The report by the business rescue practitioners, Piers Marsden and Peter van den Steen, was made to the Directorate of Priority Crime Investigation (Hawks) in terms of section 34 of the Prevention and Combating of Corrupt Activities Act.<\/p>\n
amaBhungane understands that the section 34 report, submitted on July 1 this year, also forms part of former Public Protector Thuli Madonsela\u2019s state capture report.<\/p>\n
The business rescue practitioners refused to confirm or deny the existence of the report, but amaBhungane has seen a copy, which sets out in detail what happened on April 11:<\/p>\n
- \n
- On that morning, Nazeem Howa, the chief executive of Gupta-owned Oakbay Investments, called the business rescue practitioners and asked for a meeting.<\/li>\n
- At 10:00, Howa sat with the practitioners at Tegeta\u2019s office in Sandton and delivered the bad news \u2013 Tegeta was R600-million short of the purchase price for Optimum Coal.<\/li>\n
- At Howa\u2019s request, the practitioners called an urgent meeting with Optimum\u2019s three bank creditors \u2013 First Rand Bank, Investec and Nedbank \u2013 and a representative of Optimum\u2019s then-owner, Glencore. At the meeting, held at about 13:30 at First Rand’s Sandton offices, the practitioners asked whether the consortium of banks would offer Tegeta a R600-million bridging loan.<\/li>\n
- At 15:00, Marsden phoned Howa to tell him the banks had refused the request.<\/li>\n<\/ul>\n
Leaked Eskom minutes, broadcast on Carte Blanche<\/em> in June, show that about six hours after Howa was informed that the banks would not stump up the funding, Eskom held a \u201cspecial tender committee meeting\u201d where it decided to hand Tegeta a R587-million prepayment for coal.<\/p>\n
Two days later, Tegeta delivered the full purchase price of R2.15-billion for Optimum Coal.<\/p>\n
Tegeta\u2019s purchase of Optimum from Glencore has been muddied by allegations of political interference and favouritism, particularly directed at mines minister Mosebenzi Zwane and Eskom.<\/p>\n
Tegeta is partly owned by the Gupta family through Oakbay Investments, but smaller stakes are owned by President Jacob Zuma\u2019s son Duduzane Zuma, Gupta-linked businessman Salim Essa and an opaque offshore company registered in the United Arab Emirates.<\/p>\n
Eskom has repeatedly denied showing Tegeta favourable treatment.<\/p>\n
Tegeta, through Oakbay Investments, declined to comment on this detailed timeline, saying it was \u201csubject to an apparent ongoing investigation and the provisions of the Public Protector Act\u201d.<\/p>\n
Tegeta failed to secure financing<\/em><\/strong><\/p>\n
Eskom and Oakbay deny that the approach for the R587-million prepayment was made after Tegeta failed to secure financing from the banks, saying that Eskom had been in discussions with Tegeta for some time.<\/p>\n
\u201cFollowing negotiations (of which we have proof and necessary documentation) we agreed that a prepayment be made against onerous provisions,\u201d Oakbay said. \u201cWe cannot comment on how Eskom dealt with the transaction on their side save to mention that a formal agreement was reached, signed pursuant whereto an invoice was issued and paid.\u201d<\/p>\n
Asked by amaBhungane whether the prepayment was used \u2013 either directly or as security to secure third-party funding \u2013 to fund the acquisition of Optimum, Tegeta said: \u201cYes, although we could have obtained finance from any other source or business venture or bank, we utilised the money as we deemed appropriate. We deny that this was, in any way, inappropriate.\u201d<\/p>\n
In a public\u00a0statement last night<\/a>, Tegeta again denied that there was anything wrong with Eskom helping to fund its purchase of Optimum through the prepayment, saying: \u201c[T]he pre-payment was perfectly legitimate and Tegeta was entitled to do with the proceeds as it saw fit.\u201d<\/p>\n
However, this directly contradicts statements made by Eskom and Tegeta about why the controversial prepayment was needed in the first place.<\/p>\n
Since June, Eskom has repeatedly claimed that the prepayment was needed to open up new mining areas at Optimum\u2019s Mpumalanga mine so that it could meet the requirements of delivering an additional 250,000 tons to Arnot.<\/p>\n
The additional tons were needed, it said, to avert a coal shortage during winter.<\/p>\n
Additional equipment needed<\/em><\/strong><\/p>\n
In a statement to amaBhungane on Wednesday, Eskom repeated this claim: \u201c[T]here was an indication that additional equipment was needed to reach the required tempo of coal delivery to Eskom that would mitigate the shortfall. Tegeta mentioned these as the factors that led the company to request a prepayment from Eskom.\u201d<\/p>\n
This echoes claims Howa made in an\u00a0interview\u00a0<\/a>with Carte Blanche<\/em> in June, when he claimed the prepayment was needed, among other things, to restart the drag lines, pay salaries, and for blasting.<\/p>\n
\u201cThe fundamental question you ask me, what was the money used for, the money was used to service the Arnot contract,\u201d Howa said at the time.<\/p>\n
Despite this, the business rescue practitioners, who were tasked with running the mine, say they did not see a cent of the prepayment.<\/p>\n
\u201cHowa remarked that the prepayment had been made on the basis that [Optimum Coal Mine] was in business rescue and required money for its liquidity and for the start-up of equipment,\u201d the section 34 report reads.<\/p>\n
\u201cWe confirm that the prepayment was not made to [Optimum Coal Mine] and that [the mine] provides a 30-day payment term to Tegeta for the delivery of the coal.\u201d<\/p>\n
In written statements, Eskom and Oakbay Investments denied that the mine was entitled to receive any part of the prepayment.<\/p>\n
Belatedly, Eskom is now seeking to characterise the prepayment as a loan, albeit one that would be repaid in coal at a very high price.<\/p>\n
In a statement yesterday, the utility said:<\/p>\n
\u201cWe can confirm that the full amount of the prepayment to Tegeta has been recovered via coal delivered to Eskom by the end of August 2016. During this period of time Eskom had sufficient security in place to cover any potential default by Tegeta.\u201d<\/p>\n
Eskom added that an internal audit review approved the prepayment in terms of the Public Finance Management Act and National Treasury regulations.<\/p>\n
It said it had not been approached by the Hawks, but that \u201c[s]hould the DPCI approach Eskom, Eskom will co-operate with the investigation\u201d.<\/p>\n
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\nThe amaBhungane Centre for Investigative Journalism produced this story. Like it? Be an amaB supporter<\/a> and help it do more. Sign up for its newsletter<\/a> to get more.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"Eskom executives agreed to give the Guptas millions of rands to pay for their Optimum Coal deal at a special late-night tender committee meeting<\/p>\n","protected":false},"author":6,"featured_media":22441,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-4524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=4524"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4524\/revisions"}],"predecessor-version":[{"id":30702,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4524\/revisions\/30702"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/22441"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=4524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=4524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=4524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}