Eskom takes action to recover funds paid to McKinsey, Trillian

Friday, October 6, 2017

Eskom is taking action to recover funds that were paid to McKinsey and Trillian.

In a statement on Thursday, the power utility said it has written to the two companies explaining the action it would take. Eskom requested their cooperation in the matter.

“Eskom sought McKinsey and Trillian’s cooperation in respectively returning R1 billion and R564 million, which appears to have been unlawfully paid out in 2016 and 2017. The interim findings from Eskom investigations, into the circumstances surrounding payments made to both companies, point to certain decisions by Eskom, and resultant payments, as being unlawful.”

The power utility also stated that it is obliged, pursuant to its statutory and common law duties, including the PFMA (Public Finance Management Act) and the Companies Act, to seek to set aside the unlawful decisions that were taken and to have all the money unlawfully paid out returned. 

“Being such a critical entity, which is inextricably tied to the nation’s economy, it is in the public interest to do everything we can as Eskom to claw back all the fees which were unlawfully paid, while expediting the disciplinary processes currently underway,” said the power utility.

Speaking ahead of the presentation of the department’s annual report at the Old Assembly Chamber in Parliament on Wednesday, Public Enterprises Minister Lynne Brown said she believes structures can be put in place to avoid a repetition of the ease with which Eskom appears to have been able to lie to its shareholder in respect of its dealings with McKinsey and Trillian.

“I want to be very clear about this: I regard Eskom’s lies, when asked to provide information to a Parliamentary question, as an assault on our democratic system of governance. The opposition was entitled to ask the question and to receive a truthful response. Had a truthful response been forthcoming, and the facts of the relationship been exposed last December, appropriate action would have been taken to investigate by now,” she said. 

The Minister said she has since asked Eskom why the response provided to her in December differed from its recent responses on the McKinsey-Trillian matter. 

The Minister indicated that she received a report from the board on Tuesday and has asked her department’s Legal & Governance unit for its considered recommendations.

The Minister’s remarks came after Eskom board interim chairperson, Zethemba Khoza, announced the suspension of four senior executive members due to their alleged involvement in the McKinsey-Trillian relationship. 

After the interim board was appointed in June, the Minister – as a shareholder - immediately instructed it to initiate investigations into allegations of irregular conduct and to also take disciplinary action against members of the executive, if warranted. 

“This instruction accords with the shareholder’s responsibilities in instances where boards fail to act appropriately on such allegations. Should boards fail to heed these directions, the shareholder has the right to intervene,” she said at the time. –

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