South Africa Launches Probe into Eskom’s Gupta Contracts

The graft-busting Special Investigating Unit (SIU) is now set to investigate allegations of corruption and maladministration surrounding nine contracts tied to Eskom’s operations, including coal and diesel procurement, with some linked to Gupta-owned businesses.

The Gupta family is known for its involvement in state capture - a form of systemic political corruption in which private interests influence a state's decision-making processes. The family’s links extend to South Africa’s former President Jacob Zuma who was tried for corruption, money laundering and racketeering. 

“The investigation will encompass any unlawful or improper conduct by Eskom officials, employees, suppliers, service providers, or any other involved parties,” the SIU said in a statement.

The SIU will also investigate any unauthorized, irregular, fruitless, or wasteful expenditure incurred by Eskom or the country from March 2006 to August 2024.

Ramaphosa’s proclamation authorizes the SIU to investigate several contracts linked to Eskom, including coal procurement from Tegeta Exploration and Resources, IT services agreements with T-Systems International and SAP South Africa, and a capital scrubbing task order. 

The probe also covers contracts for security services from Combined Private Investigations, forensic services from Kapditwala Incorporated, and IT services from Cutting Edge Commerce. 

Additionally, the SIU will examine alleged maladministration involving pre-payments of 1.68 billion South African rands (US$93.45 million) and 659 million rands ($36.65 million) made by Eskom for coal, with one payment later converted into a guarantee.

In 2013, Eskom signed several coal supply agreements with Gupta-owned Tegeta as part of the power utility’s medium-term coal procurement mandate.

The Commission of Inquiry into State Capture reported that, in addition to Eskom’s irregular advance payments to Tegeta, the agreements allowed Tegeta to secure highly favorable terms and extensions for its coal supply contracts.

The deal with the Guptas not only undermined South Africa's power supply, causing a surge in costs as Eskom turned to pricier power generation methods, but it also marked the beginning of a broader pattern of corruption.

In 2018, Eskom executive Abram Masango was suspended over allegations of misconduct linked to the Kusile power station. Additionally, in 2020, the SIU declared Eskom’s 3.7 billion rands ($205.81 million) contract with Tegeta’s Brackfontein mine unlawful.