In early July 2023, Daily Maverick was approached by a whistle-blower who claimed to hold significant documentary evidence of corruption and maladministration in Eskom’s ‘informal’ or ‘low-value’ procurement systems. Over the next few months, we would discover not only that these claims held up, but that National Treasury was as much to blame for the situation as the power utility itself. More than that, we would discover that nobody in a position of authority was interested in answering our questions, let alone in fixing the problems. And the result, aside from untold billions in fraudulent and wasteful expenditure, was a fleet of power stations that were becoming almost impossible to maintain.
Around two minutes into the seven-minute telephone call, the supplier asked the pivotal question. Up until then, in a conversation that never pretended to be anything other than what it was, the two men had been feeling each other out. They already knew each other’s names so it clearly wasn’t the first time they’d spoken — the supplier was “Andre” and the inside Eskom man was “Gerald” — but now was the moment to get into the details of the scam.
And so, at last, Andre was getting the full picture. Although he would only lay out R150,000, which was the price of the actual consignment, he would put in an order for more than five times that amount, which Gerald would push through the system. From the total R800,000, Andre would keep R450,000. The remainder, a further R350,000, would be split between Gerald and his line management.
By the estimate of one of our multiple sources, the holes in informal procurement were costing the South African taxpayer in the region of R300-million per month. But for us to establish the veracity of this enormous estimate, Eskom would have needed to take seriously the 23 pages of questions that we had sent.
Like the ambidextrous non-response, these hypotheticals appeared to collapse in on themselves until right was left and left was right. If the stakes weren’t the rolling blackouts that had been dropping the economy into freefall, we might have turned on our heels and followed the breadcrumbs back to sanity.
“The traceability behind all of these interesting purchases can be linked to the PR number, RFQ number and/or the PO number. Together with the PGr , the history should be there.” “Please see below some SAP buyer roles via which buyers procured goods/services through the SAP system,” our whistle-blower explained, before pointing out that Eskom staffers had been “fraudulently… hiding behind these ‘ghost’ vehicles to procure whatever.”“The buyer group should have an actual person’s name and surname and should be unique to a specific person’s identity . This was taken in 2020 and these roles have most definitely made purchases.
For instance, the screen grab that displayed confusion and inconsistency in buyer group roles, with a total of 1,340 entries that had apparently been uploaded at random — here, the names of individual buyers appeared above or below the names of Eskom power stations and even entire Eskom divisions, such as generation and transmission, which each had their own purchasing group codes .
According to the whistle-blower, the core problem with Eskom procurement could be traced to the “Back-2-Basics Programme,” an R8.5-billion project that had been initiated in 2010 to improve and streamline Eskom’s service tools, operations, maintenance and engineering., in fact, the whistle-blower had expressed “bewilderment” that nobody had yet properly investigated the role that the B2B programme had played in “ruining Eskom”.
While this made perfect sense at the start, by 2019, after four revisions, the “Authority to Execute” had expanded to a total of 22 sub-categories, from the chief procurement officer at the top to the end-user and LPO buyer at the bottom, with the Eskom board, group taxation department, RG&C department and P&SCM contract department all playing roles.
More than that, though, the acronym-heavy phrase gave credence to our primary source’s allegation that Eskom’s procurement processes had become irrelevant to most staffers — far from stamping out corruption, it seemed, the layers of cross-departmental oversight and the complexity of the system were abetting enterprise-wide malfeasance.
In the email outlining the context, our whistle-blower referred to the informal tendering instructions that compelled Eskom buyers, once a requisition or “need” was established, to search for the goods or services on the CSD. Again, Eskom’s media desk was afforded the opportunity to respond to each of the allegations in turn.
Still, when it came to the CSD-related questions, we had a long-shot chance at some answers. Since both of the contact people that had been listed in the CSD for Afrika Crime Solutions and Metsing Cartridge squared with the information we obtained from a companies’ director search, we also put the relevant questions to them.
Accordingly, the document continued, the Preferential Procurement Policy Framework Act had been passed in 2000 to give effect to section 217, by implementing “standardised tendering processes in the procurement of goods and services by organs of state.” As such, the PPPFA had also been “intrinsically linked” to the Public Finance Management Act , promulgated in 1999.
So what did this department, the very same institution that had long been responsible for managing the nation’s collective taxpayer funds, have to say in response to“Thank you for the media query,” the department informed us. “We note that you indicate that you have already sent the query to Eskom as well. They are best placed to respond.
The next point drilled deeper into the dilemma, noting that “the majority of local suppliers” had not been registered on Eskom’s database, which was causing delays in the placement of orders and posing the risk that power stations would not get the necessary spares. “The issues with the CSD database are not going away,” stated the manager. “It is becoming more of an issue.”
Clearly, then, the recipients of this email — who numbered a dozen in all — held positions of authority at Eskom’s fleet of power stations. And what they were now being told was that a certain revision in document 32-1034 was about to make their jobs a lot more difficult. But the most glaring logical conundrum was this: if “some” internal emails were acknowledged as real, didn’t that speak to the legitimacy of the source in general?In this regard, aside from the internal emails and the screen grabs, we were provided with a series of spreadsheets — directly exported from the SAP system — that demonstrated, from the earliest years of the B2B programme, how taxpayers’ funds had been put to questionable and practically un-auditable use.
Ironically, the very same spreadsheet contained a line item from June 2011 for the printing of B2B training manuals, which listed 1,000 manuals at a value of R3-million per item for a total value of R3-million. Did the spend on grass-cutting services have anything to do with the screen grab above from the CSD? Again, because of the inconsistency and corruption in the system, it was impossible forWhat we could tell, however, was that the information in this latest spreadsheet wasn’t an anomaly. A third spreadsheet from the SAP system showed the exact same pattern — i.e., the entry of random dates stretching in no particular order from 2011 to 2019, with neither rhyme nor reason on the categories.
In this regard, there was one final paragraph that we received from the Eskom media desk in response to our detailed questions, and on the surface it had to do with documents 32-1033 and 32-1034: The looting and corruption will continue until the NPA is empowered to put the thieves in jail and reassert the rule of law.Thanks to Daily Maverick we now get more proof of State entities that are dysfunctional. The feeding trough just gets bigger. We have to wonder what people employed by Eskom do to oversee purchasing departments ? Whenever a problem is identified, outside auditors are appointed to do the job that should be done internally.
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