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Brown takes legal action against chief suspects in Eskom’s shady dealings

CAPE TOWN — One way of looking at Public Enterprises Minister Lynne Brown’s strong legal clampdown on shady historical Eskom dealings is that she had no other choice if she was to retain any credibility. Another is to look at how she intervened in the jack-in-the-box fiasco of former Eskom CEO Brian Molefe, refusing an obscene pension pay-out of all proportion to his tenure. Again, you could say not doing so would have been politically stupid, even in the brazen looting climate that has desensitized so many in the upper echelons of the ANC. Yet we all base our opinions on what we know about a politician, personally or anecdotally. I’m inclined to say she’s among the better apples in a basket of rotting fruit. I knew her in her early days as a provincial cabinet minister in the Western Cape legislature, which I covered for the then-credible Cape Times. She was, as far as I could tell, an honest, forthright MEC, even though she was unavoidably embroiled in several controversies. Even as a politician gauging which way the wind is blowing, (the worst interpretation of her current motives), we can be grateful that it’s quickening the tide turning against the Zuptoids – and their private sector supporters. – Chris Bateman

By Paul Vecchiatto

(Bloomberg) – South African Public Enterprises Minister Lynne Brown has instructed Eskom Holdings SOC Ltd. to begin legal action against companies including McKinsey & Co. over their involvement in disputed contracts at the country’s state-owned electricity company.

Brown ordered Eskom to start taking legal steps against consultancy firms McKinsey and Trillian Capital Partners Ltd., as well as suspended acting Chief Executive Officer Matshela Koko and Chief Financial Officer Anoj Singh, who is on special leave, her spokesman, Colin Cruywagen, said by phone Thursday. Three other senior managers may also face misconduct charges, Business Day reported Friday, without citing its sources.

File Photo: President Jacob Zuma joined by Lynne Brown and Eskom’s Brian Molefe at the official opening of the Medupi Power Station Unit 6.

McKinsey in July said it’s reviewing documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian, a company linked to the politically connected Gupta family, made R1.6 billion ($120 million) in fees and expected to make another R7.8 billion, according to amaBhungane and Scorpio, two investigative journalism groups. The U.S. firm hasn’t engaged in corruption or paid bribes, it said in an emailed response to questions.

Singh was placed on leave in July after he was linked to a series of questionable deals involving the Gupta family, who are friends with President Jacob Zuma. Koko was suspended pending an investigation into contracts awarded to a company where his stepdaughter was a director. He had denied wrongdoing.

Eskom is spending tens of billions of dollars on new power plants that are years behind schedule and is at the center of allegations that the Guptas, who are in business with Zuma’s son, used their relationship with the president to win state business. The company disclosed 3 billion rand of irregular expenditure in its financial results on July 20, a figure which its auditors said they couldn’t independently confirm. Zuma and the Guptas have denied wrongdoing.

South Africa’s biggest opposition party has already filed charges of fraud, racketeering and collusion against McKinsey and said it plans to approach the U.S. Department of Justice about the work the consultancy did for Eskom.

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