“Former Eskom board chairperson Jabu Mabuza’s name is entangled in an R11-billion boiler tube maintenance contract at the ailing power utility,
where a company of his distant relative has emerged as one of those that made it through to the final bidding process for the critical contract.”
“The relationship, and the possibility of a conflict of interest, raised questions inside Eskom in the days before his resignation last week.”
“Nomvula Mabuza’s company — IDS Industry Service and Plant Construction Africa (IDS Africa) — was formed in April 2018, shortly after a new Eskom board was appointed.”
“It allegedly stands to benefit from 70% of the utility’s boiler tube maintenance contract, if the contract it is bidding for in a joint venture with American outfit General Electric (GE) is successful.”
“IDS Africa already has a contract valued at R100-million for boiler tube maintenance at Medupi power station, which was awarded in February 2019.”
“Eskom has, since last year, set aside R50-billion over the next four years for maintenance, with the bulk going towards maintaining boiler tubes.”
“There were no declarations of a possible conflict of interest by either Nomvula or Jabu Mabuza, regarding the two contracts.”
“Mabuza and Eskom say that Nomvula is a distant relative and that the former chairperson never sat in on discussions and decisionmaking processes relating to boiler tube maintenance contracts.”
“Several insiders and people with knowledge of the scale of the maintenance contract at Eskom expressed surprise that IDS Africa, as a relatively new company, would already be in the running for even a stake in such a lucrative job.”
“In her IDS Africa company profile, Nomvula claims that the entity has “47 years plant engineering experience” — a direct contradiction to her company’s registration records.”
The 35-year-old further claims that IDS Africa is working at Kusile and Medupi power stations, “continuing the legacy started since 2013 when IDS Africa Gmbh were roped in by Mitsubishi Hitachi Europe …”
“But investigations by the Mail & Guardian show that no company called IDS Africa Gmbh ever worked with Hitachi in 2013.”
“An IDS Industry Service and Plant Construction South Africa (IDS South Africa), however, was registered in May 2013 with two Croation nationals — Drazan Vrca and Marc Vrca — as its directors. It was this company contracted to Hitachi.”
“A source with knowledge of the Croatian IDS questioned why Vrca and Nomvula would need to register a separate company in South Africa.”
“It simply does not make sense to me because you would not need this complicated arrangement which looks like fronting,” said the source, who left Eskom more than five years ago. They asked not to be named as they still have close commercial ties to Eskom.
“The M&G has also established that a whistle-blower wrote to the Judicial Commission of Inquiry into Allegations of State Capture and to Public Enterprises Minister Pravin Gordhan in February and March last year, offering evidence against IDS Africa.”
“In the letter drafted by the whistle-blower’s lawyers and seen by the M&G, it is alleged that there has been widespread fraud and corruption regarding the awarding of tenders at Medupi and Kusile power stations.”
“The whistle-blower says in the letter that IDS Africa should be investigated by the commission as one of the companies which benefited from such fraudulent awards.”
They claim that: “During the [Medupi] tender process and in particular on the date of award, IDS Africa had no employees and had no experience in the maintenance of boilers… IDS Africa may, in fact, be a front.”
“An insider at Eskom told the M&G that the boiler tube maintenance contract has been stalled since December, after the tender committee resolved to scrap and restart the process to appoint a new service provider.”
“Another high-level source said that although chief procurement officer Solly Tshitangano sent a board submission asking for the process to be halted and restarted, Eskom’s full board is yet to confirm the cancellation.”
“The reasons provided were not convincing, so it was not cancelled … the preferred bidders should be awarded soon,” the source said.
Eskom told the M&G: “The bid process has not yet been concluded as the governance approval process is under way, therefore, information cannot be disclosed.”
A senior Eskom insider said there were genuine concerns about the evaluation of the R11-billion contract: “The facts are that the tender was not properly evaluated and due diligence reports indicated that finances of recommended suppliers are not sound.”
“They added, however, that some board members felt the cancellation request was made because Babcock International had been disqualified. Mabuza has a 26% stake in Babcock, which he put in a blind trust.”
The source suggested that the board “is not concerned about prioritising maintenance but concerned on who should get tenders”.
“In answers sent just days before Mabuza resigned, both he and Eskom told the M&G that they had no knowledge of Nomvula’s declarations and business dealings.”
Eskom said: “Nomvula Mabuza is a distant relative. Her father and Mr Mabuza’s father share the same great grandfather but not the same great grandmother. Mr Mabuza is not aware of what her professional activities involve nor what disclosure she has or has not made to Eskom.”
The utility added that: “Mr Mabuza, as matter of principle does not sit in any meetings nor participate in any discussion or decisionmaking process relating to boilers ... As such the details around this tender and contract management are not in his purview.”
