Eskom: Optimum received R1,8bn prepayment on coal with Ramaphosa as board chairperson #Zondo

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In 2012, Cyril Ramaphosa was appointed chairperson and non-executive director of Optimum coal mine. Ramaphosa was the black economic empowerment partner for Glencore International which owned 67.77% in shares. Optimum is South Africa’s sixth-largest coal producer and fourth-largest exporter of the commodity. It owns two operating mines, both located in Mpumalanga. While Ramaphosa disinvested from his business interests in order to avoid conflict of interest, the Zondo Commission has heard how Eskom arranged to pay R1,8bn to Optimum instead of Tegeta Resources. The latter was owned by the Guptas and set to take control of Optimum through a guarantee issued by Eskom. Later, evidence would emerge of how Glencore was strong-armed into selling Optimum to the Guptas – Bernice Maune. 

Suzanne Daniels, the former head of legal and compliance at Eskom has told Judge Ray Zondo that Eskom approved a pre-payment of R1,8bn to Optimum coal mine. The payment was reviewed by all board members and signed off by then group CEO Matshela Koko and CFO Anoj Singh, both executives believed to have worked closely with the Guptas.

When questioned by evidence leader Adv Pule Seleke about the payments, Daniels said it was to be a direct payment to Optimum, which was owned by Glencore International. President Cyril Ramaphosa was the chairman of Optimum at the time and a BEE partner to Glencore through his Shanduka Resources company.

“In essence it was to prepay for coal to Optimum and not from Tegeta. This was a request to consider payment of R1,7bn upfront. for up to 1 year of coal supply,” said Daniels.

There were only two board members who questioned the deal. Veroshni Naidoo and Maria Cassim sent emails to Daniels which were forwarded to Koko and Singh. Naidoo approved the payment but requested it be sent to the investment and finance committee for further vetting. She also asked if it met the standards for the Public Finance Management Act and if the department of public enterprises had approved it.

Cassim had questions over financial construction and coal pricing which was sent to Koko and Singh for reply.
The replies sent to Cassim were on the morning of 9 December 2015, said Daniels.

Seleka then questioned the drafting of the agreement as there was convolution and confusion of the identity of the entity with whom to do the transaction. Seleka then asked if it was explained to the board what the purpose of submission was. Daniels responded that a covering note had been issued, stating it was for the pre-purchase of coal in cash for R1,8bn to Optimum. Supporting documents were also sent to Koko.

Interestingly, the board did not meet to make the decision on the payment instead a round-robin process was enlisted. According to Daniels, the reason for this was because it was December and there was a rush to get a decision so the instruction was sent out with the document. The commission also heard how Singh had insisted the round robin was done.

“There was no explanation for the urgency either than there was a threat to the supply of coal. There was a commitment from Optimum to have supply continue despite business rescue,” Daniels said.

Daniels also testified that:

  • There were emails exchanged between Eric Wood, CEO of Regiments Capital (a consulting agency used by the Guptas and Salim Essa to facilitate government business)
  • An email address from a portal registered under ‘Business Man’ was used to communicate with Matshela Koko, Singh and Daniels. This email address would issue instructions, review documents and send changes to agreements.
  • The ‘Business Man’ email address made changes to the agreement for Optimum, instructing Wood
  • Daniels denies she made amendments to the Optimum agreement and sent out drafts about this.

Last week, former Eskom group CEO Matshela Koko said he was axed from his position in 2018 because he had chased R1,4bn owed to Eskom by Optimum coal. He testified Ramaphosa had axed him to protect his interests in the mine.

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