South Africa's Eskom takes Deloitte to court alleging improper contracts

JOHANNESBURG (Reuters) – South Africa’s cash-strapped state power firm Eskom said on Monday it had filed court papers in a bid to recover 207 million rand ($14 million) in connection with contracts it alleged were improperly awarded to Deloitte Consulting in 2016.

FILE PHOTO: Men walk past electricity pylons as they return from work in Orlando, Soweto township, South Africa March 18, 2019. REUTERS/Siphiwe Sibeko

Deloitte was not immediately available for comment.

Eskom, drowning in debt of over 450 billion rand and reliant on government bailouts to keep the lights on, is at the center of a judicial inquiry into corruption at state entities, in addition to several other probes into mismanagement at the company.

On Monday, the power firm’s chief executive and chairman Jabu Mabuza said in a statement it was going after Deloitte for 207 million rand linked to contracts it was awarded by previous Eskom executives in 2016.

“Information before us shows that Deloitte engaged in activities that were unfair, inequitable, non-transparent and uncompetitive using off-the-record briefings with Eskom officials to submit proposals, and were granted contracts even though their pricing was way above their competitors,” said Mabuza.

Mabuza said Eskom was asking the court to declare the activities relating to a batch of tenders “unlawful and unconstitutional, to set aside the awards, and for Deloitte to pay back the amounts paid to them”.

The investigations and inquiries were triggered by the 2016 leaking of a trove of documents detailing relations between the wealthy Gupta family, former President Jacob Zuma, and deals struck with state firms like Eskom, as well a number of big companies including multinationals like McKinsey and Germany’s SAP.

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The Gupta family and Zuma have denied the allegations.

Earlier in October the United States sanctioned the three Gupta brothers over the corruption allegations.

The probes have led to resignations and the firing of numerous executives in state firms, a broad presidential inquiry into graft, as well as the eventually axing of Zuma by his party in 2018 just months before the end of his second term.

At Eskom, which supplies 90% of the country’s electricity, the clean-out has seen the chief executive and chief financial officers pushed out in quick succession.

Reporting by Mfuneko Toyana; Editing by Sonya Hepinstall



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