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Probe found Gupta-linked companies scored Eskom contracts with fake BEE certificates, the DA says

Three Gupta-linked companies were awarded multi-million rand contracts with Eskom utility despite fraudulent B-BBEE certificates or misrepresenting their empowerment status, according to a report seen by the DA.

Dean Macpherson, a member of Parliament for the DA, on Wednesday released correspondence between the B-BBEE Commission and the DA over a complaint against the companies, which he lodged in March 2018. The commission, which falls under the Department of Trade and Industry , is mandated to investigate complaints related to the B-BBEE Act.

The three documents, between 7 and 14 pages long, are the commission's "final findings". They are all dated July 12, 2019, and are signed by Moipone Kgaboesele, executive director of investigations and enforcement.

While the findings state that they include "restricted information" and should not be shared until the commission has published a final report, Macpherson told Fin24 by phone on Wednesday that the DA had obtained legal advice that the findings may be released as there is no rationale. reason to withhold the content.

Sidwell Medupe, spokesperson for the Department of Trade and Industry, confirmed to Fin24 that it had finalized its investigations of the complaints and issued its findings. It would, however, publish the findings in due course as guided by the B-BBEE Act, he said.

Two of the investigations relate to the B-BBEE verification company BEE Matrix. The DA had alleged in its initial complaint that the company had in 2016 irregularly awarded B-BBEE certificates to Gupta-owned companies Tegeta Exploration and Resources and Optimum Coal Mine. The DA says the commission found that the BEE Matrix and its technical signatory, Simone Mitchell, "acted in a manner contrary to the B-BBEE Act".

Some of the commission's other findings, according to the DA:

  • A B-BBEE certificate was awarded to Optimum Coal Mine without following the verification process, making it invalid;
  • Tegeta and Trillian Management Partners misrepresented their B-BBEE status to secure Eskom contracts;
  • Tegeta was wrongly classified as an exempt micro-enterprise with an annual turnover of no more than R5m and a B-BBEE Contributor Level 3. The commission stated that based on multi-million-rand contracts Tegeta entered into with Eskom the year before, should have been classified as a large entity.
  • Trillian Management Partners misrepresented its B-BBEE status as that of a B-BBEE Contributor Level 4. The company was classified as an exempt micro enterprise when this was not the case.
  • Eskom accepted or invalid B-BBEE certificate from Tegeta and Optimum Coal Mine. The power utility also accepted a B-BBEE sworn affidavit from Trillian and the invalid B-BBEE certificate from Tegeta – which misrepresented the B-BBEE status of the companies. All the while, Eskom had known the value of the contracts it awarded to entities, and that it exceeded the limited turnover of R10m required for companies to be classified as exempt micro enterprises.

Eskom was also criticized for failing to follow empowerment legislation. "Eskom failed to implement B-BBEE requirements in the procurement process relating to the three entities in question … its conduct and / or omission may have been misrepresented by B-BBEE entities," read one of the letters from the commission .

While Eskom officials had "all the information at their disposal to identify the misrepresentation of B-BBEE status, especially regarding Trillian and Tegeta", they did not do so.

Call for further investigations

According to the DA's documents, the commission made several recommendations, including:

  • BEE Matrix should have its accreditation removed as a verification agency;
  • The Companies and Intellectual Property Commission and the SA Revenue Service should investigate Trillian;
  • Eskom report implicated officials to police
  • That power utility lays a complaint against Gupta-linked companies with the police and or the National Prosecuting Authority.

Macpherson, meanwhile, said in a statement the DA would lay down a criminal record against three companies and various executives, including Mitchell, for allegedly issuing fraudulent certificates.

This is not the first time that the verification agency has been found wanting by the commission. After it was found to have issued an invalid certificate in July 2018, the commission wrote in a report that the responses received from its leadership showed a "total disregard of their fiduciary duties as shareholders and directors."

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