Johannesburg – An Eskom employee has told the Zondo commission how the South African Reserve Bank (SARB) was misled in an application by the power utility to allow for an R25 billion loan deal with a Chinese consortium.
Eskom had applied for the SARB to approve a deal which would allow Eskom to sign off on a facilities agreement with Chinese company Huarong.
The deal was part of an R25 billion loan that Eskom would receive from Huarong Energy Africa, a Chinese and South African consortium.
The money was meant to enable Eskom to maintain its powers stations.
The deal would have committed Eskom to pay about $19 million, which amounts to over R200 million, immediately after the deal was signed.
Eskom’s corporate specialist at the treasury department, Sincedile Ebenezer Shweni, told the commission that when they applied for SARB’s approval the concerning information about Huarong was omitted.
He said Indeva Investments, the parent company of Huarong, had no trading record or revenue.
This information would have allowed the SARB to stop the deal by not approving it. Shweni said he had not thought of alerting the bank because he did not want to be held responsible for triggering the massive cancellation fee.
Earlier, Shweni had told the commission how Eskom regulations were floated to push through the Huarong deal.
Shweni said when the Eskom treasury department got the unsolicited proposal from Huarong, the group did research on the company and to check if there were no similar offers available. He said everyone thought it was a good proposal at the beginning.
He said he started to notice suspicious steps being taken such as the proposal not been taken through the power utility’s risk and liability asset committee. He said this was unusual because that committee was sharp and could analyse a proposal and figure out certain issues. Instead, Shweni said it was taken up towards a higher committee.
He said because the proposal had former CFO Anoj Sign’s signature than it warranted the proposal being analysed on a higher structure.
He said he raised issues when dealing with term sheet which treasury under Singh signed. Shweni said he had issues with the large cancellation fee and long term payment period.
He confirmed that the proposal from Huarong was not taken to the power utility’s legal team and the team only started being involved at a later stage.
"The committee that was evaluating did not know how to deal with this because of the issue of the signed term sheet. Perhaps outside of the committee that was evaluating then you could say that Huarong got a head start compared to others. None of the others had their term sheets signed. None of the others had proposals or entities had visits that were paid (by Eskom officials)," said Shweni.
On Friday, Eskom’s treasurer, Andre Pillay told the commission how former Eskom interim CEO Sean Maritz pushed through the deal and signed it even with objections from the board.
Shweni was one of several witnesses that have appeared at the inquiry regarding state capture at Eskom.
On Tuesday, Snehal Nagar and Gert Opperman from Eskom’s Energy primary division will take the stand.