Eskom Moves to Recoup $220 Million from Former Execs, Guptas

(Bloomberg) --

South Africa's Eskom Holdings SOC Ltd. issued a summons against former executives and board members, seeking to recover about 3.8 billion rand ($220 million) that it alleges was diverted illegally.

The funds were used to help the politically connected Gupta family acquire operations of Optimum Coal Holdings, which supplied the fuel to one of the utility's power plants, Eskom and South Africa's Special Investigating Unit said in a statement. A further claim pertains to payments made unlawfully to consultants by the utility.

“The funds were lost in a concerted effort corruptly to divert financial resources from Eskom to improperly and illegally benefit the Gupta family,” the parties said.

Evidence presented to a judicial commission of inquiry has implicated the Guptas and their allies in looting billions of rand from Eskom and other state companies with the tacit consent of former President Jacob Zuma. The Guptas and Zuma, who the ruling party forced to quit in 2018, have denied wrongdoing.

Eskom has been reviewing major contracts awarded in recent years in a bid to recover any losses suffered through illegal or irregular activity. This year it also moved to start liquidation proceedings against Trillian Management Consulting and Trillian Capital Partners, which are also linked to the Guptas, and have failed to repay funds the utility said were illegally disbursed.

The 12 defendants in the delictual claim brought by the indebted utility include former Eskom Chief Executive Officer Brian Molefe, former group executive Matshela Koko and former Minister of Mineral Resources Mosebenzi Zwane, along with Gupta family members and associates. Rajesh Gupta, Atul Gupta and Ajay Gupta along with associate Salim Essa are currently fugitives from justice in South Africa and based in Dubai, Eskom said.

Former executives and board members “breached their fiduciary duty of care and good faith to Eskom,” according to the statement.

A summons was issued in the North Gauteng High Court in Pretoria on Monday, the statement said. Eskom and the investigating unit said they reserve the right to pursue other individuals and entities, or to join others to the action.

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