Viroshini Naidoo vs. Financial Mail

He says the following statements concerning Naidoo were not in dispute: She was Moodley’s wife; she was a director of Eskom and an employee of Albatime; Albatime was owned by her husband; she was present at the Eskom board meeting held in Cape Town in April 2015 where the sale of the Optimum coal mine was discussed; and Mr Mark Pamensky was also present at this meeting.

The story also said that according to the State of Capture Report, Albatime helped finance the “Gupta deal”.

The editor submits that Naidoo’s argument in this regard was over-simplifying the magazine’s reportage on this issue – the “package” offered to readers in that edition was about much more than just LornaVision. It was about the SABC, the Minister of Communications, Mr Hlaudi Motsoeneng and the award of “questionable” SABC contracts, as was testified in the Parliamentary Ad Hoc Committee’s investigation. It was also about “links” between role players and the Gupta family.

He argues that, when it came to these “links”, Naidoo was directly relevant – her relationship with Moodley, her directorship at Eskom, her employment with Albatime, and her presence at a board meeting where the sale of a mine to Gupta-controlled entities was discussed, all placed her squarely in the picture.

·         Par 5.103 of the report, which states, “As mentioned earlier, Mr Moodley is married to Ms Naidoo (Eskom Board member). His role in the Tegeta acquisition of OCH remained unknown until it was established that his company Albatime made payments for the benefit of Tegeta towards the acquisition of OCH (our underlining).”

·         In chapter 7 of the report, the Public Protector explained that, having considered the evidence uncovered during the investigation against the relevant regulatory framework, she proceeded to make certain “observations”. Based on that, the Public Protector proposed that, because of the extent of the issues that needed to be traversed, a commission of inquiry be established.

Rose says, “Arguing, as Ms Naidoo does, that the Public Protector report is ‘not factual’ and consequently, that the media may not report on what was ‘found’ in the report, is [not] supported by the contents of the report… The Public Protector’s report is final and binding until ordered otherwise by a court of law. In the interim fair and accurate reportage on the findings in the report, and the inferences one may draw from such findings, cannot be suppressed merely because a person mentioned in the report claims the findings are false. Note also that the Financial Mail did include Mr Moodley’s denials in this regard.”

The editor adds that the Financial Mail cannot be held liable for the conduct of Eskom in not immediately informing Naidoo about the notice from the former Public Protector, nor can the publication be responsible for the absence of communication between the former Public Protector and Naidoo.

·         Naidoo was only mentioned in passing, in a sidebar to the main story;

·         The information contained in the two paragraphs pertaining to her was not new – it originates from a formal Public Protector report which has been freely available since early November 2016; and

·         Since the release of the Report it has been widely reported on, and Naidoo was mentioned repeatedly in a range of news reports in this regard (even before the release of the Report).

He argues that, under these circumstances, the Financial Mail was not duty-bound to approach Naidoo for comment.

Recent e-mails shine new light on Eskom’s R660m ‘prepayment’ to Gupta-owned Tegeta. It now appears that the energy utility’s top brass was warned that the deal did not make economic sense

That Eskom meeting, held at 9pm on April 11 2016, was vital for the Guptas, if they were to realise their ambitions to become major players in the coal game.

Now, e-mails seen by the Financial Mail show that Matshela Koko — who was tipped to take the top job at Eskom before he was suspended last month amid a slew of nepotism allegations — was warned that the prepayment would not be economically viable for Eskom, but went ahead with it anyway.

Eskom company secretary Suzanne Daniels surprised the board’s tender committee less than 45 minutes before the meeting, informing the board that it would be asked to green-light the Gupta prepayment.

“The transaction requires urgent [board tender committee] consideration and approval for immediate implementation,” Daniels wrote in an e-mail.

She said the matter was urgent because two coal supply contracts for Arnot power station were about to expire. Eskom needed to ensure security of supply for the high-demand winter months, so both contracts had to be extended without going out to tender.

One contract was with Gupta-owned Tegeta Exploration & Resources, which had been supplying coal to Arnot from Optimum colliery through an offtake deal since January. At the time, Optimum was in business rescue. (Fortuitously, Tegeta was the company buying Optimum Coal from Glencore.)

Attached to Daniels’ e-mail was a four-page submission signed by Koko that asked the committee to approve five months’ upfront payment to the Gupta company “to meet the production requirements”. Tegeta would be paid R19.69/gigajoule (GJ) — almost double the average price of R11.05/GJ that Eskom pays for coal. The total bill came to R660m including Vat.

Critically, the Financial Mail has established that at least one board member, Viroshini Naidoo, found Daniels’ last-minute e-mail disturbing. Half an hour later she fired off a response to Daniels, copying in Eskom’s seven-member committee, including Koko.

Naidoo questioned the price offered and the wisdom of prepaying a company in business rescue. “Is Tegeta the new company that bought Optimum? Was Optimum supplying us before and at a better rate? Are they not in business rescue? By prepaying them, who gets the money?” she asked. “Is it the business rescue practitioner? Can we lose money by it going to the administrator? Can we justify the price we are paying for this coal to the public and [the department of public enterprises]?”

During the meeting, Naidoo sent another e-mail to Daniels (copied to the committee, including Koko) that read: “Why is the shortage discovered so late, why are these two companies chosen over others?” she asked.

Nobody gave her an answer.

In the end, the committee approved the Gupta prepayment, even though the question of the risk of paying a company in business rescue upfront remained unanswered. Despite Naidoo’s strong misgivings, Koko signed the deal with the Guptas two days later.

These new revelations that Naidoo had resisted this payment show clearly that even people on Eskom’s own board had deep reservations about the “prepayment”.

This would become important when, six months later, public protector Thuli Madonsela revealed in her report on state capture that the Eskom prepayment was not used to fund “production requirements”, as Koko had claimed, but to provide the Guptas with the outstanding cash they urgently needed to close the deal.

The money came in the nick of time. Six hours earlier, the banks had told the Guptas they wouldn’t be able to give them the R600m needed to meet the Optimum price tag of R2.15bn, due two days later. Without the prepayment, the deal would have fallen through.

A draft treasury report, sent to Koko in April this year, confirms as much. It says: “The advance payment of R659,558,079 should be regarded as a loan because there is no evidence that [Optimum or Tegeta] used the funds to procure any equipment” to increase output, adding it should be repaid with interest.

Treasury says any notion that the Guptas would be paid at a discounted rate for the coal was a sham too. Eskom had paid “R19.69/GJ for the coal that should have cost it R18.68/GJ”, it said.

E-mails leaked to the Financial Mail and other publications in recent weeks, along with Madonsela’s report, also show that Koko, former Eskom CEO Brian Molefe and mineral resources minister Mosebenzi Zwane gave the Guptas a helping hand at crucial milestones to clinch the deal.

When Optimum was owned by Glencore, it was losing R100m/month because its contract obliged it to sell coal to Eskom at less than it cost to mine it, and Molefe refused to raise the amount Eskom was paying.

In July 2015, the Guptas offered Glencore R2bn for Optimum. Two weeks later, Molefe slapped a R2.2bn penalty on Optimum for delivering “substandard coal”. Last month former mineral resources minister Ngoako Ramatlhodi accused Ben Ngubane, who resigned as Eskom chairman this week, of trying to strongarm him into suspending all Glencore’s mining licences in SA until the penalty was paid. (The penalty was subsequently “settled” in a private arbitration after the Guptas took control of Optimum — but, tellingly, Eskom won’t say for how much.)

Molefe has denied Madonsela’s claim that he pushed Optimum into business rescue to favour the Guptas. But the leaked e-mails suggest Koko was sending the Guptas confidential information about the Optimum deal, including a legal opinion.

On December 9, Tegeta CEO Ravindra Nath sent Koko a letter (copied to Rajesh “Tony” Gupta) thanking him for holding a meeting to discuss a R1.68bn prepayment for coal that would be supplied from Optimum mine — even though the company hadn’t even bought the mine yet. Nath asked for written confirmation that the prepayment would be forthcoming, providing his attorney’s bank details.

The next day, December 10, Tegeta signed the deal to buy Optimum from Glencore.

Koko’s cosy relationship with the Guptas continued. The leaked e-mails show that on January 4 2016, the Guptas treated him to a stay at the Oberoi hotel in Dubai, complete with chauffeur-driven luxury car hire.

Within weeks, Eskom had awarded Tegeta a lucrative contract to supply coal from the Optimum mine to the Arnot power station — the same contract that was extended with a R660m prepayment three months later.

Asked for comment this week, Koko declined. “The prepayment is being investigated by national treasury and the SIU [Special Investigating Unit],” he said. “I would not like to open another line of investigation by the media. I would let the current investigative processes unfold and I will co-operate with them.”

Speaking to the Financial Mail this week, Naidoo said she would never have approved the prepayment, had she known the money was being paid to the Guptas to fund their acquisition of Optimum.

“The prepayment was for operating capital to mine coal to be delivered to Eskom, not to buy the company,” she says. “I was duped into rubber-stamping this.”

Naidoo feels aggrieved that she’s been tarred and feathered as a Gupta deployee in Madonsela’s report. “I am not a ‘Gupta link’ or a pal of the family. I’ve always applied my mind as a director solely for the benefit of Eskom,” she says.

Naidoo says she was only told by Eskom the night before Madonsela’s report was finalised that she had been implicated. By then Eskom had spent almost a week compiling its response to Madonsela without consulting her.

In her report, Madonsela says Albatime, a company belonging to Naidoo’s husband, Kuben Moodley, had helped fund the Guptas’ purchase of Optimum — a charge Moodley denies. Madonsela says Naidoo was conflicted because she had worked for Albatime while serving on the Eskom board, and attended critical board meetings that had benefited the Guptas. Moodley had also served as Zwane’s adviser from October 2015 to the end of March 2016, which coincides with the time of the Optimum sale negotiations.

“Ms Naidoo did not declare her spouse’s involvement in the purchase of all shares in Optimum. This represents a serious conflict,” Madonsela’s report says.

But Naidoo says Madonsela got it wrong, because Albatime hadn’t contributed a cent towards the Optimum sale. She says she had declared to Eskom that she worked for Albatime and that her husband was Zwane’s adviser, which is why she recused herself from several board meetings. And Moodley no longer worked for Zwane when the prepayment meeting took place.

“If Madonsela had contacted me I would have explained all this and given her all the documents to prove it,” she says. “This entire situation has destroyed my reputation both professionally and personally.”

“Eskom only discovered the nature and extent of Ms Naidoo’s failure to provide a full disclosure … when the public protector’s report was released,” says Qoma. He says it is “not becoming of an ex-board member” to raise concerns now about a prepayment she had approved.

“One of the critical skills of being a board member is the ability to discern deception and/or falsehoods — her allegations are ominously suggestive of her, to say the least,” says Qoma.

He says Eskom is waiting for the outcome of President Jacob Zuma’s review application of Madonsela’s report to deal with all the issues related to the prepayment and Tegeta.

But the fact remains that, until now, there has been no evidence that any of Eskom’s directors had taken issue with the payment to the Guptas. These new revelations will put further pressure on Eskom’s top brass to explain themselves.

The Gupta family’s attorney, Gert van der Merwe, says a decision has been taken not to comment on the leaked e-mails until a formal inquiry has been instituted.