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Cliffe Dekker Hofmeyr Attorneys

Forensic investigation into allegations of potential conflict

of interest by the Interim Chief Executive Officer of Eskom

Holdings SOC Limited

Cliffe Dekker Hofmeyr Final Report 23 June 2017 ___________________________________________________________________________________________________

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Table of contents

i) List of Abbreviations ............................................................................................................. 4

ii) List of Role Players ................................................................................................................ 6

iii) List of Entities ........................................................................................................................ 9

iv) List of Exhibits ..................................................................................................................... 10

Executive Summary .................................................................................................................... 13

Chapter 1: Introduction ............................................................................................................. 20

1.1 Background .......................................................................................................................... 20

1.2 Mandate and scope of assignment ..................................................................................... 20

1.3 Purpose of the report .......................................................................................................... 21

1.4 Qualifications ....................................................................................................................... 21

1.5 Limitations/Assumptions ..................................................................................................... 22

Chapter 2: Approach ................................................................................................................. 24

2.1 Introduction ......................................................................................................................... 24

2.2. Assignment scope ................................................................................................................ 24

2.3 Procedures performed ........................................................................................................ 24

2.4 Period under investigation .................................................................................................. 25

2.5 Consultations ....................................................................................................................... 25

2.6 Documentation sourced ...................................................................................................... 26

Chapter 3: Regulatory framework .............................................................................................. 29

3.1. Background .......................................................................................................................... 29

3.2 The Constitution, no 108 of 1996 ........................................................................................ 30

3.3 The PFMA, no 1 of 1999 ...................................................................................................... 30

3.4 National Treasury Regulations/Instruction Notes ............................................................... 32

3.5 National Treasury Code of Conduct .................................................................................... 33

3.6 Corporate Governance in the Public Sector ........................................................................ 33

3.7 The PPPFA, no 5 of 2000 ...................................................................................................... 34

3.8 Eskom Procurement and Supply Management Procedure (32-1034) ................................ 34

3.9 Code of Ethics Procedure (32 -757) ..................................................................................... 39

3.10 Code of Ethics Policy (32 – 527)........................................................................................... 40

3.11 Conflict of Interest Policy (32 – 173) ................................................................................... 40

3.12 Declaration of Interest Procedure (32 – 225) ...................................................................... 42


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3.13 2013 Delegation of Authority Policy (240-62072907) ......................................................... 44

3.14 2017 Delegation of Authority Policy (240-62072907) ......................................................... 45

3.15 Process Control Manual (“PCM”) for Vendor Master Data (240-45657065) ...................... 46

3.16 PCM for External Suppliers (240-78921684) ....................................................................... 46

3.17 Eskom Supplier Integrity Pact (240-113650212) ................................................................. 46

3.18 NT Instruction Note 3 of 2016/17 ....................................................................................... 47

3.19 Memorandum of Incorporation .......................................................................................... 48

Chapter 4: Stake holders ........................................................................................................... 49

4.1. Legal entities ........................................................................................................................ 49

4.2 Individuals ............................................................................................................................ 52

4.3 Central Supplier Database ................................................................................................... 54

4.4 Mokoni Trust with reference IT00216/2016(MN) ............................................................... 54

Chapter 5: Declaration of Interest .............................................................................................. 57

5.1 Declarations made by Eskom employee ............................................................................. 57

5.2 Declarations by Impulse International (Pty) Ltd .................................................................. 67

5.3 Timeline of involvement of stakeholders in Impulse International (Pty) Ltd ...................... 69

Chapter 6: Impulse International (Pty) Ltd ................................................................................. 71

6.1 Eskom DOA .......................................................................................................................... 71

6.2 Contracts awarded to Impulse International (Pty) Ltd ........................................................ 72

6.2 Procurement of services ...................................................................................................... 74

7. Conclusions ............................................................................................................................ 76

8. CDH Legal Finding and Recommendation 80


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i) List of Abbreviations

Below is a list of abbreviations utilised in the report:

Abbreviation Description

BODTC Board Tender Committee

BBBEE Broad Based Black Economic Empowerment Act, no 53 of 2003

Capex Capital Expenditure

CC Close Corporation

CE Chief Executive

CEO Chief Executive Officer

CFO Chief Financial Officer

C&I Control and instrumentation

CIPC Company and Intellectual Property Commission

Constitution Constitution of South Africa, no 108 of 1996

CPO Chief Procurement Officer

CSD Central Supplier Database

DE Divisional Executive

DOA Delegation of Authority

DCF Delegation Consent Form

DOI Delegation of Interest

EXCO Executive Committee

EXCOPS Executive Committee Procurement Sub- Committee

FD Finance Director

GE Group Executive

HR Human Resources

Interim CEO Interim Chief Executive Officer

LPO Local Purchase Order


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Abbreviation Description

Mokoni trust Mokoni trust (IT000216/2016(MN)

NDA Non-disclosure agreement

NEC New Engineering Contract

NT Regulations National Treasury regulations

Opex Operational Expenditure

PCM Process Control Manual

PFMA Public Finance Management Act, no 1 of 1999

PO Purchase Order

PPPFA Preferential Procurement Policy Framework Act, no 5 of 2000

PR Purchase requisition

(Pty) Ltd Propriety Limited

PTC Procurement Tender Committee

RFP Request for proposal

SAP system Systems Applications and Products system

SCM Supply Chain Management

SD&L Supplier Development and Localisation

VAT Value Added Tax


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ii) List of Role Players

Below is a list of abbreviations in respect of the role players referred to in this report and exhibits:

Abbreviation Description of Person

Male individuals

Mr Bezuidenhout CW Bezuidenhout, Procurement Manager: Eskom Holdings

Mr Bhima D Bhima, Acting Senior General Manager: Outage: Eskom Rotek Industries SOC Limited

Mr Cumming J G I Cumming, Product Group Manager: Eskom Rotek Industries SOC Limited

Mr Coetzee Johannes Coetzee, lawyer representing Ms Koko

Mr Dewey D Dewey, Project Finance & Risk Manager: Medupi Projects

Mr Esterhuyzen Pierre Esterhuyzen, Senior Manager: Project Sourcing: Kusile Power Station

Mr Fourie W Fourie, Financial Manager: Kriel Power Station

Mr Ibrahim S Ibrahim, Project Manager: Medupi Power Station

Mr Khan Mohamed Khan, Acting General Manager: Corporate Finance: Eskom Holdings

Mr Koko Matshela Koko, Group Executive: Generation: Eskom Holdings

Mr Lachenicht John Lachenicht, Head of Procurement: Eskom Rotek Industries SOC Limited

Mr Lefifi K Lefifi, Project Manager: Kendal Power Station

Mr Gani Asger Gani, Attorney representing Ms Choma

Mr Masogo Solly Masogo, Line Manager: Business Improvement: Kriel Power Station

Mr Marokane D Marokane, Acting Group Executive: Group Capital: Eskom Holdings

Mr Masango Abram Masango, Prior Group Executive: Group Capital: Eskom Holdings

Mr Mazibuko Sifiso Mazibuko, Project Director: Kusile Power Station

Mr Molefe Brian Molefe, Former Chief Executive Officer: Eskom Holdings

Mr Moloto M Moloto, Maintenance/Supervising Manager: Majuba Power Station


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Mr Mollo P Mollo, Procurement Manager: Majuba Power Station

Mr Mokhutsane Tebogo Mokhutsane, Chairman: Kriel Procurement Tender Committee (Middle Manager Operating CoE)

Mr Mtshali Thulani Mtshali, Delivery Manager/Senior Manager: Kusile Power Station Project

Mr Mulovhedzi E Mulovhedzi, Procurement Manager: Kendal Power Station

Mr Nair K Nair, Chief Advisor Policies & Assurance: Medupi Projects

Mr Nani T C Nani, General Manager: Kendal Power Station

Mr Ndila L Ndila, Procurement Officer: Majuba Power Station

Mr Ngoba A Ngoba, Senior Manager: Projects: Kusile Power Station

Dr Ngubane Baldwin Ngubane, Chairman of the Board: Eskom Holdings

Mr Nkuna Tinyiko C Nkuna, Acting Finance Manager: Kriel Power Station

Mr Pather Pragasen Pather, CEO Impulse International (Pty) Ltd and Eskom Supplier

Mr Pepler Wally Pepler, Site Procurement Manager: Kusile Power Station

Mr Pule David Pule, SD&L Manager: Kusile Power Station

Mr Seswai Watson Seswai, CEO of Seswai Marketing and Branding (Beneficiary: Mokoni trust)

Mr Singh Anoj Singh, Chief Financial Officer: Eskom Holdings

Mr Sithole Frans Sithole: Executive Line Manager/Project Director: Kusile Power Station

Mr Tshabalala N Tshabalala, Acting Operating Manager: Kriel Power Station

Mr van der Westhuizen Pieter van der Westhuizen, Medupi Power Station Project

Mr van Deventer Pierre Van Deventer, Management Accountant: Kriel Power Station

Female individuals

Ms Choma Koketso Choma, beneficiary of Mokoni trust and stepdaughter to Mr Koko

Ms Daniels Suzanne Daniels, Company Secretary: Eskom Holdings


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Ms Koko Mosima Koko, mother of Ms Choma and spouse to Mr Koko

Ms Masemula Martha Masemula, Senior Advisor: Buying: Kusile Power Station Project

Ms Pule Elsie Pule, Group Executive: Human Resources: Eskom Holdings

Ms Ramapulane Suzane Ramapulane, Control & Instrumentation Manager: Majuba Power Station

Ms Rampedi Magdeline Rampedi, Contracts Manager: Eskom Rotek Industries SOC Limited

Ms Strydom Christa Strydom, Procurement Practitioner: Eskom Holdings

Ms van Rooyen Vivian van Rooyen, TGS Business Partner: Eskom Rotek Industries SOC Limited


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iii) List of Entities

Below is a list of abbreviations in respect of the entities referred to in this report:

Abbreviation Description of Entity

CDH Cliffe Dekker Hofmeyr Attorneys

Eskom Eskom Holdings SOC Limited

ERI Eskom Rotek Industries SOC Limited

High Echelon Trading High Echelon Trading 94 CC

Impulse Holdings Impulse Holdings (Proprietary) Limited

Impulse International (Pty) Ltd

Impulse International (Proprietary) Limited

Indiwize Construction Indiwize Construction (Proprietary) Limited

JKMA JKMA Investments (Proprietary) Limited

Nkonki Nkonki Incorporated

NT National Treasury

PwC PricewaterhouseCoopers Incorporated

Rotek Rotek Industries (Proprietary) Limited

Ukwakhiwa Ukwakhiwa Investments (Proprietary) Limited


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iv) List of Exhibits

Exhibit No.

Description of Exhibits

1 Company and Intellectual Property Commission search results for Impulse International (Pty) Ltd with registration number 2012/097222/07

2 Company and Intellectual Property Commission search results for JKMA Investments (Pty) Ltd with registration number 2016/087062/07

3 Company and Intellectual Property Commission search results for Ukwakhiwa Investments (Pty) Ltd with registration number 2016/072200/07

4 Company and Intellectual Property Commission search results for Impulse Holdings (Pty) Ltd with registration number 2012/084488/07

5 Company and Intellectual Property Commission search results for Indiwize Construction (Pty) Ltd with registration number 2012/196338/07

6 Company and Intellectual Property Commission search results for High Echelon Trading 94 CC with registration number 2002/063138/23

7 Directorship/Membership interests search result for Mr Pather in Companies/Close Corporations

8 Directorship/Membership interests search result for Ms Choma in Companies/Close Corporations

9 Directorship/Membership interests search result for Mr Koko in Companies/Close Corporations

10 Directorship/Membership interests search result for Ms Koko in Companies/Close Corporations

11 Central Supplier Database (“CSD”) for Government reflecting registration of Impulse International (Pty) Ltd

12 Correspondence from Mr Coetzee, the legal representative of Ms Koko

13 Declaration of Interest e-form dated 3 September 2015

14 Declaration of Interest e-form dated 8 June 2016

15 Declaration of Interest e-form dated 24 February 2017

16 Letter of caution dated 3 October 2016

17 Declaration of interest e-form dated 11 February 2008

18 Declaration of interest e-form dated 11 August 2008

19 Declaration of Interest e-form dated 30 July 2009

20 Declaration of Interest e-form dated 28 February 2011


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Exhibit No.


21 Declaration of Interest e-form dated 26 October 2011

22 Declaration of Interest e-form dated 16 May 2012



25 Business Management System Sole Source Justification, signed by Mr Koko 26 October 2015

26 Letter dated 17 March 2016 addressed to Mr Cumming and signed by Mr Koko

27 Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 April 2016 for Contract 4600061441

28 Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 August 2016 for Contract 4600061009

29 Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 September 2016 for Contract 4600061859

30 Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 May 2017 for Contract 4600062251

31 Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 18 May 2017

32 Eskom Vendor Registration for Impulse International (Pty) Ltd on 19 August 2014 with vendor registration number 11082200

33 Contract number 4600060205 with related documentation










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Exhibit No.



43 CDH Memorandum dated 3 June 2017


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Executive Summary

1. It is evident that Mr Koko was appointed as the GE: Generation during late 2015. He was

also responsible for Technology, consisting of maintenance and engineering. He was

appointed as the Interim Group Chief Executive (“CE”) with effect from 1 December 2016

until the vacant post of the Group CE is filled or until he is advised otherwise.

2. Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014

and was appointed by Eskom from the 22 July 2014 as per the SAP system information to

render services to Eskom.

3. It was established that the initial contract with reference number 4600055020 was signed

between Eskom and Impulse International (Pty) Ltd on 21 August 2014 for the provision

of specialised services. The first Impulse International (Pty) Ltd invoice dated 19 August

2014 and referenced 106 was submitted for payment in respect of work done during the

period ending 17 August 2014. According to an internal Eskom procurement document

dated 15 July 2014 and named as “Medupi Power Station Project” the procurement was

classified as “emergency procurement”.

4. Emergency procurement is defined as an imminent or immediate and unforeseeable

requirement. When an emergency arise and there is no procurement function

immediately available or there is limited time to initiate a normal procurement process

via one of the acceptable procurement methods or sourcing mechanisms, then the

emergency procurement procedure may be used to resolve the emergency situation.

This procedure is described in paragraph 3.5.2 of the Procedure document (32 – 1034).

5. It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and

was also appointed as a sub-contractor to render services to Eskom. We established that

10 (ten) contracts were awarded by Eskom to Impulse International (Pty) Ltd in the total

value of R 390 139 515.22 according to the SAP system. It was further established that

Impulse International (Pty) Ltd was not appointed on any Eskom panel of service

providers.


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6. The total payments received by Impulse International (Pty) Ltd as a sub-contractor to ABB

South Africa (Pty) Ltd amounts to R343 518 005.54 according to documentation provided

by Mr Pather.

7. Ms Choma, the stepdaughter of Mr Koko, was appointed as a non-executive director at

Impulse International (Pty) Ltd on 31 March 2016. Mr Pather the CEO of Impulse

International (Pty) Ltd initially allocated 25% shareholding to Ms Choma on 31 March

2016. According to Mr Pather, 35 % shareholding was allocated to her in total in order

to ensure a favourable BEE score.

8. Ms Choma resigned as a non-executive director of Impulse International (Pty) Ltd on 20

September 2016. She stated that she was not employed by Impulse International (Pty)

Ltd nor did she received any payment relevant to her appointment as a non-executive

director. Mr Pather confirmed that no payment was made to Ms Choma as a non-

executive director.

9. The Mokoni trust with reference IT 2000216/2016(MN) was registered on 7 July 2016 and

on 21 September 2016 Ms Choma transferred 25 % shares in Impulse International (Pty)

Ltd to the Mokoni trust where she was registered as a trustee and a beneficiary. Mr

Pather transferred 10% shareholding of Impulse International (Pty) Ltd to the Mokoni

trust on 21 September 2016.

10. The graphical representation relevant to the declaration of interest by Mr Koko and the

appointment of Ms Choma as a non-executive director and shareholder of Impulse

International (Pty) Ltd is reflected hereunder:


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11. Ms Koko and Ms Choma confirmed that Mr Koko was not informed of her appointment

as a non-executive director at Impulse International (Pty) Ltd on 31 March 2016. Mr Koko

became aware of her appointment as director and shareholder around

August/September 2016 where after he requested her to resign as a non- executive

director and relinquish her shareholding in Impulse International (Pty) Ltd. She submitted

her resignation on 20 September 2016 as a non-executive director and decided to

transfer her shares to the Mokoni trust. Mr Koko was not aware at the time of her

decision to keep the shareholding in Impulse International (Pty) Ltd via the Mokoni Trust.

12. Mr Coetzee from Ströh Coetzee Attorneys confirmed that he advised inter alia Ms Koko

for the past 20 years and acted as her attorney and conveyancer. According to Mr

Coetzee, the latest business venture that Ms Koko undertook, was a town house

development situated in Buitekant Street, Middelburg under the name “Three on

Buitekant”. Mr Coetzee confirmed that he advised Mr Choma, Ms Choma and Ms Koko

on the restructuring and establishment of various companies, trusts and business entities

as their family attorney.

13. Mr Coetzee advised Ms Koko and Ms Choma in February 2016 to structure their business

entities and shareholding vehicles in such a manner as to optimise risk management,


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estate planning and business efficiency. Ms Koko and Ms Choma followed his advice and

they established the Mokoni and Bokoni trusts during February 2016 although both trusts

were only registered in July 2016. He confirmed that “it was always the intention that

shares should not be held by Ms Choma in her own name but through trust structures and

that she should conduct business in the name of separate legal entities”.

14. According to Mr Coetzee, they registered Ukwakhiwa Investments (Pty) Ltd which was

set up in February 2016. The company was not retained as a shelf company, but was

actively trading and involved in the building activities of the “Three on Buitekant”

townhouse project. Mr Coetzee stated that he has never met or spoken to Ms Koko’s

new husband, Mr Koko.

15. Mr Coetzee confirmed that he was approached in February 2017 to file the resignation

of Ms Choma as trustee in both trusts with the Master of the High Court Mpumalanga

and the amendment of the trust deeds to remove her as a trustee was lodged with the

Master of the High Court during February 2017.

16. Mr Koko was informed in February 2017 that Ms Choma was a beneficiary to the Mokoni

trust that held 35% shareholding in Impulse International (Pty) Ltd since 21 September

2016. After he became aware of Ms Choma’s shareholding, he declared her interest in

the trust, which holds 35% shares in Impulse International (Pty) Ltd, to Eskom.

17. Mr Koko declared on 24 February 2017 that his stepdaughter is a beneficiary in a trust

which owns 35% interest in the entity styled Impulse International (Pty) Ltd. This

declaration was approved by the Chairperson of the Eskom Board, Dr Baldwin Ngubane

on 1 March 2017.

18. Mr Pather did not declare the directorship or shareholding of Ms Choma to Eskom during

2016 when Impulse International (Pty) Ltd was awarded 4 (four) contracts to the

accumulative value of R193 665 807.77 during 2016 as per the SAP system information.

19. Mr Pather declared his relationship with Mr Koko on 12 May 2017 after signing a contract

(4600062251) with Eskom on 28 February 2017.

20. We received a letter from the attorney of Mr Pather on 26 May 2017 indicating that “in

hindsight, disclosure should have been made and was prudent not only to safeguard the


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interest of Eskom, but also, as afore stated, to be transparent and accountable and

thereby serve the interest of the respective contracting parties as well as the public

interest”.

21. The timeline hereunder reflects a summary of events/dates relevant to the declaration

on interests of Mr Koko and appointment of Ms Choma at Impulse International (Pty) Ltd.

Legend

SHADE DATE FROM

DATE TO EVENT

31-Mar-16 20-Sep-16 Ms Choma was appointed director of Impulse International (Pty) Ltd

07-Jul-16 23-Feb-17 Ms Choma was appointed beneficiary and trustee of Mokoni trust

23-Feb-17 End of Timeline Ms Choma resigned as trustee of Mokoni trust and is sole beneficiary of Mokoni trust


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22. According to the SAP data provided by Eskom, the peak period of financial transacting

amounting to 56% of all contracts (to date) between Eskom and Impulse International

(Pty) Ltd was in year 2016 as presented below:

YEAR NO OF CONTRACT CUMULATIVE VALUE % PER YEAR

2014 1 R 10 722 228,66 3%

2015 1 R 65 854 766,64 19%

2016 4 R 193 665 807,77 56%

2017 3 R 78 355 912,15 22%

TOTAL 9 R 348 598 715,22 100%

23. According to the currently available documentation, Eskom utilised their procurement

processes as described in their procurement policy, in the awarding of contracts to

Impulse International (Pty) Ltd. There are no indication on any of the available

documentation sourced that Mr Koko was involved in the approval and awarding of

contracts to Impulse International (Pty) Ltd.

24. It appears from the available evidence, that Mr Koko was not informed regarding the

directorship and shareholding of Ms Choma in Impulse International (Pty) Ltd on the

commencement and duration thereof. There was therefore no conflict of interests to be

made by Mr Koko in 2016 regarding the non-executive directorship and shareholding of

Ms Choma in Impulse International (Pty) Ltd.

25. The available evidence support Mr Koko’s version that he requested Ms Choma to resign

as a non-executive director of Impulse International (Pty) Ltd and relinquish her

shareholding in the entity after he became aware of same during August/September

2016. Mr Koko became aware of the fact that Ms Choma was a beneficiary in the Mokoni

trust in February 2017 and he declared her shareholding in the trust, which holds 35%

shares in Impulse International (Pty) Ltd to Eskom on 24 February 2017, which declaration

was approved by Dr B Ngubane.


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26. The legal opinion obtained relevant to section 75 of the Companies Act, also addresses

the conflict of interest provisions in the PFMA as well as Eskom's internal conflict of

interest policies. The opinion albeit based on the face of it and the evidence provided

that whilst there are some technical differences between the Companies Act, PFMA and

the policies in terms of their ambit and the range of persons to whom they apply,

ultimately their basic and essential principles are the same: There must be disclosure and

recusal where one (or one's related parties) are interested in the matter being considered

at a meeting or other decision-making forum, and additionally ongoing updates of

personal business interests must be made within the organisation.

27. Section 75 of the Companies Act referred to above, provides that if a director/prescribed

officer of a company acquires a personal financial interest in an agreement or other

matter in which the company has a material interest, or knows that a related person has

acquired a personal financial interest in the matter, after the agreement or other matter

has been approved by the company, the director/prescribed officer must promptly

disclose that interest.

28. Mr Koko upon becoming aware that Ms Choma is registered as a beneficiary to the

Mokoni trust in February 2017, declared her shareholding in the trust, which holds 35%

shares in Impulse International (Pty) Ltd, to Eskom as contemplated by section 75 of the

Companies Act, no 71 of 2008 and as provided for by Eskom's declaration of interest

policy.

27. The facts as set out in this report are based on a limited fact-gathering and interviewing

process. In the circumstances, without having interrogated the evidence gathered and

based on the untested statements and documentation made available to us, we are

unable on the basis of this fact finding enquiry to come to any conclusion.


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Chapter 1: Introduction

1.1 Background

1.1.1 Cliffe Dekker Hofmeyr Attorneys (“CDH”) was instructed by Eskom Holdings SOC Limited

(“Eskom”) to conduct a forensic and legal investigation in respect of various articles

published concerning the potential conflict of interest relating to the Interim Chief Executive

Officer (“CEO”), Mr Matshela Koko’s (“Mr Koko”) stepdaughter’s shareholding in an entity

styled Impulse International (Pty) Ltd (“Impulse International”), the latter being a service

provider to Eskom.

1.1.2 The objective of the investigation was to ascertain whether the allegations could be

corroborated and/or substantiated by evidence including viva voce, real and/or

documentary evidence which investigation was limited to a fact-gathering and interviewing

process

1.1.3 The process of a full investigation including examination and cross-examination of witnesses

was not the process followed.

1.1.4 This report was prepared to set out the outcome of the fact-gathering and interviewing

process in order that opinions can be given and recommendations made on the way forward

having regard to the content of the report.

1.1.5 CDH informed Eskom on 28 March 2017 that it would be appointing an independent auditing

firm to assist with the forensic investigation.

1.1.6 Nkonki Incorporated (“Nkonki”) was appointed on 3 April 2017 by CDH to conduct a forensic

investigation concerning the potential conflict of interest relating to Mr Koko’s

stepdaughter’s shareholding in Impulse International (Pty) Ltd.

1.2 Mandate and scope of assignment

1.2.1 Nkonki was appointed on 3 April 2017 to conduct a forensic investigation into the allegations

referred to supra.

1.2.2 The scope of work included inter alia to:


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Conduct searches in order to ascertain the detail of Impulse International’s director/s

as well as the appointment and/or resignation dates of the directors in order to

establish if Ms Koketso Choma (“Ms Choma”) was appointed as a director and if so,

whether she resigned as a director;

Obtain the relevant information regarding all the contracts awarded to Impulse

International by Eskom;

Consult with the CEO of Impulse International, Mr Pragasen Pather (“Mr Pather”)

regarding the appointment and resignation of Ms Choma as a director of the company

and the detail of contracts awarded to Impulse International by Eskom;

Obtain information relevant to the shareholding of Impulse International and

declarations of interests made by Ms Choma;

Obtain detail from Eskom regarding the contracts awarded to Impulse International

and the procurement processes followed when the contracts were awarded including

the value thereof;

Obtain Mr Koko’s declaration of interests for the year 2016 and 2017;

Obtain information regarding the Mokoni trust and its interests in Impulse

International; and

Any additional information should the need arise before conclusion of the

investigation.

1.3 Purpose of the report

1.3.1 The purpose of this draft report is to make known our findings emanating from the

investigation conducted as described in the scope of work above.

1.3.2 The report is confidential and has been compiled for only the information of CDH.

1.4 Qualifications

1.4.1 This report is to be used solely for the purpose and subject to the limitations, set out in this

section. The report serves as an information document and may not be used for any other

purpose, without our prior consent.


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1.4.2 Although we have, to the best of our professional ability, examined documentation made

available to us, the information contained in this report is subject to the following:

The conformity to the original documentation of all copied documents submitted to

us has been assumed;

Except in instances where we deemed it necessary, we have not verified the

authenticity or validity/veracity of the documentation made available to us; and

Where we have not had sight of a document following a request, we were not able to

verify its existence and assumed that a record thereof has not been kept.

1.4.3 We confirm our role as independent consultants and that our independence in conducting

this investigation cannot be limited by any party. The report in its current format is not

intended for use as submission in civil litigation, criminal litigation and disciplinary hearings.

1.4.4 Nkonki will not accept any responsibility should this report be disclosed or released to any

party, other than the intended recipient.

1.4.5 Nkonki does not accept any liability for any loss, either directly or indirectly, suffered by any

third party arising from the fulfilment of the mandate.

1.4.6 The scope of the work was limited to an investigation into allegations made in various articles

concerning the potential conflict of interest relating to Mr Koko’s stepdaughter’s

shareholding in Impulse International.

1.4.7 Although the work performed incorporates our understanding of the law as it stands, we do

not express an opinion on the interpretation of the law or the legal effect of the facts or the

guilt or innocence of any person or party, but have merely stated the facts as they have come

to our attention. The procedures performed do not constitute an audit or a review in

accordance with International Standards on Auditing or International Standards on Review

Engagements (or relevant national standards or practices). Consequently, we do not express

an audit or legal opinion thereon.

1.5 Limitations/Assumptions

1.5.1 During our investigation, the following encumbrances were experienced:


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We were limited to documentation provided to us by Eskom relevant to Impulse

International (Pty) Ltd and we accepted the documentation at face value;

We were limited to a scoping period of 1 April 2016 to 31 March 2017 to source

documentation; and

We were limited to a scoping period of September 2014 to 28 March 2017 to source

data from the Eskom SAP system.

1.5.2 We were limited to documentation and data provided by Eskom relevant to Impulse

International (Pty) Ltd. We did not source documentation or data relevant to transactions

where Impulse International (Pty) Ltd was appointed as a sub-contractor to contractors

appointed by Eskom.

1.5.3 We received documentation from Impulse International (Pty) Ltd on 23 May 2017 relevant

to contracts entered into between Eskom and Impulse International (Pty) Ltd and we utilised

the documentation in context of the investigation at face value.

1.5.4 Our analysis was limited to procurement transactions where payments were effected. We

did not include procurement transactions that were limited to PO's that had no respective

payments to corresponding invoices.


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Chapter 2: Approach

2.1 Introduction

2.1.1 Our methodology and approach to conduct this investigation is reflected hereunder.

2.1.2 We were required to:

Establish the veracity of the allegations made in articles relevant to the potential

conflict of interest regarding the Interim CEO, Mr Koko;

Ascertain whether the allegations could be corroborated and/or substantiated by

evidence including viva voce, real and/or documentary evidence.

2.2. Assignment scope

2.2.1 We were required to conduct an investigation to determine the veracity of allegations

made in various articles relevant to the potential conflict of interest of the Interim CEO

and the shareholding of his stepdaughter in the entity styled as Impulse International.

We had to review and analyse documentation, conduct consultations and analyse data

relevant to the allegations referred to supra.

2.2.2 The assignment was divided in four (4) parts namely:

Sourcing of documentation and data relevant to the matter;

Analysis of documentation and data sourced;

Conducting consultations with identified role players; and

Identifying the veracity of the allegations referred to supra.

2.3 Procedures performed

2.3.1 Our procedures followed included inter alia:

Information, documentation and data sourced and received during the

investigation were perused and analysed;

Consultations were conducted with Eskom employees;

Consultation were conducted with external parties;

Written communication was forwarded to and received from external parties;


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Publicly available information was sourced regarding legal entities identified during

the investigation; and

Publicly available information was sourced regarding individuals identified during

the investigation.

2.3.2 We proceeded with a view to establish the correctness of the allegation of potential

conflict of interest made against the Interim CEO.

2.3.3 The investigation focused on the analysis of documentation, information and data

relevant to Eskom and Impulse International and where considered appropriate,

supporting documentation and explanations.

2.3.4 We are, however, not able to certify that we received all the documentation that may be

in existence or that the contents of any documentation at our disposal or any statements

or information obtained by or made available to us are true and correct. If additional or

further documentation is made available after the date of this report, our findings might

change relevant to our current assignment.

2.4 Period under investigation

2.4.1 The period of our investigation extended from 1 April 2016 to 31 March 2017. In certain

instances, we considered events and/or transactions and/or data outside of this period.

The information contained in this report is based on prevailing conditions and

documentation and information sourced as at 13 June 2017. This report and information

contained herein shall not amount to any form of guarantee that Nkonki has determined

or predicted future events or circumstances.

2.5 Consultations

2.5.1 Consultations were conducted with the following Eskom employees:

Mr Abram Masango;

Mr Anoj Singh;

Mr Frans Sithole;

Mr Sifiso Mazibuko;

Ms Elsie Pule;


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Mr Thulani Mtshali; and

Mr Matshela Koko.

2.5.2 Consultations were conducted with the following external individuals in the presence of

their attorneys:

Ms Koketso Choma

Mr Pragasen Pather (two consultations); and

Ms Mosima Koko.

2.5.3 We conducted consultations with 3 (three) individuals who wanted to stay anonymous

and who alleged that they could assist with the investigation.

2.5.4 At the time of our report, we did not consult with Dr B Ngubani in order to confirm any

discussion with Mr Koko regarding the conflict of interest that was reported on 24

February 2017.

2.5.5 We attempted to arrange a consultation with Mr Watson Seswai (“Mr Seswai”), one of

the trustees of the Mokoni trust, but decided not to proceed as Mr Seswai forwarded

specific requirements for a consultation via his legal representative.

2.6 Documentation sourced

2.6.1 We requested documentation from Eskom which included inter alia copies of policies and

procedures, minutes of Executive Committee Procurement Sub- Committee (“EXCOPS”)

and Board Tender Committee (“BODTC”) meetings, contracts entered into between

Eskom and Impulse International, financial transaction documentation, etc.

2.6.2 The list of documentation and data sourced from Eskom during the investigation is

reflected hereunder:

Copies of policies and procedures as referred to in the report;

Copies of DOA’s authorised in 2013 and 2017;

Copies of declarations of interests submitted by Mr Koko for the period 2009 to

2017;

Copies of declarations of interests submitted by Impulse International (Pty) Ltd for

the period 2014 to end of March 2017;


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Vendor registration documentation relevant to Impulse International (Pty) Ltd;

Company search documentation relevant to the entities referred to in the report;

Director search documentation relevant to the individuals referred to in the report;

Copies of the following contracts awarded to Impulse International (Pty) Ltd;

Contract 4600055020: Medupi Power Station - July 2014;

Contract 4600058830: Various Power Stations - November 2015 to June

2016;

Contract 4600061441: Kriel Power Station - April 2016;

Contract 4600060205: Kusile Power Station - July 2016;

Contract 4600061009: Kusile Power Station - July 2016 - Extension on

4600060205;

Contract 4600061015: Kendal Power Station - September 2016;

Contract 4600061859: Majuba Power Station - September 2016;

Contract 4600061909: Kriel Power Station - November 2016; and

Contract 4600062251: Kendal Power Station - February 2017.

Copy of letter of award of contract MPGXC004442: Matla Power Station -

February/March 2017.

Minutes of EXCOPS meetings for the period 1 April 2016 to 31 March 2017; and

SAP data extracts related to Impulse International (Pty) Ltd including purchase

order (“PO”) and invoice detail for the period September 2014 to March 2017.

2.6.3 We sourced documentation from Mr Pather and Ms Koko during the investigation and

relevant to the alleged conflict of interest, including inter alia:

An organigram detailing the Impulse group of companies;

Share register of Ukwakhiwa Investments (Pty) Ltd;

Tender register of Impulse International (Pty) Ltd as at 22 December 2016;

Valuation report of High Echelon Trading 94 (Pty) Ltd’s property investment at 3

Buitekant Street, Middelburg;

Copies of 10 (ten) contracts entered into with Eskom with supporting

documentation;

Copies of 3 (three) purchase orders issued by Eskom to Impulse International (Pty)

Ltd with supporting documentation;


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Electronic files detailing Impulse International (Pty) Ltd’s company registration;

Video on Impulse International (Pty) Ltd’s corporate social investment (“CSI”);

Digital file reflecting Impulse International (Pty) Ltd structure and organogram;

Spreadsheet containing contract information;

Spreadsheet containing payment information from Eskom;

Subcontracting information relevant to ABB South Africa (Pty) Ltd;

Information relevant to various Impulse International (Pty) Ltd contracts per

location; and

Digital copies of declaration of interests made by Impulse International (Pty) Ltd to

Eskom.


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Chapter 3: Regulatory framework

3.1. Background

3.1.1 In terms of Schedule 2, Part A of the Public Finance Management Act (“PFMA”), no 1 of

1999, Eskom is listed as at 30 April 2015 as a major public entity and should therefore

comply with the requirements applicable to supply chain management in the public

sector. A review of the legislative framework that forms the premise of our findings has

been conducted which framework includes inter alia, the following:

The Constitution of South Africa, no 108 of 1996;

The Public Finance Management Act (“PFMA”), no 1 of 1999;

National Treasury Regulations/Instruction Notes;

National Treasury Code of Conduct;

Corporate Governance in the Public Sector;

Preferential Procurement Policy Framework Act, 5 of 2000;

Eskom’s Procurement and Supply Management Procedure (32 - 1034);

Eskom’s Private Work Policy (32 – 1186);

Eskom’s Code of Ethics Procedure (32 - 757);

Eskom’s Code of Ethics “The Way” Policy (32 – 527);

Eskom’s Declaration of Interest Procedure (32 – 225);

Eskom’s Process Control Manual (“PCM”) for Manage Vendor Master Data (240-

45657065);

Eskom’s PCM for Source External Suppliers (240-78921684);

Eskom’s Supplier Integrity Pact (240-113650212);

Eskom’s Delegation of Authority Policy (240-62072907);

Compliance to the Preferential Procurement Policy Framework Act (“PPPFA”), no

5 of 2000;

Eskom’s PCM for Source Internal and State Owned Suppliers (240-78921668);

Eskom’s Practice Note and guide on the implementation of the PPPFA (240-

53207174);


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Eskom’s Conflict of Interest Policy (32 – 173);

Eskom’s Delegation of Authority Policy (240-62072907);

National Treasury Instruction SCM Instruction Note 3 of 2016/2017; and

Eskom’s requirements for probity checks and proactive assurance review (240-

51036654).

3.2 The Constitution, no 108 of 1996

3.2.1 Section 217 (1) of the Constitution, no 108 of 1996 provides that "when an organ of state

in the national, provincial or local sphere of government, or any other institution identified

in national legislation, contracts for goods or services, it must do so in accordance with a

system which is fair, equitable, transparent, competitive and cost-effective."

3.2.2 Sub-section (2) thereof states that sub-section (1) does not prevent the organs of state or

institutions referred to in that sub-section from implementing a procurement policy

providing for (a) categories of preference in the allocation of contracts; and (b) the

protection or advancement of persons, or categories of persons, disadvantaged by unfair

discrimination.

3.3 The PFMA, no 1 of 1999

3.3.1 The PFMA regulates financial management in the public entities as listed in inter alia

Schedule 2 of the Act. The legislation empowers National Treasury (“NT”) to issue

guidelines and instructions or practice notes on various issues relating to procurement

with the aim to ensure minimum norms and standards to government.

3.3.2 As already indicated, Eskom is defined as a major public entity in terms of Schedule 2, of

the PFMA and should therefore comply with the requirements applicable to supply chain

management in the public sector. Section 3 of the PFMA provides that “in the event of

any inconsistency between this Act and any other legislation, this Act prevails”.

3.3.3 In terms of section 49 of the PFMA every public entity must have an authority which must

be accountable for the purposes of the PFMA. The Eskom Board is the accounting

authority for purposes of the PFMA and the Board must exercise the duty of utmost care

to ensure reasonable protection of the assets and records of the public entity.


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3.3.4 The Board must also take effective and appropriate steps against any employee of Eskom

who contravenes or fails to comply with a provision of the PFMA, who commits an act

which undermines the financial management and internal control system of Eskom or

makes and/or permits an irregular expenditure or fruitless and wasteful expenditure.

3.3.5 In terms of section 76 (4) of the PFMA, the National Treasury (“NT”) may make regulations

or issue instructions applicable to all institutions to which the PFMA applies concerning,

inter alia, the determination of a framework for appropriate procurement and a

provisioning system which is fair, equitable, transparent, competitive and cost effective

and any other matter that may facilitate the application of the PFMA.

3.3.6 The Board commits an act of financial misconduct in terms of section 83 of the PFMA if it

willfully or negligently fails to comply with a requirement of section 50, 51, 52, 53, 54 or

55 of the PFMA or makes and/or permits an irregular expenditure or fruitless and wasteful

expenditure.

3.3.7 In terms of section 83 (2) of the PFMA, every member of the Board is individually and

severally liable for any financial misconduct as referred to in paragraph 3.3.6.

3.3.8 Section 85 (1) of the PFMA provides that the Minister must make regulations prescribing-

(a) “The manner, form and circumstances in which allegations and disciplinary in

criminal charges of financial misconduct must be reported to the National

Treasury, the relevant Provincial Treasury and the Auditor General including –

(i) particulars of the alleged financial misconduct; and

(ii) the steps taken in connection with such financial misconduct;

(b) Matters relating to the investigation of the allegations of financial misconduct;

(c) The circumstances in which the National Treasury or a provincial treasury may

direct that disciplinary steps be taken or criminal charges be laid against a person

for financial misconduct;

The circumstances in which the findings of a disciplinary board and any sanctions imposed

by the board must be reported to the National Treasury, the relevant provincial treasury

and the Auditor General”.


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3.4 National Treasury Regulations/Instruction Notes

3.4.1 The NT Regulations published in March 2005 and promulgated in terms of section 76(4)

of the PFMA, prescribes a procurement framework giving effect to section 217 of the

Constitution. It applies to all public entities in Schedule 2, but only to the extent as

indicated in paragraph 6.1.2 and regulations 24, 25, 27 to 29 and 31 to 33.

3.4.2 Accounting authorities are required to develop and implement an effective and efficient

supply chain management (“SCM”) system for the acquisition of goods and services. The

SCM system is required to be fair, equitable, transparent, competitive and cost effective

and to be consistent with the PPPFA and the Broad Based Black Economic Empowerment

Act (“BBBEE”), no 53 of 2003.

3.4.3 All officials and other role players in SCM systems must comply with the highest ethical

standards in order to promote mutual trust and respect and an environment where

business can be conducted with integrity, and in a fair and reasonable manner.

3.4.4 The accounting authority must check NT’s database before awarding contracts to ensure

that no recommended bidders, or any of its directors, are listed as companies or persons

prohibited from doing business with the public sector. The accounting authority must

further reject a proposal for the award of the contract if the recommended bidder has

committed a corrupt or fraudulent act in competing for the particular contract.

3.4.5 The accounting authority must cancel an awarded contract if the supplier committed any

corrupt or fraudulent act during the bidding process or execution of the contract, as well

as when official/other role player committed corrupt or fraudulent act during the bidding

process to the benefit of such supplier. It may also disregard a bid of any bidder if that

bidder, or any of its directors, have abused the institution’s SCM system, committed fraud

or any other improper conduct in relation to such system or have failed to perform on any

previous contract.

3.4.6 Regulation 33.1 requires that if any employee is alleged to have committed financial

misconduct, the accounting authority must ensure that an investigation is conducted into

the matter and if confirmed, must ensure thereafter that a disciplinary hearing is held.

This is also a requirement in terms of section 85 (1) of the PFMA.


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3.5 National Treasury Code of Conduct

3.5.1 In terms of NT Practice Note 4 of 2003, SCM officials and other role players involved in the

SCM process should adhere to the Code of Conduct for SCM practitioners. SCM

practitioners and other role players involved in SCM processes:

must disclose conflict of interests;

may not use positions for private gain or to improperly benefit another person;

may not compromise the integrity or credibility of the SCM system through

acceptance of gifts or hospitality or any other act;

must be scrupulous in the use of public property;

must assist accounting authorities in combating corruption and fraud in the SCM

system;

always disclose interests of family members, partner or associate and withdraw

from participating in the process; and

any breach or failure to comply must be reported to the accounting authority in

writing.

3.6 Corporate Governance in the Public Sector

3.6.1 Although the PFMA as referred to above, should be considered in its entirety, sections 46

to 86 are of particular importance for financial governance issues. Accounting authorities

must ensure that accurate books and records are kept and that financial statements and

other statutory reports are prepared.

3.6.2 To ensure that public entities are achieving objectives set out in policies, corporate plans

and other planning processes, the Department of Public Enterprises has designed a

framework of compliance for the use of public entities as contemplated in inter alia

Schedule 2 of the PFMA. This policy framework for State Owned Enterprises was

published in August 2000.

3.6.3 Corporate Governance was further institutionalized by the publication of the King I Report

in November 1994. The Report was later superseded by legislation as referred to

hereunder and also the King II, King III and King IV Reports.


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3.7 The PPPFA, no 5 of 2000

3.7.1 The Preferential Procurement Policy Framework Act, 5 of 2000 (“PPPFA”) gives effect to

section 217(3) of the Constitution. It, among others, provides that an organ of state must

determine its preferential procurement policy and implement it within the prescribed

framework. This also provides for the promulgation of regulations. The primary aim of the

PPPFA is to address past discriminatory policies and practices in the government

procurement system.

3.8 Eskom Procurement and Supply Management

Procedure (32-1034)

3.8.1 This Procedure sets out procedures governing operational areas within the procurement

and supply chain operations managed under Group Executive: Technology and

Commercial within Eskom. It applies uniformly throughout Eskom, its Divisions, wholly-

owned subsidiaries and entities wherein Eskom has a controlling interest, operating in

terms of South African law, which are subject to the provisions of the PFMA.

3.8.2 The Procedure was compiled by Group Technology and Commercial: Risk & Governance

and it was signed off on 19 May 2014 by Mr Koko, the Group Executive (Acting)

Technology and Commercial. The revision date of this procedure was April 2017.

Although we perused the complete procedure document, reference is made in the report

to specific paragraphs applicable on the current investigation.

3.8.3 The Procedure inter alia states that the Chief Executive (“CE”) delegated procurement

authority to the Executive Committee (“EXCO”) and some authority has in turn been

delegated to the EXCO procurement Sub-Committee (“EXCOPS”) to approve

procurement/disposals which exceed head office operational/capital expenditure

procurement tender committee delegations. The Group Executive: Technology and

Commercial as a member of the EXCO, is appointed to lead and manage the Technology

and Commercial Group within Eskom.

3.8.4 The Delegation of Authority (“DOA”) Policy forms part of the approved procurement

framework and the core principle is that individual employees may be permitted by a


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written delegation of authority to bind Eskom into contracts of purchase/sale regarding

assets, goods or services, either acing in a dual, triple or as part of a tender committee.

DOA’s for the procurement or disposal of assets, goods or services, must be exercised with

the recommendation and approval of another delegated and accredited procurement

practitioner as part of a dual or triple adjudication system of approval, or with approval

from a delegated Procurement & Tender Committee (“PTC”).

3.8.5 Sole adjudication or sole signature authorities are no longer permitted, except in the case

of Local Purchase Order (“LPO”) approvals granted by Cost Centre Managers, which are

processed and authorised via workflow on the SAP system.

3.8.6 A duel transaction applies to commercial transactions not exceeding R1 million in value,

excluding value added tax (“VAT”) and not exceeding 1 year in contract duration. Triple

adjudication applies to the approval of commercial transactions not exceeding R5 million,

excluding VAT and not exceeding a contract duration of 2 years.

3.8.7 Where the value and/or duration of a procurement or disposal exceeds the delegations

of duel and triple adjudication, the procurement or disposal must be approved by a

delegated tender committee. In all instances, a tender committee must comprise of

Eskom employees. The DOA granted to the tender committee is distinct from budgetary

approval which is obtained as part of the financial planning process. The delegation

conferred to PTC’s includes the specific approvals of condonations, ratifications and

appointments of strategic and management consultants, all of which cannot be

authorised within dual or triple adjudication, irrespective of value.

3.8.8 The delegations for Head Office PTC’s have been delegated by the Board and are

authorised by the Group Executive: Technology and Commercial. The Finance Director

(“FD”) or relevant Group Executive (“GE”) will give effect to the stipulated DOA’s by

making nominations for the appointments of chairpersons and members to the various

site-based tender committees in consultation with the Group Executive: Technology and

Commercial and the Risk and Governance Department within Group Technology and

Commercial.

3.8.9 The procurement process starts with the identification of a need by the end-user or the

Inventory Optimiser in the case of stocked items. Irrespective of the value of the proposed


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purchase, the End-User is responsible to provide adequate information to the

procurement practitioner to proceed with the transaction. The end-user generates a

purchase requisition (“PR”) which reflects the estimated value, duration and specification

or scope of the assets, goods or services and other information as required.

3.8.10 The Cost Centre Manager approves the PR, taking into consideration the budget, scope of

works and business need. After his/her approval, the PR will be released electronically to

the relevant procurement department.

3.8.11 Eskom approved standard forms of contract and conditions of contract are used for

placing all orders or contracts. The New Engineering Contract (“NEC”) suite of contracts,

the International Federation of Consulting Engineers (“FIDIC”) suite of contracts and

selected Eskom in-house contracts are used as conditions of purchase in Eskom. The

procurement practitioner in consultation with the cross-functional team, where

applicable, selects the appropriate contract to best mitigate the risks of the procurement

as part of the approved strategy and such selection is confirmed prior to the issue of the

tender.

3.8.12 Procurement practitioners may execute informal tendering for transactions between the

value of R30 000 up to R1 million. Three quotations must be sourced by the procurement

practitioner. A formal competitive tendering process must be followed for transactions

greater than R1 million (including VAT) and/or greater than one (1) year in duration. This

formal process may also be executed for orders or contracts less than R1 million and/or

less than one year as a result of the complexity and nature of certain contracts below R1

million or where a request for proposal (“RFP”) is required.

3.8.13 Procurement practitioners are the only employees in Eskom mandated to execute formal

competitive tendering processes. It is Eskom’s preferred position to publicly advertise

tenders as far as possible to enable open market participation. It may be permissible to

proceed with a tender on a closed/limited basis where only selected suppliers are

targeted, provided that it is supported by an approved strategy, which motivates why use

of an open tender process is not possible or not practically feasible.

3.8.14 All contracts/orders must be loaded onto the SAP system which facilitates the monetary

and time-related control of contracts. The procurement practitioner must ensure that all


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conditions are loaded correctly and according to the original signed contract before an

End-User or any other authorised official can place orders against the contract.

3.8.15 A contract file is opened for every PR that is executed via a formal or informal tender.

Where only one supplier has been identified as being capable or available to supply the

assets, goods or services, it may become necessary to deviate from competitive bidding

and to follow the sole source process. A supplier can be appointed as a general sole source

for a specified category of assets, goods or services for a maximum period of three years.

The approval for the appointment of the supplier as a general sole source supplier for an

identified category needs to be obtained from the relevant PTC.

3.8.16 Urgent procurement may be deemed foreseeable and not necessarily immediate in need

and emergency procurement is defined as an imminent or immediate and unforeseeable

requirement. Urgent procurement must still be administered via a PR in the SAP system,

using the normal procurement methods and sourcing mechanisms. Urgent requirements

may be approved via “special meetings”, round robin approvals or within systems of

general or EXCO duel/triple adjudication and should be immediately prioritised by the

relevant procurement manager and the delegated approval authority.

3.8.17 When emergency arise and there is no procurement function immediately available or

there is limited time to initiate a normal procurement process via one of the acceptable

procurement methods or sourcing mechanisms, then the emergency procurement

procedure may be used to resolve the emergency situation. This procedure is described

in paragraph 3.5.2 of the Procedure document (32 – 1034).

3.8.18 A contract manager’s primary role is to be the first and single point of contact between

Eskom and the supplier during the execution and delivery phase of the contract. The

contract value and time is used to execute the contract according to the approved scope

of work or the description of the assets, goods or services according to the contract.

3.8.19 In the case of panel contracts, a task order committee may be appointed by the delegated

approval authority to oversee and approve the issuing of task orders. The specific

delegation to manage contractual claims is granted to the Eskom Agent on a Delegation

Consent Form (“DCF”) and must be approved by the relevant delegated approval

authority. The DCF gives the Eskom Agent the authority to duly assess, manage and


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authorise claims relating to time and money in the contract, which may arise out of

unforeseen or unplanned circumstances and which may result in amendments to the

approved scope or specifications.

3.8.20 In terms of the Procedure, the appointment of a panel of service providers must be

supported by a signed and approved strategy from a relevant PTC and approval for

contract award, which must be obtained from the relevant PTC. Appointed contract

managers are responsible for putting in place appropriate systems and controls to ensure

that:

Work/task orders are distributed fairly and equitably among the panel of service

providers;

Criteria for the selection of a particular service provider for the allocation of

work/task orders are defined and documented and made known to end-users;

The documented and approved task order approval process is utilised;

Task orders are placed against contracts with sufficient funds and time available

for the completion of work/services;

Task orders are supported by a SAP 45 number confirming the

order/commitment; and

Supplier Development and Localisation (“SD&L”) targets and objectives are being

monitored and tracked.

3.8.21 All invoice approvals and payments must be executed in accordance with the latest

version of Eskom’s Accounts Payable Procedure. The procurement manager does not get

involved in the handling of invoices or any payment other than where he/she is assigned

to be the contract manager. All payment certificates must be issued and certified by the

contract manager. The contract may only be terminated in accordance with the

termination clauses and reasons for termination as contained in the contract.

3.8.22 Supplier registration is described under paragraph 3.8.1 of the Procedure document.

Every entity registered as a supplier on the Eskom Supplier Database are required at all

relevant times to conduct themselves in a manner fully consistent and/or in accordance

with the current Eskom Purchasing Pact with Suppliers and the General Conditions of

Supplier Registration.


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3.8.23 The delegated signing authorities for contracts are:

No Approval Authority Signing Authority

1 Board of Directors Group Executive – may nominate a Divisional Executive, SGM or GM

2 BODTC Group Executive – may nominate a Divisional Executive, SGM or GM

3 EXCO Divisional Executive – may nominate a SGM or GM

4 EXCOPS Divisional Executive – may nominate a SGM, GM or E-band Manager

5 Head Office and Site PTC’s E-band Manager

6 Triple Adjudication Middle Manager

7 Duel Adjudication Manager

8 Non-buyers (LPO’s) Cost Centre Managers

3.8.24 Paragraph 3.12.2 refers to the managing of service providers’ misconduct. According to

the Procedure, every service provider will at all times be treated with fairness. Where a

service provider’s conduct becomes unacceptable and in breach of the necessary

relationship of good faith required for purposes of maintaining and managing service

provider relationships, Eskom will implement an internal administrative process to

investigate reported acts of service provider misconduct, which may lead to a service

provider being suspended and not being allowed to conduct any business with Eskom

either directly or indirectly for a stipulated period of time.

3.9 Code of Ethics Procedure (32 -757)

3.9.1 The purpose of the Code of Ethics Procedure is to address specific ethics issues in the

workplace and provide guidance on how to address same. Ethical behaviour is defined as

desirable, acceptable conduct that will bring about what is good and right in the

interaction with others. Compliance with Eskom’s Code of Ethics, Code of Ethics

Procedure and ethics related policies is required of all directors and employees of Eskom.


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3.10 Code of Ethics Policy (32 – 527)

3.10.1 This policy provides for the ethical standards and behaviour that are required of all

directors and employees of Eskom and its subsidiaries. The policy was compiled on 6

August 2014 and authorised by the Interim CE on 26 August 2014.

3.11 Conflict of Interest Policy (32 – 173)

3.11.1 This policy was compiled by M Adam: Corporate Counsel/DE: Regulation & Legal on 6

August 2014 and authorised by Mr Tsotsi: Chairman on 29 August 2014. The policy sets

out the obligations of employees and directors with regard to conflicts of interest and the

declaration and management of these interests.

3.11.2 The duty to declare is a legal obligation and ensure compliance with good governance

practices. Every employee and director has a duty to avoid conflict of interest that could

adversely influence his/her judgement, objectivity or loyalty to Eskom when acting on its

behalf.

3.11.3 In addition to the annual declaration, any conflict of interest must be declared as soon as

the employee or director know that it has arisen, which requires that an amendment to

the annual declaration be submitted within 5 (five) working days of knowing that such

conflict has arisen.

3.11.4 Even if there are no conflicts of interest, the prescribed electronic form must still be

completed and submitted by the directors and employees with a task grading of nine (9)

and above.

3.11.5 Employees and directors should disclose their interests in a particular field of business,

even if it is not directly related to a specific contract/tender being considered by a

committee or the Board or a committee of the Board, especially where strategies

pertinent to that area of business are being discussed.

3.11.6 The fact that an employee or a director declared the conflict of interest, does not mean

that it has been addressed and the conflict must further be managed responsibly. Where

there is a conflict of interest (actual, potential or perceived), it is required that the

employee or director “must refrain from being part of any deliberations, document


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preparations, execution or meetings and must not have access to information dealing with

that particular matter. Also, the employee or director must not participate in any decisions

relating to the matter.”

3.11.7 Employees may not have a personal or other interest in an Eskom contract, whether as a

supplier, an advisor, or by virtue of being a director or owner of a business, or in any other

capacity. The policy further states that “this includes third-party related transactions with

an indirect link to an Eskom contract (for example, having a personal or other interest in a

business that has an interest in a Supplier to Eskom)”.

3.11.8 Failure to comply with the obligations set out in this policy amounts to a breach of this

policy and could amount to misconduct as defined in Eskom’s Disciplinary Code and

Procedure. Such failure may further amount to a contravention of the common law, the

PFMA or the Companies Act, no 71 of 2008.

3.11.9 In terms of paragraph 3.3.3 of the policy, the situations where conflicts could arise is listed

as inter alia:

“a) the acceptance and/or offering of business courtesies;

b) directors and employees having private business interests in entities that do,

or might do business with Eskom;

c) Directors and employees having affiliations with non-profit organisations that

receive funding or any form of aid from Eskom; and

d) Private, professional, political, academic or other interest that my conflict with

Eskom’s interests”.

3.11.10 In terms of paragraph 3.3.9 of the policy, the knowing or knows when used of a person in

relation to a particular matter, means that the person either:

“(a) had actual knowledge of the matter; or

(b) was in a position in which the person ought reasonably to have –

i) had actual knowledge;

ii) Investigated the matter to an extent that would have provided the person with

actual knowledge; or


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iii) taken other measures which, if taken, would reasonably be expected to have

provided the person with actual knowledge of the matter”.

3.11.11 Paragraph 3.3.17 defines the related and inter-related person(s) and control relevant to

declaration of conflict of interest. Persons are considered to be related if they inter alia:

(i) are married, or live together in a relationship similar to a marriage, or

(ii) are separated by no more than two degrees of natural or adopted consanguinity or

affinity

3.11.12 Persons who are considered to be inter-related, means “persons who are related to one

another in a linked series of relationships, such that two or the persons are related in a

manner contemplated in subsection (1) and one of them is related to the third in any such

manner and so forth in an unbroken series”.

3.11.13 According to the policy, managers and directors need to be aware that their seniority

results in perceptions of conflict more readily and their conduct is therefore subject to

greater scrutiny.

3.11.14 Managers are responsible for ensuring that employees renew their declarations at the

beginning of each financial year and ethics co-ordinators within each division are

responsible for monitoring submissions by employees. The submissions are done at the

end of each month from April to July to ensure 100% divisional submission for the target

group by end July each year. Declarations submitted by Eskom’s EXCO must be approved

by the CE and the submissions monitored by the Ethics Office.

3.12 Declaration of Interest Procedure (32 – 225)

3.12.1 According to this procedure document, every Eskom employee has a duty to avoid a

conflict of interest. It is therefore required to have a process in place for declaring and

effectively managing any conflicts of interest in order to uphold organisational integrity

and good corporate governance. This procedure was compiled on 6 August 2014 by the

Ethics Manager and authorised by the Interim CE on 26 August 2014.

3.12.2 According to this procedure, a “conflict of interest arises when one’s personal interests,

personal financial interests or any other interests, affect, or could be perceived to affect,


Page | 43

or has the potential to affect, one’s objectivity and discretion and/or the objectivity and

discretion of another in performing Eskom duties or making decisions on behalf of Eskom”.

3.12.3 A personal interest is defined as an interest that “may be an actual or potential, direct or

indirect interest of an employee or a director, or of a related person or an inter-related

person or other associate of the employee or director, in any business, entity, undertaking,

or investment, as a shareholder, director, associate, member, advise/consultant,

prescribed officer or in any other capacity”.

3.12.4 Declarations are done on a prescribed electronic form available from the e-forms website

and signed off by the relevant manager in accordance with each division’s delegation of

authority. Even if there are no conflicts of interest, the prescribed electronic form must

be completed and submitted by employees with a TASK grading of 9 (nine) and above.

3.12.5 The obligation in terms of the procedure is to “declare all interest regardless of whether

they are conflicting, directorships, memberships, details of any related or inter-related

persons or other associate that does business with Eskom and all material personal

interests, whether a conflict exists or not”.

3.12.6 Employees should disclose interests in a particular field of business, even if it is not directly

related to a specific contract or tender being considered by a committee or the Board or

a committee of the Board.

3.12.7 Any conflict of interest must be declared as soon as the employee know that it has arisen,

in addition to the annual declaration of interest. If an employee fails to disclose a conflict

of interest and any other employee who is aware of the conflict, he/she must then declare

the conflict of interest to his/her senior manager or the Ethics Office.

3.12.8 Where a conflict of interest exists, the employee must refrain from being part of any

deliberations, document preparations, execution of meetings and must not have access

to information dealing with that particular matter. The employee must also refrain from

participating in any decisions relating to the specific matter.

3.12.9 Paragraph 3.1.4.1 of the Procedure address the monitoring of conflicts of interest and

states inter alia that the relevant manager and/or committee chairman must assess

whether there are any conflicts of interest with regard to his/her employees or committee


Page | 44

members. The Eskom data base for declarations of interest must be utilised during this

process of monitoring.

3.12.10 The Commercial Division is required to ensure that processes are adequate for the

effective declaration and monitoring of conflicts of interest, selection of buyers, the

rotation of buyers, the choice of procurement methods and the selection of potential

suppliers.

3.12.11 Employees should refrain from directly intervening in any procurement issues outside the

normal procurement processes or lines of authority. Users should be involved in the

technical evaluation of suppliers before a tender is awarded.

3.13 2013 Delegation of Authority Policy (240-62072907)

3.13.1 This policy was compiled by M Adam, the Corporate Counsel/Divisional Executive –

Regulation and Legal on 31 May 2013 and authorised by Mr Tsotsi, the Chairman of Eskom

Board. The policy was effective from 1 April 2013 and the review date of the policy was

March 2016. The policy was codified in two parts, namely the DOA policy principles and

Annexure A, the DOA delegations.

3.13.2 The DOA addressed the delegation from the Board to executives and also addressed

further delegations by the executives to employees in Eskom in terms of a standard

Group/Divisional delegation.

3.13.3 All authority reflected in the policy could be exercised after an appropriate procurement

process has been executed by a procurement practitioner assigned by Group Commercial.

The Technology and Commercial Group was responsible for the procurement process and

execution thereof.

3.13.4 The policy states that all sole source, condonation, ratification and modifications

exceeding 20% in terms of time and value, had to be approved by the appropriate

procurement committees and reported to the EXCOPS if within the group/divisions. The

sole source transactions had to be reviewed by the SD&L Department.

3.13.5 Dual and triple adjudication systems replaced sole adjudication systems with this revised

DOA and sole adjudication was no longer applicable at any level of delegation.


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3.14 2017 Delegation of Authority Policy (240-62072907)

3.14.1 This policy was compiled and signed by Ms Daniels: Group Company Secretary on 16

January 2017. It was authorised by Dr B Ngubane, the Chairman of the Board on 17

February 2017. In terms of this policy, all authority set out in same, must only be exercised

after an appropriate procurement process has been executed by a procurement

practitioner assigned by the Procurement and SCM Department.

3.14.2 The commercial processes must be fair, equitable, transparent, competitive and cost-

effective according to the policy. According to the policy, regional or site tender

committees means committees that are established by the Chief Procurement Officer

(“CPO”). The committees consist of at least 3 (three) members, collectively with technical,

commercial and finance representatives or skills to approve procurement for a site or

business unit (Site Committee) or across sites (Regional Committees) and must include a

representative from the Procurement and SCM Department and take into account equity

and transformation in its composition.

3.14.3 A Corporate Opex or Capex Procurement Committee means a committee established by

the CPO at Head Office responsible for procurement matters.

3.14.4 All transactions with dual and triple adjudication must be reported to the committee

authorised to deal with that level or decision for oversight. Transaction trends must be

analysed and investigated to identify and manage risks and compliance on transactions

lower than R5 million and all transactions reported to procurement committees below the

divisional tender counsels, must be reported to the next level committee for oversight.

3.14.5 The procurement within Eskom, is subject to the Procurement and SCM policy, with

reference number 32-1033 and procedure with reference 32-1034.

3.14.6 Groups/Divisions are required to develop DOA requirements in line with the applicable

limits specified in this policy and “no Group/Divisional DOA may be in conflict with the

Eskom DOA nor may it delegate powers that are outside the parameters of this policy”.

3.14.7 According to this policy, one aspect of good governance relates to an effective decision-

making process and a clear DOA contributes to the applicability of an effective decision-

making process.


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3.14.8 We were informed on 2 May 2017 that new divisional procurement and tender

committees came into effect and that EXCOPS had ceased to exist on 31 March 2017.

3.15 Process Control Manual (“PCM”) for Vendor Master Data (240-45657065)

3.15.1 This Manual was compiled by the Master Data Steward and authorised on 6 November

2014 by the Senior General Manager: Shared Services.

3.15.2 The document was intended to provide a view of all the key elements of the process

including business roles, key risks and controls, technology requirements, process

requirements, reporting requirements and process measures.

3.16 PCM for External Suppliers (240-78921684)

3.16.1 The content of this PCM is relevant to process and additional technical information

relevant to the key elements of the process as described in 3.15. This process comprises

of the analysing, assessing and selecting of external suppliers, their goods and services

based on certain specifications and requirements to achieve operational improvements

and support business strategic objectives.

3.17 Eskom Supplier Integrity Pact (240-113650212)

3.17.1 This pact was compiled by the Policy and Procedure Manager on 29 June 2016 and

authorised by the Group CPO on 29 June 2016. This pact is between Eskom and its

suppliers that prescribes the “ethical behaviour” that brings about good and appropriate

consequences and outcome in the interaction with others. This document was intended

to replace “Supplier Code of Conduct” and to supplement all other relevant Commercial

and Ethics related policies/codes/procedures.

3.17.2 Eskom expects every supplier to act ethically and with integrity at all times. Eskom

suppliers are required to read this pact and sign and submit the Integrity Declaration Form

(Annexure A) whenever they participate in any Eskom tender/enquiry or when any

contract modification is affected.

3.17.3 In terms of paragraph 3.2.3 it is stated that “suppliers will thus be required to complete

the Declaration of Interest Form (incorporated in Annexure A-Integrity Pact Declaration)


Page | 47

wherein they are required to disclose any interest that an Eskom employee/director may

have, whether financial, private or personal, in its business and/or any

affiliation/relationship which affects, or may affect, or may be perceived to affect, the

decision-making during tender award. Should a supplier later become aware of a conflict

of interest (family, business and/or social relationship) between its owners members /

directors / partners / shareholders and an Eskom employee/director with respect to a

tender in which it participated, supplier is required to disclose the interest/relationship to

Eskom and submit whatever information may be required regarding the parties involved”.

3.17.4 According to paragraph 4.2 of the pact, all Eskom employees/directors are required to

complete an annual delegation of interest (“DOI”) wherein they are required to declare

all interests, regardless of whether they are conflicting directorships, memberships,

details of any related or inter-related persons or other associate that does business with

Eskom and all other material personal interests, whether a conflict exists or not. In

addition to this annual declaration, employees or directors are required to declare

additional DOI and non-disclosure agreement (“NDA”) if involved in a tender evaluation

and/or adjudication and/or negotiation process.

3.17.5 Annexure B of the pact refers to the reconsideration of supplier registration status and

the procedure for such reconsideration.

3.18 NT Instruction Note 3 of 2016/17

3.18.1 The objective of this Instruction Note is to provide guidance on measures to prevent and

limit the abuse in the SCM system. It is required that an accounting authority must

establish a system that deals with the management of complaints and/or allegations of

abuse in the SCM system.

3.18.2 The Instruction Note further address the deviations from normal bidding processes. In

terms of paragraph 8.1 the accounting authority must only deviate from inviting

competitive bids in cases of emergency and sole supplier status. Emergency procurement

may occur when “there is a serious and unexpected situation that poses an immediate risk

to health, life, property or environment which calls an agency to action and there is

insufficient time to invite competitive bids”.


Page | 48

3.18.3 Sole sourcing procurement may be done when there is evidence that only 1 (one) supplier

possesses the unique and singularly available capacity to meet the requirements of the

institution.

3.18.4 The accounting authority must further ensure that contracts are not varied by more than

20% or R20 million (including VAT) for construction related goods, works and/or services

and 15% or R15 million (including VAT) for all other goods and/or services of the original

contract value.

3.19 Memorandum of Incorporation 3.19.1 The Board may, other than the statutory committees of the Audit Committee and the

Social and Ethics Committee, establish Standing Committees and Ad Hoc Committees in

terms of section 72 of the Companies Act, no71 of 2008. Meetings of a committee of

the Board, are governed by the provisions of this Memorandum of Incorporation

(“MOI”) regulating the meetings and proceedings of directors.


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Chapter 4: Stake holders

4.1. Legal entities

4.1.1 We sourced publicly available information of entities and individuals identified during the

investigation as reflected hereunder:

Impulse International (Pty) Ltd

4.1.2 We sourced information from the Company and Intellectual Property Commission

(“CIPC”) relevant to the above mentioned entity and it established that the registration

number of the entity is 2012/097222/07 (see Exhibit 1).

4.1.3 The search results for Impulse International (Pty) Ltd reflected that it was duly registered

with the CIPC as a close corporation (“CC”) in 1997 with registration number

1997/006976/23 and subsequently converted to a private company on 5 January 2012

with registration number 2012/097222/07 and the business status was reflected as in

business.

4.1.4 The search results reflected the following detail pertaining to its directors and respective

status:

Impulse International (Pty) Ltd – Registration number 2012/097222/07

Director Name ID Number Director status Date

Appointed Date Resigned

Pragasen Pather 6403075179051 Active 05-Jun-12 Not applicable

Koketso Choma 9009120583085 Resigned 31-Mar-16 20-Sep-16

Frederick de Lange 8211195046086 Resigned 07-Jun-12 07-Jun-12

JKMA Investments (Pty) Ltd

4.1.5 The search results for JKMA Investments (Pty) Ltd reflected that it was duly registered

with the CIPC as a private company on 25 February 2016 with registration number

2016/087062/07 and business status was reflected as in business (see Exhibit 2).



Page | 50

status:

JKMA Investments (Pty) Ltd – Registration number 2016/087062/07



Ali Denewade 8608146215183 Active 25-Feb-16 Not applicable

Koketso Choma 9009120583085 Active 25-Feb-16 Not applicable

Jose Lete 8611126058185 Active 25-Feb-16 Not applicable

Moira Ndlovu 8909120323088 Active 25-Feb-16 Not applicable

Ukwakhiwa Investments (Pty) Ltd

4.1.7 The search results for Ukwakhiwa Investments (Pty) Ltd reflected that it was duly

registered with the CIPC as a private company on 23 February 2016 with registration

number 2016/072200/07 and business status was reflected as in business (see Exhibit 3).


status:

Ukwakhiwa (Pty) Ltd – Registration number 2016/072200/07



Koketso Choma 9009120583085 Active 23-Mar-16 Not applicable

Sylvia Maila 9109070219084 Resigned 23-Feb-16 23-Mar-16

Impulse Holdings (Pty) Ltd

4.1.9 The search results for Impulse Holdings (Pty) Ltd reflected that it was duly registered with

the CIPC as a private company on 15 May 2012 with registration number 2012/084488/07

and business status was reflected as in business (see Exhibit 4).


status:


Page | 51

Impulse Holdings (Pty) Ltd – Registration number 2012/084488/07

Director Name ID Number Director status

Date Appointed Date Resigned

Pragasen Pather 6403075179085 Active 15-May-12 Not applicable

Indiwize Construction (Pty) Ltd

4.1.11 The search results for Indiwize Construction (Pty) Ltd reflected that it was duly registered

with the CIPC as a private company on 1 November 2012 with registration number



status:

Indiwize Construction (Pty) Ltd – Registration number 2012/196338/07

Director Name ID Number Director status


Pragasen Pather 6403075179085 Active 15-May-12 Not applicable

High Echelon Trading 94 Close Corporation

4.1.13 The search results for High Echelon Trading 94 Close Corporation reflected that it was duly

registered with the CIPC as a private entity on 12 August 2002 with registration number


4.1.14 The search results reflected the following detail pertaining to its members and respective

status:

High Echelon Trading 94 CC – Registration number 2002/063138/23

Member Name ID Number Director status


Mosima Choma 7112270300086 Active 18-Feb-03 Not applicable


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4.2 Individuals

4.2.1 We conducted searches in order to determine whether identified individuals were

appointed as office bearers in legal entities.

Mr Pather

4.2.2 According to searches conducted, Mr Pather holds directorship in the following entities

(see Exhibit 7):

Pragasen Pather – ID number 6403075179051

Entity Name Registration number Status Date Appointed

Impulse Holdings 2012/084488/07 Active 15-May-12

Impulse Energy 2012/086687/07 Active 18-May-12

Impulse Mining 2012/086690/07 Active 18-May-12

Impulse International 2012/097222/07 Active 05-Jul-12

Impulse Nuclear 2012/181908/07 Active 08-Oct-12

Indiwize Construction 2012/196338/07 Active 01-Nov-12

Impulse Professional Quantity Surveyors 2014/133233/07 Active 17-Oct-14

K2015056893 (South Africa) 2015/056893/07 Active 24-Feb-15

Impulse Supertrans 2015/139211/07 Active 05-May-15

Impulse Water Holdings 2015/139253/07 Active 05-May-15

Impulse Sourcing 2015/322039/07 Active 08-Sep-15

Impulse Power 2016/375225/07 Active 29-Aug-16

Impulse Legacy 2016/477732/08 Active 03-Nov-16

Indiwize 2010/112529/23 Active 27-Jul-10

Ms Choma

4.2.3 According to searches conducted, Ms Koketso Choma (“Ms Choma”) holds directorship

in the following entities (see Exhibit 8):

Koketso Choma – ID number 9009120583085

Entity Name Registration

number Status Date Appointed

Ukwakhiwa Investments 2016/072200/07 Active 23-Mar-16

JKMA Investments 2016/087062/07 Active 25-Feb-16


Page | 53

Mr Koko

4.2.4 According to searches conducted, Mr Koko holds directorship in the following entities

(see Exhibit 9):

Matshela Koko – ID number 6903095350087

Entity Name Registration

number Status

Date Appointed

Date Resigned

Rotek Industries (Pty) Ltd 1964/003378/30 Active 27-Jun-12 Not applicable

Eskom Rotek Industries SOC Ltd 1990/006897/30 Active 27-Jun-12 Not applicable

Technology Services International 1995/009705/30 Resigned 24-May-12 24-May-13

Ms Koko

4.2.5 According to searches conducted, Ms Mosima Koko (“Ms Koko”) holds directorship in the

following entities (see Exhibit 10):

Elizabeth Mosima Koko – ID number 7112270300086

Entity Name Registration number Status Date Appointed Date Resigned

Arengo 48 2004/026158/07 Active 14-Oct-04 14-Sep-04

Silver Falcon Trading 208 2005/012809/07 Active 20-Jul-05 Not applicable

Pacific Breeze Trading 299 2005/030709/07 Active 28-Oct-05 Not applicable

Thubalihle Trading Enterprise 1996/040303/23 Active 23-May-01 Not applicable

Rural Hardware 106 2001/075109/23 Active 28-Feb-02 28-Feb-02

High Echelon Trading 94 2002/063138/23 Active 18-Feb-03 21-Oct-03

Central High Trading 18 2002/087123/23 Active 15-Nov-02 15-Nov-02

Kokbesthakho Building Construction 2001/016838/23 Resigned 15-Mar-01 18-May-05

Lapenta Trade 86 2006/204699/23 Resigned 08-Oct-07 Not applicable

Cedar Point Trading 4 2006/016065/07 Active 03-Jul-06 Not applicable

High Echelon Trading 94 2005/043348/07 Active 09-Dec-05 Not applicable

Lionsden Holdings 2015/118008/07 Active 25-May-16 Not applicable

Turnkey Finishings 2015/250382/07 Active 03-Aug-15 Not applicable

Lawandla Group 2016/207754/07 Active 02-Jun-16 Not applicable

Lefe Blue Mountain Lodge 2016/227133/07 Resigned 08-Jun-16 Not applicable

K2014112892 2014/112892/07 Active 11-Jun-14 Not applicable


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4.3 Central Supplier Database

4.3.1 The Central Supplier Database (“CSD”) for Government reflects that Impulse

International (Pty) Ltd was registered as a supplier with supplier number MAAA0234986

(see Exhibit 11).

4.4 Mokoni Trust with reference IT00216/2016(MN)

4.4.1 It was established that Ms Choma was a trustee of the Mokoni trust duly registered with

the Master of the High Court Nelspruit on 7 July 2016. She was also a capital income

beneficiary of the Bokoni trust with reference IT00217/2016(MN).

4.4.2 Ms Choma, resigned as a trustee of the Mokoni trust according to a letter of resignation

dated 23 February 2017. During a consultation, Ms Choma provided a non-executive

shareholders agreement between Mr Pather and the Mokoni trust duly signed by both

parties, but undated. Further to this, she also provided a shareholders resolution dated

and signed 21 September 2016 where it was resolved that:

250 ordinary shares held by Ms Choma have been transferred from Ms Choma to

the Mokoni trust;

100 ordinary shares held by Mr Pather have been transferred by Mr Pather to the

Mokoni trust;

The 1 000 authorised shares of Impulse International (Pty) Ltd were allocated as

follows:

350 ordinary shares were allocated to the Mokoni trust;

650 ordinary shares were allocated to Mr Pather; and

Ms Choma was no longer a shareholder of Impulse International (Pty) Ltd as

she transferred her shares to the Mokoni trust.

4.4.3 We did not source a document confirming the shareholding of 35% allocated to Ms

Choma. We were however informed by Ms Koko, Mr Pather and Ms Choma that the

latter held 35 % shareholding in the Mokoni trust. Mr Koko declared on 24 February 2017

to Eskom that his stepdaughter held 35% shareholding in the Mokoni trust. Mr Pather

submitted a declaration to Eskom dated 18 May 2017 that “the step daughter of Matshela


Page | 55

Koko is Koketso Choma who is a beneficiary of a trust that holds 35 % shareholding in

Impulse International (Pty) Ltd”.

4.4.4 During the investigation, 3 (three) separate lists of questions were forwarded to Mr

Pather to which he responded. We also consulted with Mr Pather on 17 May 2017 and

23 May 2017. Mr Pather in his response to questions dated 19 April 2017, stated inter

alia that:

Impulse International (Pty) Ltd has been doing business with Eskom since 2014,

long prior to him becoming acquainted with Mr Koko and prior to Ms Choma’s

securing any shares in Impulse International (Pty) Ltd;

He was aware that Ms Choma is the daughter to Ms Koko and the step-daughter

to Mr Koko;

He confirmed the appointment of Ms Choma as non-executive director at Impulse

International (Pty) Ltd from 5 April 2016 and indicated that she was introduced to

him (Mr Pather) by Ms Koko;

Mr Pather acknowledged that Ms Choma resigned as non- executive director of

Impulse International (Pty) Ltd with effect from 20 September 2016;

According to Mr Pather, Mr Koko had no influence or involvement in the

procurement process relevant to the appointment of Impulse International (Pty)

Ltd; and

Ms Choma’s relationship with Mr Koko was declared to Impulse International (Pty)

Ltd and Ms Choma’s relationship with Mr Koko was not declared to Eskom by

Impulse International (Pty) Ltd, as Mr Pather “believed there was no duty on

Impulse to declare such relationship at the time of Ms Choma’s appointment”.

4.4.5 According to the Mokoni trust agreement three (3) trustees were appointed, namely Mr

Johannes Coetzee (“Mr Coetzee”), Ms Choma and Mr Watson Seswai (“Mr Seswai”). The

beneficiaries in the trust referred to income and capital beneficiaries. The trustees

entered into a deed of amendment of the Mokoni trust on 23 February 2017 as Ms Choma

resigned as a trustee of the Mokoni trust.


Page | 56

4.4.6 We received correspondence from Mr Coetzee, the legal representative of Ms Koko

relevant to the registration of the Mokoni trust and the advice given to Ms Koko regarding

shareholding (see Exhibit 12).

4.4.7 We drafted a graphical presentation of Impulse International (Pty) Ltd shareholding and

the shareholding transferred to Mokoni trust referred to supra.


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Chapter 5: Declaration of Interest

5.1 Declarations made by Eskom employee

E-form declarations

5.1.1 We were provided with the declaration of interest e-forms submitted by Mr Koko for the

past eleven (11) years (2007 to 2017). For purposes of this investigation, we focused on

the declaration of interest e-forms submitted during the period 2015/2016 and

2016/2017.

5.1.2 Mr Koko submitted a declaration of interest e-form on 3 September 2015 wherein he

declared his directorship in Eskom Rotek Industries (“ERI”) and his membership in the

Engineering Society. The declaration was approved by Mr Brian Molefe (“Mr Molefe”)

for the period 19 November 2015 to 14 July 2016 (see Exhibit 13).

5.1.3 Mr Koko submitted a declaration of interest e-form on 8 June 2016 again declaring his

involvement in ERI. His declaration was approved by Mr Molefe for the period 8 June

2016 to 14 July 2016 (see Exhibit 14).

5.1.4 Mr Koko submitted a declaration of interest e-form on 24 February 2017 declaring his

step daughter, Ms Choma’s, involvement in Impulse International (Pty) Ltd. He declared

that “my stepdaughter is a beneficiary in a Trust which owns 35% interest in Impulse (Pty)

Ltd”.

5.1.5 He declared that the circumstances under which a conflict of interest could be created,

was “if the company does business with Eskom”. This declaration was approved by the

Chairperson of the Board, Dr Baldwin Ngubane (“Dr Ngubane”) on 1 March 2017 (see

Exhibit 15).

5.1.6 According to a letter signed by Mr Molefe dated 3 October 2016 issued to Mr Koko

wherein it was stated that all Eskom employees must declare their interest (s) at the

beginning of every financial year (1 April) on the e-form. It was further stated that Mr

Koko failed to complete declarations for 2007 and 2010 and he was informed that any

repetition of similar contraventions would lead to disciplinary measures instituted in


Page | 58

terms of Eskom’s Disciplinary Code and Procedure (see Exhibit 16).

5.1.7 We therefore also perused the declarations as submitted by Mr Koko for the remaining

period, namely 2007 to 2014 and noted that he submitted the following declarations:

Year Date Detail of declaration Approver ID Exhibit

1 2007 11 February 2008

No declaration Mothibbi 17

2 2008 11 August 2008

Declared Business involvement of Ms Koko – Turnkey Group (Pty) Ltd

Damesba

Veletins

18

3 2009 30 July 2009 Declared Business involvement of Ms Koko – Turnkey Group (Pty) Ltd

Damesba

Veletins

19

4 2010 28 February 2011

No declaration Damesba

20

3 2011 26 October 2011

Declared that he took part in procurement and human resource processes, but had no interest to declare

Damesba

21

4 2012 16 May 2012 Declared that he took part in procurement and human resource processes, but had no interest to declare

Marokadl 22

5 2013 3 June 2013 Declared that he took part in procurement and human resource processes, but had no interest to declare. Mr Koko declared his wife’s involvement in Basil Read.

Marokadl 23


Page | 59

6 2014 3 June 2014 Mr Koko declared his wife interest in Basil Read

Lennonsj 24

5.1.8 During a consultation with Mr Koko on 16 May 2017 he stated inter alia his knowledge

about the relevant Eskom policies and procedures and stated that all Eskom employees

must make an annual declaration of interest. They must make a further declaration of

conflict of interest as and when one becomes aware of an alleged/perceived conflict.

5.1.9 Mr Koko declared during a consultation on 13 June 2017 that he received the letter

referred to above and that same contained incorrect information in that referral was

made to him as the Head of Eskom Enterprises and that he failed to submit a declaration

for 2010. He confirmed that the declaration dated 28 February 2011 was indeed

applicable on 2010. This letter was also not only forwarded to him, but was forwarded to

various employees.

5.1.10 A stated by Mr Koko on 16 May 2017, he had no conflict of interest to declare up to August

/September 2016 as he only became aware that Ms Choma was appointed as a non-

executive director and awarded shareholding in Impulse International (Pty) Ltd during

August/September 2016. Ms Choma at the time, did not participate in any commercial

activities relevant to Impulse International (Pty) Ltd. After becoming aware of Ms

Choma’s involvement in Impulse International (Pty) Ltd, Mr Koko requested her to resign

as a director and to relinquish her shareholding in the entity.

5.1.11 Mr Koko explained further that Ms Choma was getting to the end of her contract at

PricewaterhouseCoopers (“PwC”) and she wanted to make a decision regarding her

career. Mr Koko asked Ms Choma to resign from Impulse International (Pty) Ltd as a

director and to relinquish her shareholding in the company in August/September 2016.

Ms Choma and her mother, Ms Koko agreed that she would resign and relinquish the

shareholding. At the time, he was of the opinion that her involvement in Impulse

International (Pty) Ltd might create a perceived conflict of interest for him as the entity

was a service provider to Eskom and also taking into account his appointment as a GE:

Generation. He did not follow up whether she (Ms Choma) indeed resigned as a director


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and whether she relinquished her shares in Impulse International (Pty) Ltd.

5.1.12 Mr Koko wanted Ms Choma to resign as a director and to “pull out” of Mokoni trust during

August/September 2016 when he became aware of her involvement in Impulse

International (Pty) Ltd. Ms Koko indicated during that a discussion in February 2017 she

made Mr Koko aware of the shareholding by the trust and he was unhappy with it. Ms

Choma was then removed as a trustee on advice of Ms Koko’s lawyer and was only a

beneficiary to the trust.

5.1.13 Mr Koko had a discussion with his wife in February 2017 during which she informed him

that Ms Choma was a trustee in Mokoni trust and that the trust held shareholding in

Impulse International (Pty) Ltd. Mr Koko wanted as much distance as possible from

Impulse International (Pty) Ltd and therefore insisted that Ms Koko’s appointment as a

trustee be terminated.

5.1.14 Mr Koko felt uncomfortable at the time with the trustee status of Ms Choma in the Mokoni

trust as it held shareholding in Impulse International. Ms Koko however informed him in

February 2017 that she sourced legal advice from an attorney, Mr Coetzee and that Mr

Koko would not be compromised if Ms Choma was appointed only as a beneficiary in the

Mokoni trust and not as a trustee. He was informed that the status of Ms Choma was

changed to that of a beneficiary of the Mokoni trust.

5.1.15 According to Mr Koko he established that an Impulse International (Pty) Ltd Board

resolution was taken on 22 March 2016 to appoint Ms Choma as a non-executive director

where after she was appointed as a director on 6 April 2016. A Board resolution was taken

on 22 September 2016 regarding her resignation as a director and Ms Choma resigned on

6 October 2016 as a director from Impulse International (Pty) Ltd.

5.1.16 According to Mr Koko, Ms Choma, her mother and her biological father are business

partners and Mr Koko is not involved where Ms Choma makes decisions regarding her

career or business involvement.

5.1.17 Mr Koko stated that on 3 (three) separate occasions his wife was involved in business with

specific entities and he asked her to resign from the respective entities. He explained the

instances where his wife became involved, namely Group 5, Basil Read and Builders


Page | 61

Warehouse via a project of Murray & Roberts. In all three instances, he asked her to either

leave or resign. He did not confirm whether Ms Choma’s relinquished her shareholding

in Impulse International (Pty) Ltd in August/September 2016.

5.1.18 According to Mr Koko, he had no influence of the appointment of Impulse International

(Pty) Ltd by Eskom in each of the 9 (nine) contracts awarded to the entity (at the time of

the consultation, only 9 (nine) contracts were available to us). He established that Impulse

International (Pty) Ltd was appointed in 2014 by Eskom as a vendor and their first contract

was awarded by Medupi Power Station. He was introduced to Mr Pather by his wife and

became aware of various community projects including the project at Lephalele which

was a water purification project done for an antenatal clinic, a project in Mozambique and

a mobile clinic in Diepsloot which were facilitated by Mr Pather and Impulse International

(Pty) Ltd.

5.1.19 Mr Koko stated that he and Mr Pather discussed social initiatives and at times they

communicated. According to Mr Koko, the information published regarding their alleged

telephonic communication, was incorrect. He compared the detail of the phone call times

and dates with his itemised billing and it did not correspond. Mr Koko made available the

itemised billing of his cell phone with number 082 859 9334. We established that 2 (two)

calls were made on 31 January 2016 from this number (082 859 9334) to 082 857 6011

being the cell phone number of Mr Pather. The calls were respectively made as per the

schedule hereunder:

No Date and time Duration

1 31 January 2016 at 19h53 7 seconds

2 31 January 2016 at 19h56 52 seconds

5.1.20 Mr Koko informed us that he has another cell phone with number 071 679 4381 which is

utilised by his wife, Ms Koko. He applied to get access to the itemised billing for this

phone, but at the time of this report, the billing was not yet available to us.

5.1.21 As a GE: Generation he was not a member of EXCOPS or a tender committee. The 2017

DOA gave procurement authority to the CE and the 2013 DOA did not make provision for


Page | 62

procurement authority to the CE. He established that most of the contracts awarded to

Impulse International (Pty) Ltd was awarded by the Group Capital Division and only two

(2) contracts were awarded by the Generation Division to Impulse International (Pty) Ltd

at Kendal and Matla Power Stations. The threshold amounts of the contracts determined

the procurement processes to be followed in terms of the relevant DOA’s.

5.1.22 We sourced two documents reflecting the signature of Mr Koko where Impulse

International (Pty) Ltd was appointed by Eskom to render services (see Exhibit 25 and

Exhibit 26).

5.1.23 According to Mr Koko, he was appointed as the GE: Generation on 1 October 2015 and

the Technology Division formed part of his portfolio. The Commercial Division at the time

reported to the Chief Financial Officer (“CFO”).

5.1.24 Mr Koko stated that there was no conflict of interest to declare relevant to Impulse

International (Pty) Ltd during 2016 as no conflict of interest existed according to him.

After he was informed that his step-daughter was a beneficiary in the Mokoni trust, it was

decided that he should declare this perceived conflict of interest which he did. He had a

discussion with Dr Ngubane relevant to the perceived conflict of interest dated 24

February 2017. He informed Dr Ngubane that his step-daughter held shareholding in

Mokoni trust who in turn held shareholding in Impulse International (Pty) Ltd.

5.1.25 Various newspaper articles were published wherein it was stated that the step-daughter

of Mr Koko, who graduated as a chartered accountant, was appointed as a director at

Impulse International (Pty) Ltd and that she held shareholding in Impulse International

(Pty) Ltd as a trustee of the Mokoni trust. We established that Ms Choma is currently an

accountant who has complied with all the requirements of registering as a chartered

accountant, but that her registration is currently pending.

Appointment of Ms Choma as director and shareholder

5.1.26 We forwarded a list of questions to Ms Choma to which she responded and we consulted

with Ms Choma as represented by Advocate Barry Roux SC and briefed by Mr Asger Gani

(“Mr Gani”) on 26 April 2017. During the consultation, she declared inter alia that:

She was approached by Mr Pather who is the CEO of Impulse International (Pty)


Page | 63

Ltd and it was on a recommendation by her mother, Ms Koko that she was

appointed as a non-executive director at Impulse International (Pty) Ltd;

Her directorship started on 6 April 2016, but her application to be registered as a

director was already submitted on 31 March 2016;

She was appointed as a beneficiary to the Mokoni trust on 6 April 2016, which

trust holds 35% shareholding in Impulse International (Pty) Ltd;

She did not know if Impulse International (Pty) Ltd declared the relationship to

Eskom as she was a non- executive director and was not involved in the day-day

running of the business;

She confirmed that Impulse International (Pty) Ltd made payments to a company,

Ukwakhiwa Investments (Pty) Ltd wherein she is the sole director and

shareholder;

The CEO of Impulse International (Pty) Ltd transferred money into Ukwakhiwa

Investments (Pty) Ltd for the purchase of property which is owned by High

Echelon Property Investment (Pty) Ltd;

Indiwize Construction (Pty) Ltd is a shareholder in the Mokoni trust;

Mr Pather is the CEO in Indiwize Construction (Pty) Ltd and Indiwize Construction

(Pty) Ltd is a shareholder in Ukwakhiwa Investments (Pty) Ltd and is the company

that made a capital investment in Ukwakhiwa Investments (Pty) Ltd;

Mokoni trust is also a shareholder in Ukwakhiwa Investments (Pty) Ltd; and

Money was paid to Ukwakhiwa Investments (Pty) Ltd for the purchase of property

in High Echelon Property Investment (Pty) Ltd.

5.1.27 Ms Choma confirmed that Mr Koko became aware of her directorship around August/

September 2016 during an informal discussion. Mr Koko, Ms Koko and Ms Choma decided

that she must resign in September 2016 and end her relationship with Impulse

International (Pty) Ltd as a director and shareholder.

5.1.28 Ms Choma confirmed that she resigned as a director and moved her shareholding to the

Mokoni trust as she felt that she had done nothing wrong as she was not involved in any

Eskom related work.

5.1.29 We consulted with Ms Koko on 9 May 2017 who confirmed inter alia that:


Page | 64

She met Mr Pather late in 2014 or early 2015 and she introduced her daughter, Ms

Choma to Mr Pather around March 2016;

Her daughter was appointed as a non-executive director of Impulse International

(Pty) Ltd;

Her daughter was a shareholder of Impulse International (Pty) Ltd and she was

guiding and advising her daughter to retain the shareholding in Mokoni trust, but

the trust was not registered at the time when Ms Choma became involved in

Impulse International (Pty) Ltd;

She decided not to inform Mr Koko of Ms Choma’s involvement as a director or

shareholder of Impulse International (Pty) Ltd as there was no need for her to

inform him at the time and she lost previous business opportunities as a result of

his position within Eskom.

During August/September 2016 she and her daughter had a discussion with Mr

Koko and he was informed about the involvement of Ms Choma in Impulse

International (Pty) Ltd. Mr Koko asked Ms Choma to resign as a director and to

relinquish her shareholding in the company. Ms Choma resigned as a director,

however Ms Koko advised her daughter to transfer the shareholding into Mokoni

trust and to keep the shareholding,

Mr Koko was not aware of the Mokoni trust and she made him aware of the trust

in February 2017. Mr Koko was very unhappy about the fact that he was not aware

that the shareholding was held by a trust and they had a tough discussion around

the trust as her view was that the shareholding being owned by a trust, removes

the control or the involvement of the directors. Ms Choma at that stage was no

longer a director;

She believed that there was no conflict of interest and the conflict was perceived;

She managed the situation by putting the shareholding in a trust, because it

removes the face, it removes the control and perceptions, but Mr Koko was really

not happy about it;

In February 2017 when her husband became aware of the trust, they had a

discussion and she told him that her lawyer’s view is that her shareholding should

be held by a trust and Ms Choma has no control within the business. Mr Koko was


Page | 65

unhappy with it and she consulted with her lawyer again who said they can further

remove Ms Choma as a trustee and she can just stay on as a beneficiary;

It was then decided between them that Mr Koko should declare a perceived

conflict of interest to Eskom which he did;

She told Mr Koko that they had to strike a balance, declare the shareholding or the

ownership by a trust then they have to deal with concerns as she achieved what

she needed to achieve;

She was guiding Ms Choma and advising her on business transactions; and

In 2016 they also registered Ukwakhiwa

5.1.30 We consulted with Mr Pather of Impulse International (Pty) Ltd on 17 and 23 May 2017

and he confirmed the appointment of Ms Choma as a non-executive director at Impulse

International (Pty) Ltd. Mr Pather stated that she resigned as a director and that her

shareholding was initially 25% in Impulse International (Pty) Ltd and that it was later

increased to 35 % and kept in the Mokoni trust. He stated that Impulse International

(Pty) Ltd made no payments to Ms Choma in the time that she was appointed as a

director.

5.1.31 He stated that an amount of R16 million was paid by Impulse Holdings (Pty) Ltd as an

investment to the entity styled Ukwakhiwa Investments (Pty) Ltd. He explained during

the consultation on 23 May 2017 that the R16 million was part of a R38 million he had to

pay as part of his 45% shareholding in Ukwakhiwa Investments (Pty) Ltd through Indiziwe

Construction (Pty) Ltd and it was paid via a loan account between the two companies.

We did not receive documentation relevant to the loan account/s.

5.1.32 We received a letter dated 17 May 2017 from Coetzee (“Mr Coetzee, an attorney,

confirming that he advised Ms Koko on various legal matters and attended to the

conveyancing matters of Mr Choma and his various companies and entities. It is stated

in the letter inter alia that Ms Koko and Ms Choma followed his advice and established

the Mokoni and Bokoni trusts during February 2016. Both trusts were only registered in

July 2016 and it was always the intention that shares should not be held by Ms Choma in

her own name, but through trust structures and that she should conduct business in the

name of separate legal entities.


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5.1.33 According to Mr Coetzee, Ms Koko was advised that any existing and future ventures

should be conducted via trading companies of which the Mokoni and Bokoni trusts should

obtain and keep the shareholding. They registered a company Ukwakhiwa Investments

(Pty) Ltd in February 2016 for that purpose. Ukwakhiwa Investments (Pty) Ltd was

actively trading and involved in the building activities of the “3 Buitekant” townhouse

project consisting of 140 townhouses of which 57 have been completed and all

infrastructure installed.

5.1.34 Mr Coetzee stated that he never met Mr Koko and the latter’s position at Eskom and

possible contracts with Eskom were never considered or taken into account when he gave

the advice as to how the companies and trusts should be structured. The restructuring

and establishment of the trusts were based purely on sound risk management and

business principles according to Mr Coetzee.

5.1.35 Mr Coetzee further stated that he was approached in February 2017 to file the resignation

of Ms Choma as trustee in both trusts with the Master of the High Court Mpumalanga.

The amendment of the trust deed to remove Ms Choma was lodged with the Master’s

Offices during February 2017. He also confirmed that the “Mokoni trust” and “Indizwe”

are shareholders in Ukwakhiwa Investments (Pty) Ltd.

5.1.36 We prepared a graphical representation of the information hereunder and as referred to

above.


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5.2 Declarations by Impulse International (Pty) Ltd

5.2.1 We sourced copies of the contracts awarded to Impulse International (Pty) Ltd by Eskom

in order to ascertain whether the service provider (Impulse International (Pty) Ltd made

any supplier declarations of interest.

5.2.2 The tabulation below illustrates all contract numbers associated to the vendor number

11082200 denoted as "IMPULSE INTERNATIONAL" on the Eskom SAP system and

information provided to us by Mr Pather. The table further provides start and end dates

per contract and the total registered contract value:

Ref Contract Number Start of Contract End of Contract Contract Doc Value

1 4600055020 22 July 2014 31 January 2015 R10 722 228,66

2 4600060205 25 March 2016 19 August 2016 R63 445 861,52

3 4600061009 20 August 2016 28 March 2017 R79 244 640,00

4 4600061015 17 August 2016 28 February 2017 R19 800 000,00

5 4600058830 04 December 2015 30 January 2019 R65 854 766,64

6 4600061441 12 October 2016 30 September 2019 R31 175 306,25

7 4600061859 01 January 2017 31 December 2019 R 42 711 873,90

8 4600061909 09 January 2017 09 June 2017 R14 292 438,25

9 4600062251 01 March 2017 31 August 2017 R21 351 600,00

10 4600062636 1 May 2017 30 April 2020 R41 540 800,00

GRAND TOTAL R 390 139 515,22

5.2.3 It should be noted that the above mentioned value does not indicate the amount-

cumulative purchase orders (“PO’s”) or invoices values registered on the SAP system for

the vendor in question, but the budget amount against the contract at the time of

registration on the SAP system.

5.2.4 We have also noted that there are various PO’s within the SAP system that we have

received from Eskom with no allocation to contract numbers, despite being captured and

allocated to the “11082200” Impulse International vendor number. The tabulation below

provides the relevant data:


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5.2.5 This table provides the registered PO amounts captured on the SAP system and respective

invoice amounts also retrieved from the SAP system.

5.2.6 We were able to source 5 (five) declarations of interest from Eskom and Mr Pather as per

the schedule hereunder:

Ref Date of declaration Contract relevant to

the declaration

Date of contract

signed

Exhibit

no

1 12 April 2016 4600061441 12 October 2016 27

2 12 August 2016 4600061009 16 August 2016 28

3 12 September 2016 4600061859 16 February 2017 29

4 12 May 2017 4600062251 28 February 2017 30

5 18 May 2017 4600061909 12 December 2016 31

5.2.7 Mr Pather did not declare the involvement of Ms Choma as a director or shareholder in

Impulse International (Pty) Ltd in the first three declarations despite the fact that she was

appointed as a non-executive director on 31 March 2016. A declaration relevant to

contract number 4600062251 was submitted dated 12 May 2017 almost 3 (three) months

after the contract was signed. The declaration relevant to contract number 4600062251

stated that “Yes – the director of the Supplier is an acquaintance of Mr Matshelo Koko, the

CEO of Eskom. Due to Mr Koko’s recent appointment as CEO, he may be participating in

the procurement process”. The declaration submitted on 18 May 2017 was made almost

5 (five) months after the contract was signed. The declaration reflected that:

“ 1. The director of the supplier is an acquaintance of Mr Matshela Koko. Due to Mr Koko’s

Ref SAP PO Ref Number PO Amount Invoice Amount Paid

1 3070310598 R 1 965 889,50 R1 965 889,50

2 4502278900 R 29 442 000,00 R412 834,80

3 4502343269 R 1 905 750,00 R1 626 952,32

4 4502394584 R 1 702 750,00 R1 552 710,24

5 4502496496 R 2 270 333,33 Not Paid

6 4502507299 R 408 864,12 R408 864,12

TOTAL R 37 695 586,95 R5 967 250,98


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recent appointment as the Acting CEO, he may be participating in the procurement

process.

2. In addition, the step daughter of Matshela Koko is Koketso Choma who is a beneficiary

of a trust that holds 35% shareholding in Impulse International (Pty) Ltd”.

5.3 Timeline of involvement of stakeholders in Impulse

International (Pty) Ltd

5.3.1 We drafted a graphical presentation of the timeline relevant to the contractual history of

Impulse International (Pty) Ltd and the Mokoni trust as reflected hereunder:

5.3.2 The contract detail and related financial information represented above, has been

extracted from the Eskom SAP system. We have provided that each line denoted by a

“SAP Contract” prefix represents an Impulse International (Pty) Ltd contract that has been

extracted from the Eskom SAP system. This information is provided below:


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5.3.3 It should be further noted that the other 3 (three) lines represented on the timeline with

non-“SAP Contract” prefixes are specific timeline events that are related to:

DATE EVENT

23-Feb-17 Ms Choma resigned as a trustee from Mokoni trust

21-Sep-16 35% Shares of Impulse International (Pty) Ltd was transferred into the Mokoni trust

24-Feb-17 Mr Koko declared a conflict of interest regarding the Mokoni trust

5.3.4 There are 3 (three) shaded areas contained within the timeline graph which are denoted

as follows:

SHADE DATE FROM

DATE TO EVENT

31-Mar-16 20-Sep-16 Ms Choma was appointed director of Impulse International (Pty) Ltd

07-Jul-16 23-Feb-17 Ms Choma was appointed beneficiary and trustee of Mokoni trust

23-Feb-17 End of Timeline Ms Choma resigned as trustee of Mokoni trust and is sole beneficiary of Mokoni trust

5.3.5 The timeline reflects that we have received 5 (five) declarations made by Impulse

International (Pty) Ltd that have been marked on the timeline (denoted by a♦ on the

timeline):

Ref Contract The date per contract of declarations signed by Impulse International (Pty) Ltd

1 4600061009 12-Apr-16

2 4600061441 12-Aug-16

3 4600061859 12-Sep-16

4 4600062251 12-May-17

5 4600062636 18-May-17


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Chapter 6: Impulse International (Pty) Ltd

6.1 Eskom DOA

6.1.1 The Eskom Delegation of Authority Policy (240-62072907) approved in 2013, forms part

of the approved procurement framework and individual employees may be permitted by

a written delegation of authority to bind Eskom into contracts of purchase/sale regarding

assets, goods or services, either acting in a dual or, triple adjudication or as part of a

tender committee.

6.1.2 The DOA policy states the following relevant to procurement:

“2.2.12.1 The Commercial processes should be fair, equitable, transparent,

competitive and cost effective. All authority can only be exercised after an

appropriate procurement process has been executed by a Procurement

Practitioner assigned by Group Commercial.

2.2.12.2 The Technology and Commercial Group is responsible for the procurement

process and execution.

2.2.12.3 All Sole Source, Condonation, Ratification and Modifications exceeding 20%

in terms of time/value must be approved by the appropriate Procurement

Committees and reported to the EXCO Procurement Committee if within the

group/divisions. All Sole Source Transactions must be reviewed by the

Supplier Development and Localisation Department.

2.2.12.13 All transactions to procurement committees below the EXCO subcommittee

must be reported to the next level committee for oversight.

6.1.3 The approval authority for the day to day running of the operations of Eskom Divisions

(delegation of operational and management authorities) resides with the FD, GE and DE

subject to the directions and conditions required by the Chief Executive. The approval

authority for effective delegation of operational matters resides with the CE, GE and DE.

6.1.4 DOA’s for the procurement of services, must be exercised with the recommendation and

approval of another delegated and accredited procurement practitioner as part of a dual


Page | 72

or triple adjudication system of approval, or with approval from a delegated PTC. The

delegation to PTC’s includes the specific approvals of condonations, ratifications and

appointments of strategic and management consultants.

6.1.5 A supplier can be appointed as a general sole source for a specified category of assets,

goods or services for a maximum period of three years and the approval needs to be

obtained from the relevant PTC.

Acquisition of operational expenditure and the provision and

acquisition of services

6.1.6 Transactions from R5m to R50m for a maximum of 5 years to be recommended by the

Commercial Senior Manager or higher and approved by the Regional or Site based

procurement committees established by the CPO.

EXCO Dual and Triple Adjudication

6.1.7 Transactions up to R50m for a maximum of 3 years (EXCO dual adjudication) to be

recommended by the CPO and procuring GE, and approved by any 2 EXCO members

excluding the procuring members.

6.2 Contracts awarded to Impulse International (Pty) Ltd

6.2.1 Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014


render services to Eskom (see Exhibit 32).

6.2.2 It was established that a contract with reference number 4600055020 was signed

between Eskom and Impulse International (Pty) Ltd on 21 August 2014 for the provision

of specialised services. The first Impulse International (Pty) Ltd invoice dated 19 August

2014 and referenced 106 was submitted for payment in respect of work done during the

period ending 17 August 2014. According to an internal Eskom procurement document

dated 15 July 2014 and named as “Madupi Power Station Project” the procurement was

classified as “emergency procurement”

6.2.2 It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and

was also appointed as a sub-contractor to render services to Eskom. We established that


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10 (ten) contracts were awarded by Eskom to Impulse International (Pty) Ltd in the total

value of R390 139 515.22 according to the SAP system. Mr Pather provided us with the

details of another contract (4600062636) and submitted a copy of the contract and

supporting documentation to us.

Impulse Procurement Information Eskom Procurement Information

Ref Contract Number

Procurement Method

Contract Doc Value

Procurement Method Exhibit

Reference

1 4600060205 RFQ R 63 445 861,52 Emergency 33

2 4600061009 RFQ R 79 244 640,00 Sole Sourcing 34

3 4600061015 Tender Award R 19 800 000,00 Emergency/RFQ 35

4 4600058830 Tender Award R 65 854 766,64 Sole Sourcing 36

5 4600061441 Tender Award R 31 175 306,25 Invitation to Tender 37

6 4600061859 RFQ R 42 711 873,90 Invitation to Tender 38



9 4600055020 RFQ R 10 722 228,66 Emergency 41

10 4600062636 Tender Award R 41 540 800,00 Invitation to Tender 42

6.2.3 Eskom provided us with supporting documentation relevant to the contracts reflected in

the schedule hereunder:

Contract numbers End User

1 4600055020 Medupi Power Station - July 2014

2 4600058830 Various Power Stations - November 2015 to June 2016

3 4600061441 Kriel Power Station - April 2016

4 4600060205 Kusile Power Station - July 2016

5 4600061009 Kusile Power Station - July 2016

6 4600061015 Kendal Power Station - September 2016

7 4600061859 Majuba Power Station - September 2016

8 4600061909 Kriel Power Station - November 2016

9 4600062251 Kendal Power Station - February 2017

6.2.5 Mr Pather also provided us with the detail of sub-contracting work that Impulse

International (Pty) Ltd did for ABB South Africa (Pty) Ltd. The table hereunder reflects 6

(six) contracts as provided by Mr Pather:


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Ref Contract number Start date End date Value

1 ABB_TCP 01 February 2016 31 December 2016 R47 000 000,00

2 LOI 12 July 2016 28 February 2017 R76 675 743,20

3 Not Available 01 March 2017 17 June 2017 R111 648 376,97

4 2202053035 02 May 2016 31 August 2016 R4 392 960,00

5 Not Available 01 August 2016 30 June 2017 R60 507 607,08

6 LOI+ Letter 01 January 2017 31 March 2017 R43 293 318,29

Grand Total R 343 518 005,54

6.3 Procurement of services

6.3.1 The review and analyses of the contract supporting documentation for Impulse

International (Pty) Ltd, as received from Eskom, identified the procurement processes

followed and role players involved within the procurement of services from Impulse

International (Pty) Ltd.

6.3.2 Below we provide detail on each of the contracts identified relevant to the period 1 April

2016 to 31 March 2017. We however sourced copies of contracts awarded to Impulse

International (Pty) Ltd since 2004 when it was appointed as a vendor.

Ref Contract Number Power Station

Procurement Methodology Contract Value Threshold DoA Policy Level

1 4600055020 Medupi Emergency R10 722 228,66

R5M-R100M

Medupi Projects R5M-R100M Tender Committee

2 4600060205 Kusile Emergency R63 445 861,52 R100M

Kusile Projects R100M Tender Committee

3 4600061009 Kusile Sole Source R79 244 640,00 R100M

Kusile Projects R100M Tender Committee

4 4600061015 Kendal Emergency R19 800 000,00 R0M-R50M Kendal R0-R50M Tender Committee

5 4600058830 Various Sole Source R65 854 766,64 R100M

Mancom Procurement Tender Committee

6 4600061441 Kriel Invitation to Tender R31 175 306,25 R100M

Kriel Main R100M Tender Committee

7 4600061859 Majuba Invitation to Tender R42 711 873,90 ≤R50M

Majuba <R50M Tender Committee

8 4600061909 Kriel Power Station Sole Source R14 292 438,25 R100M

Kriel Main PTC R100M Tender Committee

9 4600062251

Kendal Power Station

Sole Source R21 351 600,00 R0M-R50M Kendal R0-R50M Tender Committee

10 4600062636

Matla Power Station

Invitation to Tender

R47 771 920,00 R0M-R50M

Matla Procurement Tender Committee


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6.3.3 We sourced a legal opinion relevant to the applicability of section 75 of the Companies

Act, no 71 of 2008 insofar as it relates to the facts of this investigation (see Exhibit 43).

6.3.4 We identified one (1) contract entered into between ERI and Impulse International (Pty)

Ltd during 2015, being contract number 4600058830. The contract was initially awarded

with a contract value of R65 854 766.64. It was modified and extended for an additional

12 (twelve) months and the additional extended contract value was R29 442 000.00. The

total value of the contract was R95 296 766.64. Mr Koko declared his interest as a

director in ERI during 2015.

6.3.5 Mr Koko stated during the consultations conducted, that he was not involved in any of

the commercial processes relevant to the appointment of Impulse International (Pty) Ltd.

6.3.6 We sourced data in respect of 46 PO’s captured on the SAP system related to Impulse

International (Pty) Ltd. It was established that the existence of a PO does not constitute

a payment and we sourced PO’s, purchase requisitions and invoice data from the SAP

system. We therefore specifically analysed payment transactions to Impulse

International (Pty) Ltd that have been processed to the level of paid invoices only as this

constituted a completed procurement transaction.


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7. Conclusions 7.1. It is evident that Mr Koko was appointed as the GE: Generation during late 2015. He was

also responsible for Technology, consisting of maintenance and engineering. He was

appointed as the Interim CE on 1 December 2016.

7.2 Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014


render various project management and support services to Eskom.

7.3 It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and

was also appointed as a sub-contractor to render services to Eskom. We cumulatively

established that 10 (ten) contracts were awarded by Eskom to Impulse International (Pty)

Ltd in the total value of R 390 139 515,22 as reflected in the schedule hereunder:

Ref Contract Number Start of Contract End of Contract Contract Doc Value

1 4600055020 22 July 2014 31 January 2015 R10 722 228,66

2 4600060205 25 March 2016 19 August 2016 R63 445 861,52

3 4600061009 20 August 2016 28 March 2017 R79 244 640,00

4 4600061015 17 August 2016 28 February 2017 R19 800 000,00

5 4600058830 04 December 2015 30 January 2019 R65 854 766,64

6 4600061441 12 October 2016 30 September 2019 R31 175 306,25

7 4600061859 01 January 2017 31 December 2019 R42 711 873,90

8 4600061909 09 January 2017 09 June 2017 R14 292 438,25

9 4600062251 01 March 2017 31 August 2017 R21 351 600,00

10 4600062636 1 May 2017 30 April 2020 R41 540 800.00

Grand total R 390 139 515,22

7.4 Mr Koko declared his directorship in ERI and also his membership in the Engineering

Society on 3 September 2015. His declaration was approved by Mr Molefe. Mr Koko

declared his involvement in ERI again on 8 June 2016 and the declaration was also

approved by Mr Molefe. Mr Koko declared on 24 February 2017 that his stepdaughter is

a beneficiary in a trust which owns 35% interest in the entity styled Impulse International

(Pty) Ltd. This declaration was approved by the Chairperson of the Eskom Board, Dr B

Ngubane on 1 March 2017.


Page | 77

7.5 Ms Choma, the stepdaughter of Mr Koko, was appointed as a non-executive director at

Impulse International (Pty) Ltd on 31 March 2016. Mr Pather, the CEO of Impulse

International (Pty) Ltd allocated 25% shareholding to Ms Choma on 31 March 2016.

7.6 Ms Choma resigned as a non-executive director of Impulse International (Pty) Ltd on 20

September 2016. She was not employed by Impulse International (Pty) Ltd nor did she

receive any payment relevant to her appointment as a non-executive director. Mr Pather

confirmed that Ms Choma did not receive a salary/payment as a non-executive director

to Impulse International (Pty) Ltd.

7.7 The Mokoni trust with reference IT 2000216/2016(MN) was registered on 7 July 2016.

On 21 September 2016 Ms Choma transferred 25 % shares in Impulse International (Pty)

Ltd to the Mokoni trust where she was registered as a trustee and a beneficiary at the

time.

7.8 Mr Pather transferred 10% shareholding of Impulse International (Pty) Ltd to the Mokoni

trust on 21 September 2016.

7.9 On 23 February 2017 Ms Choma was registered as only a beneficiary to the Mokoni trust.

7.10 Ms Koko and Ms Choma confirmed that Mr Koko was not informed of her appointment

as a non-executive director at Impulse International (Pty) Ltd on 31 March 2016. Mr Koko

became aware of her appointment as director and shareholder around

August/September 2016 where after, he requested her to resign as a non-executive

director and relinquish her shareholding in Impulse International (Pty) Ltd. She submitted

her resignation on 20 September 2016 as a non-executive director and decided to

transfer her shares to the Mokoni trust on 21 September 2016. Mr Koko was not aware

at the time of her decision to keep the shareholding in Impulse International (Pty) Ltd.

7.11 Mr Koko was informed in February 2017 that Ms Choma was a beneficiary to the Mokoni

trust that held 35% shareholding in Impulse International (Pty) Ltd since 21 September

2016. Ms Koko advised Ms Choma to stay on as only a beneficiary to the Mokoni trust.

7.12 During 2016, Mr Koko submitted his declaration of interest as required by Eskom and

declared conflicts of interests referred to in the report. He did not declare the

directorship or shareholding of Ms Choma during 2016 and he stated that he was not


Page | 78

aware of same. When he became aware, he requested her to resign as a non-executive

director and to relinquish her shareholding.

7.13 Mr Koko became aware that Ms Choma is registered as a beneficiary to the Mokoni trust

in February 2017 and he declared her shareholding in the trust, which holds 35% shares

in Impulse International (Pty) Ltd, to Eskom.

7.14 Mr Pather did not declare the directorship or shareholding of Ms Choma to Eskom during

2016 when Impulse International (Pty) Ltd was awarded 4 (four) contracts to the

accumulative value of R193 665 807.77 as per SAP system information.

7.15 However, Mr Pather declared his relationship with Mr Koko on 12 May 2017 after signing

a contract (4600062251) with Eskom on 28 February 2017. We received a letter from the

attorney of Mr Pather on 26 May 2017 indicating that “in hindsight, disclosure should

have been made and was prudent not only to safeguard the interest of Eskom, but also,

as afore stated, to be transparent and accountable and thereby serve the interest of the

respective contracting parties as well as the public interest”.

7.16 According to the currently available documentation, Eskom utilised their procurement

processes as described in their procurement policy, in the awarding of contracts to

Impulse International (Pty) Ltd. There are no indications on any of the available

documentation that Mr Koko was involved in the approval and awarding of contracts to

Impulse International (Pty) Ltd.

7.17 According to the SAP data provided by Eskom, the peak period of financial transacting

amounting to 56% of all contracts (to date) between Eskom and Impulse International

(Pty) Ltd was in year 2016 as presented below:

Year Number of contracts Cumulative value % per year

2014 1 R 10 722 228,66 3%

2015 1 R 65 854 766,64 19%

2016 4 R 193 665 807,77 56%

2017 3 R 78 355 912,15 22%

Total R 348 598 715,22 100%


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7.18 The legal opinion obtained relevant to section 75 of the Companies Act, also addresses

the conflict of interest provisions in the PFMA as well as Eskom's internal conflict of

interest policies. The opinion albeit based on the face of it and the evidence and the

evidence provided that whilst there are some technical differences between the

Companies Act, PFMA and the policies in terms of their ambit and the range of persons

to whom they apply, ultimately their basic and essential principles are the same: There

must be disclosure and recusal where one (or one's related parties) are interested in the

matter being considered at a meeting or other decision-making forum, and additionally

ongoing updates of personal business interests must be made within the organisation.

7.19 Section 75 of the Companies Act referred to above, provides that if a director/prescribed

officer of a company acquires a personal financial interest in an agreement or other

matter in which the company has a material interest, or knows that a related person has

acquired a personal financial interest in the matter, after the agreement or other matter

has been approved by the company, the director/prescribed officer must promptly

disclose that interest.

7.20 Mr Koko upon becoming aware that Ms Choma is registered as a beneficiary to the

Mokoni trust in February 2017, declared her shareholding in the trust, which holds 35%

shares in Impulse International (Pty) Ltd, to Eskom as contemplated by section 75 of the

Companies Act, no 71 of 2008 and as provided for by Eskom's declaration of interest

policy.

7.21 The facts as set out in this report are based on a limited fact-gathering and interviewing

process. In the circumstances, without having interrogated the evidence gathered and

based on the untested statements and documentation made available to us, we are

unable on the basis of this fact finding enquiry to come to any conclusion.


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8. CDH Legal Findings and Recommendations

8.1 CDH has obtained a legal opinion from Senior counsel and a number of anomalies and

unanswered questions arose which are set out below:

8.1.1 First issue

8.1.1.1 Mr Koko was the Eskom GE: Generation from late 2015 to the end of November 2016.

He was appointed as the Eskom Interim GCE with effect from 1 December 2016. Quite

evidently, he occupied senior positions in Eskom. The mere ipse dixit of Mrs Koko and

Ms Choma that when Ms Choma was appointed as a non-executive director at Impulse

International, and acquired a shareholding therein, Mr Koko was not informed

thereof. There is no indication that the mere ipse dixit of Ms Koko and Ms Choma

was scrutinised or tested.

8.1.1.2 On 25 March 2016, Impulse International commenced with the execution of a contract

with Eskom, which value was in excess of R63 million. The suggestion that Mr Koko

was not informed that Ms Choma had not only been appointed a director but also

acquired an equity interest in Impulse International (without any reference to any

purchase price for that equity interest) would require further testing through a

mechanism such as cross-examination.

8.1.1.3 On Mr Koko's version, he only became aware of Ms Choma's appointment as a director

of and her acquisition of a shareholding in Impulse International during

August/September 2016, whereafter he requested her to resign as a non-executive

director and relinquish her shareholding in Impulse International. By this stage,

contracts worth approximately R162 million had been concluded between Impulse

International and Eskom whilst Ms Choma was involved with Impulse International (as

a shareholder and non-executive director). It does not appear that the question of Mr

Koko's knowledge of those contracts was canvassed with him at all, nor is there any

explanation of why Mr Koko saw fit to ask Ms Choma to resign as a director of Impulse

International and to divest herself of her shareholding therein. In other words, on his


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version, Mr Koko's request of Ms Choma must have been based on his knowledge of

the contractual relationships between Eskom and Impulse International. This being

the case, there is no explanation at all why Mr Koko did not, as required by Eskom's

conflict of interest policy, immediately (or at least within five days) declare this

conflict. At the minimum, this issue needs to be canvassed further.

8.1.1.4 Furthermore, if Mr Koko was aware of the contracts which Impulse International had

with Eskom when he requested (on his version) Ms Choma to resign as a director of

Impulse International and to divert herself of her shareholding therein, he would then

have been aware that her shareholding in Impulse International would have had

economic value. There is no explanation regarding the terms upon which he expected

her to relinquish her shareholding, nor to whom.

8.1.1.5 In addition, there is no explanation at all for Mr Koko not having then confronted Mr

Pather for an explanation of why Impulse International did not make disclosure of the

conflict or perceived conflict of interest having regard to Ms Choma's role in Impulse

International. Even if Mr Koko had an innocent state of mind at the time, there can

be no explanation for Mr Pather not having made full disclosure to Eskom. And, the

appropriate course of action at that time (on Mr Koko's version of the facts) would

have been for Mr Pather to have been confronted about his non-disclosure of the

conflict of interest, either by Mr Koko himself or at the behest and instance of Mr

Koko.

8.1.1.6 Finally, Mr Koko states that he was not aware that Ms Choma then decided not to

relinquish her shareholding in Impulse International, but rather to transfer that

shareholding into the Mokoni Trust, of which she was both a trustee and a beneficiary.

In other words, she simply moved the shares from a direct holding to an indirect

holding. Again, on an issue which would have had some significance, there is no

explanation for Mr Koko not having followed up with Ms Choma on his request that

she relinquish her shareholding.

8.1.2 Second issue:

8.1.2.1 At the time when Ms Choma transferred 25% of her shareholding into the Mokoni

Trust, the Mokoni Trust was awarded a further 10% shareholding. The coincidence


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in timing thereof would require further investigation and certainly an explanation.

This is because at the very point in time when (on Mr Koko's version) one would have

expected Ms Choma to have relinquished her shareholding in Impulse International,

she instead transferred it into the Mokoni Trust and simultaneously through the

Mokoni Trust acquired a further 10% shareholding in Impulse International. It seems,

at least prima facie, that the real intention at the time was for Ms Choma 's equity

interest in Impulse International to be held indirectly (through the Trust) and that this

is why she would have transferred her 25% shareholding into the Mokoni Trust, rather

than as a result of a request by Mr Koko that she relinquishes her shareholding in

Impulse International.

8.1.2.2 The further issue which arises is on what commercial terms was the additional 10%

shareholding in Impulse International transferred to the Mokoni Trust? This has not

been canvassed.

8.1.3 Third issue:

8.1.3.1 On Mr Koko's version, he was informed in February 2017 that Ms Choma was a

beneficiary to the Mokoni Trust which held a 35% shareholding in Impulse

International since 21 September 2016.

8.1.3.2 It would appear that Mr Koko's version is that he only then declared her interest in

the Mokoni Trust to Eskom. And he did so through the submission of a declaration of

interest e-form in which he declared that Ms Choma "... is a beneficiary in a Trust

which owns 35% interest in Impulse ..." and further that the circumstances under

which a conflict of interest could be created was "if the company does business with

Eskom."

8.1.3.3 This declaration in itself is troubling. There appears to be no full declaration of the

extent of Impulse International's contractual relationship with Eskom, its value and

that most of the contracts were awarded after Ms Choma had become involved with

Impulse International nor is there any declaration that Impulse International was in

fact doing business with Eskom. In other words, the declaration (having regard to the

content of the CDH Report) suggested that a conflict of interest could arise, without a

full disclosure that a conflict of interest had already arisen.


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8.1.3.4 There is also no indication by Mr Koko of why he did not enquire further from Ms

Choma as to her failure to have relinquished her shareholding when he requested her

to do so during August/September 2016. Nor is there any indication of whether he

queried the basis upon which, on the contrary, her shareholding was transferred into

the Mokoni Trust (of which she is a beneficiary).

8.1.4 Fourth issue:

8.1.4.1 As stated earlier, on his own version, Mr Pather did not declare Ms Choma's interest

in Impulse International to Eskom during 2016. During this period, Impulse

International was awarded four contracts with a combined value of approximately 193

million by Eskom.

8.1.4.2 In addition, most of the contracts awarded to Impulse International were either

emergency or sole sourcing contracts, without a tender process having been followed.

Now, whilst there is justification in particular circumstances for contracts to be

concluded on that basis, it seems rather too coincidental that after Ms Choma became

involved with Impulse International, the number of contracts it acquired from Eskom

had gone from an initial contract (concluded during 2014) to a further 9 contracts with

a total combined value of R380 million. In addition, there would have been the

substantial sub-contracts, in excess of R260 million, which were awarded to Impulse

International after Ms Choma became involved with Impulse International.

8.1.4.3 The response from Mr Pather regarding his failure to make disclosure of Ms Choma's

interest in Impulse International was simply a statement that "in hindsight, disclosure

should have been made and was prudent ...". He does not explain why something as

obvious as the need for such disclosure was not thought of at the appropriate time.

8.1.4.4 The substantial increase in value of contracts awarded to Impulse International from

the moment Ms Choma became involved with Impulse International needs to be

canvassed.

8.1.5 Fifth issue:

8.1.5.1 Mr Koko stated that in August / September 2016, when he became aware that Ms

Choma was a director of Impulse International and a shareholder therein, he


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requested her to resign as a director and to relinquish her shareholding. He could

only have done so (if he did indeed do so) because the position was obviously

untenable.

8.1.5.2 By February 2017, when on Mr Koko's version he had learned that Ms Choma did not

truly relinquish her shareholding in Impulse International, but had (through the

Mokoni Trust) in fact increased here shareholding therein, Mr Koko's sense of disquiet

ought logically to have increased. After all, not only did Ms Choma ignore his request

of August/September 2016, but she sought to hide her shareholding interest in

Impulse International through the transfer of her shares to the Mokoni Trust.

8.1.5.3 And, through this period, the award of contracts by Eskom to Impulse International

increased. At that point, Mr Koko states that his course of action was to declare a

conflict of interest in the manner which he did earlier. But, one would have expected

significantly more from him having regard to what occurred after he purportedly

requested Ms Choma to resign as a director of Impulse International and relinquish

her shareholding therein during August/September 2016.

8.1.5.4 In short, there is, prima facie, a contradiction between Mr Koko's reaction in February

2017 when he learns (on his version) that the Mokoni Trust holds 35% of the shares in

Impulse International and his purported reaction in August/September when (on his

version) he first learns of Ms Choma's interest and involvement in Impulse

International.

8.1.6 Sixth issue:

8.1.6.1 Finally, there is the substantial issue of why, even if he only did become aware of Ms

Choma's interest and involvement in Impulse International during August / September

2016, Mr Koko took no steps to declare the conflict or perceived conflict of interest

forthwith (or at least within five days).

8.1.6.2 Mr Koko was required to do so in terms of Eskom's policy. he failed to do so. This

issue needs to be further canvassed.


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8.2 CONCLUSION

8.2.1 There are sufficient anomalies in the explanation actually given by Mr Koko and further

many unanswered questions from the explanations given by Mr Koko, Mrs Koko, Ms

Choma and Mr Pather for Eskom simply to be satisfied that the matter can be closed.

8.2.2 These anomalies and unanswered questions, and Mr Koko's failure to have made a full

disclosure during August/September 2016 (on his own factual version of events) requires

the matter to be taken further.

8.2.3 There are sufficient issues which arise which would warrant disciplinary proceedings to

be instituted against Mr Koko. This would be in the interests of both Mr Koko and Eskom

since, through the interrogative process of a disciplinary proceeding (with the leading of

evidence forensic consideration of documents and the cross-examination of witnesses)

the anomalies and unanswered question can be fully canvassed.

8.2.4 If there are proper answers and explanations from Mr Koko and any other witnesses he

calls on his behalf, then the issue can properly be closed off and no further steps need be

taken against Mr Koko. However, the disciplinary proceedings may well exacerbate

Eskom's concerns and illustrate that the anomalies are real anomalies and that there are

no satisfactory answers to the unanswered questions. This could then lead to Eskom

taking further action against Mr Koko, depending on the outcome of and

recommendations made through the disciplinary proceedings.

cliffe dekker hofmeyr attorneys - ee publishers · mr bezuidenhout cw bezuidenhout, ... ms koko...

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