‘Sabotage’ by Kyle Cowan: Eskom’s corruption and neglect uncovered

1 Jun 2022

In May 2022, evidence of sabotage emerged at three Eskom power stations – cables and an air pipe were cut at Tutuka, crucial copper parts were removed from three units within the heart of Hendrina, and an attempt was made to take a unit at Matla offline. Sabotage at Eskom is real, the utility proclaimed. At that time, Kyle Cowan’s book on Eskom, aptly titled ‘Sabotage’, was on the printing press.

Based on exclusive interviews with chief executive officer André de Ruyter, chief operating officer Jan Oberholzer, Eskom chairperson Professor Malegapuru Makgoba and other key figures, Sabotage is a story of conspiracy and subterfuge at South Africa’s ailing power utility, uncovering the power struggles that threaten the country’s very survival.

In the following excerpt, Oberholzer reveals the relentless corruption, neglect or incompetence he discovered when he returned to Eskom in 2018 – ranging from a derelict facility storing high-value, strategic spares, to dodgy contracts for office coffee and sugar.

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In early 2018, Oberholzer got a call from an Eskom board member asking him to come back to the utility to help turn the ship around. He was reluctant at first, but he set about studying the financials and soon realised that things were not going well. After five weeks of deep thought, he relented.

‘Lindy had planted the seed in my mind,’ he said, ‘you know, that this call had come from God. And eventually I thought to myself, well, if my purpose in life is as I had realised so many years before, to contribute positively, this was perhaps my chance to plough back into Eskom my years of experience and knowledge.’

He was interviewed by the board and undertook a psychometric examination.

‘I had decided one day to visit my cousin in the Boksburg, Benoni area and just as I pulled up to the house my phone rang, and it was a number I did not recognise. But it was Phakamani [Hadebe, the then chief executive of Eskom], who asked me, you know, when can you start?’

Read in Daily Maverick | The anatomy of a disaster: A short history of Eskom and South Africa’s reliance on coal

On 16 July 2018, after a 10-year hiatus, Oberholzer returned to Eskom, now as the second-most senior executive in the company. It was on that first day, he said, that he realised just how bad things were – there was load shedding at the time and a massive strike by union members.

‘It was an incredible culture shock when I arrived back at Eskom, because what the board said to me the challenges were, they didn’t even know a tenth of what the issues really were.’

Oberholzer had returned to an Eskom reeling from the aftershocks of state capture. On his first day back, he called for individual meetings with the executives who would be reporting to him. In a series of one-hour sessions with each of them, he began to understand just how deep the challenges were.

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‘If I had still been drinking at that point, I probably would have gone off on my own with a bottle. I admit I thought what the hell was I thinking coming back.’

Oberholzer set about getting reports from each of the divisions to assess the current state of play. After reading the reports, he identified several immediate problems, and picked up that, on the transmission side of the business, there was a looming crisis that could potentially lead to a disaster on the scale of load shedding.

‘We have infrastructure there sometimes more than 48 years old. And there simply wasn’t any maintenance. If you look at the performance figures, transmission was going south quickly. But fortunately, in the last two years or so, we have managed to turn that around,’ Oberholzer told me.

Read in Daily Maverick | South Africa’s troubled power utility is being reset: Eskom CEO André de Ruyter explains how

The incidents and issues that required attention quickly multiplied, and every day people would approach him with information about issues that needed to be investigated. Early on, he visited power stations and examined some of the issues people had raised with him, and soon started uncovering major problems – caused by corruption, neglect or incompetence, or a combination thereof.

He decided to visit a warehouse where certain high-value, strategic spares and parts were kept – its location is closely guarded, but, according to Oberholzer, the facility, built by the apartheid government, is like a massive bomb shelter with metre-thick concrete walls and massive steel doors. It is located near one of the power stations and he was aware, peripherally, that the store contained spares worth more than R20 billion. Some officials, he said, were reluctant to organise the visit. So at 7 a.m. one Monday morning, he set off and arrived at the facility unannounced.

‘As I drove up, I could see one of the massive steel doors sort of hanging, broken, to one side. A guy came ambling up to me, chewing a piece of gum, and I told him who I was and what I was doing there. I proceeded inside.’

He found a clear layer of dust on everything. Wooden crates of spares had been broken open, the expensive, sometimes nearly irreplaceable strategic parts stripped of the copper inside them. Towards the rear of the facility, weeds and grass had started growing through the concrete to knee height. Parts lay scattered among the growth.

‘I asked the guy who was sitting there, do you have a computer where I can check the inventory? No computer. Do you have a book, something? He didn’t. Some of those parts were supposed to be preserved.’

As Oberholzer came walking back out of the facility, having seen the state of it, the power station manager arrived.

‘I think they must have seen the look on my face. Because they immediately just threw up their hands and said they weren’t accountable for the facility.’

It was only after Oberholzer asked the procurement boss at head office to find out who was responsible for the warehouse that the same manager realised it was his responsibility.

Oberholzer uncovered a plethora of disgraceful lapses – including the basics, such as Eskom paying R54 for a single black bag, R22 for a roll of single-ply toilet paper and double that for a litre of milk.

‘I visited the distribution centre in King William’s Town, and the one guy there said to me, you people at head office don’t know what you are doing. He explained that if he wanted to buy coffee or milk, he had to get it delivered from Johannesburg, where he could buy it locally for half the price. And that’s when I realised there were middlemen everywhere making a fortune,’ Oberholzer said. In those early days, he made it a priority to start relinking procurement of such basic goods to power stations and offices, decentralising it all.

But contracts for milk and sugar, while emblematic of Eskom’s state, were not the biggest problems he would have to deal with.

‘I nearly fell on my back when I found out that the costs for Medupi and Kusile had basically doubled. It just couldn’t be, I thought to myself.’

Twenty-three days after he returned to Eskom, Oberholzer signed a mandate for Bowmans law firm to investigate several key contracts at Kusile, including the turbine contract originally awarded to Alstom, which was bought by General Electric; the boiler contract awarded to Hitachi, since ceded to Mitsubishi; as well as civil construction contracts awarded to Tubular and his former employer, Stefanutti Stocks. He had learned that there were major problems with these contracts from people who had approached him with information during his first days in office.

He had set in motion the first steps of a major war with deeply entrenched networks.

‘I remember visiting Kusile one day, and in the mess hall I engaged with staff, and I told them, corruption was a major problem,’ Oberholzer recalled. ‘And one or two arrogant people challenged me, and said, you know, so what are you saying? My response was simple. Just watch the scoreboard, and you will understand.’

It would take just four months for the first attack on Oberholzer to begin, when Jabulane Mavimbela, the power station manager of Tutuka, filed a grievance against him, as well as acting head of generation Andrew Etzinger and a senior official brought in to help steer generation in the right direction, Chris Schutte. Mavimbela accused them of victimisation and harassment, motivated, he said, by racism.

Prior to this, all three men had spoken with Mavimbela about the performance of Tutuka, which was floundering. The power station had become Eskom’s worst-performing station, with regular breakdowns. The utility had also uncovered rampant corruption that apparently flourished under Mavimbela’s watch, including the theft of hundreds of millions of rands’ worth of fuel oil and spares. Arrests had been made concerning an alleged syndicate involved in pilfering the spares, while Eskom said more arrests would follow regarding the fuel oil. DM/ ML

Kyle Cowan is an award-winning journalist. He was twice named joint winner of the prestigious Taco Kuiper Award for investigative journalism and works at News24 as part of their in-depth investigative team. Sabotage: Eskom Under Siege is published by Penguin Random House SA (R280). Visit The Reading List for South African book news, daily – including excerpts!

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