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Greenblo: Eskom, show us the money – reveal Guptas’ Optimum fine settlement

The way in which Gupta-owned Tegeta came to get its hands on the Optimum Coal Mine, previously owned by Glencore, has become one of the central scenes in South Africa’s state capture play. This week fresh revelations emerged thanks to an amaBhungane report which reveals a former mining minister’s allegations over how Eskom’s Brian Molefe and Ben Ngubane tried to pressure him into helping the Guptas take over Optimum. Another thorny at issue at play has been Eskom’s non-disclosure of what kind of settlement was reached between Tegeta and itself over a previous R2bn penalty. Eskom’s Matshela Koko previously told Carte Blanche that his company wants that money – so, did they actually get in the end? South African taxpayers deserve to know as Allan Greenblo outlines below. – Gareth van Zyl

By Allan Greenblo*

Eskom is invited to offer evidence that the “private arbitration” between itself and Tegeta Exploration & Resources, over the R2bn penalty imposed by Eskom on Optimum Coal Mine when it was owned by Glencore, existed at all. It can do so by providing information that, irrespective of any arrangement to set up the “private arbitration”, should be in the public domain:

  • Who instigated the “private arbitration” and on what date;
  • Whether Brian Molefe was Eskom chief executive at the time;
  • When the hearing was held;
  • The identity of the arbitrator;
  • How the arbitrator was selected.
Eskom’s electric pylons are pictured in Soweto, southwest of Johannesburg, in this March 31, 2015 file photo. REUTERS/Siphiwe Sibeko/Files

Eskom has already said that it cannot disclose the “contents of the agreement” (the settlement amount) because the arbitration had been private. However, the contents of an agreement can normally be divulged with the consent of the parties to it.

Further, Eskom’s argument offers insufficient ground to keep secret the background to the arbitration. Neither is there an obvious reason that those involved with the arbitration, and its terms of reference, need also remain a mystery; even to government which, through the Department of Public Enterprises, is its shareholder.

What must be put to rest is any suspicion that “private arbitration” isn’t a euphemism for a quiet discussion effectively between Molefe and representatives of the Gupta family, newly the main owner of Tegeta. It would be easy for Eskom, if it wanted, to dispel any doubts.

Read also: Journalists uncover fresh Eskom Zupta scandal: R10bn in 15 days for Gupta-linked companies

The doubts arise from perusal of the share contract in which Glencore agreed to donate Optimum to Tegeta subject to two conditions. The first was that Eskom agreed to waive the R2bn in penalties against Glencore. The second was that Eskom released Glencore from its guarantee for all obligations owed by Optimum (in business rescue) to Eskom.

These conditions were clearly met because the contract proceeded to implementation. Moreover, it’s reliably understood that Eskom had waived its R2bn claim against Glencore and released Glencore from its guarantee obligations for zero consideration. In that event, what was there to be arbitrated between Eskom and Tegeta?

Glencore’s donation to Tegeta of its shareholding in Optimum, reputedly at the insistence of Mineral Resources minister Mosebenzi Zwane, implies that Eskom wrote off a R2bn asset for which Glencore was good. This was a result of Eskom’s abandonment of the Glencore obligations without having demanded any alternative value or security.

Read also: Busted: Guptas gifted Zuma son his stake 3 weeks before stinky Optimum deal

A write-off of R2bn would obviously be reduced by the amount settled in the “private arbitration”, if indeed there was such an amount and Tegeta has indeed paid it. Even had Tegeta paid say R500m, it would still leave a R1,5bn write-off. Add to this the R650m in an advance payment by Eskom to Tegeta, allegedly for coal to be supplied by Optimum, and it seems pretty evident that Eskom was keen to pursue the Tegeta deal with unbridled enthusiasm.

Little is left to the imagination.

  • Allan Greenblo is editorial director of Today’s Trustee (www.totrust.co.za), a quarterly magazine mainly for principal officers and trustees of retirement funds.
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