Cash shedding now the new Eskom game

10 months ago written by

There might not be any load shedding in South Africa any more but Eskom is certainly in the business of cash shedding… and the Guptas seem to be part of the action yet again.

Eskom was forced to suspend its chief financial officer, Anoj Singh, after a number of South African banks called in over R351 billion in loans.

The weekend rag Sunday Times reports that the South Africa Treasury faced the prospect of having to raise hundreds of billions of rands after the Development Bank of Southern Africa (DBSA) issued an ultimatum to the power utility to recall a R15 billion loan.

Eskom reacted by suspending Singh as news rolled in that the development bank’s threat was being bolstered by warning letters from Barclays Africa and Rand Merchant Bank. quotes “a source close to the issue as saying: “It’s a major sovereignty risk. . . It’s R350 billion because once DBSA happens it triggers everyone else. If they all pull out it means Treasury must go and find hundreds of billions by tomorrow.”

The Sunday Times says the letters from the three banks raised grave concerns about Eskom’s qualified audit and its poor governance. They also show that Eskom earlier unsuccessfully attempted to get the DBSA to amend a contract requiring a clean audit, three days before it postponed announcing its results.

The DBSA rejected this, saying it was “directed at extricating Eskom from the consequences of its own conduct, with only lip-service for the effect on others”.

“Indeed it does not appear to the DBSA that Eskom appreciates the significant commercial financial and reputational risks to which Eskom has exposed the DBSA and its stakeholders following on the event of default and the request made by Eskom in its letter dated July 7,” wrote DBSA chief executive, Patrick Dlamini.

Singh, according to Business Tech, is at the centre of the state capture controversy involving the Gupta family. He was once again linked to the family by leaked emails, which stated that he had signed a number of dubious contracts with Gupta-associated Tegeta.

The contracts came to light at Eskom’s financial results presentation last week, when R3 billion in unauthorised spending was highlighted.

During a crisis meeting with the DBSA, Gigaba called public enterprises minister, Lynne Brown, to discussed the importance of suspending Singh as a signal to markets. He was placed on special leave hours later.

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