South Africa is ready to start a probe into contracts of state-owned power utility Eskom, which provided false information about dealings with Trillian Capital Partners and McKinsey & Co, public enterprises minister Lynne Brown said on Wednesday.
“I view Eskom’s lying about its relationship with McKinsey and Trillian as an assault on our democracy,” Brown told lawmakers in Cape Town. “If the truth had been told first, then the investigation into the contracts could have been far advanced at this stage.”
Eskom is at the centre of allegations that the politically connected Gupta family used their relationship with President Jacob Zuma to win lucrative contracts from state companies. The Guptas and Zuma have denied any wrongdoing. Trillian, a financial services firm, is linked to the Gupta family through business associate Salim Essa, who was its principal shareholder until he sold out in July.
While Eskom previously denied having done business with Trillian, the utility said in July it would commission an independent investigation into work done by the company and disclosed R495m of payments it had made to it. Trillian was the so-called supply development partner of McKinsey in an agreement it had to provide services to Eskom. That relationship ended in March 2016.
“We do acknowledge that the minister has previously been given wrong information and Eskom is currently in the process of dealing with the individuals who have given wrong information to the minister and the board,” Khulu Phasiwe, Eskom’s spokesman, said by phone.
Spokesmen for Trillian and McKinsey didn’t immediately respond to phone calls or e-mails seeking comment on Brown’s speech.
McKinsey, which said in July it was reviewing documents related to work done for Eskom, has said it didn’t engage in corruption or pay bribes and that the fees it made from Eskom were in line with similar projects.
Letters written in March 2016 by McKinsey to Trillian and Eskom executives show the US consulting firm was concerned about the reputation risk of working with Trillian as a project development partner. Trillian “is not aware of any basis for McKinsey raising concerns with Eskom after the commencement of the joint work for Eskom, or at all”, the company said in response.
The state’s Special Investigating Unit is waiting for approval from Zuma to begin its probe of Eskom, said Brown. The minister also plans to arrange a special general meeting in November to appoint a new permanent board for Eskom, she said. — Reported by Paul Vecchiatto and Paul Burkhardt, (c) 2017 Bloomberg LP
