suspension, you had called her to Melrose Arch for a meeting and she did oblige. Did you come across that evidence too?

Mr Koko: I have.

Adv Vanara: And that at that meeting, in the presence of Mr Salim Essa, Mr Salim Essa wanted to know the procedures to suspend senior executives. You’d also know because that was the same piece of evidence.

Mr Koko: I am aware of that.

Adv Vanara: What is your response to that?

Mr Koko: I confirm that I called Ms Daniels to Melrose and I confirm that I discussed with her my pending suspension because it was brought to my attention by both the Group Executive and the Chief Executive’s Assistant. The reason I called her was because she was in my office, and part of her role as a lawyer was to advise me. She was a lawyer, a competent lawyer, so I called her to Melrose to discuss with her the options I had, pending the suspension. It was just the two of us. There was no third party.

Adv Vanara: It was not correct that Mr Salim Essa was at the meeting?

Mr Koko: Certainly not.

Adv Vanara: With the knowledge that you have of Ms Daniel’s testimony and the inaccuracies in that statement, why haven’t you dealt with it in the submission, in the same manner as you dealt with contradictions in Ms Venete Klein’s statement and others.

Mr Koko: I have no response for that. I, quite frankly, knew that I would have an opportunity here to raise things that I’ve not put forward to you.

Adv Vanara: Did you think that you would not get the same opportunity to raise the inconsistencies of Ms Venete Klein and others as you have done in the submission? I am putting it to you that you did not contradict Ms Daniel’s version because it is the truth.

Mr Koko: That is not correct. There are too many untruths that were said in these meetings that I have not responded to. Khulani said a lot of things. Mr Tsotsi said a lot of things that I have not dealt with. Erica Johnson has said a lot of things that I have not responded to.

Adv Vanara: You would have responded to Ms Klein because you felt very strongly. That is your answer. And with others to whom you responded.

Mr Koko: That is correct. I find it extremely offensive for someone to call me a thief, a brazen thief.

Adv Vanara: I would have felt the same, so I don’t see anything extraordinary in that. But I would certainly think that it can’t get any more serious where you are implicated as having knowledge of what was to happen to yourself and other senior executives, which links you to the developments that were happening in Durban at the President’s residence. Because that is what the testimony seemed to suggest. There was a meeting in Durban where these names, the idea of the suspension, get to be decided and the list is compiled and on the eve of the suspension, there is evidence that says you are calling one of the lawyers in the presence of Mr Salim Essa who wants to understand the procedure for suspending senior executives - in your presence, and you also confirm the suspensions. Do you understand how serious this matter has since become?

Mr Koko: What is the question, sir?

Adv Vanara: I am saying that, notwithstanding that, you didn’t feel the need to challenge that testimony in your submission.

Mr Koko: I said that there were many things that have been said in this Committee that I have not, in writing, responded to, and that was not a train smash for me because I expected to have an opportunity. I expected this Committee to ask me that question and I knew that I would have the opportunity to respond.

Adv Vanara: Mr Abram Masango. How well do you know him?

Mr Koko: I know Abram extremely well. We call each other “maatjie” and the reason that we call each other “maatjie” is because we were neighbours in Mpumalanga. I know him extremely well.

Adv Vanara: He is still to testify before this Committee, but I have had an opportunity to consult with him and this is what he has told me, at least in respect of the suspensions: that on the eve of the suspension, you called him again to Melrose Arch in the presence of Mr Salim Essa. What is your response to that?

Mr Koko: I did not.

Adv Vanara: And, when he got to Melrose Arch, eventually, having gotten lost for some time, he met you and you took him to an office in Melrose Arch and took him inside where you introduced him to Salim Essa. What is your response to that?

Mr Koko: I did not.

Adv Vanara: And that, at the meeting, you told him of the suspensions of the four executives. I guess it follows that you will say, because there was no meeting, this never happened. Is that your response?

Mr Koko: It is.

Adv Vanara: Is it correct that a day before you got to be suspended, you were acting in the place of Mr Dan Marokane’s position who was on a week’s leave?

Mr Koko: I cannot recall. I cannot recall.

Adv Vanara: If you cannot recall, you must accept what those who can recall say. Isn’t that a fact?

Mr Koko: No. It is quite simple. If I was asked to prepare for it, I would have done that because all I would have done would have been to go to Eskom and check the delegations of my authority and check who was acting then. So, it is that I do not recall but give me the chance and I will go back to Eskom, I’ll check the delegations of authority and then I’ll tell you. Otherwise, if I knew upfront, I would have done that.

Adv Vanara: His version is that you told him that he was going to act in Mr Dan Marokane’s position once the suspensions were effected the following day. Did Mr Masango act in Mr Dan Marokane’s position after the suspensions were effected, or you don’t know?

Mr Koko: No, I do know.

Adv Vanara: You know?

Mr Koko: I do know. When Dan was suspended, Abram became the Acting Group Executive, Group Capital. It was Mr Marokane’s position and he eventually was appointed in that position on a permanent basis.

Adv Vanara: So, what you would not know, because you are disputing the existence of the meeting, is that you praised him on that appointment. Do you dispute that, because there was no meeting?

Mr Koko: Certainly.

Adv Vanara: You do confirm that he was eventually acting in the position of Mr Marokane and was eventually appointed to the position.

Mr Koko: Yes. That is correct.

Adv Vanara: At the end of these proceedings, we would have at least two people who say that you invited to Melrose Arch in the presence of Mr Salim Essa. The discussion was about … in fact, you informed them, Suzanne Daniels and Mr Masango, that the four of you were to be suspended. In respect of that, Mr Marokane [Masango], when he wanted to find out why you were even going to be suspended, you said don’t worry. Of course, except that you are disputing that part. But at the end of these proceedings, there will be two witnesses that place you in Melrose Arch in the presence of Mr Salim Essa, and with you, on the other hand, saying in respect of at least Dan Marokane [Masango],  that that meeting did not take place. In respect of Suzanne Daniels, it did happen in Melrose Arch, but it was not in the presence of Salim Essa. Is that what I understand to be the situation?

Mr Koko: That is a big challenge there because between March 2015 and now, both witnesses would have had the opportunity to say that I have been involved in the activity, which does not sound right. And the issue for me would be: why did you keep quiet for so long?

Adv Vanara: We will certainly do an assessment of the credibility of witnesses. Let us step off the suspensions. I want us to spend some time, because you have taken us through, but we have a timeline for certain transactions. I am sorry, but before we get there, you recently underwent a disciplinary hearing?

Mr Koko: That is correct.

Adv Vanara: You know the charges that you faced. When I present you with the document, and to put you at ease, this is not directed at you. An employee does not decide which charges are preferred against him.

Mr Koko: That is correct.

Adv Vanara: That is the responsibility of the employer.

Mr Koko: That is correct.

Adv Vanara presented a document to Mr Koko

Adv Vanara: Can you identify the document that is in front of you, sir? Read the heading.

Mr Koko: Allegations of Misconduct at the disciplinary inquiry held at Eskom, Megawatt Park in the matter between Eskom and Mr Koko.

Adv Vanara: Can we, with the indulgence of the Committee, give Mr Koko an opportunity, together with his legal team, to see if it is the same one used in the inquiry. I am sure it is. What I want to find out is, that document, are those were the charges that were preferred, the charge sheet that was preferred to you at the inquiry. That is all that I want.

Mr Koko and his counsel examined the document and had a brief discussion.    

Mr Koko: The Impulse conflict of interest charges are identical – charges 1 to 5.

Adv Vanara: Charges 1 to 5 are identical.

Mr Koko: Charges 6 to 10 in the document, there are charges that are out.

Adv Vanara: Charges 6 to 10, you were not charged with these.

Mr Koko: Only two of what was in charges 6 to 10, on the anonymous charge, are out of the ones I was charged with. From 6 to 10, only two are not in there.

Adv Vanara: Charges 1 to 5: you faced those in the hearing.

Mr Koko: Yes. Those are the Impulse R1 billion lavishing charges.

Adv Vanara: Just a moment, on those that you say are not in the charge sheet. You say that on charge 6?

Mr Koko: “It is alleged that Mr Masango is aligned to the wrong politician”. I was not charged with Mr Masango aligning with the wrong politician.

Adv Vanara: What number is that?

Mr Koko: 34

Adv Vanara: It says number 7.

Mr Koko: That is correct. I did not face a charge with number 36 on the WBHO. No, I apologise, that one I had. Number 39: It is alleged that on your instruction or alternatively with your approval or further alternatively with your knowledge, the red card, yellow card, green card disciplinary system was implemented in Generation Group. I also did not face that one. The other one that I did not face - I have given you two, and the third one that I did not face: It is alleged that you instructed the CFO to instruct Mr Masango to take study leave with immediate effect in order to ease the political tensions.

Adv Vanara: That is number 41. So that is basically charge number 10.

Mr Koko: That is correct.

Adv Vanara: So, in the charge sheet, in terms of the main charges, i.e. charges number 1 to 10 and under charge number one there would be separate allegations to be supporting the allegation. So, if I get this, from this document, you were charged with nine out of the ten charges.

Mr Koko: No.

Adv Vanara: I am referring to the main headings –Charge 1 Misconduct. Charges 1 to 5. Anything under charge 1 you had to answer that. Anything under charge 2 you had to answer that. Under charge 3 anything, you had to answer. Charge 4 and 5 the same. Things seemed to change from charge 6. Charge 6, still stays but certain elements have been taken out. Only charge 10 was not part of the charges.

Mr Koko: That is my reading of the document as I have it.

Adv Vanara: You would not have any idea why, when you received the final charge sheet, it was not a carbon copy of this charge sheet. You didn’t prepare it. You just had to respond to those allegations.

Mr Koko: That is correct.

Adv Vanara: Let us look at the coal supply to Arnot power station. Exxaro was the co-supplier to Arnot, which, you indicated, started many years ago and the end date was 31 December 2015. So, they got a long contract?

Mr Koko: It was a 40-year contract.

Adv Vanara: Does Contracts Management fall within your responsibility at Eskom?

Mr Koko: There is no distinct department called “Contracts Management” at Eskom.

Adv Vanara: Let’s talk about the function.

Mr Koko: I am talking about the function as well. At the end of Mr Molefe’s tenure, he was setting up such a department.

Adv Vanara: And, yet Eskom deals with a multitude of contracts.

Mr Koko: The fact that there is no department does not mean that the functionality does not occur. So, for every contract that an adjudication authority approves, Eskom appoints a Project Manager with what we call a DCF delegation form that gets signed by the delegated authority. And there are requirements for a project manager to manage every contract. He has to be competent and competencies are known and listed and there are programs that train project managers to manage contracts. So, the functionality happens. It is not that it doesn’t happen.

Adv Vanara: Okay, closer to my initial question. I understand that there will be these different project managers under one person, from what you’re saying. Who is ultimately responsible for all of those people?

Mr Koko: For capital projects, the Group Capital Executive is accountable for them. The GE Group Capital used to be Mr Masango, but he was promoted. It was Krish Govender, but I think there’s a new guy there since Krish left. I’m not in the office now, so I don’t know who.

Adv Vanara: In respect of those that do not fall within Group Capital, who will be accountable for them?

Mr Koko: The coal ones fall under the Divisional Executive for Primary Energy. So, all coal contracts are centralised in a division called Primary Energy and the Board actually delegates authority to the head of Primary Energy.

Adv Vanara: Who is?

Mr Koko: Now I will go back in history. In 2014, it was Kilian Maharaj. When Kilian Maharaj left, it was Mr Vusi Mboweni. When Mr Vusi Mboweni left, it is currently Ms Ayanda Nteta.

Adv Vanara: 2015. Ms Ayanda Nteta started in 2015.

Mr Koko: Ms Nteta was acting in 2015, I think.

Adv Vanara: To whom do these divisional managers report?

Mr Koko: Divisional managers report to Group Executives. When I was on suspension, the Senior General Manager for Primary Energy, which is a commercial function, was restructured to report to the Chief Financial Officer. So, when I came back, we were in a transition, but, ultimately, Primary Energy was linked to the Group CFO.

Adv Vanara: It is correct that, in anticipation of the end of that Arnot contract, there was a Request for Proposals (RFP) issued in August 2015?

Mr Koko: Certainly.

Adv Vanara: For how long did that RFP process run?

Mr Koko: I don’t know, sir. I don’t know.

Adv Vanara: Let us try to put these issues on the record. In December, when the contract ended, was the RFP process finalised?

Mr Koko: No.

Adv Vanara: In April of 2016, was the RFP process finalised?

Mr Koko: No.

Adv Vanara: But you were looking for suppliers to supply coal to Arnot?

Mr Koko: That is correct.

Adv Vanara: Are you aware of an approach by Eskom to National Treasury. I am asking all these questions because I want to follow the sequence. I do not want to trick you; I just want to follow the sequence.

Mr Koko: The difficulty I have with Arnot is that it is not one of the things that you have asked me to prepare for, so I am working from memory. That is the challenge I have, but I’ll do the best I can to assist the Committee.

Adv Vanara: No, it’s fine. I am sorry, Chair, but this is a bulky document and I need to get to the date.

Chairperson: We are not in a hurry. Take your time.

Adv Vanara: You would recall that there was an agreement that was entered into by Eskom together with Optimum Coal Mine. Let me finish so that you can respond. After 31 December, or in preparation for events after 31 December, and given the fact that the RFP process that started in August 2015 had not been completed, and with a view of ensuring continuity of the supply of coal to Arnot, Eskom entered into an agreement with Tegeta to supply coal to Arnot Power Station through Optimum Coal Mine. Are you aware of that?

Mr Koko: I am aware of two contracts. The first contract is 150 000 tons in January.

Adv Vanara: Just go slow with us. The year?

Mr Koko: 2016. The first one is 150 000 tons in January. The second was 250 000 tons. It was in February 2016.

Adv Vanara: There is a first one for 150 000 tons in January 2016.

Mr Koko: And there was a second one in February for 250 000 tons, making it 400 000 tons.

Adv Vanara: The second one.

Mr Koko: All-in-all, it was 400 000 tons. All of that had to be complete by 15 April 2016.

Adv Vanara: So, the second contract … Is it both contracts, because you now speak of one and two?

Mr Koko: All the 400 000 tons must have been completed by 15 April 2016. Chair, something in my mind, can I refer to a document that will clarify me and then I do not mislead you? Can I fetch a document and then I don’t mislead you?

In the Annexures to my submission, on the BTC (Board Tender Committee) Minutes of 11 April, MMK 27, page 172, the short-term contracts for Tegeta are tabled at 600 000 tons of coal. That must be completed in April 2015.

Adv Vanara: Sorry, can you just take us through slowly so that we can pick up on your document. You say that is the 11 April submission.

Mr Koko: Yes. MMK 27 and you find that it in page 172 and in page 173 of that document and it refers to 600 000 tons of coal. The first paragraph. Chair, this is about granularity and detail, and of that 600 000, 400 000 was going to Arnot and 200 000 for Kriel. So, for Arnot, it is 400 000, and for Kriel, it is 200 000.

Adv Vanara: On this MMK 27, which page? It has four pages.

Mr Koko: You will find it on page 172 and I’m talking to the first paragraph of 173.

Adv Vanara: Okay. Now I see it. And the 400 000 ton only related to Arnot.

Mr Koko: To my recollection, yes, sir. So, if I go to my notes, if you will allow me, Chair. I am just trying to assist the Committee. The January one was done on 22 January and the February one was done on, I think, 18 February. The January one was going at R470 per ton and R70 per ton. The February one is R80.68. And Chair, I can confirm these notes because I’m working from my own notes and from memory, but I think they are in the ballpark. I think they are correct.

Adv Vanara: Let’s focus on the 400 000 tons for now that was meant for Arnot. Come 15 April, the RFP process, you say, has not yet been completed.

Mr Koko: Correct.

Adv Vanara: And I agree with you. This is consistent with the information at my disposal. In April, in anticipation of the expiry of these contracts, the last day for delivery of coal was 15 April.

Mr Koko: Correct.

Adv Vanara: Then, the meeting on the 11th was meant to get BTC approvals to extend these contracts. Correct?

Mr Koko: That is correct.

Adv Vanara: By 5 months, which would then take it to September 2016. Correct? In other words, you went to BTC, and you wanted an extension of these contracts by five months. So, I am saying that logically that extension would have taken you to around about September 2016. Is that your understanding?

Mr Koko: No, my understanding in the document before you in MMK 27 page 172, it was an extension and a modification for the volumes as well. The volumes are now 1.25 million.

Adv Vanara: Where were the volumes? On page 174? Is that where the volumes are?

Mr Koko: That is correct.

Adv Vanara: Volumes aside, we are still traversing the issue of the timeline, but I do appreciate that you raise the issue of volume so that we take that into account. So, this contract, with the submission that you are making to BTC, you were hoping to get an extension of the existing contract? It might include, not only the time adjusting, but also the volumes.

Mr Koko: That is correct.

Adv Vanara: That takes us to the end of September, around about September.

Mr Koko: That is correct. Yes.

Adv Vanara: In September 2016, what had happened to the RFP process?

Mr Koko: My understanding is that successful tenders for the Arnot inquiry had been submitted to National Treasury and I still don’t think, even today, there is a resolution to award the long-term contract.

Adv Vanara: Let’s park the RFP until at least September. You are confirming that around September that process had not been concluded. I don’t want to hold you accountable to a firm response to that, but you think that it never got to the final process.

Mr Koko: At least up until I took leave in May 2017, that process was not complete. I do not know what happened after May 2017.

Adv Vanara: You went on annual leave or special leave?

Mr Koko: Special leave.

Adv Vanara: You went on special leave in May and, of course, you are not back at work yet, to date.

Mr Koko: I was back at work on 8 January 2018.

Adv Vanara: Are you still at work?

Mr Koko: Certainly.

Adv Vanara: Have you never been suspended? You have just been on special leave?

Mr Koko: I was suspended on 2 August 2017.

Adv Vanara: That was a side issue. I am sorry to detour. So, by the time you go on special leave was the last time you would have really had much contact. I don’t think you would have had time to revisit these issues on your return. But, all we know is that by May 2017 the RFP process was not complete. Let’s then trace the extension. What happened to the extension? That contract extended by BTC must’ve run its course until the end of September, at least, because there was authority for the extension of that one.

Mr Koko: That is correct.

Adv Vanara: Was Tegeta, through Optimum, the only supplier of coal to Arnot at the time?

Mr Koko: No, the second one, that is, you will also find it on page 172, is Umsimbithi.

Adv Vanara: Is Umsimbithi that company where there was labour unrest?

Mr Koko: Correct, correct, but there were more because the two of them alone would not support the full product required by Arnot. So, what you see there is supplies of interest by the other suppliers of Arnot, which I don’t have currently.

Adv Vanara: No, it would be unfair of us to expect you to know.

Mr Koko: Arnot’s coal burn would be close to 3.5 million tons, if not more. It would be much more, around 6 million tons.

Adv Vanara: What was the amount, the quantity, of the coal that was supplied by Tegeta through Optimum Coal Mine to Arnot for that five-month period?

Mr Koko: The document in front of you says: Current contracts 500 000. Page 174 of the Annexures.

Adv Vanara: Yes, that was the initial contract that ran from January to April 2015.

Mr Koko: That is correct.

Adv Vanara: You were asking for a five-month extension with, as you correctly point out, volume changes? And that volume, the second addendum, is 1.25 million and to Umsimbithi, you were just extending the term, not the volumes.

Mr Koko: Correct. Remember, the reason for Umsimbithi is the labour unrest that you raised; they did not have the ability to ramp up.

Adv Vanara: And this contract gets to be extended until around September 2016. Then it comes to an end on the due date. Are you aware that Eskom then approached National Treasury for permission to extend the contract of that second addendum on page 174? Are you aware of that?

Mr Koko: No, I don’t. I am not aware of that. My expectation is that the burn for Arnot does not disappear. The coal requirements for Arnot still exist. It does not disappear. So, at the end of that contract, that would have been met by the contract based on the inquiry which is not in place. There must be something that fills the gap.

Adv Vanara: We’ll get there. But I am happy that we seem to be journeying along together. And as you correctly point out, the RFP process at that stage, according to your version, had not been finalised.

Mr Koko: That is correct.

Adv Vanara: Something had to be done to fill the vacuum

Mr Koko: That is correct.

Adv Vanara: Eskom, in filling that vacuum, writes to Treasury. I am going to give you this document once I have interacted with use of that you can satisfy yourself that are not reading the bogus document. Unfortunately, I do not have a copy, but it is a document that you might be having. Eskom, on 11 August 2016, through Mr Edwin Mabalane, Chief Procurement Officer, addressed a letter to the Director of SOE Governance at National Treasury requesting approval for variation in contract value. That is the heading. It reads as follows. Maybe I should give it to you to read so we do not waste time. Please read it for the record.

Mr Koko read the letter from Eskom to National Treasury.

Adv Vanara: Can you read the attachment on the back, for the record? (Contract 46000059576)

Ms L Mnganga-Gcabashe (ANC): Chairperson, could we get the value amounts for the order repeated? Just the value amount for two months to five months contract.

Mr Koko: R235 021 150.

Adv Vanara: In light of where we paused, it would appear that Eskom’s intention was to extend Tegeta’s supply of coal through Optimum to Arnot for a further six months. Is that a correct reading of that?

Mr Koko: Yes, that is what the document says.

Adv Vanara: The intention of Eskom, this is now September, so if Treasury approves this, it is going to be March 2017. At least from the document that Eskom is submitting to Treasury here, seeking authorisation for the extension. Let’s hear the response from National Treasury. Treasury responds to this letter in a letter dated 22 August 2016. I want to read it for the record and, of course, make it available to you. It is addressed to Mr Brian Molefe. “The supply of coal to Arnot Power Station”. The amount quoted is R854 955 000, and, of course, that amount excludes CPA, VAT, transport, quality adjustments. The original contract amount is R235 021 150. The extension of the contract was recommended by the Eskom Chief Procurement Officer on 11 August 2016. The reason provided for the extension is due to the medium-term coal supply is not fully meeting Arnot coal burn requirements. Eskom coal supply plan indicates that Arnot requires 250 000 tons per month to supply coal for the financial year 2017 and beyond. The reason provided for this extension is valid. However, it is not clear why the competitive bidding process was not finalised for Eskom to comply with Section 217 subsection 1 of the Constitution. As such, Treasury does not support the extension of the contract but supports a deviation to request for potential suppliers to enter a closed bid process. So now we understand that Eskom had to go for the closed bid process. Were you aware of that?

Mr Koko: That letter sounds familiar.

Adv Vanara: Eskom, indeed, went through the bid process and the report on the closed bid process was submitted to Treasury on 11 March 2017. In essence, that report recommended two service providers, which was Exxaro at R16 a gigajoule and Optimum at R18.05 a gigajoule. You recall the outcome of that closed bid process?

Mr Koko: Ja.

Adv Vanara: Exxaro and Optimum, which is Tegeta. At this stage Tegeta was the lawful owners of the mine.

Mr Koko: Correct.

Adv Vanara: Indeed, National Treasury’s response to Eskom is contained in a letter that says Eskom must go and negotiate with both Exxaro and Optimum but putting a threshold of not more than R14.35. Do know about this? Was it ever brought to your attention?

Mr Koko: No.

Adv Vanara: Then Eskom went back to Exxaro. Let me pause there. Are you aware of a company that was then providing this coal to close the vacuum, seeing that Treasury did not approve the extension? Still, somebody had to do the work.

Mr Koko: No. You recognise that you are outside my delegations of authority right now and I am finding it very difficult at this point to respond to questions in the scope that is outside my delegations of authority.

Adv Vanara: No, it is fine. I am just following the sequence. I do not think we would hold you personally accountable. All I am saying is: were you aware of it? If you were not, there is nothing wrong. But, it is important for me to state the facts for the record.

Mr Koko: Understood.

Adv Vanara: Then, Eskom has been requested by National Treasury to go back and negotiate with Exxaro and Optimum for a R14.45 price per Gj. Eskom responds in its letter dated 14 June 2017. That letter is important. The letter is addressed to Treasury again. This is the feedback that Eskom is giving to Treasury in respect of the implementation of the advice of Treasury. “Exxaro Coal, Mpumalanga did not agree to a further extension of their RFP… We also note that Treasury refers to R14.45 as a benchmark. We would need to understand Treasury’s rationale.” The response comes from the Chief Procurement Officer, J. Pillay. Are you aware of this response from Eskom?

Mr Koko: No, sir.

Adv Vanara: That is the letter that I have just read but one thing that is clear from that letter, is that there is a difficulty with the implementation of Treasury’s advice or directive because 1) Exxaro’s RFP has expired and they would not want to participate in the process. It would appear that Treasury wants to engage with Exxaro on the matter. Eskom was raising concern with the benchmark of Treasury because it seemed to be too close to Exxaro. Is my understanding correct?

Mr Koko: No. I am seeing this for the first time but if anybody tells me of a benchmark of R14.45 Gj for the 23 cv, I doubt his competency. I think there is a difficulty that I think my colleagues are raising and I do not think National Treasury is wrong. Their heart at the right place. What they miss in this letter, is that Arnot coal quality specification, for lack of a better word, in our business terms, we say the sweeter coal and we will have a different benchmark than for the new power stations. National Treasury has set itself on the right path and what it is telling us here, without sticking to the letter here, they are simply saying to us that your coal costs are too high, go and bargain hard, go and get cheaper prices. I think that is the context that I am getting out of this. I would not be stuck on the R14. I think you need a benchmark. I think over time they will learn to understand what is a better benchmark. But the context of it and the letter, I think they have their heart in the right place.

Adv Vanara: This closed bid, I am advised, was only finalised in July 2017. You might know, you might not know.

Mr Koko: As I said, from May 2017, I was out of Eskom

Adv Vanara: Let us then get back to the submissions to the Board in December 2015, which asked for prepayment of R1.6 billion. This background provides a context within which we need to deal with these transactions. Would you agree? You might not. It is fine. In the submission of December - I see that you are trying to look for it. Find it.

Mr Koko: MK22, page 66 of the Annexures.

Adv Vanara: The background of these things you might not have known, but at least when we get to the submission document, you coordinated with Mr Singh. Is that correct?

Mr Koko: It was prepared by Ms Daniels. I own the document.

Adv Vanara: Can you then tell the Committee what you wanted to get the Board to approve, and for what?

Mr Koko: This letter went to my interactions with the Department of Mineral Resources and it was based on the reality before me at the time that the coal supply for Hendrina is not guaranteed by the business rescue practitioners beyond the 31 January 2017 and that we do not have a firm contract for Arnot Power Station. That, to me, was a crisis. That, to me, is what prompted me to approach DMR (Department of Mineral Resources) and request them to support us in whatever way, given that they had already assisted with the discussions with Optimum and the intention was to procure coal that will match our long-term supply for the next 12 months.

Adv Vanara: That Optimum, or to get through Optimum Coal Mine, would supply the coal.

Mr Koko: That is correct.

Adv Vanara: Is that what then leads to what we described earlier as contract number one and contract number two that would have ended the delivery date of coal on 15 April?

Mr Koko: No, sir. This is different. Contract one and two leads up to the prepayment of 11 April 2016. No, I apologise. This does not materialise. This is not implemented because the conditions set out in this contract were not met. This contract, you will see in my submission, ended up nowhere, in my view. It was not implemented because we did not buy the coal as we envisaged from Tegeta. No order was placed on Tegeta.

Adv Vanara: In terms of this contract, you say there was no order placed for, I assume, delivery of coal in terms of that contract.

Mr Koko: In terms of the submissions that you are looking at, MK 22 and MK 66, Chair I gave the “Yes” incorrectly. Not 2017. I mentioned the date 2016, so when I spoke of coal supply for Arnot and coal supply for Hendrina, and coal supply for Koornfontein, it is actually 2016. In terms of what you have on page 66 as approved by the Board Tender Committee and IFC (International Finance Corporation), no effect was given to this transaction because the condition precedent imposed by BTC and IFC were not met.

Adv Vanara: I understand that nothing happened under that contract, but what was the intention?

Mr Koko: The intention was to procure coal for the next 12 months and pay in advance for it.

Adv Vanara: So, no coal was procured on this contract, but we know that your colleague… There was a decision of the Board to prepay Tegeta for R1.6 billion.

Mr Koko: That is correct, subject to the conditions that the Board set.

Adv Vanara: And we know that, in Mr Singh’s testimony, because of the difficulty with the preconditions that had to be met, the case was not advanced, but the guarantee was arranged with ABSA.

Mr Koko: I know that the cash was not advanced, and I now know that there was a guarantee with ABSA.

Adv Vanara: R1.6 billion?

Mr Koko: Correct. That expired in March, I think.

Adv Vanara: Do you have any knowledge of what would have happened or what the beneficiary of the R1.6 billion would have done with it?

Mr Koko: Not at all, sir. I do not. But I need to add that if you go and look at the Eskom records, you will find out that in the financial year 2016, we prepaid R3.5 billion upfront. So, the prepayment of R3.5 billion, and I do not think anybody in Eskom will tell you what the suppliers have done with the R3.5 billion. It is not common, and you may disagree with me, we learn every way. When I buy a gadget, I do not ask from the person selling me what I will do with the money upfront. I look at the business case. You may disagree with that but that was what was happening in Eskom. We do not say: “I pay you 3.5, what are you going to do with it?” So, I do not know what Tegeta was going to do with the 1.6 other than what DMR and the reasons in the DMR letter that are suggested, which makes it clear to me.

Adv Vanara: But it could not be implemented?

Mr Koko: They were not implemented.

Adv Vanara: Because it was impractical to implement because of the conditions?

Mr Koko: Why? I do not understand that now.

Adv Vanara: DMR, unless Mr Singh’s testimony was not accurate, his reading of the DMR letter was that it provided, it kind of sweet talked Eskom, to kind of advance cash around the tune of 1.7 billion to the company that was acquiring Optimum.

Mr Koko: Is that what Mr Singh testified?

Adv Vanara: Let us go to the letter.

Mr Koko: I am very familiar with the letter. What I am not getting myself involved into, is what Mr Singh said and as you were talking of it. That part I’m not getting myself involved in.

Adv Vanara: What is DMR, in your understanding, saying has to happen?

Mr Koko: DMR says: We are making sense out of the risk that you are submitting to us based on the security of coal supply. We will do the best we can to deal with the Competition Commission; we will do the best we can to deal with ourselves and other parties. But if the security of supply is as chronic as you are suggesting (and remember that it is not them, it is me saying that this is a problem), you may consider buying, post the sale of Optimum, buying coal and security so that Optimum is able to ramp up as quick as you wanted to ramp up and to get the coal that you want.

Adv Vanara: And that would be Optimum, not under Glencore, but Optimum under Tegeta, then it is all right.

Mr Koko: Certainly. If you look at the condition… if you look at the pre-conditions under 3.2. It says: OCM (Optimum Coal Mine) is formally declared not to be in business rescue as required by the Companies Act. So, Optimum has to be discharged out of the business rescue so that it is going concern, and only when it is a going concern, only a company that is a going concern can guarantee you coal in the future so that you pay for it today.

Adv Vanara: We know that that arrangement did not work. We know that coal did not get to be delivered to Arnot in terms of that contract.

Mr Koko: That is correct.

Adv Vanara: So, Eskom did not benefit out of that contract?

Mr Koko: That is correct.

Adv Vanara: But Tegeta did benefit because it ended up with a R1.68 guarantee from Eskom.

Mr Koko: What’s the question, sir?

Adv Vanara: I am telling you that Eskom did not benefit, to which you agree. There was no coal supplier. But the beneficiary of that arrangement was Tegeta because there was a R1.68 guarantee issued from ABSA on the instructions of Eskom, so they benefited.

Mr Koko: I take note. I hear you. I cannot comment further, but I hear you.

Adv Vanara: That’s fine. And that naturally there would have been expenses, fees associated with these kinds of guarantees and so forth which Eskom would have had to pay. The exact figures I do not expect you to know, but as an executive of a multi-billion Rand company like Eskom, would it be a fair statement to put to you that there could have been costs associated with the transaction, payable by Eskom?

Mr Koko: I have seen some court papers attaching a value to that.

Adv Vanara: Now, let us move away from the R1.6 billion. We are now in January. This contract that would give Eskom, that would entitle Eskom to receive coal to supply Arnot during January and February the 400,000 tons. What was the basis of that contract? Was it the December contract or was it a completely new one?

Mr Koko: It had nothing to do with the December contract. Are you linking it to the R1.6 billion? No, it had no link to the R1.6 billion.

Adv Vanara: There must have been a legal basis for Tegeta, through Optimum Coal Mine, supplying coal to Eskom through January and April, on 15 April 2016.

Mr Koko: Correct. The person who signs a contract acts under a mandate and my expectation is that those contracts were done and tapped into the mandate which existed at the time, otherwise it becomes irregular.

Adv Vanara: For purposes of the record, I have not seen that contract, but I do assume that there would have been a contract. Your submission to the BTC on 11 April 2016, you are asking for an extension of a contract, which presupposes that there was a contract.

Mr Koko: Certainly.

Adv Vanara: But what we do not know, is whether or not there was a competitive process that would have identified Tegeta to supply that 400,000 tons of coal from January to 15 April, or do you know?

Mr Koko: I think that Anoj had made that statement in many different forums. I want to put it to you that up until around 2015/2016, Eskom never ever had a competitive process for procuring coal. I find it very difficult that close to R55 billion is spent on coal without following a competitive bid, and Eskom is not called to account for that, and when there are two contracts for R 200 million because it is Tegeta linked to the Gupta somebody has to account for that. It is the Board that has just left that has issued an instruction that within the unique features of coal supply and Eskom, work with National Treasury and find a competitive bidding process. Given that for the last 80 years, that had never happened. For the last 80 – 90 years there was no competitive bidding in Exxaro; there was no competitive bidding with Glencore; there was no competitive bidding with all the big majors, but times have changed, and we do here the public saying that it may have suited Eskom then but with the current perceptions, find a way to be competitive with National Treasury. And that the Board of Eskom has resolved on. So, I cannot tell you that there was a competitive bidding with those two or not, but it is most unlikely. I mean you talk of Umsimbithi. There was no competitive bidding with Umsimbithi. Mafube, there is no competitive bidding with Mafube. You can list all of them. There is no competitive bidding.

Adv Vanara: That’s fine. All I wanted to know was the likelihood given the context in which Eskom was operating. The likelihood is that there was no competitive bidding.

Mr Koko: Correct.

Adv Vanara: Let us move to when that contract comes to an end. Then there is another motivation on 11 April. This motivation – can we get to that motivation in your submissions?

Mr Koko: Page 172, MK 27.

Adv Vanara: Again, can you take the Committee through that transaction. What is it that you wanted to obtain from the submission?

Mr Koko: We wanted business continuity because the volumes that were going to Arnot were going to be consumed by 15 April 2016. We had already, on 23 December, and I need to take you to that document because it then tells you the rationale of why I approved it, and not only approved but take ownership of the document on 11 April. MK 26, page 169. You will see there that it is a delegated body in Eskom that looks at the short to long term planning and makes sure that we have coal supply so that we don’t wake up overnight and have no coal. And they do that analysis every year, quarterly and say: In the next three months, we will need so many tons of coal and this is where we are and get that. When they reach a situation where they cannot guarantee coal supply, they declare an emergency. I was alive to this meeting. I had been briefed that there is a coal emergency at Arnot that was declared by duly delegated authority so there was a need for coal. So, at my level, I no longer debate with the we need coal or not because a team of experts has done that in December 23. MK 27 is the implementation that arose out of the meeting of December 23, 2015 and they talked to the suppliers within the mandate that they had, and they came to me and said: Here is a plan and 15 April is quite important. We approached to suppliers. Umsimbithi cannot ramp up as it has got issues with labour issues; Tegeta has asked for a prepayment. I was also alive to the resolutions of the Board of 2008 on coal prepayment and I took the Committee through it in 2008. It was being done so the pieces came together as to how we can execute it.

Adv Vanara: So, from the document that you just pointed out, there was a meeting on 23 December 2015 by Committee you are referring to

Mr Koko: That is correct.

Adv Vanara: And an emergency is determined for future supply of coal at Arnot. Is that correct?

Mr Koko: That is correct.

Adv Vanara: When is this anticipated, this event? Is it now all is going to rise in the future?

Mr Koko: They look at a 12-month rolling window and every month we must secure coal and their view is that we will have difficulty post 15 April if we have nothing in place to replace the volumes that will not be there on 15 April 2016.

Adv Vanara: So, where there is a need for coal, there must be a supplier for coal, naturally.

Mr Koko: Certainly.

Adv Vanara: And, there is already an RFP process started in September. Had Tegeta submitted an RFP in respect of that process?

Mr Koko: I would not know at this stage because that is privileged information that I would not have.

Adv Vanara: I am telling you that Tegeta was not part of those four companies. So, you do not know, are you prepared to accept that Tegeta was not part of that process?

Mr Koko: No, I am saying that Eskom commercial processes are such that when you have an RFP and the suppliers tender, that information is placed in what we called C-max (as in C maximum prison) so that no one has access to it and at that point the information was at C-max and I would not know, and I would be surprised if you said, you knew who had tendered at that time because that would be a breach of Eskom processes.

Adv Vanara: I am not saying that I knew because it was the business of Eskom, but I know now.

Mr Koko: You say you know it, so I accept it.

Adv Vanara: What I find strange is that this Committee must have known that the contract of Exxaro with Arnot comes to an end in a few days’ time, and there is an RFP process that is going on, but does not get to be finalised. Why is there no attempt to finalise the RFP process?

Mr Koko: I cannot talk for the Committee. I cannot talk on the details. No, I cannot talk for the details.

Adv Vanara: I accept that you cannot talk on the details, but you work with coal and you work with this energy. Does it not bother you? It did not bother you then, but in hindsight, there was an emergency declared and there was an RFP process that was not getting finalised.

Mr Koko: Let me tell you bothers me. It is a 40-year contract and we have always known that it will come to an end in December 2015. In fact, two years before that, we were already engaging with Exxaro on the demobilisation plan. The inquiry was issued on time. That I know. And I speak under correction here, and I can confirm that, but I think that the final tenderers were maybe already with National Treasury at that point. I cannot speak to that, but I am guessing now, and I do not want to get to that space. I do not want to guess. What does bother me is that it is a 40-year contract; it is not expiring all of a sudden; it is not something that you wake up now and say: What do we do? If that is the point you are making, then I accept that.

Adv Vanara: You then accept that if the RFP process was not finalised and there is a need, this emergency hanging on, which has to be attended, and it was, indeed, attended and one of the beneficiaries of that outside process appears to be Tegeta. Do you want to comment on that?

Mr Koko: I want to answer your question. I ‘m not sure what your comment is, but the issue is that there will always be, the emergency will always be there as long as you do not resolve it, as long as you do not have a contract and close the RFP and lock it. I was away from work for eight months. One of the first things I had to deal with when I came back was the coal contracts that are not being concluded, that are open because Eskom and National Treasury cannot find their feet together, trying to find chemistry together, which is not there as yet. I think, and if I can be honest with you, there is a lot of suspicion from our colleagues in National Treasury about what we do, and they ask a lot of questions and we are in a loop. We are in a loop. We have not found a reason and that is impacting the time to close a contract.

Adv Vanara: On that note, we have been requested by the Chair to take a break.

Chairperson: Honourable members we are going to take a 10 minutes break now.

Adv Vanara: You are not accepting it’s a problem that a 40-year contract comes to an end and there was no proper replacement in place.

Mr Koko: I shared your view that when a 40-year contract comes to an end, there should be a contract in place. I did deal with the challenges and the teething problems and problem of marriage that we are working out with National Treasury.

Adv Vanara: I hope that those issues get to be resolved soon.

Mr Koko: There’s progress; there’s light. Tomorrow will be better than today.

Adv Vanara: Let’s then move to the motivation for the extension of the five–month contract. Remember, in April, there was a motivation to extend, and September. As you say, there were other coal suppliers who were providing coal to Arnot. Today hear you correctly?

Mr Koko: Yes. I did say that the volumes for Arnot are much higher than what Umsimbithi and Tegeta would supply under their current contract. In fact, they would be very small.

Adv Vanara: Do you know the contract terms of the other suppliers were supplying coal to Arnot?

Mr Koko: I do not know but we do not have the long-term contracts like there was with Exxaro and the long-term contract that will arise, will be out of the RFP.

Adv Vanara: I observe that in the motivation for the extension of the contract to National Treasury only dealt with Tegeta. Is it because other contracts were longer-term contracts than Tegeta?

Mr Koko: The letter that you read to the Committee said: the volumes that was supplied by the RFP would not be sufficient and needed a top up and they went to Tegeta for a top up. I am just putting that what you made me read.

Adv Vanara: My question is that there is that letter to National Treasury. Because what it suggests, too, is that now at least, there is some progress with the RFP. Am I correct?

Mr Koko: Remember that I have been out of the system for eight months now and the feedback that I have received is that there is a problem with the conclusion of this contract, so I am cautiously optimistic that there is progress. This contract for Arnot must be concluded, otherwise next year we will be here explaining ourselves.

Adv Vanara: When you quoted a provision in that letter, it said that with the RFP process, there were negotiations going on.

Mr Koko: Correct.

Adv Vanara: Does that indicate progress because the negotiations would be post adjudication?

Mr Koko: It suggests progress.

Adv Vanara: But not finalisation, as we know.

Mr Koko: Correct.

Adv Vanara: My question - I accept the top up in respect of Tegeta - my question is whether there no other short-term contracts which required extensions.

Mr Koko: I don’t have the details. I do not want to answer but what we normally do: the suppliers that are there, we go to all of them and the ask for more volumes. So, my expectation is that the rest of the suppliers would have reached their capacity to go to the next one.

Adv Vanara: In the five-month period, Tegeta was at 1 250 tons.

Mr Koko: That is correct

Adv Vanara: In the submission document to Treasury, again there was a request for the volumes to be increased to 2 500 tons, which National Treasury did not approve and that is why Eskom had to go for the closed bid.

Mr Koko: That is correct.

Adv Vanara: What I perhaps need assistance on is Tegeta and now the negotiations between the companies that would have been successful bidders through the RFP process because they were at the negotiation stage and there were certain quantities that they also had to provide. Is my understanding correct? Tegeta was to top up what those successful bidders would have provided.

Mr Koko: Yes.

Adv Vanara: So, previously it was operating without those successful bidders that would have come through the RFP process. Do you understand what I am saying?

Mr Koko: No, I don’t.

Adv Vanara: During the five-month, even if you include the January, and we are in September, there are no additional coal suppliers that come through the RFP process.

Mr Koko: Correct.

Adv Vanara: The RFP process is not finalised and now there is progress with the process that has probably identified a number of service providers and this talk quantities and probably talk of price.

Mr Koko: Correct.

Adv Vanara: And the motivation is that Tegeta is going to top up whatever comes of that process with the 2 500 tons.

Mr Koko: Tegeta has to top up the volumes identified in the document that I read.

Adv Vanara: But help me understand this. When, in the past eight months that it has been increasing (it started at 400 000 and is now sitting at 1 250 tons, potentially going to 2 500), did the submission to increase the volumes of Tegeta take into account, because this is all under emergency, my understanding is that some of the pressure is going to be taken off Tegeta because there will be additional coal suppliers that are going to support coal to Arnot. Do you follow what I am saying?

Mr Koko: No, I don’t, sir.

Adv Vanara: We’ll come back later to that. During this period that is Treasury and Eskom are engaging, this 2.5 million tons that Tegeta cannot supply, because the contract came to an end and Treasury did not allow the extension, who supplies this coal?

Mr Koko: The challenge we have, and it is a big challenge. I think you asked a very good question and I hope that the people out there are listening. Because we are not concluding these contracts, the coal supply to Arnot is compromised. There are two ways to manage it and thanks God we have surplus capacity. We ran down Arnot and ran it less and less so that we use less, and less coal and we then relied on stockpiles. But that only works in the situation of surplus when we have surplus capacity and when you can afford to run down Arnot, to run down the stockpiles at Arnot. In 2014, we would not have survived with Arnot as it is today because we did not have capacity in 2014. Now we have other stations that we rely on. We have Medupi on - we have three units at Medupi; we have got Kusile coming on, so we could afford to say to Arnot: shut down two or four of your units. Not for, that is too much. Shut down one, or two to three and then save the coal there and rely on Medupi and Kusile and other sites. That only works because we have surplus.

Adv Vanara: So, is your answer that the stockpiles are currently providing the 250 000 tons?

Mr Koko: Not the 200 000 but the combination of load ramp down and the stockpile is how we manage for now. Not a sustainable situation.

Adv Vanara: Do those situations not expose us, the country to possibilities of load shedding?

Mr Koko: I do not have load shedding in my terminology. I did say that we stop load shedding. When people were saying prepare for three or four years of load shedding, it stopped in July 2018. It is not in our terminology. There is no demand.

Adv Vanara: It cannot be 2018

Mr Koko: 8 July 2015 is when we stopped and to be exact, it was even in peak – it was 7:05 in the evening and we were in control. Mr Masango was the acting Chief Executive, Mr Molefe was in the US. I lived it. I took pain. I know every second of it.

Adv Vanara: The situation that you have just explained where you find yourself in this most comfortable position, you are saying the situation prevailed around June 2015.

Mr Koko: It was stopped by the leadership of Brian Molefe on 8 August 2015, not July. I apologise.

Adv Vanara: The question that I have is…Clearly had National Treasury not intervened on the extensions of the Tegeta contract, and had not said “No,” that contract would have run to the beginning of 2017 because it was a request for six-month contract, so it would have been March 2017? Is that correct?

Mr Koko: I agree.

Adv Vanara: And you dealt with the emergency in December, well, it would seem, after when National Treasury said “No,” to the extensions of Tegeta. Is that a fair observation? There are no problems at Eskom in terms of power supply? I got that to be your response.

Mr Koko: There is no power supply problem at Eskom. The country’s lights will continue to be switched on for the next five years. There is surplus capacity currently, and if we do get into trouble, it will not because we do not have the capacity, it will be because of something else. The capacity is there. In fact, we must export more.

Adv Vanara: This capacity that is there, when did it start piling up?

Mr Koko: I was on suspension and Brian Molefe came in. He testified in this Committee that he worked with a team of young engineers, the top engineers. They put in a maintenance program. The problem we had in the past, we came from a situation where we were not maintaining the plant and when we woke up to it that it is not the right thing to do, we over-maintained the plant. And when you over-maintain the plant, you take away capacity out of it and we were unable to match demand. And what Brian and the top engineers did, and Brian was courteous and polite to include Tshediso Matona in it as well, was to come up with a maintenance program that said you could keep lights on. You could do your maintenance and you can burn less diesel. And by consistently doing that, you build up additional capacity that the country has now.

Adv Vanara: My question was: at what stage, after that first intervention - you gave a date around 8 August 2015-

Mr Koko: Well, that was the breakpoint. That was the point when it stopped and from then on it got better and better every day.

Adv Vanara; And, in April, what were those stockpiles situation?

Mr Koko: We have a rule of average stockpile of 40 days. That is what we have. We have power stations that do not have capacity to keep 40 days’ stockpile. Komati has 10 days’ stock. Other stations got less. But an average is 40 days’ stockpile. So, if you stop supply from today, then you have got 40 days to run. The problem with 40 days is that you lock your working capital up. Me and the Finance Director fight every day because he says that he is looking at working capital that I am consuming. And there is a reason why it is 40 days. It is because out of the 2008 crisis when we ran out of coal. I think there is a better balance which must not necessarily be at 40 days.

Adv Vanara: I need to be precise. The stockpiles that would have assisted with Arnot at the time - what were those stockpiles?

Mr Koko: 54 days. And we going to run it down to, I think, from 54 to 30 days. It is on the R1.68 billion proposal.

Adv Vanara: Sorry, the 54 days’ stockpile at Arnot would be around April 2016?

Mr Koko: Yes, at the time when we wrote the document. And it was too high. Just looking at what could happen.

Adv Vanara: Do you have an idea subsequent September 2017, what the levels of stockpiles would be?

Mr Koko: No.

Adv Vanara: Your assumption is that you would expect it to be higher or lower?

Mr Koko: I would expect it to be lower. It cannot be higher.

Adv Vanara: This is exactly the problem that I have with the submissions both in December 2015. The basis of the procurement is emergency and there is a threat that if we do not procure, there is going to be disaster.

Mr Koko: Certainly.

Adv Vanara: We are sitting with, by your own admission, stockpiles less than 54 days at the time that Treasury says, “Don’t extend the contract.” The contract is, indeed, not extended, the RF people process is not being finalised, and Eskom continues. And you have confirmed that load shedding is history. What was this emergency that on the 14th, while the stockpiles were sitting at 54 days, would have made or created this emergency that the stockpiles could not have dealt with?

Mr Koko: No, sir. I don’t think your rationale is correct. You are making an assumption that said that because National Treasury said, “No”, there was no other plan made. And because there was no other plan made, there was no need. That is the wrong assumption.

Adv Vanara: But, I thought, because remember I asked you, absent the contract extension of Tegeta, for the 2 500 tons, there was a vacuum and I was interested in who had filled the vacuum. Your response was: your stockpiles.

Mr Koko: My response was stockpiles and the load but what I did not tell you, and maybe it is my omission, that we have what we call “swing contracts”. A swing contract is a contract that we have that can be changed from Kriel to Arnot, Matla to another station. So, you move the coal around. It is the coal that you have but you move it around.

Adv Vanara: there is a request from some Committee Members for you to repeat your answer.

Mr Koko: So, you swing it. You have bought coal for Kriel and you have made plans to get coal supplied to Arnot. Your Arnot contract is not concluded timeously so you manage all load. Your usual stockpiles and you say what are other contracts do I have in hand that is supplying other sites, and then you move them. Typically, those would be the most expensive options which is why you do not start with them. And the next issue we have to deal with, is what is the cost impact of National Treasury saying no because then you go to the next expensive option that you do not want to go to.

Adv Vanara: But that most expensive process, will it not be self-induced in this instance, given the fact that there is an RFP process that cannot be finalised?

Mr Koko: Let’s, for argument’s sake, say it is self-induced. Do you choose to die? No, you manage it. You fire the people that caused it. You deal with them, you discipline them, but there must be business continuity. 

Adv Vanara: So, maybe a simple question. Why could you not have dealt with it in the way that you are currently dealing with the lack of supply from Optimum, in the same manner. Why in April, did you not deal with the lack of coal supply to Arnot in the manner in which you are currently dealing with it? Because there is no Tegeta, but you are continuing to receive coal and there’s no crisis.

Mr Koko: I really don’t understand. I think that the term “Tegeta” is coming between reason. I really don’t understand. We need the coal. We were operating under an emergency and we couldn’t find coal elsewhere. We found it in Tegeta. The fact that we found it at Tegeta does not eliminate the need. I don’t understand. I apologise. My sincere apologies.

Adv Vanara: Maybe, indeed, this Tegeta thing is coming in between. All I am asking is about the basis of emergency. That is all that I am asking.

Mr Koko: The basis of emergency is that by 15 April we will no longer have the 500 000 tons of coal that we had been receiving. It would have been consumed. The basis of continuity requires of us to replace it and more. When Tegeta’s name comes in, then, for some reason, our logic is faulty. It could have been any other supplier. And you will remember that I said that the procurement team approached all the suppliers, not only Tegeta. If your value is that we had an emergency and we only went to Tegeta, then I will take it on the chin. But that is not what happened.

Adv Vanara: Let us move to the R2.1 billion fine. My understanding is that you were closer to the negotiations around the purchase and sale of shares and rights in Glencore. Is that correct?

Mr Koko: I dealt with the business rescue practitioners, primarily.

Adv Vanara: Mr Molefe testified here that there was a firm decision that any company that would get to buy Optimum, would have to pay Eskom the fine. Any comment on that? Did you know about it or don’t you know about it?

Mr Koko: I… I. The Eskom version is documented in the Eskom documents. The letter of demand to Optimum that you will find on page 42 is an Eskom recorder. MMK 13 is dated 6 July.

Adv Vanara: Can you just take us through that?

Mr Koko: This Letter of Demand was approved. The reference is MMK 13, page 42. In fact, better still, can we go to page 40, MK 12. It will tell you what Mr Molefe said. I am going to take you through MK 12 and MK 13 because they will talk to the versions of Mr Molefe, which I did not understand him to be saying what you say he did. I could be wrong. I thought I listened to him and I thought I heard something different.

Page 40 is a memorandum which is the formal way we communicate to the Group Chief Executive. It says: Letter of Demand for Optimum Coal Mine and Optimum Coal Holdings dated 8 July. 

Mr Koko read the Memorandum (MMK 12) and the Letter of Demand (MMK 13).

Mr Koko: I refer the Committee to page 26, paragraph 73 of my submission, and this is what I understood Brian to be saying.

Mr Koko read paragraph 73 of his submission.

Adv Vanara: If, indeed, what you heard from Mr Molefe’s testimony, it is not difficult, as these people could always go back to the record.

Mr Koko: I may be mistaken, sir. Maybe because I know I thought I heard it. But I honestly think I heard him saying what I am telling you.

Adv Vanara: So, what then would have driven Pembani away from the transaction because, according to Mr Molefe, Pembani walked away from the transaction because they understood that, if they bought the mine, they would have to pay the fine.

Mr Koko: It is correct. Anybody who buys, it was our understanding, would pay the fine. It was the position of Eskom that anyone who bought Optimum would have to pay the fine. And the fine, I took you through the letter of 14 September from Glencore was estimated by the people in Glencore to be over R600 million. So, anyone who buys Optimum has to pay the fine.

Adv Vanara: What was the fine? Was it R600 million?

Mr Koko: No. Let me take you step-by-step.

Adv Vanara: Are you referring to the settled amount?

Mr Koko: No, no, no. Page 34 of the Annexures. In the version of Glencore, there are many people who say things that Glencore never said. Glencore never said that they don’t owe Eskom. I hear many people say that. What is documented by Glencore is that they owe Eskom. In my statement, I said Clinton Ephron said, “We think that we owe you R800 million.” The business rescue practitioners said to me, “We think Glencore owes about R700 million,” but Eskom was owed R2.1 billion. The point that I am making is that it is a myth that Eskom created penalties so that Glencore must die. It is a myth that is still in the public and I appeal to people out there to stop spreading the lie that penalties were created by Eskom to force Glencore into bankruptcy so that it could be bought by the Guptas. The documents of Glencore say something different.

Adv Vanara: Okay, I hear that, but, for me, Eskom’s view was that it was owed R2.1 billion and, as you say, Eskom’s view was that the R2.1 billion had to be paid.

Mr Koko: And, we also say, in the letter of demand that if you dispute that it is not R2 .1 billion, then the contract has a dispute resolution mechanism and that dispute resolution mechanism in the contract is arbitration. I said in my submission, when Clinton said to me, “I think it is r800 million”, I said, “I don’t want to get involved in discussion as we are in dispute and the contract has a dispute resolution mechanism. That mechanism is arbitration. The arbitrator decides and whatever the arbitrator decides, we accept.”. And that would have applied to Pembani, if Pembani had bought it. Remember that Pembani is Shanduka of the past. Shanduka of the past is a shareholder of Glencore, so Pembani is a shareholder of Glencore. Pembani is not someone who comes from far. Pembani is Glencore. So, they ought to have known what the contract says. The contract says if people are unhappy, arbitration and whatever arbitration decides, we accept.

Adv Vanara: We will leave that for the record. The record will speak for itself. One last issue that I just want to deal with. You gave a very eloquent explanation of the transaction to the submission that was taken to the Board Tender Committee on April 11, 2016, which is over a year now. You were asked about the transaction in an interview on Carte Blanche a very few months after you had submitted this transaction.

Mr Koko: 13 June 2016.

Adv Vanara: and you didn’t know about it. How come?

Mr Koko: One of the things I wish is that you play the video. I invite you to play the video.

The Committee agreed that the video should be played.

Chairperson: Permission to watch the video is granted to Parliament only and so the cameras will be turned off during the showing and there must be no recording of the video clip.

A video clip was shown of an interview with Mr Koko on the Carte Blanche programme.

Mr Koko: On the video I was asked three times if I paid Optimum. I said, “No.” I was asked again. A third time, I was asked: “Did you pre-pay Optimum? Look at this document.” I took the document and looked at the document. I was shocked that there was a signature of mine attached to a document that prepaid Optimum because I never paid it. Eskom never prepaid Optimum. In fact, if I have to quote the business rescue practitioner in this hearing: “We confirm that the prepayment was not made to Optimum we were certainly in control of Optimum Coal Mine. Optimum Coal Mine did not receive the R586 million subsequent payment. Optimum Mine entered into a sale agreement with Tegeta for the supply of coal to Arnot. At the time of the prepayment, certainly that prepayment was not made to Optimum.” That is the version of the business rescue practitioners, which I agree with. It would have been extremely irregular for Eskom to prepay Optimum. Extremely. Because Eskom has no contract with Optimum to supply coal to Arnot. The same business rescue practitioner said, in this room, “The contract was between Eskom and Tegeta. We had a 30-day notice contract with Optimum.” The voice-over, I think, was misleading. The voice-over says, “Koko denies or lies about prepaying Tegeta.” That is the voice-over. In the actual interview, I was asked, “Did Eskom prepay Optimum?” I said, “No.” I was asked again, “Did Eskom pre-pay Optimum?” I said,” No”. Then I said, “Well, you don’t take my no, maybe I made a mistake.” But I know she was wrong. So, I denied that. I did not lie.

Adv Vanara: They always say a picture tells a thousand words. I wouldn’t want to engage further on that but there is just one issue that I wish to pursue, and this is the submission that went to both the December Board meeting and the April 2016 Board meeting. There is talk of Optimum under Tegeta and also talk of Optimum under Glencore. Are you prepared to concede that, in the submission that we discussed this afternoon?

Mr Koko: You are going to have to show me. In 11 April 2016, for the pre-payment, there is no way that you will find Optimum there. You will find Tegeta.

Adv Vanara: You will find Tegeta and not Optimum. You knew clearly, between you and the lady that interviewed you, you knew the transaction better than her.

Mr Koko: That is correct.

Adv Vanara: And there is use of Optimum under Glencore and there is use of Optimum under Tegeta. Is that not the case?

Mr Koko: No, you will have to show me.

Adv Vanara: Forget about the submissions. But there was Optimum owned by Tegeta, which was after the transaction and all conditions were met.

Mr Koko: Remember that Tegeta acquired the rights to procure the assets to Optimum on 10 December and in March. I think they started hauling it in March.

Adv Vanara: Its fine. Let’s focus on the document that you were shown which was the submission of 11 April. When you saw the document, with the information that you know about that document, what was so difficult in you saying to the lady, “This document is not to pre-pay Optimum, but to pre-pay Tegeta. You knew the document. You had worked on it. So, what was so difficult about it?

Mr Koko: Actually, at the end of the interview, I thought that she got it and that she understood it. When we had done with the interview, I was left with the impression that she understands that the pre-payment went to Tegeta and not Optimum. I was surprised by the voice-over that I saw there. My parting shot with her left me with the impression that she got it.

Adv Vanara: No further questions, Chair.

Chairperson: Members may now ask questions.

Questions by Committee Members
Dr Luyenge: Mr Koko, it is the opportune time for you to make a contribution that will clear the dark cloud over the state-owned enterprises, of which Eskom is one of them, on the perception that is all over, that the state resources that are looted deliberately by individuals within these institutions. It is something that is a concern to all South Africans, so the position that you are in and the importance of the position that you are filling, should be used by us here because we rely on you to clear that information, honestly. Can you clearly indicate that, in the position that you are in, you do not know any of the Gupta family members, pertaining in the service provision at Eskom, Illegally or, if legal, you indicate.

Chairperson: You will respond to each and every question, Mr Koko. A Member will ask one question and you will respond to that question, and he or she will carry on like that until he finishes all his questions.

Mr Koko: I do not know, and I have not met any of the Gupta brothers I see in the pictures. I have met Mr Howa; I have met Ashu; I have met Salim Essa.

Dr Luyenge: On what did you meet them?

Mr Koko: Mr Howa was the CEO of Tegeta Resources Exploration when they did the transaction with Optimum. I met Mr Ashu was in the meeting of 24 November 2015 with Mr Howa. Salim Essa, I have met him a couple of times. He is a shareholder of Trillian and he met me a couple of times to discuss the Trillian transaction.

Dr Luyenge: Did you, at any time, ever push Optimum in order to ensure that Optimum is bankrupt and that would benefit any of the Gupta-related companies?

Mr Koko: No. I shared with the Committee the letter of September 2014. In that letter, you will find reference that Glencore took control of Optimum in 2012, after the negotiations of the 2011 price. From that day that they took over, they claimed hardship and created an impression that they took over Optimum not knowing what the actual conditions of Optimum were. All that Eskom did in 2011, not in Koko’s time, was to insist on the compliance with the coal supply agreement. In the letter of September 2014, reference is made to the export product. The fact is Optimum was in trouble because the international coal prices did not perform the way that they had expected. The arrangement of the mine’s coal contract was based on exports supporting Eskom supplies. When coal prices were good, they took the upside. They never shared it with Eskom. When the coal prices went down, they wanted favours from Eskom. All that we did was comply to the coal supply agreement.

Chairperson: Can I correct something? Let me highlight something that I have forgotten. Every Member today will get 30 minutes of interacting with Mr Koko.

Dr Luyenge: Did you ever refuse Pembani’s offer on Optimum to make way for any of the Gupta-related companies?

Mr Koko: No, we did not.

Dr Luyenge: Did you facilitate any contract and payment to Trillian?

Mr Koko: I am on record that I said, “No.”

Dr Luyenge: How do you justify the notion that you lied on TV about that transaction?

Mr Koko: The transaction that we are talking about is with Optimum? We have just seen the video now. What is interesting about this video, is that we talk about them in the same sentence. Here are we today saying, “Eskom, we think that you are wrong to pay Trillian because you did not have a contract with Trillian.” That version is sensible because in Eskom terms, when you pay a supplier, the invoice must be backed up by goods received and goods received must be backed up by an order number. We call it a three-way mission. So, when I get an invoice, I see was the work done and if it’s goods, I see the receipt for goods received and then I tick, tick, tick. I could not have done that with Optimum, so it was going to be wrong and it was going to be irregular, so I did not lie.

Dr Luyenge: Let’s get into the pre-payment itself. Tegeta did not own any mine at the time, so how did you then allow or participate in a situation whereby you want coal that will be sourced from a mine and then you are giving a loan to a company that is not in possession of a mine. What was the idea behind that?

Mr Koko: You will recall that Tegeta used to own Brakfontein mine. The contract with Brakfontein mine was R3.7 billion that was awarded on 10 March 2015. The following day I was suspended. I think, they disposed of it to Shiva in February 2016. They beneficiated coal, even after they disposed of Brakfontein and the Eskom policy on coal procurement is that you don’t sell to a middleman. You don’t sell to someone who buys coal and sells. You sell to someone who mines it, and if he doesn’t mine it, he must beneficiate it. In other words, he must either to and wash. That is why you see on the mandate of 2008, there is a prepayment approved for 2008 and R200 million. It was to pay suppliers for the washing plant, the beneficiated plant. So, it is perfectly normal. Ms Daniels testified in this Committee that it was perfectly normal for Eskom to do that transaction with Tegeta.

Dr Luyenge: You alleged that, or have an assumption or a belief that, Mr Tsotsi suspended you for a reason that you know. What you think the reason behind that suspension is, if it was unjustifiable by Mr Tsotsi?

Mr Koko: In my affidavit, Mr Tsotsi approached me around June 2014. He said that there are suppliers selling transformers. They have manufactured transformers that they want to sell. He asked, “Can we take them?” I said, “Mr Tsotsi, we cannot do that. There is no commercial process in Eskom that will allow me to do that.” He went away. He went to my junior, Mr Sekhasimbe and said that he had asked Mr Koko to do it and he will not. “You must do it. “Mr Sekhasimbe wrote a letter and Mr Tsotsi signed it. The next thing I got was a letter from the supplier saying that my Chairman had agreed and that I must pay it. I told him, “My chairman had no authority to do what he had done, so I am not going to pay you. Mr Tsotsi came back to me and told me that I had to do it. I said, “Mr Tsotsi I can’t do that.” He goes to the CEO. The CEO comes to me. I tell him, “We can’t do that. It’s wrong.” I come back to the GM and tell him that I can’t do anything with the Chairman - he does not report to me. The matter is now at my Group Executive and he will deal with the Board, but I am going to suspend you. I suspended him. I put him through a process with an external chairman. He was fired. The CEO of Eskom came to me and said, “Mr Koko, you’re making a problem for me, because I have an instruction from the Chairman that you must unsuspend Mr Sekhasimbe or both of us are going to be suspended. I said, “But, chief, I have kept you in the loop. You know why I did what I did. I will not do it.” That was on Thursday. On Sunday, I got a call from the Chief Executive’s assistant. He said, “What’s happening? I believe that there is an urgent board meeting on Monday to suspend you and the chief.” I said,” I don’t know, but I heard something similar from the chief.” On Monday I walked into the office. I went to the chief. The PA said that the chief was not there, but he was at the Board meeting. “Mr Koko, I think it is about you and the chief.” I left the office and that was when I called Ms Daniels. We were not suspended on Monday. The Minister came on Wednesday at 11:00. At 7:45 pm, I was suspended, and the reason given was basically that I was sabotaging the power system. And I knew that that was not reasonable. I heard a version of Nkandla on TV when I was watching. That was the first time I had heard the Nkandla version. It was no coincidence that once we were ushered out by the security because we were criminals sabotaging Eskom, the Chairman says, “Unsuspend Sekhasimbe and make him CEO of Eskom

Dr Luyenge: After you return from suspension, you discovered that Eskom, in terms of the management of contracts, faced stagnation. What is the cause of that in your understanding?

Mr Koko: I am not sure what you mean by stagnation. What I want to point out, which people often don’t realise...

Dr Luyenge: Let me clarify the stagnation that I referred to. There is no movement in terms of that particular aspect, so you made special reference to the management of contracts that you had to deal with on your return.

Mr Koko: What people don’t understand, and it is a very painful moment when you are in the situation which I find myself in, because you can’t talk for yourself. You are on suspension. The conditions of the suspension are that you can’t talk. You see and listen to all the stories being said about you and you can’t defend yourself. South Africans do not know that Optimum went into business rescue when I was on suspension for four months. It started halfway through. I was sitting at home. I had nothing to do with that. The reason that I started with the chronology at the time was to make this committee aware: “Ek was nie daar nie.” The part that I am telling this Committee comes out of my knowledge of reading the documents, interacting with the documents and making sense of the documents. The McKinsey contract was approved on 6 July: the famous contract that I was supposed to have been involved with. 6 July, I was at home. I was on suspension I’d already been on suspension for three months when it was approved. I was at home on suspension and I cannot speak for myself and it hurts.

Dr Luyenge: Mr Koko, the former Group Chief Executive Officer, Mr Brian Molefe, in his response dated 30 August 2016, stated that, “At the outset, it must be recorded that Eskom had managed and continued to manage its coal supplies from Tegeta and other coal suppliers, prudently and within the framework provided in terms of the Coal Supply Agreements. Eskom shall take such necessary steps against those who breach the terms of such coal supply agreements and expose Eskom to risk.” (Annexure K) What’s your view?

Mr Koko: That is correct. Since 2008, the coal price for Eskom has increased by average 18%. If you look at the report of Moody of 5 December 2016 and the 20 September 2016. They said that primary energy costs were the single biggest risk to South Africa. 18% annual increase is out of line. In 2016, the increase was 2%. We played hardball. We took painful decisions. 2% compared to18%. We cancelled contracts. We delivered. There is a company called Just Coal. There is a narrative, I mean you heard it on the video, that we cancelled Just Coal so that we created a shortfall at Arnot so that we could bring in the Guptas, Tegeta. The matter is before the courts. We will deal with that in court and I put it to this Committee that this version that Just Coal is linked to Optimum will not see the light of day in court.

Dr Luyenge: What do you say when I put it to you that Eskom had an obligation or should have known or been aware when responding to the CEO on the 30 August 2016 that Eskom allowed the coal supply agreement to commence, before the supplier had completed and reported his successful combustion tests, and to supply coal to much of our power stations. This irregularity was reported in a PriceWaterhouseCoopers report dated 10 November 2015. What is your response?

Mr Koko: I am aware of that report. You will notice that there are two PwC reports and that we presented both to SCOPA on 30 May 2016. I say “we” but, in fact, it was Eskom as I was on suspension. When those contracts were done, again it’s one of those that I had nothing to do with and as such I don’t know about them, but what I can tell you is that the coal that goes to Majuba today, is compliant. That is all what I can tell you. What happened in 2014/2015, I cannot tell as I was not there. But in my time, up until I was suspended, we have never delivered coal to Majuba that was non-compliant. On 31st August 2015, I suspended the contract of Tegeta because there were complaints (and I think it’s in the PwC report) that 50% of the coal delivered was out of spec. My immediate response, not knowing what the truth is, is to suspend. I told them that I was suspending the contract because I had had complaints and I told them I would work with them and my team. We said we would take samples to the National laboratory. So, we took three samples, we prepared them, and we sent them to the National laboratory. On 6 September, I unsuspended Tegeta to supply coal to Majuba on the basis of the results of the SABS. I suspended the laboratory and the four technicians that were working on it.

Dr Luyenge: I also want to put it before you that Eskom also failed to enforce clause 22.10 of the Coal Supply Agreement which required drainage tests to be conducted by not later than 30 days after the first delivery of contract coal. The minutes on the monthly technical liaison meeting dated 13 May 2015 indicated that drainage tests were not done were not done as required by the Coal Supply Agreement. That failure continues to include enforcement of clause 22.2 read together with clause 20.8.1.1 of the Coal Supply Agreement which requires the supplier to have acceptable auto mechanical sampling equipment for sampling of coal. The minutes of the monthly technical liaison meeting dated 10 February 2016, indicates that Tegeta Exploration and Resources was advised to write a letter to Eskom stating grievances for failing to install the autosampler by 1 July 2015 and to provide a date by when it would be installed. The fact that you were not there, in the name of collective leadership, it is from the inception date of you doing your work where you are employed that you are responsible for what you found there. You have a responsibility also of going back and redressing the imbalances of your previous officials who were there in terms of that and aligning that with your strategy to deal with the future plans in the organisation. So, it is not fair to say you are not going to be responsible for something that happened when you were not there. You cannot say that because we only got into power in1994, then we are not responsible for the problems that existed. Now we are here, we have a clear obligation to address such problems. We can’t cry foul and blame previous regimes that were there.

Mr Koko: Hon Luyenge, you have not asked a question but let me say this. The PWC Report that you are quoting from, and there are two of them, both were commissioned by the CFO, after consultation with me. Both the PWC Reports were internal assurance reports commissioned by the CFO, with my support. The reason we did that is because we wanted to solve the problems. If you look at the second PwC report, what it does, it takes what you are reading and gives them and then the second one says when they are done. So, we went to SCOPA – both the CFO and myself were not there so we called PWC and said we have reason to believe that things are not “lekker” there. Please go and check. They went to check for us. They bought the report that you quoted from and in that report, there is a management response for the primary energy team and they confirmed that they accepted it. We went to fix it and then we went to SCOPA and said, “This is what happened. We went to look for it and we fixed it.” We volunteered that report that you are reading from to National Treasury. We volunteered it to them because we were transparent and had nothing to hide. The unfortunate part is that it has come back to us as a stick, as if we were not proactive.

Dr Luyenge: When suspending coal from Brakfontein Colliery, Eskom allowed the Coal Supply Agreement to commence before the supplier had completed and reported a successful combustion test for coal supply to Majuba. But then, in your response, I would appreciate if you can include your immediate response to this because that obligation of knowing remains upon you.

Mr Koko: I am not sure how I ought to have known that the contract was not concluded properly because that information was for the Contracts Manager and it is a detail that is a bit distant from me. But once I knew, that the coal quality is presumed not to be compliant, I immediately acted and corrected the situation.

Dr Luyenge: The special Board Tender Committee did not approve the deviation to conclude new contracts with various suppliers but approved the extension of 15 short-term Coal Supply Agreements. Right?

Mr Koko: Hon Luyenge, I am lost. I am not sure which contracts you are talking about.

Dr Luyenge: Mr Koko, I am referring to the special Board Tender Committee that resolved that the Chief Financial Officer had to authorise and approve the basis for the prepayments to secure the fixed coal price for the period of extension, provided that there is a discount in the price and the CFO can provide assurance to the Committee that the transactions are economically viable.

Mr Koko: That is the meeting of 11 April 2016 and there were only two transactions there: Umsimbithi and Tegeta. And they were both approved.

Dr Luyenge: Do you agree with me when I say, also in that meeting, it transpired that there was no evidence that the Chief Financial Officer submitted any assurance or report to the Board Tender Committee assuring the committee that the transactions were economically viable. Do you agree with me?

Mr Koko: I…I am really unsure. We wanted coal. One of the suppliers requested pre-payment. We knew that the issue of security was very important. We delegated it to the authority that is competent. The Board delegated it to him as a competent authority to make sure that the securities that are in place are sound. I got an assurance from our Head of Legal that all was in order and I signed the contract on that basis.

Dr Luyenge: The last one relates to the due diligence that was supposed to be done by the CFO. I believe that today’s difference between the 11th and the 13th was not enough. Can you indicate whether that due diligence was actually done by the CFO, and I will rest my case?

Mr Koko: I trusted that the CFO and our Head of Legal had done their jobs and had applied their mines. I had no reason to doubt them. I still don’t doubt have a reason to doubt them. I have noticed the questions that have been raised about the shares and other things. I have no comment. But I don’t doubt that there are the authorised people and competence people and I don’t doubt that they have done their job.

Ms Mazzone: Mr Koko, have you read the ex-Public Protector Thuli Madonsela’s State of Capture Report?

Mr Koko: No.

Ms Mazzone: let me put it in a nutshell for you. Basically, how it goes is that state capture isn’t imaginary, it exists, it is the real thing and in the state capture, what there is, is a - for lack of a better word - a monster and the parasites are feeding this monster and what they do is take money from state-owned entities or government departments, so, in other words, they take money from the poorest of the poor and they pump money into those who are already rich and simply getting richer. Now in state capture, one of the companies that features predominantly, is Eskom and it features predominantly because if one looks at the three major state owned entities, you have Eskom, Transnet and Denel. If you were going to loot Transnet, the cleverest way would be to ensure that locomotives deals went to the right people. And if you’re going to cause chaos in Denel, you would make sure that arms deals went through post box companies and maybe kickbacks in the procurement of arms. But Eskom was a tough one and when it came to Eskom, it was all about the coal. Who got the black gold? And coal features heavily in state capture, and it is one of the predominant features of state capture and that is why this Committee is asking you so many questions about coal and we asked them to you because you are one of the experts in coal. You were the Group Executive for Generation, you were the Group CEO and just as of last week, you are still Group Executive for Generation. I don’t claim in any way shape or form to be an expert in coal but what I can tell you is that me and my colleagues on this Committee have been schooled, and schooled very well, by people who are experts in coal and they have told us what to look out for and even as someone who has absolutely no engineering or geological background of any form, I now understand a lot more about coal than I should. And certain things still don’t make sense to me. Now, the biggest issue I have with Tegeta is this. I simply do not understand why it was necessary for Tegeta to have a prepayment. A company like Eskom pays out millions of Rand. In fact, in a year, billions of Rand. It could afford the coal payments; it had government guarantees; it could have issued a guarantee on the coal. And I don’t understand why this prepayment was necessary, if not for the obvious conclusion of having to assist the Guptas in buying the mine. And that is my conclusion and the conclusion of many South Africans and the conclusion of many experts, and I would like an answer from you as to why I shouldn’t come to this conclusion.

Mr Koko: I don’t think that you should and if you do, you should do it for the R3.5 billion of prepayments that was done in 2016.

Ms Mazzone: Let me stop you there because we are pressed for time. Please don’t think that I am being rude. We need to move fast here. I don’t think that you should be paid for any of the coal. What I do want to know is this: have you received the coal, have we got waybills for the coal, where is the coal now, has it been invoiced and is it being stored?

Mr Koko: By July 2016, we had received every single ton of coal that we pre-paid for.

Ms Mazzone: And that is an absolute guarantee?

Mr Koko: Every single ton of it. We had it audited and I listened to the CFO yesterday and he referred to the independent audit that reassured him that every single ton of coal was received

Ms Mazzone: Now, you see, it is very difficult to trust everything that comes from Mr Singh because last night Mr Singh forgot many things, he couldn’t remember places he had been to, he couldn’t remember meetings he had attended, he couldn’t remember documents he had signed. So that’s why I am not going to test your testimony against Mr Singh’s testimony. Because I will be quite frank about it, and I said it last night. I said to Mr Singh, I asked him a question and he said, Well, I think you should ask Mr Koko” and I said, “I am sure Mr Koko is going to refer me back to you.” It was like a badminton match going on between the two of you. So, what I want to know is this: why put yourself in a precarious financial situation? If I want to purchase something from you, you should be hungry for my business. You should be hungry to provide me with this commodity that I need. I shouldn’t have to beg you for a commodity. We see now how we have mines fighting each other to provide Eskom. How did we allow this initial situation of prepayment to arise?

Mr Koko: Hon Mazzone, two things. At best, on the CFO, at best I can present to you the independent audit report that I referred to. It is an Eskom document. It is not the CFO’s document. That shows that the coal was delivered. That’s the best that I can do. The second thing, in answer to your question, is that when we do a pre-payment, we do a business case, and we do a value add. In fact, in the submission on the R1.68 billion, you will see the calculations of the value-add. We don’t have a blanket statement that says that we must do it, but when we do it, it must have value-added and must be tested.

Ms Mazzone: OK. Does that mean that in the meeting of 11 April 2016, when the BTC sat in the evening, that is what you were doing that night? Were you negotiating the best possible deal that we could get from Tegeta?

Mr Koko: On 11 April 2016, the executives were persuading the Board that it is the best thing to do because, as part of the emergency that was declared on 23 December 2015 and we do that as part of our winter plan, and we wanted to avoid load shedding at all costs.

Ms Mazzone: I buy that. I buy that is what you were doing. Here is my concern. A letter from Tegeta was made publicly available. It is in the public space. It was emailed to Eskom in the morning to Ms Ayanda (Nteta) where she says, “Following the completion of our negotiations…” and she continues to list all the points that were negotiated, and she says, “We are now ready, at your request, to start giving over the product.” But the meeting to do the negotiations, only happened on the evening of the 11th. Now that worries me because it means that somewhere, somehow, someone was negotiating without all of you knowing about. Who could have been negotiating on your behalf?

Mr Koko: Well, Ms Nteta leads our procurement division. She presented a document that had form and structure and the numbers. When she came to us, she said, “This supplier needs a prepayment.” Read in there that she could only have known after talking to them.

Ms Mazzone: By the time, it came to you in the evening, it was basically a fait accompli.

Mr Koko: I’m not sure what it means “a fait accompli” because the Board Tender Committee is the decision maker. The Board Tender Committee could have listened to us and said, “No” and we would walk away with a “No” answer. It was not a fait accompli. The Board Tender Committee is the decision maker, not us.

Ms Mazzone: This is another problem and it shows what the problem in corporate management in Eskom is. The Board Tender Committee is the decision-making body, not us. But, ultimately, the buck stops with you. So, the Board Tender Committee has to do the right thing, or you get the blame for its. Let me leave that there.

Mr Koko: What was important was that I said that “we persuaded the Board”. I have consistently owned up to this transaction. Advocate Vanara asked many questions on the transaction of 11 April and I said that I own it. I signed it. I owned it.

Ms Mazzone: You signed it; you are owning it. OK. Do you not think that it is concerning for South Africans, given the fact that we know about state capture, we know about the Gupta family, we know about Duduzane Zuma, we know about President Zuma putting pressure on members of the Board? And you say that you have not been pressurised, that’s what you testified, and you are a very rare member of the Board then. Knowing who owned Tegeta, did you not stop and think, perhaps this is something that is going to cause a great deal of uncertainty in the market; it’s going to cause great deal of trouble for the economy of South Africa, and maybe we should look at something such as, “Why these specific names?” Did you not step back and say, “I have an issue with this?”

Mr Koko: I had nothing before me to suggest an element of criminality. I had nothing before me to suggest improper conduct. If I had something to that effect, I would have done exactly what you are asking me.

Ms Mazzone, But, Mr Koko, state capture has been a real, and investigated, and spoken about thing for the last three years. Unless, with respect, you are living in a coal mine, you could not, not have known about state capture. You must have known it was happening. You must have heard people talking about it. You must have heard people saying that Eskom was involved.

Mr Koko: Your reference on State Capture, when you started, was the Public Protector Report. And that happened before April 11, 2016. I am not sure that you would reach the same conclusion when you did not have the benefit of it.

Ms Mazzone: Well, you see Mr Koko, you are right because I am one of the people that asked the Public Protector to investigate state capture because of what I saw going on at Eskom. Let’s leave that at that. I am very jealous that you went on holiday in Bali. That is my favourite place and I enjoy going on holiday in Bali. Very jealous about that. When you came back, you told us that your three daughters went to Doha and your son and your wife and yourself you went to Dubai.

Mr Koko: That’s correct.

Ms Mazzone: Now, this concerns me a little bit because, and in the Gupta leaked emails and in the public domain, and when you have finished tonight, I know that you are very active Twitterati, go and have a look on Twitter. The account for your stay and details of your stay have been made public. And what it does show, is that Mr Ashu Chawla was also in Dubai for that one day with you. He was staying in the hotel with you and the email actually shows that your bookings were done together, and they were done through Sahara Computers and your reservation number was 467415. You arrived on 4 January at 5:55 am and you arrived on Flight EK399. And it shows your departure being 5 January 2016, leaving Dubai to come back to South Africa the same time as Mr Ashu Chawla. I don’t understand. Was this the most unbelievable coincidence? Because why would Mr Chawla be booking your hotel for you? Are you that close that you say to him, “Okay, you’re booking your hotel, don’t you want to book mine as well?” And it goes so far as to have a detailed breakdown of your invoice which shows you had a guest with you and you paid an extra €275 above your room price. So, I have no doubt that your wife was there, because it shows that there was an extra person with you. But why was your booking done by Sahara?

Mr Koko: I can tell you that I did not meet Chawla in Dubai; he did not book for me, we did the bookings. You have a chance. Contact the hotel.

Ms Mazzone: I have contacted the hotel. I have got the email from the hotel on the Oberoi letterhead. That is one of the things. The reservation from the hotel. Well when you go on Twitter later, we’ll have a look. To the point, Mr Koko, I even know your chauffeur’s name, who fetched you from the airport and took you to the hotel, was Mr Mehboob.

Mr Koko: I don’t understand. I would like to see it.

Ms Mazzone: These things are incredibly painful for South Africans to see because it creates a massive conspiracy right under our noses and I think it is important that you understand why there is this massive, massive concern. Mr Koko, your email address is Mashela2010@yahoo.co.za Is that your email address? Not your Eskom address, your personal address?

Mr Koko: Mashela2010@yahoo.co.za was my email address which was discontinued by Yahoo and the reason given was that there was an illegal or unauthorised hit on it. It was discontinued. Later it became active and then it was discontinued again. So.

Ms Mazzone: Let me tell you, when it was active, a few interesting, maybe disturbing, things happened. On 4 November 2015 at 22:39, an email left Mashela2010@yahoo.co.za and it went to the DG of Public Enterprises who had a private email address, an infopol email address, and it said, “Please give to the boss. The fight begins.” And that email was then forwarded from the DG of Public Enterprises to wdrsa@gmail.com and Ashu Chawla. So now we know who Ashu Chawla is from Sahara, but who is this wdrsa? We have now found out that it is actually Rajesh Gupta, otherwise known as Tony Gupta. That concerns me tremendously because who are we calling “the boss” and what fight is on? And these are in the public domain. They are everywhere at the moment: on Twitter, on the Gupta leaks, on media - they are everywhere.

Mr Koko: I have never sent an email to the DG David Seleke. I have never done that.

Ms Mazzone: Did you ever send an email, perhaps, to someone called “businessman”?

Mr Koko: Not at all.

Ms Mazzone: Because that is the alias used for Mr Seleke him on his email. You know how my email, when I send it to you it says, “Tasha”. His comes up as “businessman”, so maybe “businessman” rings a bell. So, these emails that have come from your email address, or are you thinking that these were created to put you in a bad light?

Mr Koko: I have heard many versions about those emails and I think that there is a way to verify them, and they must be verified.

Ms Mazzone: I think, in actual fact, that is exactly what is happening even as we speak because I was very honest with Mr Singh last night and I’m going to be very honest with you. I PAIA’d these documents to be forensically audited because I think we need to know for sure that these are legitimate email addresses and as the Public Enterprises Committee, we certainly do need to know that. In 2015, you were in Dubai in December. We know this to be fact. Mr Singh was also in Dubai.

Mr Koko: 2015, I was not in Dubai.

Ms Mazzone: So, when I get the PAIA’d documents from Home Affairs as to who entered and exited the country...

Mr Koko: I will give you my passport. You don’t need to go to Home Affairs.

Ms Mazzone: No, I am going to go to Home Affairs because, you know, passports are easily duplicated. I need to know from Home Affairs.

Mr Koko: I was not in Dubai.

Ms Mazzone: So, let me tell you what is alleged. It is alleged that Minister Zwane joined the Guptas in Switzerland for the sale of Glencore Optimum Mine to Tegeta. Other Gupta allies were, in the meantime, in Dubai at the Gupta’s expense, including Mr Matshela Koko and Mr Singh.

Mr Koko: I was not in Dubai in 2015. You just mentioned, and I confirmed, that I was in Dubai in 3 to 5 January 2016.

Ms Mazzone: Perhaps the dating here is wrong because there is a block where it goes 2015 to 2016. Perhaps the block is wrong.

Mr Koko: That is why we have to look at the document that you have.

Ms Mazzone: Right. Fair enough. So, when you were there, did you see Mr Singh, by any chance?

Mr Koko: Not at all.

Ms Mazzone: Not at all. So maybe they are right. Dubai has become the heart of the world and we fly in and out of Dubai all the time and we miss each other even though we are in the same hotel. Now, the Carte Blanche issue is worrying me. It is worrying me for various reasons. The biggest reason is this: I did not hear Ms Devi Sankaree Govender once refer to Oakbay when she said to you the pre-payment was made to Oakbay. She said that the prepayment was done to Tegeta.

Mr Koko: She did not say that.

Ms Mazzone: Well, I’ve just got the transcript from Carte Blanche and even the transcript says Tegeta.

Mr Koko: We just listened to it. She asked me three times. That is why I asked for it to be played.

Ms Mazzone: Let’s say, for example, she said Oakbay, sorry Optimum. I have in front of me the front page of the Coal Supply Agreement and it states as follows: Coal Supply Agreement in respect for coal from Optimum Colliery entered into by Eskom Holding and Tegeta Exploration.

Mr Koko: I need to see that. We have no contract with Optimum.

Ms Mazzone: So, where do these documents come from? Who is creating these documents?

Mr Koko: I have read for you the affidavit of Piers Marsden. He says, “We confirm that the prepayment was not made to OCM (Optimum Coal Mine).” In this Committee, Piers Marsden said, “We were in control of Optimum Coal Mine. Optimum Mine did not receive the R568 million.” I agree with that version.

Ms Mazzone: I don’t agree with that version because I have a document in front of me that says: Coal Supply Agreement in respect for coal from Optimum Colliery entered into by Eskom Holding and Tegeta Exploration and Resources. So, we are going to have to agree to disagree on this because we are clearly looking at two different documents and I’ve got to tell you that I think I trust my source more than I trust your source.

Mr Koko: Unless you are saying that the business practitioner lied. I do not believe that he did. He did not lie. He told this Committee the truth.

Ms Mazzone: So why would this contract even be in existence? Would someone purposefully go to Eskom and type up a document just for the sake of causing trouble?

Mr Koko: So, you see I did the document for the Board for the pre-payment. I know what I submitted. The document that I submitted say, “Prepay Tegeta.”

Ms Mazzone: Mr Koko, I am going to be personal. I am happy to tell you mine if you tell me yours. What is fair is fair. How much do you earn from Eskom?

Mr Koko: R3.5 million.

Ms Mazzone: And you have been on special leave and suspension for some time now. Have you been paid during that period?

Mr Koko: Yes. I was suspended without privileges.

Ms Mazzone: Suspended without privileges, but you still got your salary. Who pays your legal accounts?

Mr Koko: I do.

Ms Mazzone: They must be amounting to a lot of money by now?

Mr Koko: They are not cheap.

Ms Mazzone: We are all in the wrong field. Mr Koko, have you ever appointed a legal firm to represent you in your personal capacity who has also been appointed by Eskom to represent you in a disciplinary hearing?

Mr Koko: Come again.

Ms Mazzone: Mr Koko, have you ever appointed a legal firm to represent you in your personal capacity who has also been appointed by Eskom to either investigate you or to run a disciplinary hearing against you?

Mr Koko: No. You are referring to CDH?

Ms Mazzone: I am not referring to anyone in particular. No? Never. Mr Koko, you go on holiday with your family. That means that you are family man. I am a family girl too. I go on holiday with my family and certainly when we are on holiday, we discussed dreams, aspirations, where we want to be in 10 years. And I think we have a lot in common. I found out you have a stepdaughter and I have a stepdaughter, and I know what she is going to study next year …

Mr Koko: I have three stepdaughters.

Ms Mazzone: How many? Three stepdaughters. Good luck! One of your stepdaughters gets involved with the company and gets a massive contract from Eskom. Massive. It is obscene. Are you really telling the South African public that we must believe that you didn’t know that she was involved?

Mr Koko: When I was disciplined, and Tiso Blackstar went to court to insist that the media be allowed in the press be allowed, I was advised, and took the advice, to allow the media to come in, to allow the press to come in and let them report and the reason that I did that was because I expected questions like you are posing. I wrote a letter to BLSA and I wrote a letter to Nomsa. I said stop saying that my hearing was a sham because if you do …

Ms Mazzone: I also said your hearing was a sham.

Mr Koko: If you do, I am happy to make the documents available to you, and if you are still unhappy, take it for review. I think it is fair. If you think what I said under oath and in evidence is unbelievable and the outcome should have been different, I think it is only fair that you take it for review.

Ms Mazzone: Then I am very glad that I did take it on review. I like it when we have a common understanding and that is exactly why I did go and lodge charges because of that.

Mr Koko: You laid charges. You didn’t take it for review.

Ms Mazzone: Well, laid charges. I think that is a little bit more serious.

Mr Koko: Those are two different things.

Ms Mazzone: Mr Koko, our time is up but I do want to say this: we had Mr Singh here was last night and he was a technical genius. Absolute genius. And you have come here tonight, and I think that you’re not taking responsibility for a lot of things that have gone wrong. And, it reminds me a little bit of a children’s program on TV called “Pinky and the Brain” and they are two characters who seriously try and take over the world and when they don’t get it right, the one blames the other. But I would like to say that you need to go and watch the evidence given by Mr Singh last night very seriously because you were thrown under the bus in a very big way. The Buddha once taught that ego is like dust in the eye. Without clearing the dust, you can’t see anything clearly so clear the ego and the world becomes clear in front of you. Mr Koko, I put it to you that that you are trying to create the illusion to this Committee that you are the new liberation hero against state capture. I do not think that you did a good job and I am brave enough to say it to you here, and here I am under privilege, but I will say it to you outside where I am not under privilege. I don’t think you managed Eskom out of the state of emergency as you said. I have actually got to the point where I think that load shedding could possibly have been a created illusion, which was the first enabler of state capture. So, when you leave here tonight, I want you to know that you have not pulled the wool over the eyes of this Committee and we are still continuing to interrogate every piece of document that comes into us and there are serious problems at Eskom which you should own up to and I strongly advise you to do what your colleagues did, the right thing, and resign. No further questions, Chair.

Mr M Gungubele (ANC): Good evening, Mr Koko. The great philosophers would say that you are entitled to your opinion but not your facts.

Mr Koko: You are entitled to your opinion, but you can’t have it dispute of facts.

Mr Gungubele: Exactly. You are entitled to your opinion but not your facts. My late brother would have said, “You can’t change facts, you can only learn.” However, I hope, for the first time in this interview I am not going to be as long as notoriously I am. What role did you play in the R1.6 billion of December 2015?

Mr Koko: I took my Committee through my interactions with the business rescue practitioners around the 1st, 2nd and 4th December 2015.

Mr Gungubele: Can you share what came out of those meetings?

Mr Koko: I said to the Committee that on or around 2 December, I was advised by the business rescue practitioners and a representative of Optimum, and you see in my submission I say at least one of them, but I don’t recall who it was, CFO or the Director, and they said we are taking Optimum out of business rescue. We will meet your 2018 end of contract and will deliver at R150 per ton. Now that is what we had been looking for and it was quite exciting, until I received the letter from the lawyers of the business rescue practitioners and in that letter, they are saying: “You are not guaranteed coal beyond 31 January 2016. That is different to what I was told. On 4 December 2015, which was a Friday, the business rescue practitioners published a status report. In that status report…

Mr Gungubele: How did they publish it?

Mr Koko: It came to me via the email, so I don’t know how they published it. I received it via the email, in fact.

Mr Gungubele: What makes you reach the conclusion that it had been published when you got it through your email?

Mr Koko: It was not the first report of that type and I have never queried it. It corresponded with the letter from the business practitioners’ lawyers - that coal is only guaranteed up until the 31st January.

Mr Gungubele: Didn’t you meet Glencore and the business practitioners on the 1 December 2015?

Mr Koko: That is why I said on or around the 2nd.

Mr Gungubele: I’m being specific.

Mr Koko: Well, I don’t recall. If I knew it, I would have said the exact date.

Mr Gungubele: Is it correct that three things emerged in that meeting? 1) That they would pursue the contract to the end and extension is at your discretion. Do you agree with that? Is that an understanding of one of the things of that meeting?

Mr Koko: No, the extension of Koornfontein …

Mr Gungubele: Yes, the extension of Koornfontein was at your discretion.

Mr Koko: The extension of Koornfontein, not Optimum.

Mr Gungubele: Was at your discretion?

Mr Koko: Correct.

Mr Gungubele: You were meeting the business rescue, not so?

Mr Koko: The business rescue with Optimum.

Mr Gungubele: However, Koornfontein was one of their mines, is that correct?

Mr Koko: Koornfontein is part of Optimum Holdings.

Mr Gungubele: There was an agreement there.

Mr Koko: There was an agreement that had expired.

Mr Gungubele: There was an understanding that they would no longer pursue the extension of the contract. Am I correct?

Mr Koko: Which contract?

Mr Gungubele: Koornfontein.

Mr Koko: No.

Mr Gungubele: There was no such understanding?

Mr Koko: No. They wanted it.

Mr Gungubele: But in that meeting of 1 December 2015? Anyway, there’s no disagreement with what you have said just now. Because you said that they would pursue their contract until 2018. They were not asking for an extension.

Mr Koko: Yes.

Mr Gungubele: So, there was no material difference between the two. So, we are saying the same thing. That’s fine. 2) they are no longer pursuing the wavering of the penalty. Is that correct?

Mr Koko: No, they will follow the contract resolution.

Mr Gungubele: They will no longer ask you, as Eskom, to waiver. They will follow the normal process.

Mr Koko: Yes, the normal contract resolving dispute process.

Mr Gungubele: They will supply the coal at R150 per ton.

Mr Koko: Yes.

Mr Gungubele: Those three elements, did they constitute an understanding between parties in that meeting?

Mr Koko: We had an understanding as parties and let me say again, as you are rephrasing it and I’m not sure about that. It is quite simple.

Mr Gungubele: I am not worried about your words. What is key is if we are saying the same things. You may use different words, but what is key in communication is that we are saying the same thing. So, let’s not worry about whose phrasing, unless I’m saying something different. I am saying that the three things that we agree upon are the three things that emerged in that meeting.

Mr Koko: Well, I am struggling. I want to make sure that I say it, so it is correct, and it is, indeed, what I understand.

Mr Gungubele: Let me repeat because you’re eating up my time. I am saying that in that meeting… Remember, the penalty was the problem before that meeting. Am I correct?

Mr Koko: Yes.

Mr Gungubele: But, in that meeting, you said you are no longer going to - forget the language that I am using – they would follow the normal process, whatever you call it. That is one. They would supply coal at R150 per ton. Which we were happy about. Is that correct? They would pursue the contract until its normal period. Is that correct?

Mr Koko: That is correct.

Mr Gungubele: And, I am saying that those three things constituted an understanding that was acceptable between yourselves at that meeting. That is what I am asking.

Mr Koko: Yes.

Mr Gungubele: After that, on the basis of the letter that you wrote to DMR (Department of Mineral and Resources) calling for intervention…

Mr Koko: Because the lawyer’s letter, representing the business rescue practitioners, and their status report say the same thing that is different to the three things that you have listed. Then it was a crisis for us.

Mr Gungubele: Why don’t you refer to that letter that you wrote to DMR?

Mr Koko: I have no reason to do that. I don’t know why you say that.

Mr Gungubele: You are saying the reason, after this good understanding, that made you to write this letter to DR was because of the lawyer’s letter. Now I am asking a simple question. Why are you not referring to it in the letter that you are writing to DMR?

Mr Koko: The DMR letter says that we would not have coal by the end of January, which is what the lawyer’s letter says.

Mr Gungubele requested Ms Mazzone to read a letter from Mr Koko to DMR on his behalf as it strained his eyes. Ms Mazzone read the letter (MMK 20 page 62 in the Annexures).

Mr Koko: That is the point I am saying. The two letters say that they would not have coal by the end of January.

Mr Gungubele: Where do you get that?

Mr Koko: I am basing it on the two letters I referred to.

Mr Gungubele: The letters? All that you are saying here is that this contract ends at the end of January 2016. It is here you can read it. You are not referring to a letter that comes from the lawyers of Glencore, or whatever. All that you are saying is that the contract ends in January 2016. That is the point I am making. That you’re not referring to the letter. Put it this way. You had a session with them. You are saying all of the positive things about it and now, out of the blue you are saying that the contract ends in January 2016. Look at it this way. You are telling the DMR about the good meeting that you had. Somewhere towards the end you are saying that the contract ends in January 2016. You are not saying why. Because what you’re saying is not articulated in this letter. So, can you explain?

Mr Koko: Well, it communicates exactly what I want to communicate.

Mr Gungubele: It undermines the position. If you say you had this good meeting with Optimum and Glencore, and you are praising the suitability of the coal, and the turnaround which seems to make you happy and now you’re worried that the contract ends. Remember that, in a meeting with you, they agreed to pursue the contract until 2018. Am I correct?

Mr Koko: Yes.

Mr Gungubele: Now, you’re saying in the letter that this contract is going to end in January 2016. Sorry, don’t you think I would ask you, if you were writing this letter to me, on what do you base this? Is that not the first question? This letter is coming from you to act on it as DMR. Having got the story, I am reading here that it says end of January 2016, but you said they had agreed with you. The sentence is a loophole, which seems not to be connected to anything in your letter. Do you understand what I’m saying? It doesn’t connect with any context.

Mr Koko: It is correct that we did not have guarantees beyond January 2016. It is correct. It is a fact.

Mr Gungubele: Mr Koko, you say that you met with these guys on 1 December 2015 and they said that they were going to pursue the contract until 2018. What you are articulating, based on your interaction, the outcome of your interaction with them is that the contract is going to be pursued until 2018. Now, this 2016 in this letter, it is not articulated that it is out of a particular interaction. Don’t you think it bears clarification?

Mr Koko: I am sure DMR may have asked that. But all that I am saying…

Mr Gungubele: No. You are an intelligent man. If you received this letter with this kind of story, how would you understand that sentence in this letter?

Mr Koko: If I had received the letter, I would ask. The difference this time is that I am communicating it.

Mr Gungubele: I am not asking what you’re communicating. I am saying that if you were to receive this letter as a reasonable recipient of this letter, wouldn’t you ask where the sentence comes from in the context in the letter.

Mr Koko: Hon Gungubele, you have one state-owned company communicating with another organ of state.

Mr Gungubele: I am asking a simple question. Let’s not argue this. I am saying if you were the recipient of this letter, with this context and you have this sentence which seems not to be attached to anything, looking at the context of this letter, would you not have asked where it comes from? I am asking the question. Say no if you are saying no.

Mr Koko: No, I can’t say that. I need to …

Mr Gungubele: Would you ask this question?

Mr Koko: If a sentence comes from an authorised person, I would not question it.

Mr Gungubele: Wouldn’t it be funny?

Mr Koko: If a sentence comes from an authorised person, I would not question it.

Mr Gungubele: So, anything that comes from an authorised person, you would not question it? That is senseless.

Mr Koko: Hon Gungubele, it is not senseless.

Mr Gungubele: I put it to you that in the context of this letter, that sentence has no basis. You have a duty when you write to DMR to explain where the sentence comes from. Because everything else except that sentence is reasonably articulated. Everything that is written in this letter has a context. Only the sentence cannot be explained where it comes from. Let’s go on to the letter that comes from DMR so that we can talk about that.

Mr Gungubele read letter from DMR (MK 21 page 64 in the Annexures).

Mr Gungubele: How do you understand this letter? I am sure you read it as it was responding to your letter. What did this letter from DMR mean to you?

Mr Koko: It said that they would do whatever they can, when approached to get the necessary approvals. But because we have said to them, and rightfully so, that we have a security risk crisis, I have suggested in that letter...

Mr Gungubele: Based on the meaningless sentence.

Mr Koko: My sentence is not meaningless.

Mr Gungubele: Mr Koko, let’s not waste time. The guarantee, did it come before or after the letter?

Mr Koko: It came after the letter.

Mr Gungubele: Which led to Optimum Mine been taken over by Tegeta. The point I’m trying to make to you is what is contained in the letter that you write to DMR, does not contain the basis, in my point of view, for the guarantee in December. You disagree?

Mr Koko: I disagree.

Mr Gungubele: If, in terms of this letter, Glencore, with Optimum, said to you, “We will pursue the contract until 2018, we are going to pursue the penalty differently in the normal process of the contract, we are no longer calling for extension of the contract and whatever we are going to offer coal at R150.” Those are the terms. Here, this guarantee that ends up with Tegeta owning Optimum, what are the legitimate grounds that constituted this outcome?

Mr Koko: Hon Gungubele, my letter to DMR clearly says that, as of the date of this letter, I have not received a confirmation in writing from business rescue practitioners that Optimum would be out of business rescue. So, you cannot proceed on the basis...

Mr Gungubele: What is your letter saying?

Mr Koko: That of the date of that letter, 6th I think, we have not received anything in writing from the business rescue practitioners that the business would be out of business rescue. See you cannot proceed on the basis that Optimum is out of business rescue. I asked for it in writing and I did not receive it. You are saying to me, that because they told me …

Mr Gungubele: When you did not receive the letter that you expected, what did you do? Because it is hardly four days from 1 December 2015. What did you do when you didn’t receive it?

Mr Koko: We had constant communication. There was no broken line.

Mr Gungubele: What did the communication say?

Mr Koko: Give me in writing what you told me in the meeting.

Mr Gungubele: Where is the letter of the lawyers of the business rescue practitioners?

Mr Koko: MK 16, page 53 (of the Annexures).

Mr Koko read from the letter: We can now confirm the supply arrangement until January 2016.

Mr Gungubele: Is this not Eskom lawyers? I’m trying to check where this letter comes from.

Mr Koko: It comes from Werksman’s Attorneys, the business practitioners’ attorneys, to Eskom’s lawyers, Cliff Dekker

Mr Gungubele: Okay, we can now read it.

Mr Koko reads from the letter: We can now confirm the supply arrangement until January 2016.

Mr Gungubele: What was your letter dated 27 November saying?

Mr Koko: What is going to happen with the coal supply? Can you guarantee us coal supply question?

Mr Gungubele: Why is that not referred to in this letter?

Mr Koko: That is my point. When we said resolved by the end of December, it is because it would give us certainty till 31st January. It is a statement of fact I just don’t understand

Mr Gungubele: What is questionable … this is my submission, I find it interesting that DMR, in response to you - because none of these things that you are asking for - in response to your letter, they speak about transfer of rights, they speak about prepayment, and lastly, in the letter that you prepared, you speak about the market, having made a proposal. There is a letter by Anoj Singh. In his submission …

The Chairperson interjected to remind Mr Gungubele to conclude his engagement.

Mr Gungubele: On the guarantee in the submission which he prepared, in the S3, which is an attachment from Anoj Singh’s submission, you are there asserting that Marsden made a proposal. We must argue that he never made a prepayment proposal whilst the submission in 2.2.2, from Anoj Singh, seems to suggest that. Lastly, Marsden would argue again in 3.4.2 that your suspensive conditions whose role players are BRP and OCM, have no knowledge of this. Your last comment please.

Mr Koko: I don’t know what you are reading.

Mr Gungubele: You prepared a submission for guarantee. Did you not?

Mr Koko: Yes. So, which document are you reading? You say Marsden?

Mr Gungubele: What did you say about the commitment of BRP (Business Rescue Practice) on the prepayment proposal? What did they say about prepayment?

Mr Koko: I think that you have to lead me through this because I don’t know what you’re saying.

Mr Gungubele: Thank you, Chair. I think I’ll have to leave it there.

Chairperson: Mr Koko, when he has time, will look at the Marsden letter and prepare you an answer.

Mr S Swart (ACDP): Thank you, Mr Koko, for your input. Your statement does help us to gain a better understanding and it does give you an opportunity to address some of the allegations made against you. I would like to deal with a few issues. First of all, is that you seem to have quite a defence of Tegeta and you made a statement that whenever Tegeta is raised, there is something around it. And that is fair enough. There is no problem with that. But, do you accept the Public Protector’s finding that the Eskom Board leaned over backwards to accommodate Tegeta. I am not saying you, necessarily, but when you look at the whole picture now with hindsight, and all the evidence that has been led, what we have been saying, in my view, the conclusion is inescapable that Eskom did lean over backwards to accommodate Tegeta.

Mr Koko: Hon Swart, I hold no brief for Tegeta. I hold no brief for Tegeta. My suggestion was that issues that are supposed to be common cause, that are supposed be straightforward, because it is Tegeta, we tend to lose objectivity. That is all what I meant. I hold no brief for Tegeta.

Mr Swart: Thank you for that and I accept that Glencore and other mines are not angels and that they are in the negotiations teams. They would be tough businessmen, but I want to take you to the commendable action that you took on August 31, 2015 when you suspended the Brakfontein licence because of non-compliance, and if one reads the history you will see that that was the start, or put it that way that the Brakfontein mine was the first Gupta-related company to get involved in the mining industry and what we would say, was the start of the capture of Eskom. There were a lot of concerns about the quality and that’s why they were not getting contracts from the word go. And there was blocking, blocking, blocking. It seems, from documentation, that the pressure was increasing and increasing. Eventually a contract was given. But, again, there was a problem with the standard of the coal that was being produced and you, on the 31st August, suspended that line on the basis of scientific evidence. That suspension lasted until the 5th or 6th of September and I understand that your own experts, or someone, sent the coal to an expert laboratory and then it was suddenly found to be acceptable. Could you explain that process, please? Briefly, I’m sorry I need to be brief because we have quite a lot and I don’t want to be unfair to you or rude to you.

Mr Koko: At the face of it, we had quite a few problems. At the face of it, the complaints were there. We could have ignored the complaints, but I thought it would be unreasonable not to do anything, so I suspended them. I was told that 50% of the stockpiles are not compliant. A serious number. So, we took samples, under supervision, and we sent them to the laboratory. When they returned, they were compliant on sulphur. Now that puts the matter to bed, at least, it in the short term, because it tells me what I’m dealing with.

Mr Swart: Why would you send it to SABS and not your own scientists, your in-house scientists with many years’ experience?

Mr Koko: There was a very valid reason which is embarrassing. Our laboratories, at the time, were not accredited by SANAS.

Mr Swart: But, they had always been used for accreditation of coal? There were used in the past?

Mr Koko: No, sir. Our research laboratory was under refurbishment and was moved to Komati Power Station. It was not accredited.

Mr Swart: But, you still had internal scientists that you were using.

Mr Koko: Well, having scientists and having laboratories are two different things. You accredit a laboratory and the laboratories were not accredited. That is why we went to the national laboratory that is accredited.

Mr Swart: When the complaints came, surely there were scientific reports?

Mr Koko: No. We employ laboratories. We employ external laboratories to do the analysis.

Mr Swart: And those analyses said that the coal was not acceptable?

Mr Koko: Those analyses said that the coal was not acceptable.

Mr Swart: Then you centre to SABS and they sent it back and said it was acceptable. And then you suspended all your internal scientists. Is that correct?

Mr Koko: Four. Not all.

Mr Swart: Well, four. What were their names? Doctor?

Mr Koko: Dr Mark van der Riet and I forget the other names.

Mr Swart: Charlotte Ramavhona, and two others. What was the reason for their suspension?

Mr Koko: Because the samples were obviously wrong.

Mr Swart: But, not necessarily, you see does that not play into the narrative that you were trying to assist, or that someone at Eskom was trying to assist, the Gupta -related company? If you are so convinced that they were wrong, why has no disciplinary action been instituted against them till today?

Mr Koko: I am out of the system. How could I do it?

Mr Swart: That is not a good enough. You suspended them at that stage. Why did you not insist on disciplinary action?

Mr Koko: How do I do it?

Mr Swart: At that stage when you suspended them. Have you enquired at all? You have been in and out of the system.

Mr Koko: At that time, we acted quickly.

Mr Swart: Nothing was done. No charges had been drafted in over two years. People’s careers have been affected by that. Is that not a concern for you?

Mr Koko: Yes, but…

Mr Swart: I am sorry, but it is not acceptable. You are a director, and these are people’s careers that are at stake; people with long-standing careers and new people have been involved and their whole careers have been destroyed and they are sitting at home at the moment. So that is not acceptable. But let us just continue because what I’m trying to explain to you is that there are various role players.

Each one of you facilitated the Guptas taking over contracts and everyone comes and says that they had no role. There is no problem with Tegeta. State capture didn’t exist. But each one if you played a role in facilitating Guptas taking over of large coal contracts at Eskom. So, let us take the document that you showed us about the end of December when suddenly there was this problem at Arnot power station. You yourself conceded that one of the contracts was a 40-year contract coming to an end and you should have considered that there was going to be a supply problem. That was the one contract and we understand that one of the reasons why Eskom did not accept that contract was that it was too costly. R1000. But there was a second Arnot contract. Did you watch last night’s interaction with Mr Anoj Singh?

Mr Koko: I missed that now.

Mr Swart: I raised it with him. The second Arnot contract. The Mafube contract. Are you aware of the Mafube contract?

Mr Koko: I don’t know the details of it, but…

Mr Swart: Let me just help you. It was a joint venture between Exxaro and Anglo-American. It mines coal just north of N12 Highway and supplies coal along a conveyor belt system. So, there are no transport costs to Arnot. Now the Denton Report shows that in July 2015, Mafube produce the cheapest coal on Eskom’s books. Cheaper than the R150 at Hendrina. It was R132 per ton. The cheapest. It had delivered since 2004, 1.18 million tons per year to Arnot. The contract was until the end of 2023. 2023! There is enough coal. 2023. Exxaro’s spokesman, Mzila Mthenjane, says, “The contract did not come to an end. Eskom decided to terminate the Mafube supply agreement.” And this is what I’ve been wondering the whole time. I cannot understand how Tegeta could take over Optimum, which was a loss-making mine at R150 per kilogram per ton to Hendrina. How are they going to turn that around? The only way, the only way was to start sending that coal to Arnot and that you said earlier that you dismissed it as a myth with the Just Coal issue. You said it in litigation, Just Coal, which was another producer to Arnot. Their contract was ended and that’s before the court. But here is another example of coal that was being furnished to Arnot and then was cancelled. The emergency was self-created. Eskom shot themselves in the foot and produced an emergency…

I am sorry, do you want to consult your lawyer? I don’t mind. I am a lawyer myself, so I understand.

But what I am saying to you, is that the scenario is that the emergency was created by Eskom to ensure that the Gupta-related company, Tegeta, could send the Optimum coal, which was supposed to be for Hendrina, to Arnot at a much-increased cost – R420 - and there was now a transport cost. Because what happened the very next day in January, my information is that 30-ton coal trucks were running from Optimum mine to Arnot, 60 km away, when you had Mafube with a conveyor belt system already. 60 km away. So, you had your cost, plus transport costs now. And then, not only that, according to the PwC report, Eskom reduced the required coal quantity to Hendrina. You reduced it, so the whole problem at Hendrina was reduced so that you could use that coal to go to Arnot. Now you will differ from me, I have no doubt that you will differ from me, but that is the evidence that South Africa is looking at. It is undeniable that the Eskom Board lent over backwards to accommodate Tegeta, to obtain Optimum, to obtain the coal contract at Arnot at much higher price, and your Board member Mr Pamensky, was so excited that he sent a letter and he said, “Congratulations! Mazeltov!” to the Gupta -related companies. “We have done it! We have achieved it!” It is a brilliant strategy, but it’s criminal. It is corruption. And so, Mr Koko, it is time. The cards falling. You have been left out totally. The political landscape has changed, and you have no more protection. It’s done. So, your meeting with Ms Daniels at Melrose Arch, where you say you did not meet with Mr Salim Essa. His offices are at Melrose Arch! But my dear friend, your middle name is Moses. There was a banner outside Parliament. It said, “The truth will set you free.” The truth will set you free, and we pleaded yesterday with Mr Anoj Singh to come clean because this is the first inquiry. It is easy. You are going to face a Commission of Inquiry and you are going to face criminal action. You are going to find that possibly Mr Salim Essa himself, as was reported in the City Press, will come to us and say that he met with you that day and that Ms Daniels’ version was correct. So, you understand that I am trying to assist you at this stage because you have been left out. At the moment, you don’t know what your status is. Mr Singh resigned. You have not resigned yet. Are you at work?

Mr Koko: I am at work.

Mr Swart: Did you go to work yesterday?

Mr Koko: No, because I was preparing for this inquiry.

Mr Swart: Did you go to work on Monday?

Mr Koko: No, because I was in Cape Town.

Mr Swart: Did you get leave?

Mr Koko: I am at work. I am in Cape Town at work.

Mr Swart: Did you get permission to be here?

Mr Koko: Yes, I did.

Mr Swart: So, those are the points that I’m trying to assist you with and I made a lengthy input because I do hear what you’re saying, and I accept a lot of your bona fides, but the pressure that has been building up, the pressure is undeniable. Let’s just look at the pre-payment. And I accept what you said about that video, as a lawyer, particularly when you were asked about the payment made to Optimum, but I would have explained immediately that the prepayment was made to Tegeta. That is your answer. Why would you put yourself through that, so everyone says that you lied? And I understand your explanation. It is plausible to me. It is semantics. But when you look at the prepayment, and you said that it had been done in the past, but the letter that was written from the Department of Mineral Resources encouraging you to make the prepayment, that plays into this narrative. Because we know that the Minister was meeting in Switzerland before this whole contract. You are aware that the Minister met with Glencore in Zurich and there was pressure?

Mr Koko: I have read about the Minister in Zurich.

Mr Swart: But that letter. You then write a letter to the Department of Mineral Resources and the Department comes back and says give Tegeta prepayment. You never asked for a prepayment in the letter. Is there any reason why it is not true?

Mr Koko: I have no information to say yea or nay.

Mr Swart: Earlier, you also alluded to the meeting with Mr Gobadi and the previous Minister, Mr Ramatlhodi. Did you refer to that or am I…?

Mr Koko: I referred to a meeting with Mr Molefe and Minister Ramatlhodi.

Mr Swart: And you said it ended with him pleading with Minister Ramatlhodi that the licences should not be suspended. Was that it?

Mr Koko: It was to be unsuspended. They were suspended already.

Mr Swart: The version of Minister Ramatlhodi is that they came to him and said that they must suspend all the licences of Glencore, so we will hear about that. But you don’t have to comment on that. But he was then fired and replaced by Mr Zwane and Mr Zwane is in Switzerland, negotiating the deal, and then we see the letter from the Department, out of nowhere, saying, “Yes, we will do this. One, two, three, four.” The Pubic Protector says that Tegeta was benefited. There is another letter that says Tegeta was benefited. The prepayment was not for capital expenses, for which your 2008 document said you allow prepayments. You refer to that document. But it says for “capital expenses”. You said earlier that you had no idea what the money was going to be used for. It was used to buy a mine. Your Board member, Ms Klein, from the BTC, said, had she known that, she would never have approved it. So, you understand that all the evidence is coming out now. Do you have a response to that?

Mr Koko: You have not asked a question. Honourable Chair, I really want to assist the Committee, but I think that if the Committee wanted to know about Mafube, they should have told me upfront.

Mr Swart: Excuse me. I am sorry, sir, but my time is limited. You cannot hide behind your documents. You see, the strategy that you are using is to file so many documents that we sat for five hours going through your documents and when I raise Mafube, you say no I can’t answer that. That is not acceptable. That is totally unacceptable because you raised it in your documents when you tried to explain the Arnot document and you try to put a spin on it, but you didn’t raise the Mafube issue because it doesn’t suit you to raise it. Is that not so?

Mr Koko: That is not correct. On that I cannot answer because it is not in my …

Mr Swart: I put it to you that it is so. But it doesn’t suit your narrative. Why did you not raise it in your documents?

Mr Koko: Because it is not true that we cancelled Mafube. I cannot put a version that is not true in my documents.

Mr Swart: How can you say it wasn’t true when it is in Exxaro’s Annual Report? It is in the Denton’s Report. Have you read the Denton’s Report?

Mr Koko: I cannot put a version that says we have cancelled Mafube to create a demand at …

Mr Swart: But you did cancel Mafube. Is that not correct?

Mr Koko: The contract at Mafube was cancelled but I don’t know the details of that.

Mr Swart: Why don’t you know the details of that?

Mr Koko: Why do you think that I should know the details?

Mr Swart: Because you have just alluded to the fact that Arnot was in a significant problem that had to be addressed with the coal, and one of the reasons was that the Mafube contract had been cancelled. How could you not know that? How can you not know this?

Mr Koko: I don’t get what you are saying.

Mr Swart: The Mafube contract was cancelled at the same time that the other Exxaro contracts were cancelled, which created a problem of coal supply at Arnot. And it is indicated in the Exxaro Annual Report and it is indicated in the Denton’s Report. Have you read the Denton’s Report?

Mr Koko: Hon Swart, I am just not following you.

Mr Swart: You are not following because it does not suit your version and it does not suit the version of a number of witnesses that are coming to say Tegeta was not benefited. Chairperson, I have no more questions.

Chairperson: Mr Koko, you are coming to account on your work that you have done in Eskom. For you to say that you did not prepare something … some other things will come up because they are part of the work that you are doing in Eskom so, you account on everything, whether it was stipulated in your invitation or not. If it was in your domain, you would have to respond to it, whether it is in your document or not, you will have to respond to it. That is the one thing that I want to raise with you.

Mr M Dlamini (EFF): Do you know, Mr Koko, that the researchers in EFF say, for us to be able to run a proper functional state, we need 5000 highly educated and experienced, of high integrity, black women and men. Now, there are people like Brian Molefe, highly educated and highly experienced; people like yourself highly educated and highly experienced, but you decide when you are given responsibility, you go and do wrong because you want to impress politicians. You messed up your name. This is the real value of the real currency between a man and his soul: his name. And you have messed up your name and embarrassed yourself. This is what happens when you want to impress politicians. And there’s no coming back. But as my commander-in-chief, Julius Malema, said, it is your own baby and you must feed it Maltabella. Tell me, when did the Guptas arrived at Eskom? The Tegeta company, when did they start doing business with Eskom?

Mr Koko: I stand to be corrected but the contract that I know from Tegeta, it’s 11 March 2015.

Mr Dlamini: How did they get the contract? Was it a bird? Was it a tender? How did it happen?

Mr Koko: At that time in Eskom, we were not on competitive bidding.

Mr Dlamini: But how did they get the contract? Did they just write to Eskom? Take me through the process. How did they get it?

Mr Koko: There were negotiations that, as far as I can remember, dates back as far as 2014.

Mr Dlamini: Between who? Were you part of those negotiations?

Mr Koko: No, I was not involved.

Mr Dlamini: When they entered the Eskom system, were they entering as a Junior or Major mine? Did they enter as a big mine, such as Exxaro, or did they enter as a Junior?

Mr Koko: I don’t know. Anybody that has coal, goes and talks to sourcing people. Whether they are a Junior Miner or a Major Miner, it doesn’t matter. They would be classified at that point. I think they would be Junior Miners.

Mr Dlamini: But you know what I’m asking. Don’t do that. When they entered the system, were they classified as a Junior Miner or what? I am asking you.

Mr Koko: I think you’re putting me to comment on something that I was not part of. I found them there. They were not talking to me. I was not part of the transaction. I was not part of the process. I don’t know how the conversations came about and were finalised. I’m unable to comment on the transaction as I have no details on it.

Mr Dlamini: But, you know the issue of Tegeta and quotas in this country. It is an issue that is being spoken about every day and it’s one of the things that brought you here. It is one of the major companies that is involved everywhere. It is messing up the whole country. You are saying to me that you did not even go and look at the contract and see how these people got into the system, and how they are classified. You just started from where you need to be to give them money to go and buy Optimum. You never drew any of their contracts, just to look at them and say, “How did they come into the system?”

Mr Koko: No, I did not do that. The contract is there; it is a valid contract.

Mr Dlamini: But how do you know it is valid?

Mr Koko: I have no reason to believe it is not valid.

Mr Dlamini: But how do you know it is valid? You guys, you paid Trillian Capital and McKinsey R1.6 billion, which has been proved now that it is not valid. How do you know it is valid if you did not see it?

Mr Koko: Hon Dlamini, I have no reason to believe that it is not valid.

Mr Dlamini: So, it is valid?

Mr Koko: I have no reason to believe that it is not valid.

Mr Dlamini: Just say if it is valid or not valid. Yes or no.

Mr Koko: I have no reason to believe that it is not valid.

Mr Dlamini: Let me tell you. The Guptas entered the Eskom system as Junior Miners. What is the Junior Miner strategy in Eskom? You’ve got a strategy that talks to Junior Miners in terms of how they get accepted into the system. You are aware of that strategy?

Mr Koko: I have heard about. The difficulty that I have is that you tend to think that everything at Eskom is Koko. That is the difficulty I have. I mean you are asking me for a transaction that has got nothing to do with me, that I have never been part of, and expect me to be knowledgeable of it. Why?

Mr Dlamini: I am asking about a specific company.

Mr Koko: This company, I have never interacted with it on the transaction and I don’t know why you put me under pressure to respond on what I don’t know.

Mr Dlamini: Alright, let’s talk to the Junior Miner strategies of Eskom. So, you’re saying that you don’t know?

Mr Koko: I interacted with it.

Mr Dlamini: You were an acting CEO of Eskom.

Mr Koko: Yes.

Mr Dlamini: You released a statement that we supported in terms of transformation in Eskom. That statement talked to the issues of what we expect, and you were fighting Exxaro on the issues of saying that you want 51% Black ownership and that you’re not moving, and we supported that, saying, “This is what is supposed to be happening at Eskom.” Now you are saying to me that you don’t know anything of that strategy. So that statement, what informed you?

Mr Koko: We have a policy that we procure 51% of all our commodities from black ownership. Our procurement spend in Eskom, all our commodities, must reach 51%.

Mr Dlamini: Let’s not waste time. I’m telling you that in Eskom there is a Junior Miner strategy that says all small miners that enter through the Eskom system, they must be 51% black-owned. And I’m telling you now that Tegeta came through the backdoor and they were not even 51% at the time when they entered Eskom. You can deny it if you want to. That is your problem. Let’s turn to load shedding. You mentioned a date today when you stopped load shedding. When did you know that load shedding had stopped?

Mr Koko: Load shedding stopped in Eskom on 8 August 2015.

Mr Dlamini: And then you said you have surplus, up to 5 years. Is that correct?

Mr Koko: That is correct

Mr Dlamini: And your tonnage per year? You use about 120 million tons a year.

Mr Koko: it is significantly less it’s around 117 million now.

Mr Dlamini: You stop load shedding and have a surplus for another five years. But there’s a company now of the Guptas that only contributes about 5% and then part of your submission is that you were trying to deal with the issue of security risk. How do you get the two: you stop load shedding and you have 95% of surplus of coal but this 5% company that contributes 5% - you to go through all the extremes that you did and even had to prepay them? How are they going to collapse the system? How did you need them to secure and to deal with the corruption of the system? I don’t understand that.

Mr Koko: That is because the first winter peak after load shedding had stopped, it had to be guaranteed that coal requirements could be met, and we needed to have the coal that we required for the winter of 2016.

Mr Dlamini: So, this Gupta company, with 5% contribution in terms of all the coal that you use, and you realise that this is the one that’s going to create the risk for load shedding.

Mr Koko: Again, we are falling back into the Tegeta part. Nowhere in the Eskom strategy does it say that this one company is a do or die. It was one of the companies that we were procuring coal from. Umsimbithi is another one, and the others. The issue that I made is that there are a lot of buyers and I’ve no issue with you singling one.

Mr Dlamini: Let’s leave it there. They are criminals. I’m telling you now and we are attending to that. Let’s move to R1.6 billion. How did you get to R1.6 billion? That you needed 1.6 billion? Can you give that explanation?

Mr Koko: It was the coal we required for 12 months for Arnot, Hendrina and Komati.

Mr Dlamini: What were the predictions in terms of the coal for those mines for three months? For three months you needed coal and you know that for this one to be sustainable, so much coal is needed. How much coal did you need per month?

Mr Koko: Koornfontein was 180 000 tons per month but I cannot tell you the volumes for Arnot and Hendrina. Hendrina is Komati.

Mr Dlamini: You said three. So, you don’t know you don’t know them off your head. You can’t explain the R1.6 billion to me. To get to how much you need you have to take the three power stations and see how much they need.

Mr Koko: The project team did that.

Mr Dlamini: You come here knowing that we will be asking about the R1.6 million and it is part of your submission, and you’re talking to it, but you are unable to explain how you got to that amount. You say R1.6 billion but you can’t break it down and tell us what is happening. I am asking you how you got to the R1.6 billion. You are saying to the honourable Member here that we must not ask you about other things. I am asking you on what is in your letter and your submission – the R1.6 billion. I am asking you harder to get to the 1.6 billion. So, you did not prepare to come here? I want the breakdown.

Mr Koko: I do not have the breakdown.

Mr Dlamini: The one that talks to R1.6 million prepayments and everything and you decided you were not going to prepare for it

Mr Koko: I did not prepare the details.

Mr Dlamini: What did you prepare?

Mr Koko: It’s quite simple because it was not used.

Mr Dlamini: No, no, no. I told you that you must not do that to me. I am asking you how did you get to R1.6 billion. It’s here on the submission. Let me tell you, because you don’t know. To show that you are just embarrassing yourself. What you need was the three power stations monthly usage. They use 480,000 tons per month. I am telling you. At R150 per ton so the money that you needed was R824 million, not R1.6 billion. So, you’re already pre-empting. You guys were up to no good there at Eskom. Now let’s go to the prepayment. You said you made the prepayments because you were buying coal. Was it for maintenance or what? What was the R585 million for?

Mr Koko: It was to procure 1.25 million tons of coal from Tegeta.

Mr Dlamini: Were you aware that the Guptas were turned down by the banks before your Board sat that night? Were you part of the group that sat at night to approve the R585 million?

Mr Koko: No, I was not there.

Mr Dlamini: So, you are not aware of anything?

Mr Koko: No, I was not aware.

Mr Dlamini: Let’s deal with another issue. When did you get to know about the business rescue and Optimum Mine that it needed business rescue? When was that meeting?

Mr Koko: I came back on the 20 July 2015 and Optimum was in business rescue on 4 August 2015 and we were not receiving coal at that time and it was around that time that I came to know about it.

Mr Dlamini: When you wrote this letter to DMR, did you notify them that you had tried everything and were writing a letter to DMR for a different intervention?

Mr Koko: The DMR was engaged with the process.

Mr Dlamini: So, the DMR was engaged with the process.

Mr Koko: The DMR was not blind in the process.

Mr Dlamini: When the business rescue and everybody else was involved, why did you go for the first option that they must sell? Why did you prefer that instead of enforcing the guarantees and everything else that is on the contract?

Mr Koko: That is what we did from 2014, from 2012 actually. That is what we did from 2012.

Mr Dlamini: So, you decided that you wanted to support the sale rather than to enforce the guarantees on the contract?

Mr Koko: We had enforced the guarantees on the contract since 2012, since Glencore took over Optimum until they went into business rescue on July 31.

Mr Dlamini: Was there a reason, now that you were going to do the prepayment to the Guptas who were not owning the mine, that prevented you from doing a pre-payment to Optimum? Because they were in the mine and you wanted the coal. Why didn’t you say, “You’re ready owning the mine and the coal and we’ll do a prepayment to you?” But you are going to pay people who were not owning the mine. What was stopping you from doing that?

Mr Koko: Optimum had a sale agreement with Tegeta. They presented it and …

Mr Dlamini: But by the time of the prepayments, that agreement had not yet been honoured. That agreement had not been honoured because it was only honoured when the final money had been paid to the business rescue and it had not been paid. Why did you prefer to do that? The time that you paid the Guptas, they were not owners of the mine. The agreement had not been fulfilled.

Mr Koko: How do you engage on a long-term basis with a company that is in business rescue and that is threatening liquidation?

Mr Dlamini: What is a long-term basis? Because we’re talking here about making a prepayment for six months. Is that a long-term basis?

Mr Koko: I just don’t get you.

Mr Dlamini: The coal, paid for by the prepayment, how long was that going to last you?

Mr Koko: It was assumed that Optimum was out of business rescue and I personally have a problem...

Mr Dlamini: No, no, no. I am talking about long-term. How long were you going to get coal for with that money?

Mr Koko: If we’re talking about April, five months.

Mr Dlamini: When I’m asking you, why you didn’t pay, then you say you can’t pay long term. Is five months a long period for Eskom?

Mr Koko: But Optimum had a sale agreement with Tegeta.

Mr Dlamini: Let’s leave that. That was why I wanted to deal with the issue of long periods. There were RFPs that were in process that took you 12 months, until Treasury had to reject them in favour of Tegeta, that were not finalised. Why was that? Why was that happening? Why couldn’t you finalise the tender that was already in the system so that you could keep on. You don’t finalise the tenders that you send out yourself so that Tegeta keeps getting extension until Treasury stops them. What was the challenge in finalising the contract?

Mr Koko: We dealt with this with Adv Vanara.

Mr Dlamini: But, I am not Adv Vanara. I am asking you a question.

Chairperson: Can we give each other a chance to respond? Don’t speak over one another because there are people who are listening, and they cannot hear what you are saying. They cannot understand what is being said. I am getting the tweets.

Mr Dlamini: That guidance, Chairperson is wrong. I am just asking a question and I am telling him I am not Adv Vanara. I must wait until it is finished for the follow-up? That is wrong. Mr Koko, can you deal with the question that I’m asking you?

Mr Koko: It was a 40-year contract. It expired in December 2015. For a 40-year contract, I accept the criticism that the new contract should already be in place to replace the 40-year contract that was coming to an end. That I accept. I don’t know what more do I say.

Mr Dlamini: So, you accept the criticism for not doing your work? But you are the CEO. The criticism stops with you or should we call other junior managers in? No, you are the CEO – everything stops with you. You are responsible for that company. You’re saying that, in Eskom, there are no competitive bids. For the last 40 years, there were no competitive bids.

Mr Koko: In Eskom, until around 2015, there was never an open tender to secure coal. That is what I’m saying.

Mr Dlamini: Now that is sorted.

Mr Koko: The Board of Eskom resolved that we must do it.

Mr Dlamini: The Guptas, do they have an open contract now, that went through a bit or something, or are you still on those contracts that you cannot explain? What is the current status now? How are they operating in Eskom?

Mr Koko: I don’t know. I have been out of the system for 8 months. I don’t know what is happening.

Mr Dlamini: In the last eight months before you left, what was the story? What was the status of the Guptas before you left?

Mr Koko: They had the contract that I mentioned in January and the contract that I mentioned in February 2016, and then they had the prepayment contract from the month of April.

Mr Dlamini: So, the time that you left, they still had a prepaid contract.

Mr Koko: It was done. All coal delivery was completed within five months.

 Mr Dlamini: So, the time that you left, they had no contract.

Mr Koko: Other than the Optimum contracts, they had nothing. Brakfontein is no longer owned by them.

Mr Dlamini: Do you know Salim Essa’s offices?

Mr Koko: I do.

Mr Dlamini: In Melrose. You have been to his office?

Mr Koko: I have visited him yes. I have been to his office.

Mr Dlamini: What were you doing in his offices?

Mr Koko: We discussed the Trillian payments.

Mr Dlamini: What position were you holding at that time, when you went to their offices to discuss Trillian?

Mr Koko: I was group Chief Executive for Generation.

Mr Dlamini: And that contract was under your department?

Mr Koko: No, it wasn’t.

Mr Dlamini: So, how did you leave your office at Eskom and go to Melrose to meet Salim Essa about a contract that is not yours?

Mr Koko: We had a workshop with McKinsey and Trillian at Megawatt and we met the CEO of McKinsey that day and through the CEO of McKinsey, we met him and the reason that I met him was because I’m interested in all the BEE partners of the big suppliers. They raised the issue of payment. And I said no.

Mr Dlamini: You had a workshop with McKinsey and Trillian at Megawatt and you met the CEO of McKinsey and you leave the workshop to go and meet someone in Melrose. Is that the norm? On an operation that does not sit within your department?

Mr Koko: I mean they were suppliers. That is nothing unusual.

Mr Dlamini: Okay, you visit your suppliers. What were they supplying you, McKinsey and Trillian? They just said what-what and they were ready to pay you? What were they supplying you?

Mr Dlamini: He had a project in Megawatt Park. McKinsey has been in Megawatt Park since 2011. In fact, earlier than that.

Mr Dlamini: You know where I’m getting lost. I’m thinking of your own operation because my thinking is that each and every one at Eskom, if you are HR, you deal with the issues of HR, head of generation you deal with generation. I am asking specifically whether, in your operation as head of Generation, with the services of McKinley part of what you would deal with?

Mr Koko: That is correct.

Mr Dlamini: Oh, so that is why you were on that side.

Mr Koko: They worked at Majuba. They did a project at Majuba.

Mr Dlamini: Masango. Where is Masango, the guy who was suspended? You said you had evidence of two guys who got money from suppliers in their accounts. Where are those guys? Who is the other guy?

Mr Koko: The other one is suspended; the other one has resigned.

Mr Dlamini: Do you still have those invoices?

Mr Koko: They are at Eskom.

Mr Dlamini: So, if someone gets money, because it is clearly a bribe, they get paid by suppliers and use it with the evidence and the guy resigns and ends there. What else do you do about it?

Mr Koko: It is with the police.

Mr Dlamini: To which police station did you report this case?

Mr Koko: If you need a case number, I will send it to you.

Mr Dlamini: You have got a case number? The police are investigating it on behalf of Eskom?

Mr Koko: Yes.

Mr Dlamini: Okay we will request that case number so that we can follow up on it. And the other guy that is suspended? That is the same story as well? There’s a case number for him? The one that was suspended.

Mr Koko: There is one case with the police. It is the same issue for the two people.

Mr Dlamini: Okay, that is fine. Lastly, the R2 billion fine. Your explanation during the day was that any company that was buying Optimum, had to buy including that fine. There was no separate issue for the Guptas. It was part of the package.

Mr Koko: That is correct. Yes. They settled it with R577 million.

Mr Dlamini: So how did they get it to that?

Mr Koko: It went through arbitration.

Mr Dlamini: So, it went through arbitration and they were told they must pay R500 million. Thank you, Chairperson.

Mr R Tseli (ANC): Mr Koko, I want to start by reminding you that you are still testifying under oath. The reason why I’m starting on this note is because you must be reminded that this process is in your best interests to clear your name and to assist this Committee to unearth all these alleged acts of corruption at Eskom. I’m starting there so that we know, and I can then continue where we are going.

A number of colleagues raised the issue of your stay at the Oberoi Hotel in Dubai. And I want us to conclude this thing by making a concrete proposal on this particular one so that we can close it for once in all. And my proposal is that you must prove this Committee wrong because the records that we have, suggest that Sahara Computers paid for your stay and on a number of occasions you are saying, “No.” My concrete proposal is: “Are you then able to provide records which proves this Committee wrong?” If you cannot do it now, can you commit yourself that you will submit these documents through the Chairperson, sir? By when?

Mr Koko: I think I was supposed to be here late last year. I approached them for a receipt and they sent it to me and I’ll make it available. A direct payment receipt. I’ll make it available.

Mr Tseli: By when should we expect it?

Mr Koko: Tomorrow morning.

Mr Tseli: Okay. That is fine. The steam generator Arriva contract. What role did you play in the awarding of it?

Mr Koko: that is a very interesting project. It was one of the projects that would go in my history as one of my saddest moments. This was a contract that was adjudicated at Koeberg and was awarded, and it went for a PFMA application and Minister Gigaba declined it and we had to start afresh, 12 months later. It was awarded to Arriva. It went to court and I deposed the Eskom affidavit in the High Court. It went in our favour in the High Court. There was an appeal. We lost the Supreme Court of Appeal. It went to the Constitutional Court and the Constitutional Court ruled in Eskom’s favour. Now I find it quite painful that on a matter that Apex Court has applied its mind and looked at the evidence and concluded in Eskom’s favour that we are still being called to account on a matter that has been settled.

Mr Tseli: it is fine. What was the argument of Westinghouse when they challenged this contract?

Mr Koko: Westinghouse said that Eskom had changed the adjudication criteria in the middle of play. So, they are saying that we did not tell them that we would use particular criteria to evaluate their bid. Had we told them upfront, they would have responded and would probably have won. They also argued that there were cheaper on price.

Mr Tseli: Let us go to MMK 34 on Page 208 in the Annexure - the proposed terms of settlement. In the interest of time I do not want to read the document. Who initiated the settlement? Was it yourself or Eskom through Ms V J Klein?

Mr Koko: I was suspended on 11 March 2015 and I had nothing from Eskom. On 11 May, in our first meeting, I was presented with a settlement.

Mr Tseli: In essence, Eskom initiated the settlement then?

Mr Koko: Eskom was firing me. This was a separation from Eskom on 11 May 2015.

Mr Tseli: Then, what was the outcome? What happened?

Mr Koko: I did not accept it.

Mr Tseli: In your view, why did they want to settle with you?

Mr Koko: Because the letter of suspension to me says that they have reason to believe that the power system was deliberately sabotaged, and I was one of the people singled out for it.

Mr Tseli: Let’s go back to the Brakfontein Mine issue. Why did you suspend Eskom employees in the technical services in the process of the suspension of the licence of the Brakfontein mine?

Mr Koko: Because we have a national laboratory of the country that says that the results that you have been getting from your team of problematic. I engaged the team and they did not seem to want to accept that the national laboratory of the country is giving a different view. I said that I had a choice: “To listen to the national laboratory of the country or to listen to you.”

Mr Tseli: So, what is the relationship of the suspension of the scientists and the cancellation of the agreement with Brakfontein Mine.

Mr Koko: The Brakfontein contract was not cancelled. It was suspended.

Mr Tseli: Suspension of the scientists and the suspension of that licence. I am interested in the relationship.

Mr Koko: We had very long discussions about the quality of coal for Brakfontein. The team said that the coal was not compliant. Brakfontein said that their coal was compliant. I said, “Guys, you can’t both be right. You can’t both be right. Let’s agree on a process that would all sign off on. We would all agree that we came from different positions but that going forward we are going to agree that we are going to take samples under a controlled environment. We are going to prepare under a controlled environment. We are going to transported under controlled environment. We are going to take it to a credible laboratory that would not be criticised afterwards.” And there is nothing else but our national laboratory. And it was pull and push. Eventually we did it and the result was different from what Eskom had been saying all along. I said, “But, guys, why do we embarrass ourselves like this.”

Mr Tseli: That fine. You spoke at length about the R1.6 million guarantee when you were responding to my colleagues earlier. I want to take a different angle. I am saying that the position of PFMA, the process, in terms of issuing of a guarantee. Can you take us through that process?

Mr Koko: Well, the submission was worded carefully that there are regulatory requirements that must be made into the PFMA.

Mr Tseli: My question is, was it followed? Take us through the process. Just to remind you, I think it is Section 17 of the PFMA. Just take us through in terms of the process when you want to issue a guarantee.

Mr Koko: I am not familiar with that section that you are quoting. This is the competence of Eskom Treasury. They drafted the agreement and it was signed off by a director of the company, the CFO, and it is common cause now what happened.

Mr Tseli: But, at the time of the guarantee, what was your position?

Mr Koko: My position was the delegated authority in Eskom who knows what to do and is competent and trained. I signed off the process.

Mr Tseli: You are not answering. What was your position?

Mr Koko: Group Executive: Generation.

Mr Tseli: That is fine. Yesterday, while we were interacting with Mr Singh, maybe you had the opportunity to watch the engagements. I don’t know.

Mr Koko: Not all of them, Chair. I watched some of it, but I had to prepare for this and I had to sleep early. I left my learned friend to watch. I did get the reports.

Mr Tseli: One of the issues that came out very, very sharply yesterday because Mr Singh also talked to the Tegeta fine of R569 million. He was saying that he was not part of the BTC meeting that it decided on this particular issue. But the BTC, the Tender Committee, mandated him to negotiate a discount with Tegeta.

Mr Koko: He is right.

Mr Tseli: He successfully negotiated a 3.5% discount with Tegeta. But we asked him a question, “Can he provide us with the minutes of that interaction or negotiations with Tegeta which resulted in the 3.5% discount?”

Mr Koko: That part I heard.

Mr Tseli: What was his response from the report that you got?

Mr Koko: He said he did have the minutes and he did not always take the minutes as discussions like those aren’t documented.

Mr Tseli: Is that the standard practice in the company, that if you’re given a serious responsibility, there is no need for you to take minutes?

Mr Koko: Generally, you take minutes. Generally, you keep minutes. I don’t know the context, I cannot speak for him. He testified for himself.

Mr Tseli: But, Mr Koko, you were very close to this situation. As far as you know, were there minutes of the negotiations?

Mr Koko: I have not seen minutes of the negotiations.

Mr Tseli: There are two documents. One is the resolution of the BTC which later mandated him to proceed with the negotiation. Because when I looked at one of the MMK Annexures, I don’t remember the number, there was what you call a feedback report, seemingly after a resolution was taken by the Committee. It is followed by feedback report. I don’t remember which one it was, but I just want to confirm something. How different was the feedback report from the minutes that we were talking about yesterday? Because from the feedback report that I saw here, it was like it’s a record of the implementation of the resolution of the committee. Can you talk to that?

Mr Koko: I think that you are referring to the minutes for the meeting of 11 April.

Mr Tseli: I don’t remember the MMK number.

Mr Tseli: MK29, page 178 of the Annexures.

Mr Tseli: Talk to the feedback report. What is it all about?

Mr Koko: We had a Board meeting, the famous meeting on 11 April. The 9 o’clock meeting. It is a record of what transpired in that meeting.

Mr Tseli: Oh, it is a record of what transpired in that meeting. OK. While you were testifying, you talked about the relationship that was not so good between you and Mr Tsotsi. And you continuously said that you refused to take unlawful instructions. Are you able to just give us some of the unlawful orders that you got from Mr Tsotsi that led to the state of affairs?

Mr Koko: The weakness that we had was that there was a non-executive director getting involved in executive decisions and procurement processes that he does not have delegations for. You will recall that Tsholofelo Molefe, our former CFO was here, and she testified here that the Eskom delegations authority is structured deliberately to exclude the CFO from commercial transactions. And she is correct. Eskom CEO and the Chairman of Eskom. The delegations of Eskom structured deliberately to exclude them from business transactions. Only in the later versions of the delegations of authority is the CEO given authority on specific transactions under a controlled environment. The CEO of Eskom cannot get involved in the transaction processes. He is excluded and Zola Tsotsi wanted me to do that. He would bring his friends and say, “Work with this guy. This guy is unhappy. He says that he is not benefitting.” I did not like that.

Mr Tseli: As you said, that is the reason why you ended up being suspended?

Mr Koko: Certainly.

Mr Tseli: Mr Koko, since you have been in the executive in Eskom and even acting CE, can you tell us what you are proud of in your work that you have done in Eskom.

Mr Koko: I’ll tell you something that I am very proud of in Eskom. Because of the leadership challenges or what is commonly referred to as governance challenges, people don’t realise that you have very, very competent young men and women in Eskom that are keeping the electricity system working. The electricity system in Eskom is one of the best globally. It is being kept alive by young men and woman, black and white. Competent par excellence. And that part doesn’t always arise. And I understand why because of who I am. I am very proud of Eskom engineers. They are sought after.

Mr Tseli: But in the main, I am interested in what you did and what you built up.

Mr Koko: I built up Eskom engineering. When you talk about Eskom engineering, it is associated with Koko. I am very proud of it. I am not ashamed of that. And those who work with me will always tell you, as an engineer he applied himself and those around him in engineering, they apply themselves.

Mr Tseli: Thanks, Chair.

Mr E Marais (DA): Mr Koko, I first want to start off by asking: The Minister of Finance, Minister Gigaba, over the weekend, I think he asked you and Mr Anoj Singh to resign and Mr Anoj Singh did resign. What is your response to that?

Mr Koko: My lawyers wrote a letter to Eskom and honourable Chair if you will give me an opportunity in response to that question I would like to read it.

Mr Marais: Yes, go ahead.

Mr Koko read the letter aloud. It stated that he had been suspended but that he had been cleared and therefore was not an Eskom executive who was under suspicion of corruption.

Mr Marais: Thank you. I request, if it is possible that all we be given a copy of that letter and that it be handed in to the chair.

Chairperson: Do you agree on that request, Mr Koko. You look like you are surprised.

Mr Koko: No, I have read it and it is therefore on the record. I shall make it available.

Mr Marais: Thank you. Then I continue. In your view, and being suspended now, this monthly payment of your salary, wouldn’t you see, in the line of good governance, that this is actually a fruitless and wasteful expenditure?

Mr Koko: No, sir

Mr Marais: Well, they are paying two salaries while you are on suspension.

Mr Koko: We have a celebrated constitutional democracy and we have rights and we have to live up to them.

Mr Marais: I understand your answer, but my question was about good governance. Paying two salaries for one position.

Mr Koko: Good governance and acting within the law is the same side of the same coin.

Mr Marais: What would you say if I say the following: seven CEOs at Eskom in the period 2010 to 2017? They have selected the most distinguished persons to run Eskom because it is the largest entity in the basket of state owned entities. How is it possible that we have had seven CEOs in this period?

Mr Koko: You ask me a valid question. I don’t have the privilege to appoint chief executives. I just think it’s unfortunate that that has happened, and I hope that the new situation at Eskom solves that.

Mr Marais: On good governance, what were the processes for Minister Gigaba and Minister Brown’s appointments of the new Eskom Boards in 2011 and 2014 respectively?

Mr Koko: I don’t know, sir. I don’t know what process Minister Gigaba followed or Minister Brown followed. I actually don’t know how Boards are appointed. I don’t know.

Mr Marais: Ok. What were the nature and content of the Ministers’ intentions with the new Eskom Board?

Mr Koko: I am not privy to the intentions of the Minister other than the media statement that she issued.

Mr Marais: As a CEO you always work very closely with any Minister, representing the main shareholder. Did you ever receive instructions from the Minister?

Mr Koko: My apologies, but when I became the internal CE, I found the Board there. It was already appointed. I don’t know what criteria and what objectives were intended. I was blindsided.

Mr Marais: If I make a statement and say that for the successful running of a state-owned entity, it is a triangle between the Minister, the Chairman of the Board and the CEO. Do you agree with that?

Mr Koko: Certainly.

Mr Marais: Did you ever receive direct instructions from the Minister responsible for state-owned entities?

Mr Koko: No.

Mr Marais: Not at all?

Mr Koko: No.

Mr Marais: I want to go back to one thing that was curious for me and that is about the Koeberg generators. When in 2010, the Eskom Board approved the extension of Koeberg’s lifespan, which includes the once off replacement of Koeberg’s steam generators. In 2011 the Eskom Board signed off on the Eskom Executive Procurement Committee’s recommendation that Westinghouse should be awarded the bulk of the tender and a smaller portion to Arriva. In 2011, Minister Gigaba vetoed the Board’s earlier decision to award Westinghouse the bulk of the tender. So, Minister Gigaba effectively scraps the tender process. That was one of Minister Gigaba’s first interventions in Eskom’s procurement. Now if there is a dangerous ground in any company, then that is procurement processes. Do you think it was wise for the Minister to go that route?

Mr Koko: The transaction that you are referring to needed Section 54 PFMA approval and that power is vested in the Minister and he exercised his powers not to approve it. I don’t have the reasons why the Minister did not approve it. I did not see a document when he declined it, so I don’t know the reason why Minister Gigaba declined it.

Mr Marais: Can I ask you straight question, sir? Did you, together with the CEO at that time, Mr Majila, favour Arriva to get the bulk of the tender?

Mr Koko: That was argued in the High Court and the High Court considered it and ruled in favour of Eskom.

Mr Marais: Do you think that Minister Brown, the Eskom Board and management undermined the Eskom war room instituted by Cabinet and the Deputy President to reverse load shedding and improve Eskom’s technical and financial performance?

Mr Koko: I participated in the war room, at least up until March 2015. I confirmed that there was no strategy from Eskom to frustrate the war room. We cooperated fully. I cannot account for what happened after I left but for the time that I was there, from November 2014, when the war room started, to March 2015, we cooperated fully. The operations turnaround was the technically sound and maybe it was partially the war room.

Mr Marais: To what extent, and to what end, were key reports, such as the Denton investigation, withheld from the wall room, Cabinet, Parliament?

Mr Koko: All the information that was requested from Eskom to the war room was made available. I do not know of any document or information that was deliberately withheld from the wall room when they requested it.

Mr Marais: In your view, can the Board override decisions of the Procurement Committee?

Mr Koko: Yes, they can. They are delegated to do so.

Mr Marais: Were you put under pressure to approve decisions that you did not feel comfortable with while being the CEO?

Mr Koko: I was not put under pressure, other than the experience that I have mentioned, to make any decisions left or right.

Mr Marais did you see anything take place that would put procurement operations in jeopardy interference?

Mr Koko: Yes, I have, and I spoke about it today. That relates to the project management.

Maras: Did you at any time, take any instructions from a third party?

Mr Koko: No

Mr Marais: Were you given any instructions by the Guptas?

Mr Koko: No.

Mr Marais: Thank you, chair

Ms L Mganga-Gcabashe (ANC): Good evening, Mr Koko. I would like from the start to get into the transformation in Eskom. If I read it correctly or listening to you and from the document as I get it, you have occupied executive positions from at least 2010.

Mr Koko: November 2014.

Ms Mganga-Gcabashe: But of a division?

Mr Koko: The division was 2010.

Ms Mganga-Gcabashe: We are at 23 years of democracy, it pains me that after 23 years, I have to listen to we have listened to two former CEOs of Eskom, Mr Molefe and yourself – you were acting at some stage and are occupying a top management position -and the CFO yesterday, and to some extent, some former Board Chairpersons. I’ll park that because we’ll have an opportunity to meet with one of them. The statement that says, “In over 40 years, there had never been an open tender to procure coal.” Over 40 years. In that 40 years there is this 23 years of democracy where we are supposed to transform the industry, especially that is why that public entity, one of the major public entities, has the transformation of putting black in top management. When I say black mean women, Indian and coloured. And even then, maybe not the whole 23 years, but certainly, I think, not less than 15 years now and we still talk about not following the supply chain regulations, or procurement regulations if you want to refer to it like that. And, to me, you and your other colleagues that I have mentioned and maybe even the other ones before Molefe didn’t do enough, haven’t done enough, to transform this company in terms of procurement. I heard you say, I think, that recently the Board, or the previous Board, instructed you to look at the changing of the procurement processes. What took you so long? Leave aside the Board. As an executive, you have expertise to read the PFMA, to read the Companies Act, to read the regulations on procurement, regulations on supply chain management, and to implement that ought to begin implementation of that in order to support the black businesses that you have preferred. Why has that not been done for such a long time, for so many years?

Mr Koko: Hon Mganga-Gcabashe, you are raising a very painful question that is very valid. The honest way to respond to it, and I may sound naive, but that is tough. It is tough because the particular way in which we have done things for the last 40 or 50 years, benefited a particular community. To do things in the manner that you are suggesting and to benefit the majority of the people, leads to a very serious pushback and you have to be resolute and you get to do it to a certain extent and then you pull back. The coal space is one example. Hon. Mr Dlamini made reference to a policy that used to exist in Eskom, but does not exist anymore on Major Mines. We had a strategy and we still do, Eskom major suppliers must be 51% black owned. You don’t get the support from the people who you think will support you. In fact, it is them who come and attack you. I was the one who put my head up and said, “In commodities and in coal, Eskom must procure coal on a competitive basis for 51% black companies.” Part of the reason that I feel that I am where I am, is that a push that line very hard. And at times I asked myself, “Was it worth it?” It is not easy. It is tough.

Ms Mganga-Gcabashe: Who is them? Who are they?

Mr Koko: If you Google, and you read what is on the newspapers, and you look at a significant mass in the mainstream media of anti-51% black in the coal commodity space, and competitive bidding, you will not be surprised. It is not easy. It requires strong-willed individuals, strong-willed supporters that is not always there. As I said, I may sound naive but that is my experience.

Ms Mganga-Gcabashe: OK. Not only yourself, but other members in top management have alluded to that. Giving Tegeta the tender to supply coal, Eskom was part of the transformation. Let’s come to that. That is something the Eskom leadership has been boasting about, allowing Tegeta to take over Optimum was in line with the promotion of BEE. But then an unknown entity was allowed to take over Tegeta. Are you familiar with that?

Mr Koko: I have read that in the newspapers. I think it was the Saudi who has taken over.

Ms Mganga-Gcabashe: It was the Swiss. You are familiar with that.

Mr Koko: I have read that in the newspapers.

Ms Mganga-Gcabashe: When you read about it, did you investigate, as Eskom, those allegations?

Mr Koko: I may sound like a broken record but with the timing, I had no opportunity to do that. In terms of our contract with Tegeta, and I speak under correction, but I don’t think I’m wrong, Tegeta has to inform us because of the conditions in the contract that we would not want to modify. I think we built it into the contract. That is why, in an unrelated transaction of Anglo-American and Seriti, they need our agreement to do that. So, I do not know if Eskom was approached and I do not know what was Eskom’s response. My expectation is that Eskom should have been approached and that Eskom was informed before the transaction happened.

Ms Mganga-Gcabashe: We will get an opportunity to ask Eskom. Why has Eskom been dragging its feet on signing the transfer of CFA from Anglo to a black owned company? It is called Seriti and is since April 2017. That has been the only outstanding item.

Mr Koko: I dealt with that issue on my first day back from suspension and I am advised that there are problems with the performance guarantee that Seriti must provide. That was the last discussion that I had around 8 January 2018. I met with Seriti executives. The only issue that they raised was that as a BEE company, they are unable to provide performance guarantees because it will eat into the future expenditure. The transaction was supposed to have been finalised last week. I am not sure how they have moved on that condition. From Eskom side, I understand that it has to go back to the Board. So, I don’t know, but maybe it’s on the next agenda of the Board.

Ms Mganga-Gcabashe: But, why has it taken so long?

Mr Koko: I can speak in my time. The noise that I have personally made is that these are transactions from the cost-plus mines. The cost-plus mines are owned by Eskom. Assets in these mines belong to Eskom but they were not in the balance sheet of Eskom. I asked for an audit of all the assets so that we could decide what to do with them. I believe that that audit has been done. I believe that Eskom knows what it owns in the cost-plus mines. I did not know how they have treated that. Suffice to say that when I came back on 8 January, the only condition that I was told about, was the performance guarantees.

Ms Mganga-Gcabashe: Why does Zara appear to battle to get contracts extended with Eskom?

Mr Koko: We are back to unsolicited bids. If we say that we must have competitive bids, you can’t at the same time say extend contracts. But secondly, National Treasury has regulations now that prescribes to Eskom and other state-owned entities what to do if you want to extend a contract.

Ms Mganga-Gcabashe: I am raising it because up to now you haven’t been doing what you’re supposed to do through supply chain processes or procurement processes, and other contracts have been extended and why didn’t you use that clause about the Treasury regulation to seek the authority to extend this one because the others, you have been doing?

Mr Koko: I am not sure which Exxaro one you are specifically referring to.

Ms Mganga-Gcabashe: We’ll come back to that one. Let’s go back to the BEE concept with regard to Tegeta. On February 12, 2015, it has been in the public domain since, that the CEO of Tegeta submitted a BEE certificate to Eskom which stated that Tegeta had 100% BEE procurement recognition level. Given your experience at Eskom and your knowledge of its procurement policies, would it have been justifiable to treat Tegeta with 100% BEE procurement level?

Mr Koko: Unless the certificate is a fraud, and then it’s a big problem.

Ms Mganga-Gcabashe: In your view, the certificate is legit?

Mr Koko: I have not seen it and am unable to respond. I have not seen it.

Ms Mganga-Gcabashe: Who can respond to it within your company?

Mr Koko: Supply chain and the Transformation Group.

Ms Mganga-Gcabashe: Co-Chair, our recording system and the personnel are taking notes of all these issues that we get referred back because we are still here until the end of our term to make follow-ups on Eskom.

Chairperson: They are, Chair. I can assure you they are.

Ms Mganga-Gcabashe: The second part: the BEE certificate submitted by the CEO of Tegeta stated that Tegeta was an exempted micro enterprise in terms of the BEE scorecard. At the time an enterprise qualified for BEE compliance exemption by virtue of having an annual turnover of less than R10 million. The BEE certificate was issued on 12 February 2015. Do you think that it will be obvious that Tegeta annual turnover would be greater than R10 million at the relevant time?

Mr Koko: I think it would be obvious. I think it would be obvious that Tegeta does do an annual turnover of more than R10 million, given the contracts that they have.

Ms Mganga-Gcabashe: What would you say about what they have submitted?

Mr Koko: I have not seen what they have submitted, but knowing what I know of the contracts, Tegeta would be worth more than R10 million per year.

Ms Mganga-Gcabashe: Mr Koko, are you really telling the truth? Have you really not see these documents? Just respond. I am being very polite. You were Acting CEO recently, December to May, but you have no knowledge of this? In the reports, and when Tegeta was in the media space, as a CEO, you should call the relevant division to explain certain things to you.

Mr Koko: Yes. Something has to trigger it. There have been a lot of issues about Tegeta that I’ve gone out of my way to find out what’s happening because they get reported, because they are triggered. Nothing has triggered the R10 million issue. Nothing has triggered the BEE issue. Now that I know about it, if I were in the CEO position, I would dig deeper. It hasn’t surfaced for me to do that. I am hearing it for the first time. And certainly, if I was in my former position, I would certainly do something about it.

Ms Mganga-Gcabashe: Just to exploit the situation that you were once in that position, but as you say you were not aware of the time, I was going to make another follow-up question. I was going to ask do you think that Tegeta committed a fraud by misrepresenting their annual turnover to achieve a higher BEE-related designation?

Mr Koko: I would not be able to answer that.

Ms Mganga-Gcabashe: Being a former CEO, but if it were the case?

Mr Koko: if it is untrue, it is misrepresentation and it is irregular, and it is fraudulent. That is correct

Ms Mganga-Gcabashe: Earlier on, during the day, the advocate, when he was interacting with you, he asked about the contract management branch, or shall I call it a division, and whether you have an established contract management branch or division and your answer was, “Not as yet but the previous CEO was in the process of establishing one.” I hope that I am quoting you correctly. My point is that supply chain has been in existence for many, many years, for many, many years, and if you had a supply chain division or a procurement division that you’ve been referring me to with the questions that I’ve asked, requires that you should have a management branch for contracts. Your answer was that the function is being done and that it has been performed by project managers. And I have a problem with that because it means in Eskom a project manager is an engineer which means that an engineer is responsible for developing a contract for his projects, for the budget of the project, dealing with the claims and the invoices received, develop and process the invoices, check the invoices and submit them. With every invoice there must be an attachment of a copy of the contract. If that one individual is doing that and no one is cross-checking until the claim reaches Finance to pay, that is why we’re fighting with the CFO yesterday and when we were asking him about it yesterday, he said he would not have disciplined anyone within his division because financial irregularities that took place on the project are handled by another division. I appreciate the good work that has been done by the engineers and I think that it is a lot that is good and is being done, but I do have a problem when the project manager does everything, and they are supposed to be on site and then back at the office. The people that support, who are responsible for the paperwork must be brought in by the project manager who is responsible. Why, after so many years? You can’t tell me that a big company like this, that it’s operating like a semi-private company. You can’t establish this process clearly, and when Metros have been able to have within their supply chain, departments, and contract managers have existed for many years and Eskom, is unable to do that. That is why we have so much irregularities in Eskom. That is my take. What is your take?

Mr Koko: I think I may have been misunderstood. The contracts management happens in divisions. It is decentralised. It is not centralised. What Brian Molefe tried to do was to centralise it so that you can have full sight of the contracts management; so that you can have all the details that you have previously stated quite nicely in one depository. In a decentralised division, the engineer is not a project manager. We have a different dedicated project management function that is not managed by engineers and, if they move to that Department, they no longer do engineering work. They do project management work. The roles are separated. There are imperfections. I agree with you, that has developed over years and must be in place. It is just not centralised and that is what Brian Molefe wanted to do.

Ms Mganga-Gcabashe: Even if the project managers are not qualified engineers, where I come from, the engineering department was fighting with the human settlements department over the human settlement department having contract managers, who are not in the discipline of engineering, being referred to as a project manager. Then I am going to delay our time because we know very well about the registration to become, and to have the title of being, a project manager. But I thought that in Eskom, because it is the home of engineers, I thought that your own project managers are engineers too. But I understand because I’m coming from that kind of situation myself. I have been there for over a decade. But, coming back, even those project managers … but you have answered that. But why are all the important processes, that the government has been saying are important in terms of making sure that supply chain processes are done in a manner that promotes good governance and control of finances of public institutions and public entities of government, do they get delayed and delayed for every term office of government, over and over terms of government in South Africa. Why?

Mr Koko: I can only explain in my space. One of the biggest issues in the built environment, including engineering and project management, is turnaround. The experienced people are too few. They move on quickly and you consistently have new people. That is a problem and that is what has been a problem for me.

Ms Mganga-Gcabashe: All these scorecards that are been referred to here on the issues in the public domain that have been there within the supply chain and division and we shouldn’t be really, every day, we wake up with negative news around Eskom in terms of procurement issues. Pardon me, I have just joined the Committee on 25th October but I’m failing to understand what prevents your top management to really adhere to regulations that you are supposed to adhere to in order to implement and transform Eskom. If I may quote you when Hon Marais was interacting with you, “we are celebrated as a constitutional democracy and we act within the law”, but I tend to disagree because if you are doing that, we cannot be even having the Minister in the Treasury, and the former Minister of Public Enterprises, warning us that if we quickly are not doing any urgent intervention at Eskom, we are going to be in trouble with the economy of this country. Thank you, Chairperson.

Chairperson D Rantho (ANC): I want to bring to your attention that there are allegations outside there against you, personally against you, and they still exist. You might have won the case that was taken to court against what was alleged, that you have given your stepdaughter R1 billion contract, and you then won the case because there was not enough evidence, there were no witnesses. But I just want to bring to your attention that the allegations are still there and, for you to explain to Members that it is a good thing that you explain to Members that you’ve gone through that path and you’ve won the case. There are Gupta-leaks and you should look at the authenticity of them and then you can be able to say,” I’m off the hook totally.” Those Gupta-leaked emails are going to be the subject of the Commission of Inquiry and you might be called to come and answer in front of the Commission exactly on those Gupta links. So, I don’t want you to relax and dismiss what the Members are saying. I am also worried because the issue of your stepdaughter. There are people who want to come forward, who are witnesses, who want to come forward and give evidence. So, that issue, you must not take it lightly and think that it is gone, gone forever. Are you aware that people still want to persuade the case to go forward?

Mr Koko: I am not aware.

Chairperson: I thought that you were not aware. That is why you’re taking it so lightly. The issue also that was raised by Honourable Swart of the conveyor belts. Instead of using the conveyor belt, you use other means of transport to transport the coal. My question is: the transportation that Eskom is using to transport the coal, whose transport is it? Because I think that the coals should be transported in the manner that they are being transported now, rather than using the conveyor belt. Whose transport is that? Is that the person who said that you should be doing this? Who is that person?

Mr Koko: We have two types of transporters. One set of transporters are contracted by the mines. You place the contract with the mine and they deliver to the mine, so they transport for themselves. I am not sure who is transporting specifically. And then there is another set of contractors that Eskom has employed for the last 10 years. You buy coal and they come and pick it up and transport it.

Chairperson: You were once mentioned in a Sunday Times paper. A journalist, Mzilikazi wa Afrika, said that you offered him a bag of money in the middle of the night, which he refused. Can you confirm the serious allegation against you if it is true? And just explain to the Committee the circumstances surrounding the issue. Because to me those are very serious allegations made by Mzilikazi wa Afrika to say you gave him a bag of money and he refused to take it. You are a senior person in Eskom. A very respected person by people working under you. I think those serious allegations need explanation so that you clean your name on those allegations.

Mr Koko: I have never met Mzilikazi wa Afrika in the middle of the night, never. I have never offered Mzilikazi wa Afrika any bag of money. Never ever. I do have a police enquiry case opened against Mzilikazi, which I will give to you.

Chairperson: Does Eskom have a procedure where Eskom would give a contract or a tender without opening the tender for everybody, whether that person is close to you or far from you and not related to you? Do you have a procedure that allows you to do that in Eskom?

Mr Koko: Deviations from Eskom procurement and supply process? I am not aware of that. You can’t not comply with the procurement process. You can’t. You have to comply. I am not saying that it is not happening. There is a process and if you are found, it is a misconduct. There are many misconducts.

Chairperson: You say the many misconducts. Those misconducts that you say are there, are they surrounding you or are they part of misconducts that you have ever done in Eskom?

Mr Koko: No. We are talking about procurement and supply chain. It is on record and it is commonly known that we had a qualified audit and irregular expenditure of R3 billion and that’s what I’m talking about, Honourable Rantho.

Chairperson: So, if there are irregular expenditures, are you not regarding them as deviations. I think that irregular expenditure should be happening in a company as big as Eskom because you don’t know where Eskom starts and where Eskom ends.

Mr Koko: No. No. That is why I am using the irregular expenditure. By definition they are deviations to what is acceptable and approved, which is why the auditors have registered them.

Chairperson: That is all I wanted to say or ask you about.

Chairperson: Honourable Members, we have come to the end of our day. Let me thank you for the input you have made. I think that you have opened the minds of people outside there. You have opened the eyes of people and you have exercised your mandate as Members of Parliament and as public representatives, especially of this Committee of Public Enterprises. Mr Koko, thank you, and your legal team. I don’t want to say that this will be our last time that we meet. I’ve said it before when we were opening that we might meet again. We will keep in touch. As soon as we wish to meet you, we have all the means of contacting you.

The hearing will continue next week.

Meeting was adjourned.

[At the start, the hearing was adjourned for 15 minutes to allow the Committee to adopt its Quarter 1 programme. Its parliamentary oversight visit is to Eskom, especially to meet with the new Board of Eskom.

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