Eskom delays financial results amid red flags

Eskom has delayed releasing its full-year financial results on Tuesday.

Eskom cancelled its presentation at the eleventh hour‚ saying on Monday evening that the reporting is postponed “until further notice”.

It has not given reasons for the cancellation‚ but Eskom auditors have raised red flags about serious reporting irregularities.

On Friday‚ the Mail and Guardian revealed that auditors Sizwe Ntsaluba Gobodo had reported Eskom to the Independent Regulatory Board for Auditors due to serious irregularities in their financial statements.

Under the Auditing Profession Act‚ a reportable irregularity is financial reporting that covers up something that will cause a loss to the company‚ is fraudulent‚ could be theft or is an unlawful act or omission.

On Monday Eskom spokesman Khulu Phasiwe told Bloomberg news agency the issues raised by auditors were regarding contracts given to a firm linked to the stepdaughter of former acting Eskom CEO Matshela Koko.

The second issue raised was to do with the rehiring of Brian Molefe in May for three weeks before his reappointment was rescinded due to a public outcry.

Chris Yelland‚ a frequent commentator and publisher on energy issues‚ said: “We don’t know why there is a delay in reporting results. Eskom is not explaining itself and this silence fuels speculation and rumours‚ but the cancellation is likely linked to the red flags raised by auditors.”

Eskom to publish ‘cleansed’ report

Here is a list of some recent controversies Eskom has been embroiled in.

-Boiler tender worth R4-billion set aside

At the end of June‚ the Johannesburg High Court set aside a R4-billion tender given to Chinese firm Dongfang to replace a boiler at Mpumalanga power station Duvha.
Losing bidders‚ Murray and Roberts and General Electric‚ which had put in much cheaper bids than the Chinese firm‚ approached the Johannesburg High Court to have the tender set aside. Price was supposed to be a factor in the choice‚ Eskom had said.

-Eskom paid Trillian R266-million without invoices

The Trillian report‚ released recently by advocate Geoff Budlender‚ SC‚ found millions were paid by Eskom to Trillian without proof any work was done for the power utility.
One invoice was for the broken boiler station that Dongfang had won a bid to fix. The boiler remains broken.
Budlender linked the Trillian company to the Guptas because their associate Salim Essa owns 60% of Trillian.

-US firm acts

US auditing firm McKinsey has taken steps against its SA director‚ Vikas Sagar‚ after he wrote letters saying McKinsey was doing work for the company‚ something the company denies took place. The action taken against Sagar is part of a probe that is looking into Eskom contracts given to a Gupta-linked company.

-Tegeta‚ Eskom and the Guptas

The Guptas received a R600 million pre-payment for coal from Eskom and used this money to buy the Optimum Coal mine.
Eskom said this was a pre-payment‚ but former Public Protector Thuli Madonsela said in her State of Capture report that this prepayment was irregular.

-CEO Brian Molefe resigned‚ retired‚ rehired‚ rescinded

Molefe announced he was stepping down as Eskom CEO in November 2016 in the wake of the Tegeta incident and Madonsela report.
In May‚ he returned to Eskom as CEO‚ saying he had just retired.
After Public Enterprises Minister Lynne Brown was forced to explain his reappointment‚ she filed an affidavit saying he had never retired but had taken “unpaid leave”.
The scandal led to the Eskom board firing him at the end of May

-Revelations in the Denton report‚ published in the Financial Mail

Eskom wasted about R200m over two years by failing to negotiate proper discounts with diesel suppliers. The company paid billions to companies without having received proper invoices‚ in many instances paying for services without evidence of having received the supplies for which it was paying.
Eskom contributed to its own financial problems‚ and contravened the Public Finance Management Act by failing to put proper controls in place.
It consistently overpaid for diesel‚ coal‚ logistics and other contracts.
Eskom employees diverted business opportunities to themselves at the expense of the utility.



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