ABB will repay R1.56-billion to Eskom, the latest international company to return money after being ensnared in corruption probes in the country.
The reimbursement was agreed with the Special Investigating Unit, the state-owned power utility said in a statement on Friday. ABB has already accounted for the bulk of the payment in its financials, the Zurich-based company said in a separate statement.
By returning the funds, ABB joins McKinsey & Co and KPMG among firms that have given back money they’ve earned in South Africa from contracts tainted by graft. McKinsey this week said it would repay R650-million to Transnet and South African Airways after handing back R1-billion to Eskom two years ago. The US consultancy’s chief risk officer testified at the state capture commission on Thursday.
The recovery is the biggest ever by the SIU and sends “a clear message about the commitment of government to assist the SIU and other law-enforcement agencies to do their jobs”, justice minister Ronald Lamola said at a briefing.
President Cyril Ramaphosa came to power three years ago with a pledge to clamp down on state corruption that became rampant under former President Jacob Zuma’s nine-year rule. The government estimates that more than R500-billion was looted from the state, much of it from government firms while Zuma was in power.
Investigators this year widened a probe into contracts that Eskom signed with five international companies including ABB, WSP Global, Black & Veatch, Alstom and Tenova. The deals were all repeatedly modified, with the value increasing to a multiple of their initial approved cost.
They were connected to the construction of coal-fired electricity plants, including the Kusile power station, that have run tens of billions of rand over budget and are yet to be completed. That has contributed to recurrent power shortages and Eskom’s unsustainable R484-billion of debt.
In July, Eskom said it estimated it had overpaid ABB by R1-billion and the engineering firms collectively by R4-billion. It plans to pursue a further R3-billion of irregular spending at Kusile. — Reported by S’thembile Cele and Antony Sguazzin, (c) 2020 Bloomberg LP