Eskom state capture: McKinsey, Gupta pals Eric Wood, Salim Essa and ‘financial targets’ #Zondo

The Zondo Commission has again heard how former minister of public enterprises Malusi Gigaba was an intermediary for Gupta associates to get their foot in the door at Eskom, this time through his chief of staff at the time, Thamsanqa Msomi.

According to Tsholofelo Molefe who was the financial director or CFO of Eskom in 2014, she was introduced by Msomi to Salim Essa, a Gupta lieutenant who partnered with them on their various government projects. Testifying at the state capture commission, Molefe says she was asked to be seen by Msomi and they ended up meeting at a restaurant in Woodmead, Sandton.

Msomi congratulated Molefe on her appointment and said he hoped they would have a better working relationship as her predecessor had a tense one with the ministry of public enterprises.

“We have received a number of complaints from black suppliers that Eskom is not embracing transformation,” Msomi said.

Molefe says she reacted with surprise as the state utility had prioritised transformation. Msomi was then advised that Dan Marokane, Eskom’s group executive for commercial and procurement would be the right person to speak to regarding suppliers.

After their exchange, Essa joined their table.

“As I was sitting there a gentleman by the name Salim Essa came, I was meeting him for the first time. He was the gentleman with concerns. When I asked him which supplier do you work for, what do you do, have you pitched for work from Eskom? He said he would like to do business with Eskom.”

Molefe said she would take him through the relevant processes of Eskom. She took his business card and didn’t follow up. Msomi however, followed up and kept on following up. When Molefe told Eskom board chairperson Zola Tsotsi about being hounded by Msomi, Tsotsi said the ministry should not be engaging with executives and would address the matter.

The second time Molefe met Essa it was in the company of acting CEO Collin Matjila. Molefe had presented a financial strategy to group executives and the board but Tsotsi wasn’t impressed and said the minister of public enterprises wanted a more ‘robust plan.’

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Matjila then called her to discuss the next steps and they met at a hotel in Montecasino. At that meeting, Matjila said they were running out of time and needed to find outsiders who could help Eskom accomplish their financial targets. Matjila then signalled to Essa who joined their meeting and said he could connect them with Regiments Capital, a Gupta owned company, to unlock their balance sheets.

Molefe says Essa offered to bring the CEO, Eric Wood, in to meet Molefe at the Eskom headquarters in Sunninghill. Regiments Capital and consulting agency McKinsey would then create a proposal to work with the state utility. According to Molefe the sequence of events happened as follows:

  • She advised Matjila Regiments Capital would have to apply for a tender and follow procurement processes as all suppliers.
  • Matjila said the tender process would be long-winded and they didn’t have time.
  • Molefe explained the procurement processes allowed for emergency procurement. Molefe and Matjila couldn’t see eye to eye so their meeting ended with Matjila saying he would sign the draft agreement sent by Regiments Capital.

Once Essa had sent the documents, Molefe says the deadline had passed and Regiments could no longer be considered. Matjila disagreed with her, insisting they move forward with Essa and Wood. The draft agreement proposed by Wood includes a number of initiatives to improve liquidity, unlock cash and better Eskom’s financial position. Molefe explains she wasn’t impressed as her team was already working on plans to better the utility’s financial standing.

When she refused to sign the draft agreement which would put R500m in the hands of the Guptas and their associates, Tsotsi was called in to intervene. Two meetings were then held with the second including board members. Molefe says two board members agreed that the Regiments Capital draft agreement for R500m was costly and a consensus was reached to pay R1m to the company on another project.

Tsotsi meanwhile had told the board members that heads would roll if they couldn’t agree on a financial plan that would make Lynne Brown satisfied, who was the new minister of public enterprises at the time. A year later, four Eskom executives were suspended, Molefe one of them to make way for an enquiry called for by former president Jacob Zuma.

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