Eskom Bosses Pushed Through Illegal Tegeta Payment, Probe Told

(Bloomberg) -- Eskom Holdings SOC Ltd.'s senior executives circumvented normal procedures to make an illegal 659 million-rand ($46.5-million) prepayment for coal to a company co-owned by former President Jacob Zuma's son on the day the supply contract was signed, according to a senior official at the South African state power utility.

Snehal Nagar, head of finance at Eskom's primary-energy unit, told a judicial commission the 2016 prepayment to Tegeta Exploration and Resources, whose shareholders included Duduzane Zuma and members of the Gupta family, was unprecedented during the time he worked at the utility. Details of the deal were apparently finalized during a late-night board meeting that was conducted via teleconference two days before the final contract was presented to his team for urgent payment, he said.

The commission, headed by Deputy Chief Justice Raymond Zondo, was established to probe allegations that billions of rand of taxpayer funds was stolen from the government coffers by the Guptas and other Zuma allies with his tacit consent, with Eskom a prime target during the looting spree. They all deny wrongdoing.

The instruction to pay Tegeta came from the office of Eskom's then-chief financial officer, Anoj Singh, and officials were given less than two hours to process it without any explanation why it was so urgent, Nagar said. Singh's office made no mention that Tegeta was being paid in advance for coal, and details of the prepayment only emerged later, he said.

Eskom suspended Singh in September and he resigned four months later. He denies wrongdoing. Most of Eskom's other top executives have also been replaced.

Previous evidence given to the commission and the nation's graft ombudsman indicates that Tegeta used the money it received from Eskom to cover a funding shortfall on its 2.1 billion-rand purchase of the Optimum coal complex from Glencore Plc.

Read more about how Tegeta bought Optimum.

To contact the reporter on this story: Nkululeko Ncana in Johannesburg at nncana@bloomberg.net

To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Mike Cohen, Ana Monteiro

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