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South Africa: How Eskom paid for Gupta mine

secret-dealsflag-S.AfricaDaily Maverick AMABHUNGANE  20 OCT 2016  

At a special late-night tender committee meeting, Eskom executives agreed to hand a Gupta company R587-million – money that was used, two days later, to help pay the R2.15-billion purchase price for Optimum Coal. By Susan Comrie for AMABHUNGANE.

Six hours after the banks refused to give the Guptas a R600-million loan for their controversial Optimum Coal deal, Eskom came to their rescue.

amaBhungane can reveal that at a special late-night tender committee meeting, Eskom executives agreed to hand a Gupta company R587-million – money that was then used, two days later, to help pay the R2.15-billion purchase price for Optimum Coal.

The deal, which documents show was clinched via a 21:00 teleconference call, involved extending Tegeta Exploration and Resources’ coal supply contract with Arnot power station by R587-million.

The fact that Eskom also agreed to pay the money up front reinforces the impression of preferential treatment.

Details of these hurried meetings – all held on April 11 this year – are contained in a report by the business rescue practitioners for Optimum Coal and in minutes of Eskom’s 21:00 meeting that were leaked to Carte Blanche in June.

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.

amaBhungane understands that the section 34 report, submitted on July 1 this year, also forms part of former Public Protector Thuli Madonsela’s state capture report.

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:

  • On that morning, Nazeem Howa, the chief executive of Gupta-owned Oakbay Investments, called the business rescue practitioners and asked for a meeting.
  • At 10:00, Howa sat with the practitioners at Tegeta’s office in Sandton and delivered the bad news – Tegeta was R600-million short of the purchase price for Optimum Coal.
  • At Howa’s request, the practitioners called an urgent meeting with Optimum’s three bank creditors – First Rand Bank, Investec and Nedbank – and a representative of Optimum’s 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.
  • At 15:00, Marsden phoned Howa to tell him the banks had refused the request.

Leaked Eskom minutes, broadcast on Carte Blanche in June, show that about six hours after Howa was informed that the banks would not stump up the funding, Eskom held a “special tender committee meeting” where it decided to hand Tegeta a R587-million prepayment for coal.

Two days later, Tegeta delivered the full purchase price of R2.15-billion for Optimum Coal.

Tegeta’s purchase of Optimum from Glencore has been muddied by allegations of political interference and favouritism, particularly directed at mines minister Mosebenzi Zwane and Eskom.

Tegeta is partly owned by the Gupta family through Oakbay Investments, but smaller stakes are owned by President Jacob Zuma’s son Duduzane Zuma, Gupta-linked businessman Salim Essa and an opaque offshore company registered in the United Arab Emirates.

Eskom has repeatedly denied showing Tegeta favourable treatment.

Tegeta, through Oakbay Investments, declined to comment on this detailed timeline, saying it was “subject to an apparent ongoing investigation and the provisions of the Public Protector Act”.

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.

“Following negotiations (of which we have proof and necessary documentation) we agreed that a prepayment be made against onerous provisions,” Oakbay said. “We 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.”……..

In written statements, Eskom and Oakbay Investments denied that the mine was entitled to receive any part of the prepayment.

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……….This story was produced by the amaBhungane Centre for Investigative Journalism  http://www.dailymaverick.co.za/article/2016-10-20-amabhungane-r587m-in-six-hours-how-eskom-paid-for-gupta-mine/#.WAqNwOV97Gg

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October 22, 2016 - Posted by | secrets,lies and civil liberties, South Africa

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