ABB comes clean as Eskom house of cards crashes down on global giants

By Niclas Rolander

(Bloomberg) – Swiss industrial giant ABB is being investigated for suspect payments related to work it carried out for embattled South Africa utility Eskom.

The maker of robotics and power grids “self reported” the incidents to US and South African authorities and expects it may be sanctioned, ABB said alongside third-quarter earnings on Wednesday. The Zurich-based company also took a writedown against the $160m contract, awarded in 2015 and involving the Kusile power-plant project.

The US Department of Justice and the US Securities and Exchange Commission have both been informed, the Swiss company said, adding that it is co-operating with all probes.

ABB joins a string of international companies to be caught up in graft allegations related to Eskom, which is reliant on state bailouts and seen as the greatest risk to the South African economy. German software giant SAP is being probed in the US for how it won contracts with South African state companies, while McKinsey & Co said last year it would repay money unlawfully received while working for Eskom.

Former Eskom Chief Executive Officer Matshela Koko allegedly guaranteed future contracts to ABB in return for subcontracting work to his stepdaughter’s business, the Johannesburg-based Sunday Times reported in March. He denied the accusation at the time. Koko was suspended in 2017 over allegations of wrongdoing and resigned in February of last year.

Both SAP and McKinsey became involved with third-parties linked to the Gupta family, the trio of brothers who were friends with former President Jacob Zuma and are accused of corruption during his scandal-hit tenure. They and Zuma also deny wrongdoing.

ABB “believes that there may be an unfavourable outcome in one or more of these compliance-related matters,” the company said. “It is not possible for the company to make an informed judgment about the possible financial impact.”

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