Eskom Inquiry: Anoj Singh

Meeting report

Witness: Anoj Singh
Mr Anoj Singh took the oath

Evidence Leader, Advocate, Ntuthuzelo Vanara: Can you for the record state your full name?

Mr Singh: My name is Anoj Singh.

Adv Vanara: We had an engagement with your legal team that you would be afforded an opportunity to present your 400 page submission.

Mr Singh proceeded to read his statement (see statement).

Adv Vanara: Thank you Mr Singh. Can you for the record indicate to the Committee what your academic and professional qualifications are?

Mr Singh: I hold a Bachelors degree from the University of Durban-Westville, and a Postgraduate Diploma in Finance as well from the University of Durban-Westville. My professional qualification is that I am registered with the South African Institute of Chartered Accountants (SAICA). I am a Chartered Accountant CA(SA).

Adv Vanara: Do you know Mr Eric Wood, and if so in what capacity?

Mr Singh: I do confirm that I do know Mr Eric Wood. Mr Wood was a partner originally of Regiments Capital and then later on was a partner in Trillian Capital.

Adv Vanara: How do you know Mr Eric Wood, what is the relationship if any with Mr Wood?

Mr Singh: I was first introduced to Mr Wood at Transnet when Regiments was a subcontractor to McKinsey. Mr Wood and I share a professional relationship. There is No personal relationship between Mr Wood and myself. He was a trusted business advisor.

Adv Vanara: Mr Salim Essa, do you know him, and if so how do you know him, and when did you get to know him?

Mr Singh: Mr Essa and I met on two or three occasions. The reasons for our meetings were pretty much a result of Mr Essa seeking business opportunities like most other meetings and interactions that I have with individuals. They were relatively short. I can’t remember exactly when I would have been meeting with Mr Essa but I think it was probably at my time at Transnet. In addition I would want to add that at the time that Mr Essa was a shareholder of Trillian, my interactions were solely with Mr Wood.

Adv Vanara: Mr Vikas Sagar who was at McKinsey, do you know him, and if so how do you know and when did you get to know him?

Mr Singh: I do know Mr Vikas Sagar. As you quite correctly pointed out, Mr Sagar is a partner at McKinsey & Company. My first interaction with Mr Sagar and McKinsey & Company in general was when I was at Transnet. My relationship with Mr Sagar is a professional one.

Adv Vanara: Dr Weiss [McKinsey director], do you know him, and when did you get to know him and what was the relationship if any?

Mr Singh: Yes, I do know Dr Weiss. I only got to know Dr Weiss when I got to Eskom. Dr Weiss served Eskom at the time. Dr Weiss and I shared a professional relationship. I don’t think there was anything untoward to our relationship.

Adv Vanara: The Directors of Regiments Capital whilst you were working at Transnet’ other than Mr Wood, which of the other two Directors did you know if any, and was there any professional or other relationship that you had?

Mr Singh: I think I had an occasion to meet Litha [Nyhonyha], who was also one of the owners of Regiments. I also had occasion to meet Mr Niven Pillay who was also one of the owners of Regiments at the time. Due to the transactions that we undertook at Transnet, I did have an opportunity to interact and work with Niven. But again, my relationship with Niven was purely professional. Litha and I only met on one or two occasions.

Adv Vanara: Any of the Gupta brothers that you know, and if so what relationship if any you would have had with them?

Mr Singh: The Gupta family, I wouldn’t say I have a relationship with them, but I have met the Gupta family due to the business breakfasts and The New Age (TNA) breakfast that Transnet and Eskom had sponsored at the time, but I don’t have a personal relationship with them.

Adv Vanara: Over and above your academic and professional qualifications, and having served as the Finance Director at Eskom, what would you say are the attributes of a Finance Director of a multibillion company like Eskom?

Mr Singh: I think the attributes are pretty much aligned to the outputs and functions associated with the position and I think that has been outlined in my statement in terms of the roles that I have outlined.

Adv Vanara: Would honesty be one of those?

Mr Singh: Yes, sir.

Adv Vanara: Would commitment to serving the company’s interests be one of those?

Mr Singh: Agreed.

Adv Vanara: Would integrity be one of those?

Mr Singh: Indeed.

Adv Vanara: Were you sometime in December of 2015 in Dubai and accommodated at the Oberoi Hotel?

Mr Singh: Yes, I was.

Adv Vanara: Who paid for the trip, accommodation, and all the expenses related to that travel?

Mr Singh: Adv Vanara, it was not the Gupta family. It was actually an acquaintance of mine from the United Arab Emirates (UAE), Mr Al-Balushi.

Adv Vanara: Why would you say it was not the Gupta people? Anybody could have paid for the trip. Why are you specific in saying it was not the Guptas?

Mr Singh: Because it is widely rumored that the Gupta family paid for the trip. Also, I think the question was posed to me in July at the Annual Results presentation at Eskom, and the next day it was posed to me again on Morning Live of SABC. My response to “Did you go?” was “Yes, I did go”. The question then was “Did the Guptas pay? And I said “No, the Guptas did not pay”. My story has been consistent since then and I think that has relatively plagued us quite significantly since then. Why that explanation was not accepted, I am not too sure.

Adv Vanara: You are correct, 19 July 2017, when you guys released the financial results of Eskom, you were asked the question and your response was “you would prepare a dossier explaining all of that in two weeks’ time. You would hand it to the Board and the Portfolio Committee on Public Enterprise amongst others, and release it to the public. When I looked at your submission I did not see that explanation. Why is it not in your submission, and why was it not even submitted – within two weeks as you promised?

Mr Singh: At the time there was an expectation for me to explain the transactions to firstly the Board and then to the Minister. Subsequently to that I was placed on special leave and then formally suspended. Obviously that changes the complexion of the relationship between yourself and the company, and up to today, until resignation, I still don’t have any tangible charges put to me associated with my suspension. That is why I did not submit anything to the Board within two weeks as required. Secondly, we did not cover it in the submission because the topics that were requested from us were related to the four transactions that we were asked to prepare on.

Adv Vanara: The two weeks’ promise came voluntarily from you. Forget about the request to appear before the Committee. You made a public commitment to the country, investors, and lenders that in two weeks’ time you would prepare a dossier that tells all. Why has it not been submitted to date to the Portfolio Committee at least?

Mr Singh: With due respect, I think the investors you speak about were the same investors that requested for me to be put on special leave in and around the 31 July. To be quite honest, I didn’t see the need for us to continue with that process, and hence I didn’t do it. Maybe in hindsight I should have done it. In terms of the complete dossier and tell-all that I wanted to prepare was by and large the document that I have prepared here in setting out chapter and verse my role in each of the transactions, what role played and why, and if at any stage did I have the ability to influence the outcome of the transaction. Which if you look at the documents clearly, I did not single handedly have the ability to influence the outcome of the transaction in any way, shape, or form because I didn’t possess the delegative authority to do so.

Adv Vanara: Mr Singh, from the 19 July, the two weeks came and went. Now you say in respect of the investors, you were upset with them because they were part and parcel of the reason you were suspended. I am asking you in respect of the Portfolio Committee on Public Enterprises, why hasn’t this Committee received your tell-all as promised by yourself?

Mr Singh: With the fact that I was on suspension, I was anticipating a disciplinary process that was going to unfold at the time and I awaited to understand what was going to be the outcome of the disciplinary process. Maybe it was incorrect of me to say “Okay, I made a promise to the Committee which I did not fulfill”. But again, at that stage, the Committee was also advocating the establishment of this inquiry and my view was that if we are going to have the inquiry, I will submit the documents when the inquiry is convened. Hence I have submitted the documents in their entirety albeit late in December, I thought that was the appropriate time for us to have done that.

Adv Vanara: But even in your submission before the Committee, you are still not giving a tell-all as promised. Why did you omit that?

Mr Singh: Again with due respect, Advocate. The tell-all relates to the transactions and my involvement therein. It is there plain to see what my involvement was with a level of detail I think is appropriate, with supporting evidence to back up what my role was or what my role was not. In terms of the trips, it was not a requirement for me to explain the trips, and therefore it was not there. But under oath when you asked me the question, I pretty much answered with the question which was in line with the response which I have given on the 20 July 2017.

Adv Vanara: Was it really such a difficult question for you to answer as to: firstly, were you in Dubai; and secondly, who paid for the trip that it took more than seven months for you answer the question?

Mr Singh: The question was asked and answered the day after the results presentation. As you correctly said, it was something that dawned on me the next day that if the biggest issue relating to all of these things, was the trips, then the next day when the question was asked on SABC I answered the question. The question was not asked on SABC; “Who paid for them?” You asked the question today and I volunteered the information. I don’t think anyone was interested in the narrative associated with who had actually paid for the trip because it was already a foregone conclusion that the trips were paid for by the family and No matter what I said or did, I don’t think anyone would’ve been interested in that.

Adv Vanara: Who is this common acquaintance in the UAE that paid for the trip?

Mr Singh: As I said, his name is Mr Al-Balushi. We met sometime in 2013 or 2014. He has interests in Dubai relating to property, construction, and retail, and was interested in establishing ties with South Africa, and also wanted to start up some sort of financial advisory business in the UAE. We had common interests in the sense that he wanted to know about stuff in Africa, and me wanting to know about stuff in the UAE.

Adv Vanara: And how was this trip organised, who was involved?

Mr Singh: From my perspective, I engaged with my travel agent, and they made all the arrangements and Mr Al-Balushi basically settled the bills in the UAE.

Adv Vanara: The Sahara Company that is linked to the Guptas, do you know that company?

Mr Singh: Yes, I do.

Adv Vanara: Is it associated with this common acquaintance of yours, and if so how?

Mr Singh: Not that I have enquired of Mr Al-Balushi, and not that he has disclosed that to me. Based on that, I would say no.

Adv Vanara: I am going to show you an invoice that relates to your travel to Dubai, and you didn’t have any other travels in December 2015 that were paid for other than by this common acquaintance?

Mr Singh: Not that I recall.

Adv Vanara: With your permission, Chair, I am going to ask that this invoice be given to Mr Singh so that he can identify it.

Chairperson: Permitted.

Adv Vanara: Mr Singh, can you identify whose name appears on that invoice? [Document from Gupta Leaks).

Mr Singh: Mine. It is addressed to me.

Adv Vanara: Look at the date of the invoice when it is alleged that you checked in and when you would have checked out. There is a date on the right hand side of the document.

Mr Singh: 16 December – Check in; Departure – 24 December.

Adv Vanara: Do you remember that you were in Dubai and accommodated at that hotel during that period?

Mr Singh: Yes, sir.

Adv Vanara: To whom is this invoice addressed?

Mr Singh: If you are referring to company then it is Sahara Computers.

Adv Vanara: Why would that invoice be directed to Sahara Computers and not your common acquaintance?

Mr Singh: I am not aware. I don’t know. As you can see the billing says “direct billing”. That is all I was aware of.

Adv Vanara: So you must then not be telling the Committee the truth if we go on the strength of that invoice that the trip would have been arranged by your common acquaintance in the UAE?

Mr Singh: Advocate, at the end of the day, the invoice that you present I am not too sure what the authenticity is thereof. When I was presented with the invoice, I am not too sure if Sahara Computers was actually on the invoice or not and I have not enquired of the common acquaintance whether he is associated to Sahara Computers or not.

Adv Vanara: You know the source of that document is the Gupta Leaks. Have you had time to go through those emails?

Mr Singh: No, sir.

Adv Vanara: I understand that you have given the response you have given. But according to that invoice because it is a direct billing, the person who then would have been responsible for your travel, at least on the face of that document, you must concede it does not show your common acquaintance. It shows Sahara Computers, correct?

Mr Singh: On the face of the document, that is correct, sir.

Adv Vanara: Did you go back to Dubai at the same hotel sometime in February 2016?

Mr Singh: My memory fails me, but I have made numerous trips to Dubai for personal as well as professional reasons so I probably went a number of times, sir.

Adv Vanara: So you say you were probably in Dubai?

Mr Singh: I could have been, sir, yes.

Adv Vanara: And who would have paid for those expenses?

Mr Singh: If memory serves, my memory would be if I went on a professional basis either Eskom or Transnet would have paid. We have ratings agencies and investors in Dubai so we would need to engage with them. Secondly, I would have paid for some of the trips on my own. Thirdly, Mr Al-Balushi would have paid for some of them. The exact split between all of those, I do not have at my disposal.

Adv Vanara: So again, would any of the Gupta family members or their associates have paid for your stay at Oberoi Hotel in Dubai at any time in 2016?

Mr Singh: The Gupta family did not pay for any of my travels.

Adv Vanara: With your permission Chair can we give the witness the document? [Document from Gupta Leaks).

Chairperson: Granted.

Adv Vanara: Mr Singh, there is an invoice in front of you. Can you check the date you would have checked in at Oberoi Hotel and when you would have checked out?

Mr Singh: 24 February, left on the 1 March.

Adv Vanara: Which year?

Mr Singh: 2015.

Adv Vanara: 2015?

Mr Singh: That’s what it says on this document, sir.

Adv Vanara: Do you recall that stay in Dubai?

Mr Singh: Not really, sir. It seems to be quite a long stay if I was there. I don’t recall staying that long if I was there per this purported invoice.

Adv Vanara: Can you speak a bit louder. For some reason I am struggling to hear you.

Adv Vanara: On the strength of that invoice, on the face of that invoice, at least you would be prepared to concede that you stayed in that hotel for that period?

Mr Singh: I have been to Dubai on a number of occasions. I stayed at the Oberoi Hotel on a number of occasions. If this is the purported invoice then, yes, I was there. But as I have said, it seems to be a relatively long period of time for me to be there between the 24th and the 1st.

Adv Vanara: On the face of that invoice there is a direct billing, who paid for that expense?

Mr Singh: Again as I said, I am not too sure if this was settled by myself or Mr Al-Balushi at the time. I was not prepared for that reconciliation to be done.

Adv Vanara: Mr Singh, I am just asking you, on the face of that document, who paid?

Mr Singh: According to this billing, it is blank, sir.

Adv Vanara: Okay that is fair enough. According to you it was not Sahara Computers or any associate of the Gupta family, neither was it the Gupta family?

Mr Singh: That is correct, sir.

Adv Vanara: At Eskom, there is a disclosure of interest, is that correct?

Mr Singh: That’s correct.

Adv Vanara: Did you disclose these trips that were paid by either your common acquaintance on your own version, or on the strength of the document by Sahara Computers?

Mr Singh: No,, sir, I did not. There was no need to disclose the trips in terms of the policy because my common acquaintance Mr Al-Balushi does not have any interests or business in Eskom, and for that matter I don’t think Sahara Computers is a supplier to Eskom either.

Adv Vanara: The Sahara Computers in terms of shareholding structure would have something to do with the Gupta family.

Mr Singh: Agreed.

Adv Vanara: The Gupta family had shares in Tegeta correct?

Mr Singh: Yes.

Adv Vanara: Tegeta was and still is doing business with Eskom through supplying coal, correct?

Mr Singh: Correct. I am not completely familiar with the disclosure policy which we would have to look at and see if the disclosure was required in terms of the policy.

Adv Vanara: Mr Singh, I think you need to take this Committee very seriously. You can’t take the Committee as casually as you appear to be doing. One moment you give an answer that says it was not necessary in terms of policy for you to declare, and a minute later you say you must first go and check what the policy says before you give an answer. Those are two contradictory responses. Mutually exclusive responses, and you need to decide what the answer is.

Mr Singh: On my version, Advocate, with due respect it is my contention that it did not need to be disclosed if Sahara did in fact pay. You responded by saying that Sahara is a subsidiary of Tegeta or there is common shareholding associated with that. I am not familiar with the policy that is in question, and all I said was that we need to check whether a subsidiary or common shareholding would require to be disclosed.

Adv Vanara: Any other benefit that you would have received in the benefits you seemed to have received from your common acquaintance, is there any benefit you would have received from either an associate of the Gupta family or the Guptas themselves?

Mr Singh: No, sir.

Adv Vanara: Is a shelf company registered in Dubai or anywhere in the world in your name, and if so who would have registered the company?

Mr Singh:, sir, I have no knowledge of any company registered in my name globally. The South African Reserve Bank has been in contact with me relating to my alleged bank accounts, companies, and assets and liabilities offshore. And we have made the required declaration to them that I am not aware of any so called entities or bank accounts.

Adv Vanara: On 13 to 15 June 2015, were you booked also at the Oberoi Hotel with Mr Rajesh Gupta through the Sahara system, in particular through the CEO, Mr Ashu Chawla?

Mr Singh: The possibility of me being in Dubai at that time is possible. In terms of me being with Mr Gupta or Mr Chawla, I have no knowledge of that.

Adv Vanara: What do you mean you have no knowledge, that you can’t recall being with them or you have never been with them in Dubai, at this hotel, at any time?

Mr Singh: I think I have seen the Gupta brothers in passing in Dubai, but I have never had any formal meetings with them in Dubai.

Adv Vanara: So your testimony is to the effect that a possibility does exist that coincidentally and under circumstances that you can’t explain it is possible that you would have been in Dubai at the same time, staying at the same hotel passing by each other. Is that what you would explain as a possibility?

Mr Singh: I think that is a possibility but I am not too sure under the circumstances. I cannot explain because I have just explained how I was there.

Adv Vanara: Sorry for the confusion. What I meant is you couldn’t explain why you were with Mr Rajesh Gupta or Mr Chawla at the same hotel at the same time. Did I hear you correctly?

Mr Singh: My testimony is that I may have been at the hotel at the same time, but it was never the intention to be there at the same time with Mr Gupta or Mr Chawla.

Adv Vanara: But at the same time the possibility does exist that they would have been at the same place without you knowing, is that what you are saying?

Mr Singh: That is a possibility, sir.

Adv Vanara: As business people seeing a Eskom Finance Director, would they not have an interest in talking to you?

Mr Singh: I did have in passing a conversation with them if they were there at the time, but we certainly did not have long drawn out conversations. In all my interactions with the Gupta brothers as I can recall we have never actually discussed any business transaction or related transaction to Eskom or Transnet.

Adv Vanara: Let’s come back to the governance issues at Eskom. In your submission, and correct me if I am wrong, you do allude to the fact that there was a shortage of non-executive Directors on the Board correct?

Mr Singh: That is correct, sir.

Adv Vanara: And that it had a negative effect on the governance at Eskom?

Mr Singh: That is correct, sir.

Adv Vanara: The Minister of Public Enterprises is responsible for the appointment of Directors correct?

Mr Singh: Correct.

Adv Vanara: Surely, that negativity if somebody had to take responsibility for it, who will it be?

Mr Singh: I would assume it’s the Minister of Public Enterprises.

Adv Vanara: You were a member of the Board by virtue of your position correct?

Mr Singh: Correct.

Adv Vanara: Did the Board discuss that issue, and did it raise it with the shareholder representative?

Mr Singh: If I do recall, yes, it was discussed. It was actually raised in the annual review that the Board undertakes in terms of its activities.

Adv Vanara: Did the Board, if it had such discussions, escalate this challenge to its shareholder, seeing as it had a negative impact on the governance at Eskom?

Mr Singh: My recollection was that we did raise it through the independent review that was done annually. Those annual reviews undertaken are tabled at the Annual General Meeting (AGM) of the company.

Adv Vanara: So in short, the Minister would have known of the concerns raised by the Board in relation to the vacancies that existed?

Mr Singh: Yes, in short. I think one, through us raising the concern, and two, her being aware that there were vacancies on the Board.

Adv Vanara: When would this issue have been raised, which year more or less?

Mr Singh: It certainly was not in the 2017 AGM so it must have been in the 2016 AGM, if not both.

Adv Vanara: Let’s go to the settlement of the R2 billion fine. There was a firm decision by Eskom at the time of the potential selling by Glencore of Optimum Coal Mine (OCM) and Optimum Coal Holdings (OCH) that whoever was purchasing the mine would have to pay the fine. Do you remember that?

Mr Singh: I recall, yes.

Adv Vanara: Mr Molefe testified that as a result of that firm position that Eskom held, Pembani walked away from the deal. You were not here, I don’t know whether through your representatives you got the transcripts and whether you would have picked that up. What is your comment on that, did you pick that up?

Mr Singh: At the time, I was not involved in the potential purchase and sale of Optimum so I am not aware of Pembani’s approach or otherwise.

Adv Vanara: But at least you knew that Eskom’s position, as a Finance Director I appreciate that you would have to know because it is relating to the finances, that at least the R2.1 billion fine would have to be bought together with Optimum?

Mr Singh: I was aware of that, but the Pembani approach I was not aware of.

Adv Vanara: When did that decision get to be rescinded? In other words, when did Eskom’s position change about its stance on the R2.1 billion in relation to this transaction if it changed at all?

Mr Singh: I think my view is that the stance from Eskom’s perspective did not change. The view that was held was that if the penalty was due and payable, then it must be paid. The quantification thereof however still needed to be concluded. If you go back to 2014 or so, there was a proposal tabled at the Board where Glencore at the time had agreed to Eskom that no penalty would be payable and the contract price would be increased. The Board at the time I think rejected that proposal.

Adv Vanara: No,Mr Singh, this is a very specific question. We have moved away from that scenario. We are at the time where Eskom’s position is:  whoever buyers OCH buys it with the R2.1 billion fine attached, a position you have confirmed you knew about. I am asking you when did Eskom change its stance on that position. All I am looking for is a date if you know?

Mr Singh: My response is that I was aware of the R2.1 billion claim that Eskom had on Glencore by virtue of the letter of demand issued to Glencore at the time. But my view is that….

Adv Vanara [interjecting]: With the greatest of respect, I am not asking you about your views. I am asking you a simple question, day, month, year if you know. If you don’t know, please say so.

Mr Singh: No, I don’t.

Adv Vanara: If Eskom’s firm view was that the purchaser buys the mine from Glencore and would pay the fine to Eskom this is what then must happen, when the deal is through the purchaser pays the purchase price to Glencore whatever that amount is, and pays a cheque or EFT to Eskom for the R2.1 billion fine. Do we agree at least on that?

Mr Singh: We don’t. In terms of my understanding of how the process worked was that the penalty was subject to an arbitration process which would determine the quantum of that penalty, and that is a process that was contractually allowed for by the contract between Eskom and Optimum at the time. And that is the process that Eskom used to quantify the penalty and arrive at the R577 million that was paid.

Adv Vanara: Before we get there, the scenario you have sketched now is a scenario where I have agreed with you was the position of Eskom at some point where a change would have obtained. In other words, if Eskom changed its position that the purchaser of Optimum would no longer pay for the fine, or they would get into negotiations around the fine. That is what would have happened because it means then that there is an agreement that this fine thing is not finalised. We must go through to arbitration to determine whether or not this fine is a valid fine and what the amount is, if any, to be paid. All of that activity would flow from a decision that says this fine is still open for some negotiation or decision. Do you understand what I am saying?

Mr Singh: I do, Advocate, and hence my response to your question was that I was not aware of the date that changed, if it changed. The only time that I got involved in the transaction was when the Board Tender Committee (BTC) delegated to me to sign the eventual arbitration award and contract. The activities that preceded that was by and large not undertaken by myself so I have very little knowledge associated with the activities that preceded that.

Adv Vanara: We have dealt with what you said was in the contract and I know and agree with you. What I am saying did not make it to the contract. In other words, that the purchaser of the mine would pay the seller the purchase price and pay Eskom the fine. I accept it is not in the contract and I accept your response that says you did not know when the decision changed. All that I am asking is that had that decision not changed, in other words, the seller sells the mine to a purchaser who pays a purchase price on the mine and gives Eskom the R2.1 billion fine, there would have been no need to open up the arbitration process, is that correct?

Mr Singh: It is difficult for me to say because I was not part of the sale process or the negotiation process. I guess it is something that would fall into the business rescue process I am assuming, but I am not too sure. I was not part of the conclusion of the sale process.

Adv Vanara: I am not asking you about your role, Mr Singh, I am asking you about common sense. This is quite frankly a common sense question.

Mr Singh: If it is a common sense question I would suggest that a purchaser of the mine would rely on the contractual agreements that exist between it and its counter party. The provisions of the contract make provision for an arbitration, and Eskom did not in any way, shape or form vary that provision in the contract therefore it was still alive and available, and both parties agreed to pursue that clause of the contract.

Adv Vanara: I don’t know why you want to run away from that question, Mr Singh. That question is quite frankly one that we should not spend more than a minute on. And please listen attentively and answer the question. If Pembani was presented with conditions that said, “Glencore, you sell Optimum to Pembani for R2 billion”. Pembani would pay R2 billion to Glencore, is that not the case?

Mr Singh: Correct.

Adv Vanara: And then there’s Eskom who’s got an interest in this transaction. Eskom upright and openly told Pembani: ‘If you buy this mine, you are not only going to pay the purchase price, you are going to have to pay us the R2.1 billion” and Pembani agrees beforehand and it is in the contract. Is it correct that Pembani must pay Eskom R2 billion full stop?

Mr Singh: If it is in the contract, yes.

Adv Vanara: Do you know Mr Mark Pamensky?

Mr Singh: I am aware of Mark Pamensky yes. He was a Non-Executive Director.

Adv Vanara: Chair, with your permission can I give this document to the witness to identify?

Chairperson: Granted.

Adv Vanara: That is an email sent from an iPhone. Can you identify from where that email comes from the document?

Mr Singh: The purported email originates from Mark Pamensky.

Adv Vanara. Can you for the record state the date appearing on the document?

Mr Singh: 22 November [2015].

Adv Vanara: The time?

Mr Singh: 7:40pm.

Adv Vanara: Who is the email addressed to?

Mr Singh: [email protected], and copied at [email protected]

Adv Vanara. Can you for the record read the entire email?

Mr Singh proceeded to read the email [see email document]. https://www.businesslive.co.za/bd/national/2017-08-15-outa-lays-charges-against-mark-pamensky-over-gupta-eskom-dealings/

Adv Vanara: I want us to zoom to paragraph four, if you ignore the greetings. In which [board] committee did Mr Mark Pamensky serve on the Board of Eskom?

Mr Singh: If memory serves, it was the Investment and Finance Committee (IFC).

Adv Vanara: On 22 November 2015 was he still serving or was he a member of the Investment Committee of the Board?

Mr Singh: If memory serves, I think he was still serving at the time.

Adv Vanara: Would this Investment Committee referred to in this email be the Investment Committee at Eskom?

Mr Singh: I have no idea, sir.

Adv Vanara: Is there a possibility?

Mr Singh: I don’t understand the context in which this committee is made, so it is very difficult for me to say so.

Adv Vanara: Fair enough. What is pertinent in this paragraph is the discussions that we had on the R2.1 billion fine that the purchaser had to pay. Do you remember that discussion?

Mr Singh: Yes, I do.

Adv Vanara: My reading of this communication is that Mr Pamensky is writing to the chair who is Atul at ANN7 saying that the fine has to disappear. Is that the same understanding that you get?

Mr Singh: It is a common business principle that if you are buying an asset, you should not assume the liabilities of the seller. It is pretty much common sense to me that is what is stated here.

Adv Vanara: I get this distinct impression of you that you always jump in defence of everyone but Eskom’s interest. Don’t create that impression. You might not be aware of it but that is the impression you are creating at least to me. Could you please answer the question? The question is if I read this email, a Non-Executive Director at Eskom sitting in the Investment Committee that is going to consider a transaction that involves the addressee, it says, “Make sure your company doesn’t pay the fine. Make it disappear”. Is that your same observation?

Mr Singh: The observation is correct, sir.

Adv Vanara: These are the two proposals, this is what should happen: one, Eskom should change its position on the fine. In other words, Eskom must say “Look, we are open to negotiating the fine”. That is the first option. Is that observation fair?

Mr Singh: Again, not understanding the context I would say, yes, it is fair.

Adv Vanara: The other option is if Eskom insists on the fine as it has, that the seller should bear the brunt of paying. Is that observation fair?

Mr Singh: That observation is fair, sir. I would like to add also that that is a normal business practice. If I were negotiating this transaction I would normally insist on that myself.

Adv Vanara: Now, you don’t know, that is your testimony on record, why Eskom would have moved from its stance. That is your testimony. You can’t give us the dates.

Mr Singh: That is correct, sir.

Adv Vanara: All we know is that Eskom did subsequently change its stance.

Mr Singh: If that’s the testimony of Mr Molefe then I guess we did change our stance, but how, when, and why, I am not sure.

Adv Vanara. And it would be a reasonable assumption to make that the originator of Eskom’s change of its hard stance had to do with this email?

Mr Singh: I would be hard pressed to comment on that. I am not too sure.

Adv Vanara: Let’s come back and comment about you in relation to this transaction. As a Finance Director, and I have heard you saying it makes sense to make whatever decision the Tegeta shareholder owners were making. Forget about them. Let’s focus on you and your role at Eskom, and your obligation to the organisation that is paying you a salary that is very generous compared to other CFOs. You knew that there was a firm position that company had had on the fine. When the fine disappeared, what did you do to discharge your obligation to the company?

Mr Singh: One of the things that I did was engage with the project managers to understand if there was a fine, what the issues would be to impact the quantification of that fine. But it was not my view that the R2.1 billion was cast in stone. That was not my understanding. That was then further confirmed when we went into an arbitration process with Tegeta. In my view, Mr Molefe’s assertion was that the principle of paying a penalty was not going to go away because there was an amount that needed to be paid by either the previous owners of the mine or the new owners of the mine. One of the things that the project manager said in his engagements with Glencore subsequent to the settlement, was that Eskom got a good settlement out of Tegeta because Glencore would have never settled anything in that region.

Adv Vanara: That long winded answer of yours, Mr Singh, is with respect contradictory to the understanding that you had. It is contrary to the understanding that your Group Chief Executive (GCE) had. It is contrary to the understanding that your colleague and Non-Executive Director Mark Pamensky had. Because from Mark Pamensky’s email he knows the firm position on this R2.1 billion has to be dealt with. It is either you are not telling us the truth; you are misleading the Committee on your understanding of this fine in protection of yourself and those who benefitted because in Mark Pamensky’s mind there was a problem that has to be dealt with. If it is still open to negotiation why is his email not saying “let’s negotiate these things”. Why is he even saying “if need be, if Eskom doesn’t want to withdraw this thing, make sure the seller pays the fine”. So where do you get this notion that this fine still had to be negotiated. I know in terms of the agreement, and that is why I am saying stay away from the agreement. We know what is in the agreement. There was an Eskom position before the agreement that says, “the fine is not going anywhere. You potential buyers of Optimum must know if you buy that baby there is additional bedding”. You played open cards with that and you said at least at some point you knew of that decision. You don’t know when it changed, but at some point you knew. So your position that you have explained now is not supported by this email. What is your comment on that?

Mr Singh: Firstly, I would like to categorically state that I am not misleading the Committee in any way, shape, or form. I already testified to the fact that I was not aware of the R2.1 billion that needed to be paid without negotiation. Secondly, if a R2.1 billion amount needed to be paid without negotiations I would assume a contract exists to that effect. No contract exists to that effect. Thirdly, I was not involved in the negotiations relating to the settlement of this penalty. I only got involved in this transaction because Ms Daniels requested the BTC to delegate this authority to me to sign this agreement because of her close involvement in the transaction thus far. In order to satisfy myself that the R600 million was value, I did the things that are outlined in my previous response to you, sir.

Adv Vanara: We will get to the issue of how you handled the arbitration. You say there is no contract that is in existence. I agree with you. The reason there is no contract in existence is because Eskom changed its position.

Mr Singh: With all due respect, sir, I fail to see the need for a contract between Eskom and Tegeta when a contract already exists that gives Eskom certain rights, and Tegeta certain rights, or Optimum in this case relating to poor quality coal. The right that Optimum had was to assert that it delivered in-spec coal. The right that Eskom had was to assert that it in fact received poor or out of spec coal and quantify that amount. And when that amount was quantified it needed to stand up to scrutiny in any way, shape, or form, and that is what my contention is.

Adv Vanara: I am going to put it to you, Mr Singh, that one, you knew about the firm decision that Eskom had taken on the R2.1 billion; second, that your explanation is nothing but to try and deflect your failure in exercising your fiduciary duties as Eskom Finance Director because you would have had to insist on compliance with the decision that would have benefitted Eskom R2.1 billion in that transaction. And the reason you are running away from this is in protection of yourself for the failure of exercising your fiduciary duties in favour of Eskom. What is your comment to that?

Mr Singh: Firstly, I deny the fact that I am running away from my fiduciary duties. I think I exercised my fiduciary duties to ensure that the R600 million was effectively value for money as I explained in the steps that I had taken. In terms of me knowing that there was a firm decision taken, as you produced invoices relating to my trips, I would like to see the evidence to suggest that I knew of this firm decision that was taken. I did not know of this firm decision taken. My understanding of the transaction was that there was a contract between Optimum and Eskom, and that the claim still needed to be approved by Eskom. If Optimum had taken Eskom to court, Eskom would have to go through a process of defending the claim and provide evidence to suggest that R2.1 billion was due and payable. It is as simple as that. And if a senior counsel is arbitrating over the process and comes to the view that the parties have agreed on the R600 million number and the Board subcommittee has interrogated that, there is little that I can do other than what I have explained that I have done in my statement.

Adv Vanara: Let’s go to the prepayment on the 11 April 2016. You were not at the meeting, and your explanation is that you were given certain tasks to discharge. Can we just get to your submission on that. There were three things that you had to do: negotiate a discount with Tegeta; obtain adequate security for the pre-purchase; and ensure that the transaction made commercial sense for Eskom, correct?

Mr Singh: Correct, sir.

Adv Vanara: And on page 26, paragraph 98, you say you did execute your responsibilities, correct?

Mr Singh: Correct, sir.

Adv Vanara: That was on the 12 April?

Mr Singh: Agreed, sir.

Adv Vanara: Who did you negotiate this discount with, and are there any minutes of that meeting?

Mr Singh: If memory serves, the discount was negotiated with Ms Ronica Ragavan from Oakbay or Tegeta, and Mr Ravindranath from Oakbay. I don’t think there are minutes for that meeting, sir.

Adv Vanara: Why would there be no minutes?

Mr Singh: It didn’t occur to us to keep minutes of that meeting sir, and at the time it was something that was being done as I understood it in an emergency situation so we needed to ensure that we concluded the transaction as quickly as possible.

Adv Vanara: So an Eskom Finance Director duly mandated by a Board Committee goes and does this thing without leaving any trace behind him. Is that the attitude you approached your work with?

Mr Singh: No, sir, certainly not. But in my view, the negotiations were conducted. It proved value for Eskom and it was reduced to a contract.

Adv Vanara: So if any of the BTC members were diligent and asked the question before they were persuaded by what you said, you would not be able to produce those minutes?

Mr Singh: No, sir. But as I said, I don’t think there was a need to produce the minutes because it was an agreed position between Eskom and Tegeta, and the very same 3.5% discount was reduced to a contract, in terms of the contract.

Adv Vanara: So you would go back to your BTC and agree to this 3.5%, enter into an agreement or want to enter into an agreement with Tegeta. What would have protected Eskom if Tegeta said we never agreed to a 3.5%, we agreed to a 1%?

Mr Singh: Tegeta would not have signed the contract that was signed between Eskom and Tegeta at the time.

Adv Vanara: From a general governance perspective, was what you did the correct thing, not recording minutes of that crucial meeting?

Mr Singh: Sir, I must with respect say I have been in negotiations for settlement discounts with a number of suppliers, and it’s very rarely that you enter into negotiations for a settlement discount with suppliers and reduce that to writing. It is normally either an email, or an instruction, or something like that.

Adv Vanara: My understanding is that the BTC took a decision but with suspensive conditions. You had to do these three things in one day. Were you happy with the time given to you to do the required due diligence for all these three things and report to the BTC the following day as you did?

Mr Singh: I think, sir, in this case, yes, I was. 3.5% discount for six months equates to a 7% discount annualised. Obtaining adequate security as well – Tegeta was providing us the entire share capital of Tegeta which basically meant that if they defaulted we get free coal under the contracts they had with Eskom at the time. And providing a commercial rationale was also quite simple because the alternative to security of supply at the time was burning diesel, and if you look at the cost of producing electricity with coal versus with diesel it is quite significantly different and I think we have quantified that in the document somewhere.

Adv Vanara: The due diligence that you did, where is the copy of it?

Mr Singh: I think we have reduced that to writing somewhere in the document. If you let me find it, I will refer to it.

Mr Singh proceeded to page through his submission for the due diligence report.

Mr Singh: It is page 69, paragraph 48 to 60.

Adv Vanara: Can you take the Committee through it?

Mr Singh read the relevant paragraphs.

Adv Vanara: I get what you are saying. On page 26, paragraph 98, you talk of adequate and appropriate security for the transaction. What was the security that you obtained, are you referring to shares in the company?

Mr Singh: Yes, sir.

Adv Vanara: Why the shares, and not a bank guarantee from a reputable institution?

Mr Singh: That was the first approach we had taken in terms of being able to secure a bank guarantee from a reputable institution as you mentioned. You would recall that the Oakbay Group of companies were being subjected to closure of bank accounts at the time, and hence the ability of Tegeta to provide a bank guarantee was limited. Even insurance companies would not have provided a guarantee of sorts.

Adv Vanara: And then you decided to go for the shares?


Mr Singh: Yes, sir.
Adv Vanara: Were shares the appropriate and adequate security if it was not even the first option?

Mr Singh: In my view at the time, given the circumstances, yes, sir, it was an appropriate option to be taken. As you can see, the exposure to Eskom was R600 million but the benefit was in excess of R4 billion.

Adv Vanara: The shares that Tegeta had, would you agree with me they were largely due to the coal contracts or the value of shares that OCM had, was largely due to the coal contract with Eskom?

Mr Singh: Well, the R4 billion, sir, is the value of one of the coal contracts, which was the Brakfontein contract.

Adv Vanara: If anything had happened in the normal course of conducting the business, for instance, there is contravention around environmental laws, or water legislation which necessitates the Department of Mineral Resources (DMR) to withdraw the mining licence, what would have happened to the value of the shares?

Mr Singh: The value of the shares would still be relatively intact because we only valued Brakfontein. They have other contracts with Eskom as well. All of those contracts would effectively have been ceded or taken over by Eskom. In addition to that, we didn’t only take the shares as security, we also took over the inventory of Tegeta as well. We would have access to all of the inventory as well.

Adv Vanara: So basically, it is Eskom that stood guarantee for Tegeta?

Mr Singh: No, sir.

Adv Vanara: You say the value of the shares was related to the value of the contract. And I say “any threat to the value of those shares”, and you say “Eskom would have had to bear the brunt”. Is that not your answer, unless I mistake you, please explain yourself?

Mr Singh: No, sir. All I am saying is that there was diversification in terms of the contracts, so if there was one contract that was effectively shut down because of environmental compliance and so forth, there were other contracts that Eskom could call on because we would have effectively taken over 100% of the actual entire company. So we would own all of the contracts.

Adv Vanara: What governance process did you follow to commit Eskom to a transaction which is potentially tantamount to the position of equity in another company?

Mr Singh: The contract we signed with Tegeta at the time made provision for us to acquire the necessary section 54 Public Finance and Management Act (PFMA) approval, if required, and we had checked that with the internal compliance guys and they basically said that we are okay to conclude the purchase agreement. At a point in time when or if we are required to acquire the shares, we would have to perform the section 54 application to the Department of Public Enterprises (DPE).

Adv Vanara: Did you obtain approval from your shareholder in terms of section 54(2)(c) of the PFMA, yes or no? [acquisition or disposal of a significant shareholding in a company]

Mr Singh: There was no requirement for us to do that, sir, in terms of the acquisition of the shares because we did not acquire the shares. And secondly, in terms of the pre-purchase agreement, there was no requirement to engage with the shareholder in terms of the significance of neutrality framework.

Adv Vanara: What do you mean you were not acquiring shares, you were holding shares as security?

Mr Singh: We did not acquire the shares, sir. The security would be perfected once Tegeta was in default, and only when they were in default.

Adv Vanara: Let’s go back to the R1.6 billion guarantee. Can you tell the Committee the circumstances surrounding this transaction?

Mr Singh: The forerunner to the guarantee was the requirement for Eskom to enter into a pre-purchase agreement for coal with Optimum, and this was due to certain risks that the organisation had identified, and that had gone through to IFC for review and recommendation to the Board. IFC reviewed the submission and recommended it to the Board. The Board approved by a round robin resolution for us to acquire the coal. With any normal purchase transaction it needs to be supported by a supplier agreement, and the supplier agreement was drafted based on that round robin resolution. And as a result of the supplier contract, the legal team identified the fact that there needed to be conditions precedent included in the supplier agreement. Those conditions precedent introduced timing risk between the time that the pre-purchase amount needed to be paid and the date the suspensive conditions needed to be fulfilled. So effectively the Board approved that we should pre-purchase R1.6 billion worth of coal, which means that we pay Tegeta R1.6 billion and get delivery of coal thereafter. When the legal agreement was drafted, the agreement came back saying “you can only pay this once these five things are concluded”, and they were the three or four suspensive conditions in there. This effectively said that we couldn’t pay the R1.6 billion envisaged by the Board until we had the suspensive conditions fulfilled. That did not fulfill the operational requirements because we needed to secure the coal. So the alternative was basically to say you require us to prove the ability to execute the contract when these suspensive conditions are fulfilled, we then agree that we should put in place a guarantee to demonstrate Eskom’s ability to perform under the contract when the suspensive conditions are fulfilled. The guarantee was issued by Absa. The guarantee contained the very same suspensive conditions that were subject to the contract, and the guarantee was not negotiable or transferrable.

Adv Vanara: Did this guarantee subsequently make its way to any of the Board committees for condonation?

Mr Singh: Um, to my knowledge it did not, sir. There is a requirement in terms of delegation of authority that any guarantees issued are reported to the Board via the Investment and Finance Board Committee. But in terms of the statement I have lodged, it does not seem that this guarantee was reported to the Board.

Adv Vanara: Why was it not if you say it should have been?

Mr Singh: Sir, I am not too sure at this stage. Based on my analysis, the responsibility for the reporting of that guarantee would fall within the treasury environment. Eskom Treasury was fully involved in the issuing of a guarantee. A number of individuals within the Eskom environment were aware that a guarantee was issued. It should have been reported through that process. For some reason while I was on suspension, I couldn’t get an understanding of why it was not reported. But from my understanding, it was not reported to the IFC. The second avenue where the reporting of that guarantee should have occurred is that it is normal practice that when a round robin resolution is taken, at the next Board meeting, that round robin resolution needs to be ratified by the Board. I am given to understand that the ratification did happen. Not at the next meeting of the Board, but at the subsequent meeting. However, the Group Company Secretary did not indicate to the Board that a guarantee had been issued to Tegeta for this transaction.

Adv Vanara: I have seen the submission that was made to the relevant board committees and the Board. Is it correct that you we part and parcel of preparing the submission?

Mr Singh: That is correct, sir.

Adv Vanara: Is it correct that in the submission you asked the Board for a pre-purchase payment, is that correct?

Mr Singh: That is correct, sir.

Adv Vanara: Had you done due diligence in respect of that transaction?

Mr Singh: I think we did, sir.

Adv Vanara: If you had done due diligence, why would you then go and persuade IFC and the Board to issue a cash payment to Tegeta when it had later transpired when you must implement it that you can’t? Why could you not have anticipated the risk that you later say Ms Daniels could pick up?

Mr Singh: The risk associated with the transaction was a legal risk, sir. Not a financial risk. When the risk was identified, we or I as finance put a financial response in place which was a guarantee to mitigate the risk identified.

Adv Vanara: Why was it necessary for you to prepay Tegeta?

Mr Singh: I think that emanates from an exchange of correspondence between Eskom and DMR, and the Director-General (DG) of DMR. And I think Ms Daniels alluded to a letter from the DG at the time that effectively indicated to Eskom that a prepayment of sorts should be looked at.

Adv Vanara: Mr Singh, please, you write a submission to your Investment Committee to the Board seeking approval. And you want to tell us today that you can’t explain the basis of this same decision you wanted your Board to take? We must rather go to other people?

Mr Singh: No, sir. I actually have the letter if you would like me to read the letter. But in essence effectively what the communication between Eskom’s Mr Koko and the DG from DMR was that Mr Koko had identified significant risks associated with security of the supply at the time. We were experiencing load shedding and that the security-of-supply risk would exacerbate the load shedding that we were experiencing at the time. The risks identified at the time were that Optimum was in business rescue; there was the Exxaro contract that had come to an end; and three or four other risks. Mr Koko had requested DMR’s intervention to mitigate some of the risks that he had identified. The letter that had come back from the DG at DMR basically alluded to the fact that they are aware of the risk, they are doing everything that they can to assist with approvals for the new owners of Optimum which I would assume was Tegeta at the time. They were accelerating the approval of the Competition Commission, and that we should undertake a prepayment of coal for up to 12 months of R1.6 billion to facilitate I think it was a working capital or settlement of some of the liabilities that the new owner would have to assume. That was the essence of the letter, sir.

Adv Vanara: Mr Singh, let me demonstrate to you. Remember we talked about the R2.1 billion which I put to you benefitted Tegeta. I want us to zoom to this transaction, the prepayment – turn to the guarantee of R1.6 billion. This arrangement comes at a time when Glencore and Tegeta are about to conclude the sale, is that correct?

Mr Singh: From the documentation, that would be correct, sir.

Adv Vanara: Within the documentation that you are referring to, the memos and the submissions, Mr Matshela Koko does not accept both Glencore and the business practitioner’s attempt to bring back OCM into the business, is that correct?

Mr Singh: I am not aware of that.

Adv Vanara: Let me read for you because even in his letter to DMR. Let me read the letter.

Adv Vanara read the letter.

Adv Vanara: Clearly, this is why I am saying they were insisting on continuing the business.

Mr Singh: On your reading, sir, I will accept.

Adv Vanara: But listen to what your colleague Mr Koko says, “Eskom is perplexed by this about turn given the events of the past few months and at the blatant disregard Optimum displays for the impact that the threats of liquidation has on the precarious balance of electricity security and commercial viability. As a Glencore operation, Optimum cannot be perceived to be acting in the national interest”. This has got nothing to do with Mr Koko. That is a decision to be made by Glencore, which Glencore has made. The importance of this letter is, I put to you that this letter was written at the time the contract was to be signed. You have alluded to that. They were already negotiating terms because here DMR is being required to facilitate compliance with the suspensive conditions of the contract. Is that correct?

Mr Singh: Which contract are you referring to sir?

Adv Vanara: The sale agreement between Tegeta and Glencore.

Mr Singh: I would assume so, yes, sir.

Adv Vanara: And what comes out of DMR is that Eskom must help the potential acquirers of Optimum which is Tegeta with a cash injection. What is your response to that?

Mr Singh: That is my reading of the response from DMR, sir.

Adv Vanara: So Eskom is going out of its way to ask DMR: one, to facilitate the authorisations as well as some form of getting cash injection to Tegeta. Why?

Mr Singh: My understanding is that Eskom identified a security-of-supply risk by Mr Koko’s letter. We then requested assistance to mitigate that security supply risk. I don’t think it was Eskom’s suggestion that we should enter into a prepayment or upfront payment of sorts. I think that was the response we received from DMR in the letter from DMR.

Adv Vanara: And this is on the 6th, and who is the Minister at DMR at the time?

Mr Singh: I would not know, sir.

Adv Vanara: Would it be correct that it could have been Mr Zwane?

Mr Singh: I’ll take it on your word, sir.

Adv Vanara: And that all of these transactions take place before the 9 December 2015. Do you know what happens on the 9 December 2015?

Mr Singh: No, sir.

Adv Vanara: The significant incident that happened on the 9 December was that Mr Nhlanhla Nene who was then Finance Minister, gets to be fired. Remember that?

Mr Singh: Now that you remind me, yes.

Adv Vanara: And that Minister Van Rooyen became the Finance Minister.

Mr Singh: Yes, sir.

Adv Vanara: And that he took with him officials that came from Regiments as his Advisors, that is, Mr Mohammed Bobat. Do you know about that?

Mr Singh: I am aware of that, sir.

Adv Vanara: For how long in your experience does the compliance and certificates take to be issued by DMR in transactions of this nature?

Mr Singh: I would be guessing, sir. I honestly do not have an idea.

Adv Vanara: So in your duration at Eskom this was the first and the last instance that you had to deal with?

Mr Singh: Indeed, sir. In this instance I was only there for four months.

Adv Vanara: So in this transaction, who was meant to supply coal to Eskom?

Mr Singh: I would think that the supply agreement was completed with Tegeta so Tegeta had the obligation to supply the coal to Eskom.

Adv Vanara: So the person who had an obligation to deliver was not Eskom, but Tegeta?

Mr Singh: When you say deliver, you mean?

Adv Vanara: Coal.

Mr Singh: Yes, sir. The supplier would have to be Tegeta, so they would have to supply us the coal.

Adv Vanara: Now why do you guarantee Tegeta who must perform?

Mr Singh: We did not guarantee Tegeta. We issued a guarantee in favour of Tegeta that Eskom would have the ability to deliver R1.6 billion as envisaged by the Board on the day that the suspensive conditions were fulfilled.

Adv Vanara: Who was going to benefit from that guarantee?

Mr Singh: The guarantee would have benefitted Tegeta, but the R1.6 billion also would have benefitted Eskom.

Adv Vanara: What was Tegeta supposed to do with the R1.6 billion guarantee?

Mr Singh: If I recall from the letter that was issued by the DG of DMR, there was settlement of some liabilities or other that they need to have done.

Adv Vanara: My summing up of that entire transaction is that it was a case of a cash injection to OCM knowing fully that Tegeta was going to own the mine to ensure that when Tegeta eventually takes over the mine there was sufficient money for them to run a viable business. Is that your understanding, is that what you wanted to achieve?

Mr Singh: I think that was what we alluded to in the actual submission to the Board itself. I think we did say that the R1.6 billion was going to be used by the buyer to settle liabilities and ensure that the mine was a going concern which then mitigated the security-of-supply risk that had emanated as a result of the organisation going into business rescue.

Adv Vanara: And one of the reasons for that is that you didn’t want people to lose jobs, which is what is in your submission?

Mr Singh: One of the socio-economic impacts identified was job losses.

Adv Vanara: When Glencore still wanted to pursue the mine, why was the same consideration not given to them?

Mr Singh: You probably will need to ask Mr Koko that question.

Adv Vanara: No, we can’t ask Mr Koko alone. Yes, I will ask him. But your signature is on the submission, you have associated yourself with the submission. You must answer.

Mr Singh: Yes, I do believe that my signature is associated with the submission, but at the end of the day Mr Koko would be better placed to answer that question. I rely on my colleagues every day and their judgements and abilities just as I relied on Ms Daniels for a number of things.

Adv Vanara: I put it to you, Mr Singh, that the reason you can’t answer this question is because you were bending over backwards and almost breaking your back to accommodate only one company, Tegeta. What is your comment on that?

Mr Singh: I think that is a rather harsh summary, Advocate. I don’t think I was bending over in any way, shape, or form. I think I was presented with a transaction that needed to be executed with a mandate from the shareholder. As a functionary in the organisation we are there to execute on the mandate of the shareholder.

Adv Vanara: So Tegeta gets to be the beneficiary of the R2.1 billion being squashed. So Tegeta gets a treatment that when you are asked why the same treatment could not be extended to Glencore, you can’t explain, which of course benefits only Tegeta. Do you see my point?

Mr Singh: With all due respect, I think, on the R2.1 billion, on your own version of the reading of the agreement or letter sent by Mr Koko, Glencore even conceded that they would settle the agreement via the contractual terms of the agreement that exists between Eskom and itself and Optimum. In terms of my not being able to explain why not the same terms and conditions for Glencore, yes, I think it is up to Mr Koko to explain that, and I relied on him fully to assess that.

Adv Vanara: Not only did Glencore suffer at the hands of yourself and Mr Koko. When Exxaro closed the mine that was supporting Arnot, were they providing coal to Arnot?

Mr Singh: They supplied to a number, but Arnot is one of them. I remember that.

Adv Vanara: They closed down. Correct?

Mr Singh: That is correct.

Adv Vanara: People lost jobs there. Correct?

Mr Singh: Correct.

Adv Vanara: This consideration that people should not lose jobs did not matter to Eskom it would appear.

Mr Singh: No. it did matter. The reason for Arnot closing down was not an Eskom decision. The Arnot contract had come to its natural end as I understand it at the time. And the price at which the contract had ended was R1132 a ton. I think Arnot was requiring R1400 or something like that for it to be renegotiated, and Eskom was not willing to enter into that negotiation as I understand it. The contract ended on the 31 March or 31 December, and I got there I think on the 1 August. It was relatively a new issue for me when I got there.

Adv Vanara: Let’s go to what has recently been in the media space. It relates to Huarong Energy Africa” (HEA). Can you explain your involvement in that transaction?

Mr Singh: I do recall that the term sheet was provided, and the term sheet was signed by myself. But from a perspective of giving you details associated with the transaction, I would be guessing if I could remember all of the details associated with that.

Adv Vanara: What was the transaction more or less about; what did Eskom want to do with this transaction?

Mr Singh: It was pretty much a funding transaction where we required funding, and Huarong was willing to provide funding to Eskom.

Adv Vanara: Why did you sign the term sheet before and during the time when the lawyers were considering the matter and the lawyers even advised against?

Mr Singh: Sir, to be quite honest, I think the term sheet that I signed was supported by the Eskom Treasury department, Internal Legal at the time, IFC, if I recall. I was not aware and I am actually surprised there were legal concerns associated with the transaction.

Adv Vanara: There were, and I am going to show them to you. And these you would have known about. Do you know the lawyers called White and Case?

Mr Singh: I do, sir.

Adv Vanara: Were they not the lawyers advising on this transaction?

Mr Singh: They advised on this and other transactions, yes.

Adv Vanara: Did they not advise against the signing of the term sheet?

Mr Singh: Not that I am aware of or remember.

Adv Vanara: But surely, you knew the lawyers were considering this transaction including the issue of the term sheet?

Mr Singh:, sir, as I said, from my recollection the term sheet was supported by a memorandum that was supported by internal legal at the time as well as the treasury function. It had gone through the Board IFC, and on that basis I executed or signed the term sheet.

Adv Vanara: Was it not one of the Minister’s conditions that she needed to be properly put at ease about amongst others the term sheet?

Mr Singh: I am again standing to correction, but I don’t recall that we engaged with the Minister prior to me signing the term sheet. I think we were relatively comfortable that we had the authority to enter into the transaction. I think we needed to go to the Board IFC and obtain approval, which we did. And whatever conditions which the IFC had stipulated, my understanding was that it found its way into the term sheet.

Adv Vanara: Let me remind you because your memory seems to be failing you that this is a memorandum from White and Case. Firstly, that on the 9 March 2017 they received a draft term sheet that was final and dated 22 February 2017. You wouldn’t dispute that?

Mr Singh: I have no recollection.

Adv Vanara: And that on the 10 March they had an initial meeting with Eskom Treasury to receive background on this particular transaction. You wouldn’t dispute that?

Mr Singh: Again, if it is in the memo I would assume it’s correct.

Adv Vanara: When did you sign the time sheet?

Mr Singh: I cannot recall, sir.

Adv Vanara: The document itself is dated the 14 March. So it could have been either before or after that. Is that a correct assumption?

Mr Singh: I would normally date it the day we sign it.

Adv Vanara: Yes, you signed it on the 14 March 2017. That is the date on the document. Listen to what the lawyers are saying, “That on the 12 March they provided written thoughts on the programme term sheet repeating the advice to not sign the term sheet in its current form and proposing instead at making further inputs. And these included that further detail be provided on the programme; that the structure and diagram and directors should be reflected; but most importantly the source of funds, they noted that HEA was a lender of $1.5 billion, and that HEA should identify the source of these funds, when and how they would be committed”. These are the issues they have raised. Most importantly on the financial terms, they flagged the financial terms that appeared to be onerous generally including the following: the term sheet cancellation fee of $3 million payable on bad faith cancellation, repudiation, termination of the term sheet by Eskom before the loan framework agreement is signed; the signature fee of Alpha, which was a $24 million fee [R400m] payable on signature to Alpha described as a facility fee, but there was no commitment of funds by the company HEA and this was subject to a due diligence exercise; the due diligence fee was $7.5 million. They say despite the security of the deposit, there was an uncertain amount to be left on the deposit with HEA or a letter of credit guarantee provided. This would be leaving cash with HEA without interest during the loan period that HEA could use freely. Would this kind of a clause in a contract be favorable to Eskom?

Mr Singh: Sir, I must honestly say I am not aware of that legal case that was conducted by White and Case. I don’t recall it. I don’t recall anyone raising the concerns contained in it prior to me signing the term sheet.

Adv Vanara: We will get to that aspect. What I want to find out and test with you is that if you pen your signature on a contract with this kind of provision, is that provision beneficial to Eskom, yes, or no?

Mr Singh: I think, sir, like with all of these specialized transactions we effectively do the best we can. As I said before, it had gone through the due diligence within Eskom Treasury, as well as Legal and it obtained approval to the extent that Eskom IFC had approved it. And if I recall the term sheet was signed with some sort of reprisal that would enable us to negotiate the problematic terms of the term sheet. And that is the purpose of a term sheet in the first place is that you set the negotiating parameters and you negotiate from there.

Adv Vanara: You are not answering my question. As you sit there, would you have been comfortable signing this contract which you signed with that provision?

Mr Singh: I signed the contract so I guess it is signed.

Adv Vanara: Any prepayment if Eskom prepays the loan, it has to pay all interest that would have been payable if the loan had not been repaid early. And your lawyer says this is unusual and is effectively a potentially huge prepayment fee, and nonetheless you went on to sign the contract?

Mr Singh: As I said, the due diligence which was conducted was conducted which I did not have sight of. What I take at face value is that it had gone through a process of Internal Legal, it had gone through a process of Treasury, and it had gone through a process of IFC. That’s what I went on. I have no sight of this document that you are reading from. If you have evidence to suggest that I had sight of this document at my disposal, then we can discuss it, sir.

Adv Vanara: The interest rate appears to be 100% of the asset cost for the years of the asset life based on the loans being five, 10, 15 years. The lawyers are warning that they are not sure what the intention is here but you went ahead and signed. Now I take it that you are not a lawyer, why would you have signed a legal document when the lawyers are still negotiating and giving feedback to you on the contract?

Mr Singh: The primary objective of signing a term sheet is to set the parameters for negotiation. The intention would have been to sign the term sheet, get the legal due diligence done, and negotiate the issues associated with the due diligence that was conducted. That is how I understand a normal process to unfold.

Adv Vanara: I beg to differ with you, Mr Singh. This document clearly states that it is binding. The parties agree that this term sheet shall create legally binding obligations on each party and shall be in full force and effect upon its signature. You do read before you sign don’t you, so how could you have missed this portion?

Mr Singh: I did not say I missed any portions, sir. What I was saying was that the terms and conditions of the term sheet would be in effect, but there was still room to negotiate them.

Adv Vanara: By signing this agreement, do you know that the other party has acted on this agreement, that they have issued a R400 million invoice for Eskom to pay?

Mr Singh: No, I was not aware of that.

Adv Vanara: So you didn’t read Friday’s Business Day report?

Mr Singh: No, sir, I did not.

Adv Vanara: Is it because you don’t care?

Mr Singh: Sir, I find it hard to come to your conclusion that because I did not read the Business Day, that I do not care.

Adv Vanara: Are you a Chartered Accountant that doesn’t read the Business Day?

Mr Singh: Given the experiences that I have had in the last nine months with the media, I have really not wanted to pay much attention to what was going on in the media.

Adv Vanara: Not a single individual gave you a call and said “There is this transaction in the media space and you are fingered as having authorised this huge transaction?”

Mr Singh: Sir, I think I was alluded to the fact quite later in the evening by my mother that there was this news report of this R400 million, but other than that, no.

Adv Vanara: So at least by then you knew the consequences of you signing an agreement contrary to the advice of the lawyers of the company?

Mr Singh: No,I did not, sir. Because as I said, I did not have sight of that document that you are reading from. And if I had sight of the document that you are reading from I would not have signed the agreement. It would have been as easy as that.

Adv Vanara: So you were not aware that Eskom treasury officials were involved in intense sensitive discussions around this contract?

Mr Singh: If the Committee would allow, I would be happy to extract the information as I extracted for all the other transactions to understand exactly what my role was and what I did and what I did not do. Currently you are asking about a transaction that happened almost a year ago. And from my recollection, as I said to you, this transaction went to IFC, it was approved by Internal Legal and Treasury. That’s the basis on which I signed. If there was a due diligence done thereafter, I was not aware of that due diligence.

Adv Vanara: There’s quite a number of transactions according to the testimony of Ms Mothepu. And I am going to the relationship between McKinsey and Trillian, that you authorised. Do you remember those transactions?

Mr Singh: Sir, there is a lot of transactions that I authorise.

Adv Vanara: Let me remind you. The balance optimisation and cash unlocking initiatives which included the insurance claims management for the Duvha Unit Three recovery project. Does that ring a bell?

Mr Singh: I do recall the transaction, but I don’t think we were ever billed for this piece of work they had conducted.

Adv Vanara: It’s not about billing. I am asking, did you ask them to do the work?

Mr Singh: Yes.

Adv Vanara: The rebuild on Duvha Unit Three recovery project to recover the 600MW capacity loss?

Mr Singh: No.

Adv Vanara: Did you ask them to do any work on the online vending?

Mr Singh: As part of the Master Service Agreement (MSA) I think they had done some work on the online vending, yes.

Adv Vanara: The work on the insurance claims management in relation to the Hitachi settlement offer?

Mr Singh: As part of the MSA, yes, they did do some work there.

Adv Vanara: Optimisation of the fibre optimum cable capacity?

Mr Singh: Not aware of that, sir.

Adv Vanara: The overall insurance claims management?

Mr Singh: No, sir.

Adv Vanara: The sale of Eskom Finance Company business and mortgage case books?

Mr Singh: I think as part of the MSA, they did do some work on Eskom Finance Company (EFC).

Adv Vanara: Funding model that had to go to the corporate plan of Eskom?

Mr Singh: They were not directly engaged to do that. That was a subcontractor arrangement between McKinsey and Trillian.

Adv Vanara: Was it not your responsibility to prepare the funding model to feed into Eskom’s corporate plan?

Mr Singh: It was. Actually it was not my responsibility. The corporate plan is the responsibility of the Board.

Adv Vanara: But you are member of the Board so that is your responsibility.

Mr Singh: Yes.

Adv Vanara: And it is finance related so you must assist the Board discharging that responsibility. Why did you not do it, why did somebody have to do the job for which you are paid?

Mr Singh: Well at the end of the day, sir, in raising in excess of R300 billion, you actually need to be guided and provided with expertise. There was very little to work on from the 2015/16 corporate plan. The first thing I did when I got to Eskom was pick up the previous year’s corporate plan to review. When we reviewed the corporate, the funding plan was all of two pages to borrow R200 billion. I got there on the 1 August 2015, which meant that a corporate plan had to be developed and submitted by the 28 February the following year. And given the state of the organisation and the number of issues we needed to deal with, and the crisis in which the organisation was, and working off a two page funding plan previously was quite difficult. That led us to approach the Board for them to provide assistance via consultants which was McKinsey at the time to assist us in developing the corporate plan. There were other issues that needed to be dealt with as part of the corporate plan; there needed to be a coal strategy that needed to be put in place; a maintenance strategy that need to be put in place; all of these issues were part of the equity conditions that had been given to Eskom.

Adv Vanara: With these transactions, were there any valid contracts between Eskom and this Trillian?

Mr Singh: In terms of the Duvha Unit Three insurance claim work, that work was done as part of an investment by Trillian so there was no billing for that, there was no contract and it was a relatively short period of work. I think it was maybe a week or two. In terms of the other pieces of work you mentioned, as I stated, it formed part of the MSA with McKinsey. The obligation for a subcontractor to exist was McKinsey’s responsibility.

Adv Vanara: Let’s look at the McKinsey/Regiments relationship. Is it correct that Regiments was a supplier development partner of McKinsey in a transaction that involved Eskom?

Mr Singh: I am not too sure, sir. I would have to guess if I were answering that question.

Adv Vanara: Were you aware that Eric Wood was a director at Regiments?

Mr Singh: Yes, sir.

Adv Vanara: At the time that these transactions I went through were being performed with McKinsey and Regiments, they were staff and officials of McKinsey and Regiments. Do you recall that?

Mr Singh: I would not be privy to that information, sir.

Adv Vanara: The amount of R30 million plus paid to Trillian for work done in January, February, what was the basis of that?

Mr Singh: If I recall correctly, the basis for the payment that was made in April related to the corporate plan work that was done between September and the end of February.

Adv Vanara: Which year?

Mr Singh: 2016. So it would be work from September 2015 to the end of February 2016.

Adv Vanara: But Trillian was not a registered company at the time. Eric Wood was still a director at Regiments.

Mr Singh:, sir, I am not too familiar between the corporate arrangements of Trillian and Regiments. I do know however that Eskom vendor management processes would require that Trillian be registered or as a vendor on the Eskom database which I assume would have been done, and that is how the payment would have been processed in April.

Adv Vanara: The Board Chairperson came here and said you lied to the Minister of Public Enterprises in responding to the question by Honourable Mazzone. Were you involved in preparing the response for the Minister?

Mr Singh: Firstly, sir, I was not engaged on my alleged misrepresentation, as the Chairman alludes to this, by the Eskom [board]. Secondly, yes, the activity that I performed relating to the relevant parliamentary question was that I was the Acting Group Chief Executive (GCE) at the time, and the submission was prepared by the normal Eskom processes. It was recommended by Mr Edwin Mabelane and Ms Suzanne Daniels, and I then proceeded to sign the submission. If I recall the response was to the parliamentary question. I still maintain that we did not mislead in terms of the responses to those questions.

Adv Vanara: So you accept that you were part and parcel of preparing the response to the Minister in response to the question?

Mr Singh: Yes.

Adv Vanara: We know that those responses were not accurate.

Mr Singh: Sir, my final comment was that in my view I think the answers were accurate based on the questions that were posed.

Adv Vanara: The Minister is on record acknowledging the inaccuracy of the response. That’s the first thing. The second issue is those responses came from you. The question is, did you give the Minister the full context on the issues raised or did you prepare draft responses?

Mr Singh: I think the process allows for draft responses to be prepared, and the draft responses were prepared. We did not amend them in any way. The parliamentary question response was then signed and submitted in that format.

Adv Vanara: Did you give the Minister sufficient information other than the draft responses about the entire context?

Mr Singh: There was a decision that was made to remove some additional information relating to the Trillian and McKinsey contract because the questions were very specific relating to a contract between Eskom and Trillian. The factual nature of the response was that there was no contract. And as a result of that there was a question that led on to say “Were there any payments made?” and factually there were no payments made associated with a contract because there was no contract. A contract existed between McKinsey and Eskom. The additional information that had been provided was the additional information that would then explain the payments that were made to Trillian.

Adv Vanara: When the draft questions were prepared, the questions were not directed at you. They were directed to the Minister. With respect, you are not a Member of Parliament (MP). The question from an MP to another MP – the Minister. You prepared a draft response. Did you give the Minister a briefing memo about the entire transaction enabling her to have sight of the entire context so as to then write a response or did you just prepare draft responses?

Mr Singh: We prepared draft responses, sir. The additional information was removed.

Adv Vanara: Why was that additional information removed, and by whom?

Mr Singh: I am not too sure by whom, sir, but I would assume it was believed the information did not respond to the questions.

Adv Vanara: But why was the context not provided to the Minister?

Mr Singh: In retrospect, maybe we should have provided the information to the Minister.

Adv Vanara: Why was it not given to the Minister? You are the CFO. For you to make decisions on any transaction when submissions come to you, there is a proper motivation. Why would you deprive a decision maker of the same processes that you would demand before making a decision?

Mr Singh: In terms of the parliamentary questions and responses to them, it has been a practice that we wanted to be very specific about the questions asked and the responses given. That was a practice that we installed not only in Eskom but also at Transnet.

Adv Vanara: In the interest of time, I want to quickly run through your submission paragraph by paragraph and not the entire document. Page 51, paragraph 207 you say: In October 2015 advice was sought from the Eskom Group Compliance regarding the PFMA, on the implications of the MSA. You quote the advice you received from Eskom’s Group Compliance Officer on the implications of the MSA because you say “feedback received from the Group Compliance was as follows”. Go to page 52, and you quote verbatim. You say “There is no basis within the significance and materiality framework to make an application to the Minister of Public Enterprises. Regardless of the value, namely under the PFMA, DPE approval is not required and likewise are we not required to inform our Minister of the transaction”. But I want to put it to you that you have conveniently and deliberately omitted the first part of the paragraph of the document and I am going to give it to you. Can you please read that portion that you omitted? With your permission Chair can we give the witness this email?

Adv Vanara: There is an email in front of you, sir. Where does that email come from?

Mr Singh: The first portion is from Dale Siekart [sp] to Mr Laher and Ms Mokatle, and cc’d to Mr Govender and Mr Neo Tsholanku.

Adv Vanara: Can you read the first portion of that email.

Mr Singh proceeded to read the email.

Adv Vanara: Now my question to you is why did you decide in your submission to omit this portion that says “notwithstanding past guidance regarding cost containment restrictions and the need for an exemption from the Minister of Finance”?

Mr Singh: To be quite honest, sir, there was no particular reason; because it doesn’t add to the requirement for us to inform the Minister based on the significance and materiality framework.

Adv Vanara: Did you attach in your submission that email?

Mr Singh: No, sir, it was not.

Adv Vanara: But that provision says there is a need for you to get an exemption from the Minister of Finance.

Mr Singh: It says “notwithstanding past guidance regarding cost containment restrictions and the need for an exemption from the Minister of Finance”. There is no basis.

Adv Vanara: No, no, “And the need for an exemption from the Minister of Finance”. Now you have omitted that in the response and you quote that advice as the reason why you did not obtain exemption from the Minister of Finance. My question firstly is why did you omit that portion in your response; and secondly why did you not attach that email because clearly you have the email?

Mr Singh: Firstly sir, the email that you refer to forms part of the negotiation process.

Adv Vanara: Mr Singh, can you just please tell us a simple reason why you did not attach that email in your submission. Secondly you did not quote it in its entirety, why?

Mr Singh: I am trying to explain that, sir. Firstly, the submission you have before you as I explained originally when I started with my presentation, this was a process I inherited. So some of the stuff that is in this document was not my first-hand knowledge of what had happened. It was put together to provide the Committee with an understanding of the entire process. This email for example is a case in point. It is the first time that I see this email. In terms of the reason for the first sentence not being omitted, I can’t tell you that because this is the first time that I see the email. In terms of us requiring an exemption from the Minister of Finance, again, it is the first time that I hear of that.

Adv Vanara: Mr Singh, sir, how could you quote from that email without having seen it?

Mr Singh: The document has been prepared by me to provide the Committee with an understanding of the transaction, and some of the information particularly as it relates to the negotiating part of the MSA itself was not privy to me.

Adv Vanara: For you to have quoted what you have quoted in your submission, you must have had that email in front of you, or did you miraculously know about the contents of an email that you have never seen before?

Mr Singh: No, sir. The submission was prepared by myself as well as other people. So this portion of the presentation was prepared by one of my colleagues, Mr Prish Govender. I would assume that that was at his disposal. There are a number of files that contain a number of these documents. I am assuming that this email is contained in one of those files.

Adv Vanara: I put it to you, Mr Singh, that that conduct was a deliberate ploy on your part to distort the advice that you had received; and secondly to mislead the Committee. What is your comment on that?

Mr Singh: I deny that categorically, sir. This is the first time that I see this email.

Adv Vanara: This document in front of us, the Committee, are you beginning to disown certain portions of it?

Mr Singh: No, sir. I do not disown portions of it. In my introduction I did say which portions of transactions I was involved in, and which portions of transactions I was not involved in. I originally said to you that I inherited this contract. The negotiations had begun way before I got there. I managed it and terminated it.

Adv Vanara: Can we step off this point and go to page 52, point 211. You say there the final internal audit review was completed on 12 December 2015. There is annexure AS 20, and the conclusion of the report, and you go into details. And this was an internal audit review opinion on the MSA which states that National Treasury guidelines were followed. That is what you say. And that the National Treasury cost containment instruction was not applicable, and the opinion you say is dated 12 December 2015. Do you see that?

Mr Singh: I do see that.

Adv Vanara: And before the proceedings here you took us through where you made certain adjustments. This opinion, I put it to you was obtained on 12 December 2016. Not 2015.

Mr Singh: You are correct, sir.

Adv Vanara: Why did you state it as 2015?

Mr Singh: I think it was an error which we had not picked up.

Adv Vanara: I put it to you that this is another attempt to mislead the Committee. And why I say is because you had to put December 2015 there because the significance of the year would mean that you received the opinion before you signed the contract as opposed to after you had signed the contract. What is your comment on that?

Mr Singh: Sir, I disagree with your comment. The intention with respect to obtaining the audit opinion was not to have the internal audit opinion prior to signing of the contract. The intention of the internal audit review was as I said in my opening statement when we were doing the settlement process I requested three things to be done: an internal audit review, a legal review, and the verification on the fees payable which was the Oliver Wyman report. Those three things were requested in and around sometime in October/November 2016. In my view this is an error we did not pick up. It was never the intention for us to have an internal audit report in 2015. It just didn’t exist.

Adv Vanara: Were the two conflicting internal audit reports? Was there an internal audit report on the 6 November 2015? Are you aware of that internal audit report?

Mr Singh: No, sir.

Adv Vanara: Let me remind you what that report of the 6 November 2015 said which is not contained in your submission. Let me read you what that Internal Audit stated

Adv Vanara: Internal Audit stated that the deviation approval is required from National Treasury. Do you remember that?

Mr Singh: I don’t recall that, but I do remember that it was a matter of contention.

Adv Vanara: And again, this critical document is missing from your submission.

Mr Singh: I would hesitate to suggest that there can’t be two internal audit reports on the same matter. The one that we have included is the final signed internal audit report. I would assume if there was a concern raised associated with any compliance matter, the evidence associated with that was provided to Internal Audit to their satisfaction and hence they issued a report on 12 December 2016 and not 2015 as we have recorded.

Adv Vanara: I have in my possession an Eskom Assurance and Forensic memo report on McKinsey & Company’s Top Engineering programme. I am going to ask the Chair permission to give this report to you so that I am not unfair to you.

Adv Vanara: Can you see the document is dated at the end. Can you see the date there, it is from a Molefe Mkabu Senior General Manager: Assurance and Forensic. Do you see that?

Mr Singh: Yes.

Adv Vanara: What is the date there?

Mr Singh: 6 November 2015.

Adv Vanara: Can you go under the table dealing with risks under paragraph C. What is the heading there?

Mr Singh: National Treasury cost containment instruction on cost containment measures dealing with the engagement of consultants.

Adv Vanara: What does that document say about the deviation under consulting fees?

Mr Singh proceeded to read the relevant paragraph.

Adv Vanara: So you didn’t know about this?

Mr Singh: No, I don’t recall this. But I think just in terms of the date of this document, it is addressed to the chairman of the McKinsey MSA steering committee. That steering committee as I understand it was only established in February 2016. So the date of November 2015 would be inaccurate in this document itself because that steering committee did not exist in 2015.

Adv Vanara: You don’t know the existence of that document as you sit there and that is why you didn’t include it in your submission?

Mr Singh: Agreed.

Adv Vanara: Okay. Let’s move on to page 10, paragraphs 19.17 where you deal with the fixed price contracts that include Medupi. Do you see that?

Mr Singh: Yes, sir.

Adv Vanara: You are referring to fruitless and wasteful expenditure, correct?

Mr Singh: Correct, sir.

Adv Vanara: If you believed as you believe now that it was a fruitless and wasteful expenditure, did you disclose that in the financials of Eskom?

Mr Singh: Sir, this is my view now when I was requested to prepare the submission for the Committee in terms of governance at Eskom, and particularly contract management. These amounts that are quoted here date back about three or four years. The information was audited by the Eskom auditors at the time. I don’t believe that they had viewed it as fruitless and wasteful expenditure. But in my view, I would think it was fruitless and wasteful expenditure, hence I raised it for the benefit of the Committee.

Adv Vanara: Irrespective of when it happened, you had an obligation of disclosing and reporting that, correct?

Mr Singh: Correct, sir.

Adv Vanara: And you are aware that the failure to report fruitless and wasteful expenditure is a criminal offence?

Mr Singh: I was not aware of that, sir, but I will take it on your word.

Adv Vanara: On page 15, paragraph 37, there is a R310 million for which employees were disciplined. The Back2Basics programme referred to above was reported as irregular expenditure in 2015 amounting to R310 million. Which employees were disciplined for this?

Mr Singh: Sir, I am not too sure. I know that when I got there I enquired about a disciplinary process relating to this R310 million. A document was prepared but I don’t think anyone was disciplined for this R310 million. The reason I know about this is because it was one of the outstanding matters from the 2015 audit that needed to be resolved when I got there.

Adv Vanara: So no one was disciplined for the R310 million?

Mr Singh: Not that I recall, sir.

Adv Vanara: So I put it to you that no one was disciplined as a matter of fact, and you can’t dispute it because you can’t recall?

Mr Singh: Sir, this emanated from the 2014/15 year. I was not there in 2014/15.

Adv Vanara: You were not there, but you picked it up. What did you do after picking it up?

Mr Singh: I requested a memorandum to be drawn up on the circumstances that gave rise to this and why did it emanate, and who was disciplined. From the memorandum prepared, if I recall, it indicated that most of the individuals that led that had left Eskom.

Adv Vanara: I dispute that these officials would have left because Mr Koko is still at Eskom today and this related to his division.

Mr Singh: If you say so, sir.

Adv Vanara: The question to you is if you went to the Board for condonation and writing off of this expenditure, did you do that?

Mr Singh: I think there was a condonation request that was prepared. I don’t think it actually served to the Board because in my view at the time, the amount was not condonable because it was just irregular. And I said to the guys that if it is irregular, you can’t go to the Board and ask for something that you know is irregular just for the sake of fixing it.

Adv Vanara: On page 15, paragraph 40, you say that the spend without contracts in place was R6 billion. This would clearly be irregular expenditure, correct?

Mr Singh: I would assume so, sir.

Adv Vanara: Did you deal with this in terms of the PFMA?

Mr Singh: Sir, if you look at page 17, the bullet point that starts “Since April 2016” that’s all the activities that we undertook to address these concerns that were identified in paragraph 40. The diagnostic that we had undertaken was not conclusive. We had actually issued this to the organisation for them to address these issues. It was under the auspices of the Chief Procurement Officer (CPO) at the time to deal with these issues. Also I think the external auditors didn’t flag these contracts at year end as part of their audit process.

Adv Vanara: Did you disclose these in your PFMA reports?

Mr Singh: Sir, again as I said, the diagnostic was not conclusive. It needed to be investigated by the contract managers themselves and the CPO would have made a call whether they were irregular or not which would have then led to them following the PFMA process in terms of reporting and so on. If these were genuine contracts that were not in place, it would have followed a PFMA disclosure process.

Adv Vanara: I thought we agreed that in your view these were irregular expenses?

Mr Singh: On the face of the report that was presented, they were irregular expenditures. But you could not take it on the face of the report as it being conclusively irregular expenses. There needed to be further analysis and investigation conducted relating to the R6 billion worth of transactions.

Adv Vanara: Page 16, paragraph 41, you are referring to examples of poor contract management that could potentially lead to contraventions of the PFMA. This ‘Just Coal’ when was it counselled?

Mr Singh: I think that was during the period of April or May 2017 I think.

Adv Vanara: And was this disclosed in your financials?

Mr Singh: No, it was after the 31 March. We would not disclose it then. But I think it was raised by the external auditors in their audit report to the audit committee.

Adv Vanara: Would that be the same with the deemed energy payments?

Mr Singh: Deemed energy payments, no, in my view this was fruitless and wasteful expenditure, but I don’t think the external auditors picked this up as part of their review. Again I think the PFMA process would have had an explanation as to why these are not fruitless and wasteful expenditure.

Adv Vanara: This Chief Procurement Officer you recruited from MTN, what made him a specialist in large scale procurement?

Mr Singh: We did go through a recruitment agency and there was a shortlist of candidates provided to us. I think we shortlisted four candidates. I prepared a set of questions that was then provided to BTC, and they interviewed the candidates and recommended the individual for appointment.

Adv Vanara: Reading your page 19 under paragraph 46, do I understand correctly that you say these transactions – that the prepayment decision was taken by the Board of Directors; that the R600 million was authorised by BTC; that the McKinsey company and its subsidiary Trillian was approved by BTC; the Optimum coal penalty, those issues you had nothing to do with, do I understand you correctly?

Mr Singh: Correct. Except for the R1.6 billion, I was part of the Board that approved it.

Adv Vanara: The R1.6 billion?

Mr Singh: Yes.

Adv Vanara: Do I understand you correctly to be saying the decision makers must take responsibility for those transactions?

Mr Singh: Indeed. Also to demonstrate that in my view I did not have the ability to influence the outcome of these decisions, because it was a collective decision, particularly the R600 million. I was not even part of the BTC. I was required to do three things. On the McKinsey and Trillian transaction, as I said to you, I was not there at the inception of the transaction. I inherited it, managed it for the time that it was there, and ultimately recommended its cancellation. On the Optimum penalty settlement, my involvement was via a request by Ms Daniels to sign the ultimate agreement because of the fact that she thought she needed to have segregation of duties.

Adv Vanara: Earlier on you saw the invoices I showed you that clearly on the face of those invoices of your trips, at least the December 2015 trip would have been paid by Sahara, a company associated with the Gupta family. And Trillian itself is associated with them through Salim Essa and Eric Wood. Those invoices paint the picture that your stay at Oberoi Hotel was paid by them on the face of those documents.

Mr Singh: Sir, my version was that they were not paid by the Gupta family and that is my version.

Adv Vanara: Yes, I accept your version but I am asking you on my version as evidence on the face of the invoice that I showed you.

Mr Singh: On the purported invoice, yes, sir.

Adv Vanara: And on the strength of that because there are two versions. There is your version and there’s the other version. I am saying on the other version, if it is true, that there would have been a potential conflict of interest in you having to deal with a prepayment of which Tegeta was to be a beneficiary.

Mr Singh: I would assume so, sir.

Adv Vanara: What we know now is that you did not recuse yourself. Correct?

Mr Singh: Correct.

Adv Vanara: We will get back to the details of what I view as some of the failings in that regard.

Adv Vanara: You indicated that you and Mr Koko co-authored the submission on the R1.6 billion and persuaded the Board of Directors to approve the prepayment to Tegeta?

Mr Singh: That’s correct. Our signatures are on the document.

Adv Vanara: And later after the Board approved what you persuaded it to approve, you come back and you say sorry, there is a financial risk here. Why was the financial risk not observed when you prepared that submission?

Mr Singh: Sir, as I said when you posed the question earlier, the risk was actually a legal risk that was identified through the contracting process. We responded with a financial risk mitigation measure to ensure that the transaction was still executed. So it was not a financial risk that we identified. It was actually a legal risk that emanated from us paying R1.6 billion up front without the ability of having an effective contract in place.

Adv Vanara: Chair, can I get a 10 minute adjournment, There are one or two issues that I am trying to locate but I am not in a position to locate them.

Chairperson: Ten minutes seems to be too short. I was going to give you a 30 minute break because it has been a long day. When we come back you will wrap up and the Members will continue after you.

Inquiry resumed after 30 minutes.

Adv Vanara: Mr Singh, thanks for your patience. You would recall before the break that we had a discussion around this one transaction and the term sheet. Do you recall that?

Mr Singh: I do, sir.

Adv Vanara: I conceded to the fact that you did not have certain documentation before, and I am sorry for that. Apparently we are experiencing some challenge with printing documents. I have since had the documents printed. You indicated that you signed the time sheet on the approval of the IFC and the advice from Legal and Legal Compliance, is that correct?

Mr Singh: I would if my recollection is correct say so, yes.

Adv Vanara: I have in my possession the minutes of the IFC and I am going to ask that a copy be handed over to you. Sorry, it is not the minutes, it is the action list of what has to be done subsequent to that meeting.

Adv Vanara: I would like to take you through some of the discussions around this issue at the meeting. You remember that I was reading from the lawyers that treasury had engaged with on the issue, and the concerns that they had raised. One of the issues that Dr Naidoo seems to have pointed out was the guarantee. He pointed out that the guarantee issued by Treasury incurred no cost to Eskom, whereas the guarantee issued by a private company would incur costs. He enquired whether the relevant financial evaluations had been done in this regard. Mr Pillay stated that analysis of the data had been done and comparison of all funding elements and cost elements had been done. Funding from HEA was found to be positive by Eskom. The worst case scenario would have been negotiated on what Dr Naidoo said. However even this worst case scenario stood up to scrutiny. During the number of years of construction of the asset Eskom would pay nothing. And interest would only be effective once Eskom had taken delivery of the assets. So it would appear that one member was making arguments for the transaction. What I want to get to is the resolution that is recorded. It was resolved under paragraph 7.31 of the document: “The Investment and Finance Committee under resolution approved that Eskom Treasury be mandated to negotiate, but not to conclude the financing agreement with HEA amounting to a full disclosure of names and shareholders and the value/percentage of each shareholding presented to the Committee as part of the feedback report. Now paragraph 7.32 as the CFO was authorised to give in 7.31, now clearly there is no approval for you to sign the time sheet. Where did you get it from that the IFC had approved the transaction?

Mr Singh: I think as I indicated originally this transaction was conducted almost a year ago. My responses to you were on the basis of what I recall. An important document that is not part of the documents you have provided me, sir, is the memo that would have accompanied this document that I would have used to sign. In the absence of that document it would be amiss of me to actually say that any further information relating to this. I would be happy to provide the Committee with all the necessary documentation relating to this as to when I get the access to that information from the company. But for me to respond on this basis, I think it would be counterproductive.

Mr P Gordhan (ANC): Chair I call for a point of order. It is now four to five hours that we have heard this refrain “That was nine months ago; that was a year ago”. The whole purpose of giving Mr Singh notice that the key issues that pertain to Eskom are X, Y, Z, you have had time to prepare. Each of us is going to tell you that Mr Singh you are lying, you are evasive, you are less than helpful, and there are worse conclusions we are going to call on the Chairperson to intervene if you are continuing this way. We all have other things to do. Do you think we are little children that each time we ask you a question, you say “I don’t remember, it’s somebody else who did it. I am not responsible. The document was prepared by somebody else”. Chair, could you direct Mr Singh, if he doesn’t want to cooperate he must tell us and we as a Committee must decide what we are going to do. But we can't sit through this farce, because that's what this is at the moment.

Chairperson: Thank you, Honourable Gordhan. I do remember that last year we said to him that we had given him six months from June to December last year. We thought that when we went on recess that would give you time to recall information that is at your disposal, Mr Singh. I think the Members are not getting satisfactory answers, and in the submission, there are things that you have not responded to in your submission. And remember you are speaking under oath. Therefore satisfactory answers are expected of you. What you are being asked was your daily job at Eskom. Adv Vanara, continue.

Mr Singh: I agreed that I had been given six months to prepare and I was answering all the questions posed before me to the best of my abilities.

Mr Gordhan: We can’t specify every transaction. All the substantial transactions that have come to our notice, it is fair Chair that a CFO who is well paid and well qualified, we will talk about his integrity later, he must have answers for us, otherwise this is gross disrespect for Parliament. Let alone misleading us, and that is criminal.

Chairperson: Adv Vanara, can you continue please.

Adv Vanara: You see, Mr Singh, I would not have pursued these questions had you not provided the answers that you did. The reality of the situation is that I am asking you questions about the answers that you provided and now all I am asking is that here is the documentation and the documentation disproves your responses. What do you say to that?

Mr Singh: Sir, based on the information that you have provided that based on this it says that Eskom Treasury has the mandate to negotiate but not negotiate. But again, I would refer you to my original response to say that based on the information I was given at the time, this term sheet was concluded. I would like to have an opportunity to look at the documentation that was provided to me at the time. But as far as I knew at the time, the IFC had approved us to sign the term sheet.

Adv Vanara: And that you were ably supported by your legal and compliance team, is that your response?

Mr Singh: And treasury.

Adv Vanara: You are adding treasury. We will deal with treasury later. I have given you a memorandum from Eskom. That memorandum is from the Corporate Specialist of Legal and Compliance. It is dated 22 August 2017. It is addressed to Suzanne Daniels who is Group Executive Legal and Compliance. You’ve got the document in front of you, sir. I just want to go to the discussion in the document which is on page two of the seven page document under the heading; “The binding term sheet”. Can you for the record read what is written there in 9.1?

Mr Singh proceeded to read.

Adv Vanara: This is an interaction between Legal and the Compliance division. Is it correct that they do not seem to know that they would have advised you to sign on the term sheet?

Mr Singh: Correct.

Adv Vanara: And there is no record of any advice that says you are advised to sign. The only record that is there is the advice obtained from White and Case (W&C) that the terms sheet should not be signed.

Mr Singh: As I previously stated, sir, the document such as a term sheet will be accompanied by a memo. The memo will be signed by various people. On my recollection I said that in the absence of that memo I would assume that Group Compliance and Legal had sight of it and would have been supported by treasury. And my recollection at the time was that the IFC had approved it. That memo would have given me the comfort to sign this term sheet. That memo is not here so, on my recollection of what has been said, that is my response.

Adv Vanara: If you then had this memo that would have mysteriously, I say mysteriously because we now sit with the resolution of the IFC that clearly says something contrary to what would have been in this submission that you received. We are sitting with Legal as well as the Compliance unit that actually says there was a legal opinion from an external lawyer that had advised against the transaction.

Mr Singh: I was not aware of the fact that that opinion existed when I signed it, on recollection of the events.

Adv Vanara: You see the resolution says, and I accept that case would have communicated with treasury because clearly from communication it is not you who was actually working on the contract negotiation. It was treasury mandated. Yours was to supervise that particular work in your capacity as CFO. Let us just imagine as you want us to believe that treasury supported you. In view of the opinion that treasury obtained before you signed the contract on the 9th, that is what the document says, they had obtained a legal opinion from W&C. 9.4 of the document says “W&C were on brief through Eskom’s treasury for the term sheet. They were brought in on 9 March to review the draft term sheet. They advised Eskom against signing the term sheet because of the nature and severity of the binding conditions”. I put it to you, Mr Singh, there is no way that a treasury official would in his or her right senses when knowing that the lawyers are busy looking at the matter and they are advising against signing of the term sheet, that they would have written to you and said “Mr Singh, please go ahead and sign the term sheet.”

Mr Singh: Firstly, the date on which the memo was submitted to treasury was, I think they were engaged on the 12th, you are quite correct. But based on your statement made earlier on the document given to treasury on the risks, was given to them on the 12th based on your comments if my notes are correct, and we signed on the 14th. Equally, Advocate, I would suggest that if a treasury official was not going to prepare the memo relating to the signature of the document, it would be highly irregular for me to consider signing the document in the absence thereof, and I would not have signed the document.

Adv Vanara: I agree to the extent that had there been no ulterior motives, a CFO would ordinarily not sign a document of this nature without having had contributions from treasury as was the case here, and legal. But would you equally concede that a CFO in your position, who did not have the interests of Eskom and who wanted to benefit an external service provider for whatever reason, would have signed the term sheet contrary to the advice, for whatever reason?

Mr Singh: There is a file before you of 400 odd pages which has been presented to you in December. We got thrown out of Parliament for submitting it late. These 400 pages demonstrate the diligence with which we had gone through to try and approve these transactions albeit they are questionable now. It would be very remiss of me to go ahead for whatever reason and sign a document like that without any documentation which just does not make sense at all to me in terms of the conclusion you have just put to me.

Adv Vanara: Let us move to the prepayment of the 11 April 2016 where you were asked to give the BTC assurances and also of the commercial viability of the transaction. Remember that?

Mr Singh: Yes.

Adv Vanara: And you are on record saying that you are happy with the time you were given to prepare, and that you are happy with the work that you were asked to have done and give a report back to BTC. Is that correct?

Mr Singh: That is correct.

Adv Vanara: This transaction, Eskom was going to buy coal from Tegeta, is that correct?

Mr Singh: That’s correct.

Adv Vanara: Tegeta did not own a mine at that stage.

Mr Singh: I would assume so.

Adv Vanara: I take it you are assuming the fact that Tegeta was not the owners of the mine?

Mr Singh: Yes.

Adv Vanara: And that this coal was sitting with OCM?

Mr Singh: Agreed.

Adv Vanara: There was a middle man introduced in this transaction which is Tegeta.

Mr Singh: Correct.

Adv Vanara: And you managed to negotiate with Tegeta a 3.5% discount.

Mr Singh: Yes.

Adv Vanara: This is now again common sense, I am not a CFO. If Tegeta was to purchase coal from OCM and then sell it to someone else they would want to make a profit out of that transaction, isn’t that so?

Mr Singh: Correct.

Mr Singh: For instance, if they bought the coal from OCM say for R16 per ton, they would top up to make up for their own gain, isn’t that so?

Mr Singh: There would be a margin that they would add, yes.

Adv Vanara: That would be from the margin I assume they would have given you a 3.5% discount?

Mr Singh: Highly possible.

Adv Vanara: Why were you comfortable with that kind of a transaction as a CFO? Why did you not advise BTC that it would be cheaper and in the best interest of Eskom to get coal directly from OCM?

Mr Singh: The operations guys are better suited to answer that question, but if I recall correctly, the reason for that was that the business rescue practitioners at the time had concluded an agreement with Tegeta for the excess coal supply from Optimum so from that perspective the coal that was available from Optimum was available through Tegeta and not directly through Optimum, if I understand that transaction correctly.

Adv Vanara: This coal, is it correct that it was to be supplied to Arnot power station?

Mr Singh: I would think so, yes.

Adv Vanara: And that at the time, Tegeta was already supplying coal to Arnot in a separate contractual arrangement.

Mr Singh: I am not aware of that.

Adv Vanara: But is this not the due diligence that you are meant to do?

Mr Singh: Sir, the due diligence as I understood it was to ensure that there was a commercial rationale for us to want another transaction which is the way I understood I executed, fed back to the BTC, that BTC accepted my assessment and we concluded the transaction. If there was need for me to do any additional work, I would assume that the same BTC you are referring to would have requested me to do that.

Adv Vanara: In my reading of the resolution it was not specific. It said you needed to look at the commercial viability of the transaction. You were not limited to anything. You chose to limit your scope.

Mr Singh: Again I would respond that the BTC that effectively gave me that delegation or request for information to be conducted, I fed back to that very same BTC. If they had a different expectation of what I had presented, they would have requested it.

Adv Vanara: I fail to appreciate your response, Mr Singh. The BTC has reservations about a transaction. This has been brought to their attention at short notice and they are looking for assurances from the CFO, and they are asking the CFO to do a lot of things which involve due diligence. It is not limited. If you limit it, you limited it yourself. And you quite comfortably limit it and you are not telling them that there are other issues you have not considered. Did you tell them that you only looked at areas that you now say you looked at?

Mr Singh: As I conceded, I was not aware of the other supply into Arnot from Tegeta so I couldn’t inform them of something I didn’t know. Secondly, I would still stand by my response that if the BTC was uncomfortable, it should not have approved the transaction in its meeting of the 11 April. Thirdly, in its meeting of the 13 April I believe there were still further concerns that they had. They should have directed those to me and I would have addressed them or not, and raised that, “These are the concerns that we have”.

Adv Vanara: My question is a very narrow question. You have now articulated that these are the questions that you looked at. My question now is did you play open cards, did you take the BTC around the issues that you looked at, yes or no, and if so, what were they?

Mr Singh: The issues that were at my disposal and knowledge at the time I did take the BTC around them.

Adv Vanara: Am I correct that there was an RFP (Request for Proposal) that was issued inviting service providers for a new contract because Exxaro’s contract was coming to an end 31 December 2015. As CFO you would’ve known about that process.

Mr Singh: As CFO I don’t recall it. At that stage, Procurement did not report to me. I would not be aware of an RFP that was issued on the market.

Adv Vanara: You have forced me to make this conclusion of you. You recall that I have asked you not to force me to make adverse inferences of your testimony. You recall that I asked you?

Mr Singh: Sir, I can only respond to the best of my knowledge. And I am responding to the best of my knowledge. If I didn’t know that there was an RFP, I didn’t know.

Adv Vanara: My question is very simple, do you recall earlier on when we started, I asked you not to force me to view you differently than I viewed you when you came here this afternoon?

Mr Singh: Yes, I do.

Adv Vanara: I am getting a distinct impression from you, sir, that you are very evasive on issues that you had a direct responsibility on, and where things didn’t go right, and that you are quick to point to others where you think the blame lay. Is that a fair observation?

Mr Singh: I don’t think that’s a fair observation, sir. If I did something wrong or missed something, I will be the first to put up my hand and say “Listen, I missed something”. And I didn’t do it. As you questioned me before and I said in hindsight maybe we should have done it differently, and I conceded to that. So to say I point elsewhere and don’t take accountability for my own actions, I think to the extent where point somewhere else does give an extent to where the accountability lies then, yes, I will do. But if the accountability lies with me then I will do that. As I said in terms of this term sheet I agreed, I signed the term sheet. I didn’t deny signing it even before you presented it to me. All I said was I don’t have the necessary documents to recall the circumstances under which the term sheet was signed.

Adv Vanara: So whilst working on this transaction, your testimony is that you did not know there was an RFP issued to replace Exxaro’s supply of coal to Arnot. You did not know that?

Mr Singh: To the best of my knowledge, no.

Adv Vanara: Were you aware that on 31 December 2015 Exxaro’s contract was coming to an end?

Mr Singh: That I was aware of, sir.

Adv Vanara: As CFO, how were you going to get a replacement for Exxaro?

Mr Singh: As CFO that would not be in my area of responsibility. That would be in the area of the Group Executive: Generation and Primary Energy.

Adv Vanara: And when faced with this situation knowing who had the relevant information assuming that you didn’t know, would it not have been diligent of you to go and find out about the replacement of Exxaro?

Mr Singh: Sir, with all due respect again, I think the submission that was made to BTC on the transaction that was made in April was made by I think the CPO at the time supported by Mr Koko, I think. If I am not mistaken. I would assume that all of the operational issues for Arnot supply would have been discussed at that meeting. I was not part of that meeting.

Adv Vanara: So your assumption is based on the important information that would have been collected in order to get to the decision. Is that correct?

Mr Singh: I would have assumed whatever was required for the BTC to get to the conclusion to approve the transaction on the 11 April, barring the three things they had requested me to do, was provided satisfactorily to them. Subsequent to that on the 13 April when I presented my analysis to them I would assume that the information they required was provided to them.

Adv Vanara: This RFP, because you don’t know, you must accept what I am saying that there was an RFP in September of 2015. You joined in August. Maybe you were too busy or still learning the ropes and missed that piece of action. The RFP was issued to replace Exxaro’s contract which was coming to an end and that process because the submission points to that. This is what I don’t understand. The submission that went to BTC spoke about that. Did you read that submission to inform you of the context of implementing what you have been instructed to do in view of the fact that you were not at the meeting?
 
Mr Singh: Firstly, if, Advocate, you assert that an RFP was issued in September then I’ll take it on face value that it was. Equally it is unfair to assume that the CFO would know about every single RFP issued by an organisation as big as Eskom. Thirdly, yes, I did read the submission but I assumed that all of the operational issues that pertained to the 11 April approval were addressed by the BTC to its satisfaction, given the resolution that was taken.

Adv Vanara: I accept you had one service provider to negotiate with and that service provider gave you a 3.5% discount, and the contract was extended because that was more of a contract extension as well until September for the supply of coal. Is that correct?

Mr Singh: My understanding was that it was not a contract extension. It was a new contract. Hence we concluded a new supplier agreement with them if I recall correctly. But I might be mistaken as I was not at the meeting.

Adv Vanara: Okay. I must concede to what you are saying. That was a short term supply of coal which would have been for five months until no later than September 2016. Do you recall that?

Mr Singh: Agreed.

Adv Vanara: When that contract came to an end or towards the end of that contract, Eskom went to National Treasury seeking a deviation for the extension of this contract. Do you know about that?

Mr Singh: I seem to recall it but the details I am not too clear of.

Adv Vanara: Treasury responded by saying they were not going to give permission for deviation. Was that communicated to you in one way or the other?

Mr Singh: I don’t recall it.

Adv Vanara: But you see, this is what people at National Treasury do who do due diligence. They refuse the deviation and say Eskom must go obtain at least three or four RFQs (Request for Quotations). I see you are nodding. Does that mean you are aware of this?

Mr Singh: I nodded because I agree that would be an appropriate way to deal with it.

Adv Vanara: And you know the outcome of that process was that the coal that you negotiated, a 3.5% discount where there were three or four service providers. What was the negotiated price that you got, was it R19?

Mr Singh: I don’t recall, sir, but if you say so.

Adv Vanara: That the service provider that was eventually allowed to continue the work quoted Eskom at R14. Do you see the difference?

Mr Singh: I see the difference but I would also ask if it was the same quality in terms of CV (Calorific Value).

Adv Vanara: Before Exxaro’s contract expired, was there anything about the quality of the coal of Exxaro?

Mr Singh: I am not too sure.

Adv Vanara: I will tell you that there was nothing wrong with the quality of coal that Exxaro was furnishing in the mine. And the reason I am asking that question is it is Exxaro which quoted the R14 price.

Mr Singh: I am not saying that there was a quality issue with Exxaro’s coal that was supplied to Eskom. All I am saying is that when we compare R14 to R19 we should compare it with an equivalent CV. So if R19 was 23 CV coal, is R14 23 CV coal? That is all I am saying by making that comment.

Adv Vanara: The point that I am making by this long windedness is that Eskom had to pay R19 for a coal that could as it proved later could have been obtained for R14. Because of that I find it a bit difficult to be faced with a CFO that said “I did a due diligence test. I negotiated for R19, and yet five months down the line the price that Eskom gets coal for is less than what you negotiated.

Mr Singh: Sir, with all due respect, the BTC did not ask me to conduct an entire due diligence of the transaction.

Adv Vanara: “Not the entire”.

Mr Singh: They asked me to do a commercial rationale for the transaction which I did, which was compared to the cost of diesel versus the cost of coal. It was acceptable to them. They had requested assurances from the team that had presented from the operational side associated with the cost of coal, and they were assured at the time that the cost of coal that they received under this transaction was competitive. They went out with a request, I think they got eight suppliers if I am not mistaken, and they ended up with two which was Tegeta and Umsimbhiti or one of the suppliers. So I am assuming that the BTC was comfortable with the pricing associated with the transaction, and they did not ask me to conduct a due diligence relating to the pricing of the transaction.

Adv Vanara: I would like us to go to the R1.6 billion. The submission that you and Mr Koko co-authored. Let me just get to that submission. The submission is dated the 8 December 2015. It refers to verification by an independent party and that is referred to as Regiments Capital. Remember that?

Mr Singh: Yes, sir.

Adv Vanara: As I indicated, didn’t you see any potential conflict of interest that Regiments Capital would do this verification?

Mr Singh: How so, sir?

Adv Vanara: The beneficiary of this transaction was Tegeta.

Mr Singh: Yes, sir.

Adv Vanara: And was there no shareholding of some of the shareholders of Tegeta in Regiments?

Mr Singh: Not that I am aware of, sir.

Adv Vanara: That matter I am sure one of the Members will pursue with you. I want us to go back to your page 20 and point 54 which also deals with this prepayment or R1.6 billion. You speak of a draft contract that Ms Daniels presented to you and Mr Koko on 10 December. Correct?

Mr Singh: Correct, sir.

Adv Vanara: And this is a contract that the Board approved on 9 December that you must give effect to. Correct?

Mr Singh: The contract was not presented to the Board, sir. Only the submission was presented to the Board.

Adv Vanara: Why was the contract not presented to the Board?

Mr Singh: It was not prepared at the time. The contract was only prepared subsequent to the Board approving the transaction.

Adv Vanara: So the submission spoke of a pre-purchase and not a guarantee, correct?

Mr Singh: That is correct.

Adv Vanara: So when Mr Zethembe Khoza, your former Acting Chair and subsequent Chair, when asked about this guarantee, he said he didn’t know about it, he was telling the truth?

Mr Singh: Correct, sir.

Adv Vanara: This guarantee, was it a performance guarantee or what that you prepared?

Mr Singh: It was a form of a performance guarantee that Eskom had the ability to perform, meaning we had the ability to pay R1.6 billion on the fulfillment of the suspensive conditions.

Adv Vanara: But is it not true that in prepayments or pre-purchases, it is the company that delivers the coal that must give guarantees?

Mr Singh: I think in this case, sir, the difference was Eskom had to perform by prepaying R1.6 billion in cash. That is what the Board approved. In return for that, Tegeta would supply coal for a year or whatever the terms of the contract was. But because the Board approved a payment of R1.6 billion for the purchase of coal from Tegeta, when the draft contract was prepared, the draft contract had suspensive conditions like Competition Commission, DMR approval, and so on and so forth. That would have meant that I would have to pay R1.6 billion today and the contract would only become effective when those conditions would have been fulfilled which obviously is a length of time. In terms of the conditions, we gave them until the 31 March for those conditions to be fulfilled. In order to give comfort to Tegeta that we had the ability when those suspensive conditions were fulfilled to pay R1.6 billion, instead of paying R1.6 billion and being at risk for the fulfillment of those suspensive conditions, the guarantee was issued in place. So we didn’t have to pay R1.6 billion and not have an effective contract.

Adv Vanara: That is what you define as this legal risk that has been correctly identified by the lawyer. Is that correct?

Mr Singh: It is correct.

Adv Vanara: And that comes after the meeting of the Board. Correct?

Mr Singh: That is correct.

Adv Vanara: So the intention from yourself and Mr Koko when you approached the Board was to get R1.6 billion in cash. Is that correct?

Mr Singh: That was the intention behind the submission.

Adv Vanara: On the basis that it is a prepayment arrangement. Is that correct?

Mr Singh: That is correct.

Adv Vanara: In a prepayment arrangement, shouldn’t there be security furnished by the recipient of the prepayment?

Mr Singh: That is correct. In the contract that was then signed, I think the security that was provided at the time was inventory.

Adv Vanara: When you, Mr Anoj Singh, and Mr Koko went to persuade the Board to advance R1.6 billion in cash to Tegeta knowing there has to be security for that, what was the security you had in mind and why was it not in the submission to the Board?

Mr Singh: I think the submission does make reference to security been obtained via inventory if I recall. I think it is AS-3, page 107, paragraph 2.2.3. It says “counterparty risk will be mitigated by assertion of …”

Adv Vanara: Sorry to interrupt. Can you give me the reference?

Mr Singh: It is Annexure AS-3, page 107.

Adv Vanara: And what is the document?

Mr Singh: It is a submission to the Board.

Adv Vanara: Where in the submission to the Board?

Mr Singh: Its paragraph 2.2.3.

Mr Singh proceeded to read the submission.

Adv Vanara: At the time when you were preparing this memo, had this cession been done or was it still to be done?

Mr Singh: As I said, the approach that would have been taken in all cases would have been for us to get the approval of the Board and then negotiate for the contract to be put in place as well as a cession to be put in place.

Adv Vanara: Tegeta had to use the money for specific reasons. Is that not so?

Mr Singh: Which transaction?

Adv Vanara: The R1.6 billion. The motivation was that the company they were buying is under business rescue. They needed some cash injection to enable it to bring the company to operations. How did you ensure that the money went to what your motivation said?

Mr Singh: I think firstly, sir, the transaction was never consummated. The R1.6 billion never left Eskom. The reason for that was that the suspensive conditions was not fulfilled by the 31 March and the transaction expired and their guarantee expired. There was no money that went to Tegeta.

Adv Vanara: This is one of the reasons. It is written here in the submission. Go to 3.6.2, it says: “The proceeds of the R1.68 billion prepayment of coal are to be used by OCM to extinguish existing liabilities to ensure the business continues as a going concern, correct?

Mr Singh: Correct.

Adv Vanara: Whilst I take it that was the intention when you wanted to prepay, that guarantee you gave, and do you know what it enabled Tegeta to do?

Mr Singh: No, sir. I am not aware.

Adv Vanara: If Tegeta had gone to raise money to purchase Optimum. In other words, if they go to any bank and say “We have a R1.68 billion guarantee, borrow us money”. Was that within your control?

Mr Singh: That was certainly not within my control, sir. The guarantee that was issued was issued on the basis that it contained the same suspensive conditions as the contract.

Adv Vanara: But a possibility exists if they are a stupid bank and they do advance cash on the basis of that? They will decide whether to take the risk or not.

Mr Singh: That is their risk to take.

Adv Vanara: So the point that I am making is there was a possibility that the guarantee you issued could be used for acquiring a loan for whatever reason.

Mr Singh: A very remote possibility, yes.

Adv Vanara: Chair, that was the last point for me, thank you.

Discussion

Dr Z Luyenge (ANC): The responses we got from Mr Singh are an indication that we are in a quagmire in this country as it relates to the manner in which State Owned Enterprises (SOEs) are managed. Mr Singh, can I ask you as to what salary level you are in at Eskom?

Mr Singh: I think my guaranteed remuneration was R4.6 million. And then there was pension contributions we need to add to that.

Dr Luyenge: Are you aware that you are working for that huge SOE whose ability to sustain itself is actually the cornerstone of the entire country?

Mr Singh: I am aware of that sir.

Dr Luyenge: Are you aware that you are the asset manager of that institution? Are you aware of the fact that all assets that exist in Eskom are actually upon you as to whether Eskom is coming or going in terms of sustaining the economic plight of the country? Are you aware that you are central to that?

Mr Singh: I am aware of that sir.

Dr Luyenge: Can you tell the country if you are very proud of the service that you rendered at Eskom, if all that has been said about you in particular and the role that you have played to ensure that there is stability and order in the management of Eskom finances? Are you proud of being that special person, special official?

Mr Singh: Sir I am indeed proud of what we achieved at Eskom. If we can refer the Committee to a page in the statement, page 33, table 140, you will see that in the 2015/16 financial year we obtained an IBIDA of R32 billion representing a 37.4% increase in that year. In the year 2016/17 we established an IBIDA of R38 billion representing a 14.4% increase and these were on the back of significant cost savings which are also reflected on the table. Cash from operations increased by 36.4% in 15/16, and 23.1% in 2016/17. Liquidity was quite significantly improved where we had funding percentages of 57% and 53% respectively. The energy and availability factor had improved quite significantly to 71% and then 77.3%. Capital delivery had come on stream. Those were some of the highlights we achieved in the two years that I was there sir.

Dr Luyenge: Mr Singh, were you a board member?

Mr Singh: Yes sir.

Dr Luyenge: Were you a CFO?

Mr Singh: I was sir.

Dr Luyenge: Is there any decision making that had taken place that you are supposed to be unaware of because of your centrality of the execution of your duties unless you are not at work?

Mr Singh: Yes there would be a significant number of transactions that I would not be aware of as CFO. For example, procurement transactions that happen are originated by line. Procurement will respond to those requirements. As the Advocate said, procurement will issue the RFPs, RFPs will be received, evaluated and approved through approval processes. We have delegations of authority so to the extent that a transaction falls below a certain level myself or the Chief Executive, or any other member of Exco would not know of it.

Dr Luyenge: The general perception and a hypothetical view in the country is that there is looting of state resources in South Africa and in particular at Eskom as one of the SOEs. Do you belong in that school of thought?

Mr Singh: Honourable member, no I do not. I think I have to the extent that I was allowed, have gone through pains to demonstrate the value that was created through the transactions that we took in each of the cases presented here today.

Dr Luyenge: What grounds of justification can you provide in a situation whereby billions of Rands are paid out to companies that do not have existing contracts, is it normal?

Mr Singh: If you are referring to the McKinsey and Trillian contract, I think from where we sit, there was a contract between Eskom and McKinsey. The contract required for a subcontracting arrangement to exist. That relationship existed with Trillian at the time. The obligation to ensure there was a subcontractor laid with McKinsey and there was work being performed. We undertook through the Oliver Wyman process whether value was derived and we were comfortable at the stage that value was derived. On that basis a liability for payment was accrued. We settled with McKinsey and we settled with Trillian. In terms of a contract not existing, from my perspective, I went through the normal checks and balance relating to legal and internal audit to ensure that value was delivered. Eskom processes and practices allow for subcontractors to be paid directly. That arrangement is called a partnering agreement I am given to understand, and that is the process under which it was settled. McKinsey and Trillian were not the only contractors to be settled like that, there were other examples where contractors were settled directly and I am sure it is a process followed in other SOEs as well.

Dr Luyenge: What caused McKinsey to offer a payback of the R1.6 billion?

Mr Singh: I am not too sure sir. According to the statement that they issued, they were comfortable that work was performed and that a contract existed and was valid between Eskom and McKinsey. I guess from a reputational perspective they have decided that they need to rectify the perception of wrong doing or ‘taintedness’ of that money by offering to pay back that money.

Dr Luyenge: What is it you are not sure of when you are really confirming exactly what McKinsey said to say “I don’t want this money because it is tainted”?

Mr Singh: Well in my view based on where I sit, I don’t see where the money is tainted because if they delivered value, they had a contract, performed the work, benefits were derived by Eskom, then they deserve the money, hence we paid.

Dr Luyenge: There is no sinister kind of showing when one claims that “Even if I am benefitting out of this I cannot be proud of benefitting from an unscrupulous kind of process and the benefit is therefore tainted”.

Mr Singh: I am not for one minute saying that if they have concluded that they believe that the process was tainted and therefore they have to refund the money I think they should. I am certainly not advocating that they should not.

Dr Luyenge: Mr Singh can you confirm whether you issued instructions after becoming the Eskom CFO that all coal contracts have to be submitted to you prior to their conclusion for personal review, if that is the case when did that actually occur and for what purpose?

Mr Singh: I must be honest, I don’t recall issuing such an instruction, and if such an instruction were issued it would be quite a “voluminous” work for me to take at the same time running an organisation as big as Eskom. But there was a period of time where we established a primary energy steering committee which looked at contracts that were in the process of being concluded and we reviewed those contracts from a pricing perspective to understand whether there was comparability in terms of the pricing and so on and so forth. But I don’t think I ever issued an instruction to say every single thing must come to me. I don’t recall that sir.

Dr Luyenge: Entailed in your submission Mr Singh, in an organisation as large and complex as Eskom, it is necessary to place reliance on its various departments or units. Why did you issue such instructions even if you did not issue an instruction, why did you allow a situation whereby you personally before a consideration is made by your subordinates subject to your confirmation if you are happy considering the aspects you have alluded to? Why on receipt of that particular approach you want it to start from you?

Mr Singh: As I alluded to earlier that was not the instruction that I gave that every single transaction must emanate from me. Secondly, the reason why we focused on the primary energy space is because the cost of primary energy was increasing at 18% per annum over the past five years. If you have an 8% tariff increase only from NERSA and your primary energy is increasing by 18% per annum, you are left with a significant shortfall in terms of the cash that is available to sustain the business. So one of the areas we needed to focus on quite significantly was cost of coal and secondly the use of diesel. And that the reason why we started with the primary energy steering committee. The objective of the steering committee was not to take over the functions of the managers in the primary energy space, it was to review what they were doing and to understand the levers available for us to control the cost of coal. And that we did at a macro level. It was not a transaction by transaction level.

Dr Luyenge: Would you be that surprised if there is evidence confirming that you caused substantial delays to Eskom’s procurement of coal from non-Gupta associates by delaying your reviews that you referred to of Eskom’s prospective coal contracts?

Mr Singh: I think there was delays in all contracts. At this point in time when we were looking at these transactions for potential savings associated with the numbers that I have alluded to. That was the only reason sir.

Dr Luyenge: So if there is evidence that speaks to that would you be surprised?

Mr Singh: Sir as I said there was delays. And in terms of the contracts given the fact that we had undertaken this new process so yes there should be evidence to suggest that we delayed some of these contracts.

Dr Luyenge: Was that not deliberate in order to ensure that there are these Gupta related companies?

Mr Singh: Certainly from my perspective they were not deliberate. I can categorically assure you of that. The main reason for us to review these contracts was to primarily ensure we were resting the spiraling increase in the cost of coal.

Dr Luyenge: Are you aware of any coal delivered by Tegeta or any other Gupta related company that was out of specification?

Mr Singh: Sir that would be within the realm of the primary energy space and the generation space. However, I am aware through media articles or stuff that was happening in the media that Tegeta was at some point in time delivering out of spec coal and were suspended for a period of time and then reinstated. But I think that happened before I was there. As I mentioned, Just Coal was delivering out of spec coal. The Optimum transaction for example was out of spec coal in terms of the penalty that we discussed. Those are the three that I am aware of. The other details I would assume that the operations guys are more close to that.

Dr Luyenge: How did Eskom deal with that issue?

Mr Singh: In terms of the Just Coal contract, Eskom cancelled the contract in terms of the Tegeta supply that was out of spec as in understand it. Their supply was suspended. As I said this was before my time so I am speaking on information that has come to me over a period of time. I think the contract was suspended. There was a review that was undertaken and I think their supply was then reinstated. On the Optimum supply, I think we have dealt with that in terms of what happened.

Dr Luyenge: In your written testimony you claim that you only became concerned about Eskom’s exposure to the significant financial risk under the R1.6 billion prepayment agreement once Ms Daniels presented you with a copy of the draft agreement. You also claim that a significant financial risk was posed by the fact that the prepayment was approved in December 2015 and that the coal supply agreement would only become effective in March 2016. Then which coal supply agreement only became effective in March 2016?

Mr Singh: It would have been the same coal supply agreement with the prepayment of R1.6 billion. However, the same contract for the prepurchase of coal contained suspensive conditions. Those suspensive conditions could have only been fulfilled by the 31st of March 2016 which is the date on which the contract would have become effective. So what that means is we would have paid R1.6 billion on say the 10th of December. The suspensive conditions would have only been fulfilled by the 31st of March. So between the 10th of December and the 31st of March, we would not have been able to take delivery of coal. That is a financial risk we were talking about in that period of time.

Dr Luyenge: Is it proper that the existing coal supply agreement agreed in 1993 would only become appropriate in March 2016?

Mr Singh: No sir. I think the coal agreement for 1993 was a separate agreement which was the R150/ton agreement which resulted in the penalty of R2.1 billion. The R1.6 billion transaction that would have been effective from 31st March was a separate agreement that would have seen Tegeta supply Eskom with R1.6 billion worth of coal over and above the 1993 agreement that you mentioned.

Dr Luyenge: Now, making use of your qualifications and expertise can you explain the difference between a prepayment agreement and a guarantee for a layman’s understanding?

Mr Singh: A prepayment would be where a buyer and a seller agree to deliver certain product but in order for that product to be delivered the buyer agrees to pay for that product upfront. What happened in this case in order for us not to pay for the product upfront is that we agreed to substitute the actual physical payment with a guarantee. A guarantee is a piece of paper that effectively says when you finish off these conditions and you have the ability to deliver the coal I will pay you the R1.6 billion.

Dr Luyenge: Now this kind of approach that let us prepay Tegeta in order for Tegeta to supply us with coal, and definitely coal is coming from a mine, and you are giving that guarantee to Tegeta which doesn’t own a mine. Where is the logic there?

Mr Singh: The logic exists to a certain extent in the fact that Tegeta had secure the coal from OCM already so OCM did not have the ability to say “Let us supply Eskom directly” as I understanding. And as I said in the statement, we acted on guidance from DMR in this case as well.

Dr Luyenge: On the 11th of December Tegeta’s CEO Ravindra Nath sent you an email in which he requested certain amendments to the guarantee. Maybe it is the same guarantee in question. You will have to explain. These include the exclusion of clauses 2.4 on the basis of such a clause being an internal matter for Eskom. Clause 2.4 of the draft guarantee which had been sent by you to Ravindra Nath on the same day required Tegeta to obtain the necessary approval in terms of the PFMA. It is clear from the copy of the final contract which is annexed as AS-6 in your attachments to written submissions that agreed to Ravindra Nath’s requests. Did you question Ravindra Nath’s motive in making such a brazen request, and on what authority did you approve the request and exercise on clause 2.4?

Mr Singh: Sir that was discussed and at the end of the day PFMA and legal issues are not pretty much my domain. They are the domain of Group Legal, and it was decided that we should remove that and we put it as a condition to the contract.

Dr Luyenge: Is it standard practice at Eskom under your watch not to seek approval under the PFMA? If that is the case Mr Singh can you please provide a list of transactions where PFMA approval was not obtained?

Mr Singh: It is certainly not a standard practice for us not to request PFMA approval if they are required. It is always the case that we seek guidance on whether PFMA approvals are required or not. I think in my statement I have covered the PFMA process relating to the R1.6 billion in some detail.

Dr Luyenge: In ones layman understanding of PFMA it requires that prior to Eskom engaging in certain transactions the Eskom board must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transactions to the Minister of Public Enterprises. What steps did you take to ensure compliance with the PFMA in relation to all the prepayment agreements and guarantee entered with Tegeta and other Gupta related companies?

Mr Singh: Sir if I refer you to my statement in this regard, page 23, paragraph 71-79 cover the steps that were taken for us to understand whether PFMA approval was required or not for this transaction. There were a number of people involved in this assessment from the 23rd of February 2016 through to 17th March 2016. At the end of the day the conclusion that was reached was that given that the transaction was never concluded there was no need for us to get approval from the Minister of Public Enterprises. And even if the transaction was consummated according to the emails that are contained in the document we would only need to notify the Minister of Public Enterprises if it was concluded.

Dr Luyenge: Did you ensure at the time that coal supply agreements entered with Tegeta were reported to treasury? Are you very sure even now to say that you made sure treasury was approached an approval was received?

Mr Singh: Certainly from a significance and materiality perspective there are requirements that Eskom needs to comply with to inform the Ministry of Public Enterprises relating to procurement transactions. I am not too sure if there is a requirement for us to engage with National Treasury relating to the significance and materiality framework. However, amendments to the PPPFA Act required Eskom and other SOE to engage with Treasury relating to procurement transactions that met certain requirements, and that is the question that the Advocate posed to me in terms of Eskom engaging with national Treasury for the extension of one of the contracts with Tegeta. So yes I think there are processes that would have allowed for that to be elevated to National Treasury, but not from a significance and materiality framework perspective but from a PPPFA perspective.

Dr Luyenge: You are claiming in your submission that the R1.6 billion guarantee that was provided by Eskom to Tegeta helped mitigate job losses and the potential social economic risk. Were you then concerned about job losses and social risks when OCM was owned by Glencore, if so why did you not assist Glencore or the Business rescue practitioners in the same manner you assisted Tegeta? What is that is special about Tegeta?

Mr Singh: In my view there is nothing special about Tegeta. It was a commercial decision we had undertaken at the time. If you look at the proposals being provided by Glencore, they were not willing to entertain coal at the same price of R150/ton in terms of honouring the agreement they had with Eskom. Also the penalty was an issue for them. I think they were quite keen on the proposal that was taken to the board sometime in 2014 where the purchase price was changed and the penalties were waived.

Dr Luyenge: About the 2016 R659 million prepayment, what has been the commercial value that was benefitted by Eskom through that prepayment to Tegeta?

Mr Singh: I think certainly as I was debating with the Advocate, I think the commercial value was the 3.5% discount that we obtained; the fact that we didn’t need to use diesel to prevent load shedding which was the 5.5% we quoted in the submission. Those were the commercial benefits we derived sir.

Dr Luyenge: Mr Singh are you aware that during a meeting amongst Eskom the Business Rescue Practitioners of OCM and Gupta family related person on the 24th of November 2015 Eskom emphasised that it would not waive its penalty claim in respect of the coal quality under the coal supply agreement?

Mr Singh: I was not at the meeting. I think I am aware of the meeting.

Dr Luyenge: In your view, what role did Eskom's penalty claim play in the sale of OCM share and other subsidiaries to the Gupta linked Tegeta?

Mr Singh: In my view I would think it didn’t actually play a role. I think Eskom had raised penalties on Glencore or OCM in 2012 in order for us to ensure that Eskom’s rights were still preserved. After a period of three years claims prescribed and as I understand it the letter of demand issued to Glencore that triggered the whole series of events was meant to preserve Eskom’s right in terms of being able to claim the R2.1 billion or a portion of the R2.1 billion in penalties.

Dr Luyenge: I am about to rest my case Chairperson. Lastly Mr Singh, in your responses to the evidence leader and on majority of cases you have indicated that there are many other people that have to answer appropriately in as far as you are concerned. But I want to raise a concern that says as a CFO all other people in that establishment on issues that relate to finances it is your area of specialty. It seems to be an element of maybe undermining the role of Parliament as it relates to you having to account about your activities in Eskom and the activities of Eskom rendering services in a manner that is transparent and equal opportunities existing there being accessible to all, especially South Africans. Seemingly this local content arrangement does not work with Eskom. Of the 40 companies that work in Eskom I am not sure how many you were considering to prepay. Now that you have left, can you indicate?

Mr Singh: I think as outlined in section two of my statement, I think there are a number of transactions that have resulted in prepayments. If you look on the coal side, there were four or five transactions that were done particularly under the 2000 coal mandate. Admittedly so, not to the value of R600 million but they were done. The capital we provide to the cost plus mine for example in my view are no different to a prepayment because we make available the capital upfront and get the coal over the next 10 to 15 years. One such approval that was done while I was there was the R1.8 billion Exxaro capital injection for the Matla mine. If you look at the 2008 mandate Isambane prepayment was done’ Linith was done; Silver Unicorn was done; and obviously Tegeta. This is on page 67. If you look at the cost plus mines, still on page 67, paragraph 46 – there’s about R17.5 billion that needs to be spent on cost plus mines over the next five years. We have spent about R11.3 billion to date on cost plus mines. So these are specifically prepayments in my view that have been made in the coal space. If you look at page 68 paragraph 47. Prepayments made to other companies other than coal are listed on the table there, and this was as the 31st March 2016 and amounts to R3.9 billion. It is for various different objectives.

Ms N Mazzone (DA): Thank you very much Chairperson. Mr Singh I would like to start out by asking you a few quite straightforward and direct questions. Could you tell me when you first Mr Salim Essa?

Mr Singh: As I have stated in my testimony, I can’t quite remember when.

Ms Mazzone: To jolt your memory because this amnesia is becoming problematic. Could you describe what your relationship was with Mr Salim Essa?

Mr Singh: I met with Mr Essa maybe two or three times. It was for short meetings associated with any business opportunities. We never discussed anything relating to Trillian. Not that I can recall, and I should recall because that was relatively recently. And we never discussed any Eskom or Transnet business at all.

Ms Mazzone: That’s a bit strange because you were at Transnet and then Eskom, and you met with them for business related issues. Could you describe to me what kind of business issues?

Mr Singh: I think he was in the IT space at some point in time. I think he discussed that with me. Obviously he discussed some of the consulting opportunities he was looking at. But that was it. I don’t recall any others.

Ms Mazzone: Tell me when you first met Duduzane Zuma.

Mr Singh: I don’t recall meeting Mr Zuma.

Ms Mazzone: So you have never met Duduzane Zuma?

Mr Singh: No.

Ms Mazzone: Have you ever met President Jacob Zuma?

Mr Singh: I had the pleasure of meeting the President once, and it was sometime last year after the State of the Nation Address (SONA) to try and address the impasse related to the renewable energy contracts at Eskom.

Ms Mazzone: And at any time during your tenure as CFO at Eskom did you ever receive instructions that was told was given to you by President Zuma?

Mr Singh: No.

Ms Mazzone: How would you describe your relationship with Minister Lynne Brown?

Mr Singh: Minister Brown and I had I would assume a cordial working relationship. I never called her. She called me when it was necessary to have explanation of certain things and that was it. And I obviously attended scheduled meetings that was called by her.

Ms Mazzone: So “cordial, good working relationship”. Mr Singh, I put it to you that you do have a relationship with at least one Gupta. And that would be Rajesh Gupta who is commonly known as Tony Gupta. It is also in the public domain – a string of emails that connect you directly to Mr Tony Gupta. And as I have said, it is in the public domain, and a copy of these emails have been handed out in Parliament by myself. I am going to need you to concentrate here. I don’t want you to unnecessarily purge yourself because you seem to have forgotten dates, and time, and places. One of the emails in the public domain is an email saint by [email protected]. That email informs the Oberoi Hotel that a one Mr Anoj Singh is booked in at said hotel on the 24th of February. And it requires a pick up from Dubai International Airport from Emirates flight EK766. And you stayed in Dubai for that period of time until first of March. So we are talking five days. Also in the public domain is a series of invoices which you have in your possession because our Evidence Leader Adv Vanara gave you these invoices and they are billed to Sahara Computers. Now, could you explain to me why there is a coincidence that you don’t Sahara was being billed for these invoices, and Ashu at Sahara was making travel arrangements for you to go to Dubai?

Mr Singh: As I responded to Adv Vanara, the only people that I had communicated with regards to my travel arrangements was the travel agent. And how Mr Ashu came to communicate, I am not too sure.

Ms Mazzone: I understand we all have a private life and we are entitled to one. But we are not entitled to a private life when we are under a cloud of state capture and the possible consequences of billions of billions of Rands being looted from our country. Why were you in Dubai for that period of time?

Mr Singh: As I testified to Adv Vanara, I am not sure relating to the 24th to first of March. I am not too sure of that date. It seems to be long for me to be in Dubai for that long, my trips are usually much shorter. And as I indicated to Adv Vanara that some of those trips were business and some were private, and some were to meet with Mr Al-Balushi. So from that perspective it could have been that I was there for that purpose.

Ms Mazzone: And when you were there to meet Mr Al-Balushi, describe who, and what, and why Mr Al- Balushi is.

Mr Singh: Mr Al-Balushi is a business man in the UAE. We met and there were common interests associated with me trying to understand the more workings in the UAE, and he wanted to understand the workings about South Africa and Africa in general, establishment of businesses here, financial business in Dubai, and that’s how we established a relationship.

Ms Mazzone: Now it seems, and you must understand how this looks very strange, you are the CFO of a SOE that had practically the sole monopoly for energy production in South Africa. We’ve just heard you are about in the R4.6 million a year bracket taking into account perks, etc. etc. Outside business dealings from your attention at Eskom, is that not rather problematic because you are discussing business opportunities with this gentleman? If these business opportunities aren’t aligned to Eskom, why are you discussing business opportunities with him?

Mr Singh: Ma’am this was in my private capacity. It was not relating to Eskom in any way, shape, or form, or Transnet.

Ms Mazzone: Mr Singh, Yesterday evening South Africa learned that you resigned from Eskom. Could you tell me why you resigned?

Mr Singh: It followed the announcements over the weekend. I believe that I was appointed at the behest of the government of South Africa. I represent them. And over the weekend there was a requirement for me to be removed immediately from my position and I ceded to that request. I lodged my resignation with the company and it was accepted.

Ms Mazzone: Do you have a copy of your resignation letter with you?

Mr Singh: Not on me.

Ms Mazzone: Do you roughly remember what you wrote in your resignation letter?

Mr Singh: Yes. Basically it said that “I was put on special leave on the 31st of July, subsequently suspended in September. We still await any formal charges following suspension but given the announcements over the weekend we believe it is in the best interest to tender our resignation in terms of our employment contract”. They then responded that we accept that.

Ms Mazzone: You’ve just spoken in the plural, “Our resignation letter”. Who else have you spoken to about resigning at Eskom?

Mr Singh: Our? No.

Ms Mazzone: Yes. Now. You’ve just said “We tended our resignation letter”.

Mr Singh: I mean it was between Hannes and myself that drafted the letter. That’s the reference I made to ours.

Ms Mazzone: So in all of this have you discussed your resignation with Mr Prish Govender?

Mr Singh: Nope.

Ms Mazzone: So no talking to Prish?

Mr Singh nodded in agreement.

Ms Mazzone: Mr Singh let me take you back to the Trillian question. And it’s a question that I asked. I asked this question specifically because I knew the answer before it came to me. Now you’ve just described your relationship with Minister Brown as cordial. I have to tell you, when Minister Brown was before our Committee, her description of your relationship was certainly not one that was cordial. And your attorneys and advocates have been in this Committee the whole time and they can confirm this. In actual fact, Minister Brown in Committee and under oath testified that she had been deliberately misled to provide me with the incorrect answer to my question. How would you answer that?

Mr Singh: As I said in my response to Adv Vanara...

Ms Mazzone interrupted Mr Singh.

Ms Mazzone: You don’t have to keep referring to your answer to Adv Vanara because if I was happy with your answer to Adv Vanara I wouldn’t be asking a question. We are leveling the plain field here.

Mr Singh: Okay that’s fair. The accusation of misrepresentation by myself emanated when I was on suspension. No one has actually addressed me relating to the purported misrepresentation that I committed. The board has made that submission to the Minister. The Minister has made that submission to you. In my responses I explained my understanding of that misrepresentation and where it could have come from and as I have said, the responses we gave were factually correct to the questions that were asked. The ancillary information that was then removed may have created the confusion.

Ms Mazzone: Why do you think that ancillary information was removed? That sounds to me A) either a complete conspiracy theory B) a duck of accountability or C) someone who really had it in for you.

Mr Singh: I would think that the removal was basically to ensure the response the specific to the question as we have always done in the past. At that time I didn’t think it was anything sinister – the removal of the information – and as I said, I am not too sure who actually decided the information must be removed.

Ms Mazzone: Alright, so this information is removed because you want to make it as easy for me as possible I am assuming to give me a simple and direct answer. And in the removal of the information the truth is misconstrued and what you think was a truth now becomes an untruth. How do we deal with a situation now?

Mr Singh: I think again, in hindsight maybe we should not remove the information. That could have provided as Adv Vanara correctly pointed out it was not my response. It was a response of the Minister to parliament, and maybe we should have given her the benefit of that information.

Ms Mazzone: So in the answering of this question, you have told us McKinsey dealt with Trillian. You had very little to do with it. You were just dealing with McKinsey, you were paying McKinsey, and they were giving you a service. What they did behind closed doors was their business. They carried on, you carried on. You just made sure they gave you a service, and you gave them the money for the service. But what is also in the public domain are board meetings of Eskom on the eighth of December 2015 in which you and Mr Matshela Koko approached the board and absolutely encouraged a relationship to develop between Trillian. Do you remember this board meeting, and maybe to jolt your memory, Trillian Management Consulting (TMC) which is a 100% subsidiary of Trillian, maybe that will help jolt your memory?

Mr Singh: I don’t recall attending the BTC of the 8th of December if that’s what you’re referring to. I can only assume that the submission that was presented to the BTC was the motivation for the corporate plan that needed to be concluded.

Ms Mazzone: So at this point, you must acknowledge that you knew that Eskom was in some way engaging with Trillian.

Mr Singh: I have never denied that Eskom was engaging with Trillian.

Ms Mazzone: Again then I must ask you, why would Minister Brown in a very simple question and I am going to read you the question; “Have any contracts of engagement been concluded between Eskom and Trillian, and what are the costs involved in each case?” The response was a very neat and very simple; “None. And Not Applicable”. Now I put it to you that you would have to be incredibly devious and very sinister motivation to think that because you were working with McKinsey who had subcontracted Trillian that Trillian was not involved in the mix because a subcontractor works for the subcontractor you’re paying for. The answer should have been quite simple.

Mr Singh: I think again, we answered the question directly and precisely in terms of the question that was posed. So from that perspective I think it was quite transparent in terms of the question that was asked and the response that was provided.

Ms Mazzone: Mr Singh I am going to respectfully disagree with you. I am going to tell you that when you are the CFO of a major corporation you tell the Minister of Public Enterprises that a deal that’s going to go over a billion Rand is going to be concluded by an international consultancy firm and that a company called Trillian is been used as their front company to make sure there is BEE compliance. I think you have a duty both ethically and in terms of the PFMA to inform the board and the Minister, and certainly a Member of Parliament when that question is asked.

Mr Singh: Noted.

Ms Mazzone: You see Chair, it is not as simple as Mr Singh would like to make out. Mr Singh I think you are a technical genius. And I don’t use that term lightly. Every possible loophole has been found. Every possible deviation made to the point that Adv Budlender wrote a report on the goings at Eskom. Are you familiar with the report?

Mr Singh: I have not read it cover to cover but I am aware of it.

Ms Mazzone: Let me tell you, and you might want to write this down so you can read it later. Paragraph 67.1 of the Budlender report is revealed that TMC submitted an invoice with reference number: ESK2016/MC01 to you Mr Singh on the 14th of April 2016. And now I want to specifically mention the amount of money because it is obscene. R30 666 000.00 for professional fees. But that’s not where it ends. The Budlender report continues. In paragraph 67.2 and 67.3 it goes on to say that on the 10th of August 2016 two invoices and I’ll give you their reference; ESK2016/MC02 and ESK2016/MC03 for the amounts of R122 280 000.00 and R113 265 000.00 were both submitted by Mr Govender. This is what astounds me, both were paid on the 13th of August. In a company like Eskom that is not renowned for turning around an invoice fast, that’s pretty impressive. 10th of August and its paid on the 13th of August. Now where the huge problem and huge dilemma comes in is that on the 18th of May an article was published in The New Age (TNA) newspaper and it was entitled ‘Eskom denies contract with Trillian Capital’. In this article Eskom spokesperson Mr Phasiwe categorically denied that Eskom had any contracts with Trillian Capital and or associated companies. At the point that the statement was made, did you take it upon yourself to correct him because if a CFO doesn’t know about invoices coming in and out of the company amounting to this kind of money with a turnaround of four days is a problem?

Mr Singh: In terms of the turnaround, I think there is a paragraph in my statement that deals with that. I certainly don’t deal with approvals of payments. That is done by Shared Services Centre (SSC). And when I enquired of the Shared Services Manager as to the turnaround of these invoices he had indicated that the motivations that have been provided to him were satisfactory at the time in that the work had been done way back when and due to Eskom approval processes being BTC and reviews by internal audit and so on and so forth that these payments were quite delayed in terms of the expected date on which these needed to be paid. The invoice of the 14th of April – McKinsey was actually paid in December I think it was and this invoice that was then paid in April was only paid in April due to the vendor management process that were been undertaken by Eskom to register Trillian as a vendor on the system. And again, that was sufficient for the Shared Services Manager to process that invoice. I was not aware of the statement that was made by the spokesperson. I am not aware of that article you are referring to. Had I been aware of that I would have certainly corrected him in terms of the statement he had made.

Ms Mazzone: Who would the spokesperson ask, who would he go to and ask “Do we have contracts with Trillian or any subcontractors of Trillian?”

Mr Singh: I think at the time the official response that Eskom had given out at the time was that we certainly didn’t have any contracts with Trillian. I certainly didn’t give out any impression that we didn’t have any payments that were made to Trillian because that would be factually incorrect.

Ms Mazzone: You see Mr Singh, this is the nuance and where I think you are genius because you almost got it right to convince people that Eskom was not contracted to Trillian. But we now know that direct invoices were made from Eskom to Trillian, and direct payments were made from Eskom to Trillian. That means regardless of whether or not you had a physical contract that was signed in front of you, the exchange of money tacitly implied that you had a relationship otherwise why would you be exchanging these amounts of money?

Mr Singh: Certainly I didn’t deny that Eskom had a relationship with Trillian. The relationship that Eskom had was via McKinsey and the work had been undertaken by both McKinsey and Trillian, there was an obligation to pay both McKinsey and Trillian. And that was a settlement process that was undertaken. We did receive permission from McKinsey ton pay Trillian directly. I think it’s in their policy to pay subcontractors directly. There is a process within Eskom that I referred to previously. It is a partnering agreement process that allows for subcontractors to be paid directly. There was never a view that we did not pay Trillian. That would not have been possible to contain.

Ms Mazzone: I think you’ve just hit the nail on the head. “It is impossible to contain” so why give an MP an answer that says “No. And not applicable” because it is not true?

Mr Singh: Again as you say, it is technical because the responses to the question that was posed were correct. The ancillary information would have provided the additional information that would have then allowed the Minister to provide the ancillary information.

Ms Mazzone: That is a very convenient answer Mr Singh and I am not buying it, and I don’t think many other people are buying it either. Mr Singh let me tell you, there’s a rather interesting term of phrase, and it’s a code. That code is used by the mafia. That code is known as ‘Omerta’. It is a code of silence. It is an agreement to not comply with authorities, and it is used to keep syndicates safe, it’s how they look after each other. But by no form of syndicate/form of mafia/form of crime unit has ever managed to hold this code of conduct complete. No one has ever achieved Omerta because someone must always speak because they get spooked or they realise that they were unintentionally brought into a scheme they didn’t know about, or it’s simply the right thing to do. Now you have been watching this Eskom hearing as it has unfolded, and you would have noted that many people have told us some shocking stories. The one common denominator in all of these stories is you. They have come in and systematically described your involvement with state capture, and they have not accepted responsibility solely for things. They have shifted about 70% of the blame on you. When one looks at the PFMA, specifically section 66 of the PFMA, and when one looks at the startling occurrences over the weekend at Eskom, one cannot help but wonder if there’s a reason this Omerta was broken because the silence is broken. It is over. The game is up, the heist has been foiled. And I put it to you that state capture, especially state capture in Eskom which you say you don’t think is a real thing, I am telling you that is a very very real thing and South Africa knows it to be a real thing. One of you colleagues who will be appearing here tomorrow Mr Matshela Koko who was also suspended and then reinstated. He has been involved that have passed a great deal of blame to you. I think personally one of the largest is the Tegeta prepayment, and perhaps one of the fatal mistakes was an over developed sense of overconfidence that allowed a lie to become the most publicly admitted issue ever broadcast on national TV, and that is during a Carte blanche interview where Mr Koko was asked about the prepayment, denied it, and when he was shown evidence he had to admit it was true. That prepayment could not have happened without you, and that denial that constructed story could not have happened without your input because Omerta only works when you are both on the same page and have your stories together. I want your comment on why this prepayment was denied and only accepted as reality when hard evidence was given?

Mr Singh: You are going to have to ask Mr Koko that when he gets here tomorrow but …

Ms Mazzone: It’s funny because he’s going to ask me to ask you.

Mr Singh: As I led evidence, I was not the one that approved the prepayment. The prepayment was approved by BTC on the 11th of April requiring me to do three things which I did and submitted to BTC on the 13th of April that effectively agreed that I then sign the security agreement, and that’s the only thing I signed. The agreement was actually signed by Mr Koko.

Ms Mazzone: Mr Singh it sounds to me like things at Eskom work very differently to other companies. It might not seem like a lot of money to you but R600 million is a huge sum of money. And when you bounce these huge amounts of money up and down, certainly the CFO is consulted, certainly you are asked to look at these things, and certainly no one can make a decision like this alone. Who makes these decisions, how can a decision about a prepayment be made without the CFO’s knowledge, why are they bypassing you?

Mr Singh: That was one of the reasons why I was relatively annoyed when I found out I had to do three things and not knowing about the meeting that happened the night before on the 11th of April. Notwithstanding that given that we needed to get the transaction concluded we buttoned down and got the three things done that we needed to do.

Ms Mazzone: Mr Singh on the 11th of April, because I know you are not remembering dates and you can’t remember if you were at these meetings so I am just going to give you the dates and the information so that we bypass that unnecessary step in the testimony. On the 11th of April 2015 BTC sat in the evening, you were there, and it finalised amongst itself the negotiations for Tegeta. Those board minutes are in the public domain. So there’s no question about them. Also out in the public domain is a letter from Tegeta dated the 11th of April 2015 addressed to Miss Ayanda and it says “Dear Sir, Offer to supply additional coal to Eskom OCM Pty Ltd. And it says kindly refer to the negotiations we had in the captioned matter, blah blah blah”. This email was sent in the morning. The board only met in the evening. That means negotiations happened outside the ambient of the BTC. How do we explain this?

Mr Singh: I do confirm I did not attend the meeting of the 11th of April that happened that evening because I only got to know about the fact that meeting happened the next day when Ms Daniels informed that I had three things to deliver to that same meeting or else I would have heard it from the committee itself. In terms of the letter from Tegeta, I can’t explain that. It was not addressed to me, I am not too sure what the status of that letter is and the negotiations that took place.

Ms Mazzone: So as CFO, you had absolutely no knowledge of negotiations going on with Tegeta, what the results of those negotiations were, you had no input in those negotiations, you had no say in those negotiations, a document was drafted without the CFO seeing it, and agreed to not in your presence, is that what you are telling this Committee?

Mr Singh: For the prepayment of R659 million, that is correct.

Ms Mazzone: Mr Singh in our country negligence is not a defense. I am going to end my questioning for now Chair with one last point; in 2015 you were in Dubai in December and I am going to be perfectly honest with you, and I want you to be perfectly honest with me. As we speak my PAIA (Promotion of Access to Information Act) application is already in at Home Affairs because I want to check border control access in and out of this country specifically by you because I want to make sure this information is true. In August 2015 you are seconded from Transnet to Eskom. In September President Zuma appoints Minister Zwane as Mineral Resources Minister. In December 2015 President Zuma fires the Minister of Finance Nhlanhla Nene. Minister Zwane joins the Gupta’s in Switzerland to finalise the sale of Glencore’s Optimum to Tegeta. Other Gupta allies are in Dubai and these allies are alleged to be you and Mr Koko. There is overwhelming and mounting evidence that you are part of an elaborate scheme to break up chunks of Eskom and sell them to the highest bidder. I am now beyond the point of believing that you did not know about this and that you did not play an active role in this. I have lodged criminal charges against you because I have known too well that you are a technical genius who would come and spin stories here in Parliament. Mr Singh you know these charges are being investigated. I have given over all the documents. We both know what the truth is, and Mr Singh given your testimony here tonight, let me tell you what south Africa thinks; South Africa thinks you have sold us out to the highest bidder, but South Africa has stood up and said “No more!”. This Committee is sitting here and telling you no more. The game is up, and if I were you I would start spilling the truth. No further questions Chair.

The Chairperson: Thank you very much Honourable Mazzone. Honourable Gordhan...

Mr Gordhan: Thank you Chair. Mr Singh, is self-preservation in your case trumping conscience and ethics? In other words you have to survive at any cost including lying and misleading. All of us are getting messages from people who are watching this, I’ll read you one which is about the fifth one I received; “Anoj taking you for fools”. That’s the impression you’re creating amongst the public. You are creating the impression to South Africans and your own family by the way, the mother you referred to amongst others that you will continue to stand here and deny what you are guilty of rather than own up and help the country cleanse itself of corruption. You don’t feel any qualms about that, you don’t think you want to change your tack, you don’t think you have been poorly advised – with due respect to your lawyers – in the face of all the political changes that are happening, how long do you think your story is going to stick?

Mr Singh: With due respect, I think the information that we have presented is factually based and supported by the evidence we have, and that’s all we can say. Yes, and I think the call has come relating to me moving on from Eskom, I have complied with that call and resigned. I attempted to provide this information as well to the law enforcement agencies to cooperate with them.

Mr Gordhan: Nowhere there does it say “I did this” and it is well known as Ms Mazzone was saying, you are at the heart of all of this.

Mr Singh: I think where it was required for me to say that I did this I was happy to say so. As I said before, if I did something wrong and there is a need for me to take accountability I am happy to do so. But where there is clear and unequivocal evidence of it not being in my area of responsibility I have indicated so.

Mr Gordhan: You barely took responsibility for anything. In normal business parlance with an institution like Eskom if you equate it to a corporate he CEO and CFO are the two key people in that entity. Nothing moves even operationally in austerity terms without the CFO being a key participant in that process. For the last six/seven hours all we have heard is “I don’t know, ask so and so, these are the facts, I don’t have any other facts”. You would have been in the job for two and half years and you can’t remember anything.

Mr Singh: The one area that I said was difficult for me to respond to the question was related to the Horong transaction. The rest of the transactions I was asked to prepare, I think I have been able to provide quite sufficient detail in terms of the analysis of the transactions that were requested. In terms of the areas that I said were not in my areas of responsibility related to the legal issues and legal aspects of the transactions. That’s the only area I have deferred to in terms …

Mr Gordhan: I’ll come back to these points in a moment, but let me, I mean you are very familiar I am sure with corporate governance rules and so on but clarify for me, in effect from January 2016 you have been both CFO and the Head of Treasury because Ms Hendry resigned in January 2016 at your behest.

Mr Singh: Yes she did resign…

Mr Gordhan: At your behest.

Mr Singh: Yes. There was a short period of time that Treasury reported to me directly yes.

Mr Gordhan: But directly or otherwise, it still falls within the empire of the CFO?

Mr Singh: Well when Ms Hendry was there it still fell into the CFO’s portfolio.

Mr Gordhan: No no, right now. Prior to your resignation and suspension?

Mr Singh: Let’s put it this way…

Mr Gordhan: It’s part of your portfolio of responsibilities?

Mr Singh: When Ms Hendry was there it was part of the CFO’s portfolio, when she left it was part of the CFO’s portfolio, and it still is part of the CFO’s portfolio.

Mr Gordhan: That’s all I was asking. So you can’t say ask Treasury. Asking Treasury is asking yourself in the mirror.

Mr Singh: I agree.

Mr Gordhan: But the whole evening you have been telling us “Ask Treasury” as if Treasury is some other foreign entity in Dubai. I mean there might as well be a Treasury sitting there, that’s a different matter.

Mr Singh: I think when I said we needed to consult Treasury, it was on the basis that they are the relevant subject matter specialist in that area.

Mr Gordhan: But ultimately if you are the boss of finances in Eskom the buck stops with you as the saying goes, so you can’t say “I don’t know” about major transactions.

Mr Singh: Sir again I would respectfully say that the Horong transaction was the only one where if I said…

Mr Gordhan: No no, we should have kept a checklist here on a board and shown you how many crosses you would have made on the “I don’t knows”. You know what people like you have done is ignore a very strong view that is getting stronger every day that corruption is actually eroding South Africa’s society and South Africa’s economy. Doesn’t it worry you that you are part of that?

Mr Singh: Sir I think corruption is a bad thing. I agree with that. I do not advocate for it…

Mr Gordhan: Bad for others, not for you?

Mr Singh: Sorry?

Mr Gordhan: Bad for others, not for you.

Mr Singh: No no, I don’t advocate it, and I do think that it needs to be rooted out. But what I don’t agree with is that I have been part of corruption.

Mr Gordhan: In fact people have earned South Africa a more recent reputation that we are a terrible nation, which is upsetting I bet 50 million South Africans at the moment if not more. Let’s keep that part of the conscience factor I mentioned earlier on. In terms of good corporate governance section 195 (1) of the Constitution requires that public administration must be governed by democratic values and principles. It goes on to say and I quote “Efficient economic and effective use of resource”. Section 217 of the Constitution requires all of us as public office bearers or operatives in the public domain to actually do the same. All the examples that we have talked about here for bonuses to Trillian for work barely done; the guarantees; the R600 million; more recently you are probably going to say you don’t know but Tegeta’s coal price I believe has been increased from R150 to R400 or thereabout; the quality of coal/abrasiveness as where the limit is 400 has been increased to 600; this is first-hand knowledge I am talking about now. So much for the same criteria applying to every single coal supplier. Do you think in your stay both at Transnet and Eskom that you applied to these parts of the constitution?

Mr Singh: In my view I think we have. In Eskom as well as Transnet there have been robust processes that have been developed relating to PFMA compliance…

Mr Gordhan: That’s where you get R5 billion going to Hong Kong for the robust processes? So it’s a free bonus am I right, to the Guptas and so on, I mean we will call you back for that. But if that’s the robust process you talk about then they are weaker than the blade of grass outside.

Mr Singh: Sir those were the procurement processes…

Mr Gordhan: Of course as CFO you knew nothing about that am I right?

Mr Singh: Of…

Mr Gordhan: You just donated R5 billion of South Africa’s public money?

Mr Singh: The R5 billion I am not aware of sir.

Mr Gordhan: You are not aware? South Africans are aware. For every R50 million locomotive or whatever the amount is, 20% is actually going into an account in Hong Kong but you are not aware of it?

Mr Singh: No sir.

Mr Gordhan: Okay at least we understand what your criteria for robustness is. Now if I put it to you that you have actually been and you have admitted to others that you were a Director at Eskom until you left that you are actually a delinquent Director and you should be charged for that. In terms of the Companies Act, a delinquent Director is somebody who has grossly abused the position of a Director; took personal advantage of information when opportunity contrary to section 76 (2) intends to or by gross negligence inflicted harm upon the company or subsidiary of the company and acted in a manner that amounted to gross negligence, willful misconduct, or breach of trust in relation to the performance of the Directors functions within and duties to the company. You are aware that you are a delinquent Director?

Mr Singh: Sir I dispute that I am a delinquent Director.

Mr Gordhan: Woah okay. Why?

Mr Singh: Because in each of the transactions that we have undertaken we have demonstrated value to the organisation and I don’t recall the other categories you have mentioned, but certainly in most of the transactions we have undertaken here we have demonstrated shareholder value that we have created.

Mr Gordhan: Okay let’s look at the PFMA which has an equivalent set of provisions. Reference has been made to 66 but I will come back to that. Section 52 A and B of the PFMA provides that individuals who are part of an accounting authority, and you’ll know that in SOEs the board is the accounting authority right, may not act in any way inconsistent with the responsibility assigned to accounting authorities in terms of the PFMA. But you have accepted gifts. What is Mr Al-Balushi first name by the way?

Mr Singh: Mohammed.

Mr Gordhan: I was going to show you some pictures to workout which Al-Balushi you’re talking about on google, but let’s just for example take, you have addressed it several times, here’s an email from the Gupta leaks. It says “Greetings from the Oberoi Hotel. It is directed to somebody called Sanjay Grover. Do you know a Sanjay Grover?

Mr Singh: No sir.

Mr Gordhan: Of course you wouldn’t. Then this email from Sanjay Grover dated 26 December 2015 at 13:15 PM. It says forward bills to Mr Anoj Singh and is sent to Ashu Chawla. Then Mr Ashu Chawla’s mail is directed to Mr Tony Gupta, and again it says “Re: Bills for Mr Anoj Singh”, and Mr Gupta’s response is “Okay”. You don’t know anything about this either?

Mr Singh: No sir.

Mr Gordhan: You’ve actually violated section 52 A and B of the PFMA. You should be charged for that. Section 66 you have tried to cover this under the guarantees that you actually gave without any authority. Did you inform Treasury about this, because that’s what section 66 requires?

Mr Singh: No sir.

Mr Gordhan: That’s a clean violation there as well. Then there’s 52 A again. One of my colleagues made reference to Ravindra Nath so I won’t cover that again. Then there’s 54 (2) which states that before a public entity concludes a significant business activity, the accounting authority which is the board which includes you for the public entity must promptly and in writing inform the relevant Treasury of the transaction and submit relevant particulars of the transaction which would include the guarantee of R1.5 billion, the special dispensation that you gave to Tegeta, and also the R1.6 billion deal which involves McKinsey and Trillian as well. And you admit you didn’t inform the Treasury.

Mr Singh: No sir.

Mr Gordhan: Okay. That’s another violation. Then we go to section 51 B of the PFMA. You decided to terminate the coal agreement. And this 51 A requires that the accounting authority of the public entity must act with fidelity, honesty, integrity, and in the best interest of the public entity. And if one actually puts this picture together of Tegeta, Mafube, Exxaro, and the Shenanigans around Arnot, Hendrina, in fact it’s a huge conspiracy to ensure Oakbay gets access to this business, and all of you in the top management and board of Eskom were part of this conspiracy. That’s what I am going to submit to you and you’re going to say no.

Mr Singh: I would agree that we would say no.

Mr Gordhan: No we expect that of you. And the public out there expects that of you too. Uhm, then there’s Chapter six of the PFMA, Section 51 1A (I) which says “An accounting authority for a public entity must ensure that the public entity has and maintains effective, efficient, and transparent systems of financial and risk management, and internal controls, and an appropriate procurement and provisioning system which is fair, equitable, transparent, and cost effective”. These are in fact words used in the relevant chapter in the Constitution itself. All and what we’ve heard and I want to put you that very little cognizance was taken of this in respect of McKinsey/Trillian. You admitted that Trillian was paid directly by the finance department without any contract existing, and similarly there’s a lot of under hand deals that are going down that we don’t even know about. There’s a whole lot of other sections in the PFMA that in terms of the evidence before us you have actually violated as well. I think the Committee will have to make up its mind about how it plans to make recommendations to the relevant prosecuting authorities in terms of this. You made a number of references again in the governance submissions that you made to the BTC. The BTC is a subcommittee of the board. Am I right?

Mr Singh: That’s correct sir.

Mr Gordhan: So it reports its activities to the board?

Mr Singh: That is correct.

Mr Gordhan: So any decisions taken at a BTC level are ultimately either noted, accepted, or amended at a board level.

Mr Singh: I think the minutes of the particular minutes are attached the board meetings.

Mr Gordhan: For their noting?

Mr Singh: Yes for their noting.

Mr Gordhan: So some board member is diligent enough and picks up something for example a violation of the PFMA and brings it to the notice of the board. If it had the right kind of integrity, they would intervene in that sort of situation.

Mr Singh: Yes.

Mr Gordhan: So all your references to the BTC were you say that you didn’t attend this meeting or the other meeting is actually quite irrelevant because a member of the board you have all those minutes as you have just pointed out. So technically you are aware of everything that goes on in the BTC through its minutes whether you were at the meeting or not.

Mr Singh: Subsequent to the event yes.

Mr Gordhan: If it’s a serious again violation and if all things are equal you would act in the right kind of way. In terms of governance Chair, I’ll round up by saying that in fact Mr Singh and people like him should in fact be declared delinquent Directors, should not hold board positions anywhere in any company in South Africa, and have a lot to answer for to the State Capture Commission when Deputy Chief Justice Zondo begins his processes. Let’s move on to the famous family. Did I hear you correctly saying you encountered one of the Gupta brothers in the lobby of the Oberoi Hotel?

Mr Singh: No sir. I said I may have met them in passing in the Oberoi Hotel.

Mr Gordhan: That’s strange because at the time you were at the Oberoi, the one instance which was the 17th to 24th of December 2015, Atul Gupta was there at the time, Varun Gupta was there for part of that time, Tony Gupta was there part of the time, Ronica Ragavan was there, Duduzane Zuma was there, a little bit before you Mr Zwane was there, and then there’s a long list; Mr Van Rooyen, Mr Moyane, Mr Gift Magashule, Mr Thato Magashule, Kim Davids who has been in the news recently, and Mr Mantsha, Mr Koko, and Mr Siyabonga Khama according to information that I have. It must be a very big hotel because you didn’t encounter any of these people in the breakfast room, the dinner room, and massage room because you had massages there according to the bills.

Mr Singh: No sir.

Mr Gordhan: Fascinating. Absolutely fascinating. Now this guarantee of R1.6 billion to Tegeta, just remind us again what was the purpose of this guarantee?

Mr Singh: The purpose of the guarantee was to ensure that we secure the coal from Tegeta during the period that Tegeta required to fulfil the suspensive conditions.

Mr Gordhan: It is quite a coincidence that at the time when you were considering the guarantee, according to Mr Marsden, the business rescue practitioner who appeared before us last year said that the selling price of the OCM was R2.15 billion. Money was found to the tune of R1.55 billion which is very close to the R1.6 billion. Am I right that it came from the Bank of Baroda and that indirectly your guarantee was in effect to the Bank of Baroda? What did you use as collateral for the R1.6 billion guarantee?

Mr Singh: It was backed by cash. It was in the name of Eskom.

Mr Gordhan: The R23 billion that Treasury gave you?

Mr Singh: No. the R1.6 billion sir.

Mr Gordhan: I know, I know. Where did the R1.6 billion come from? It was about the time that the R23 billion was also given by National Treasury am I right?

Mr Singh: I think it was the R10 billion first chance that had come at that time sir.

Mr Gordhan: So the assertion ladies and gentlemen is that it is a funny round tripping. The National Treasury is asked for help, R23 billion is announced in the budget. The first tranche of R10 billion is paid over, part of that R10 billion is used to put in cash of R1.6 billion to the account to generate the guarantee of R1.6 billion. We don’t want to go into the details of the transaction, but then the Bank of Baroda comes to the party, and I am sure we are going to hear about the Bank of Baroda a lot in the near future to offer the R1.6 billion. So you actually assisted not the coal supply, but in fact there was a conspiracy between DMR, yourselves, and others to make sure that OCM changes hands and goes into the Oakbay family so to speak, which is the public impression by the way. What we are then left with is about R600 million and that is politely and euphemistically called “prepayment”. I don’t know what the need for a prepayment is. You are producing coal, you deliver coal, and you get paid for the coal. Prepayment as I understood it is for capital investment is that correct?

Mr Singh: In most cases.

Mr Gordhan: In most cases. So here, what were we paying for? We were actively, consciously, and connivingly assisting Oakbay Resources to purchase this. If you include all the private jets that were used, I think you travelled in one of them?

Mr Singh: No sir.

Mr Gordhan: So you don’t know anything about Bombardier planes do you?

Mr Singh: No sir.

Mr Gordhan: Okay. Uhm let’s come to Trillian. Now at Transnet, who was the head of your BTC of sorts?

Mr Singh: A Board Acquisition and Disposals Committee.

Mr Gordhan: The Chairperson of which was?

Mr Singh: Uhmmm…

Mr Gordhan: It shouldn’t take that long.

Mr Singh: Mr Sharma

Mr Gordhan: And who was a close associate of Mr Sharma?

Mr Singh: I wouldn’t know.

Mr Gordhan: Mr Essa, whom you’ve met on a few occasions.

Mr Singh: Yes sir.

Mr Gordhan: So the Sharma – Essa – Singh axis is quite an interesting one from locomotives to mines, to consulting deals, and I’m sure lots of people will be interested in that relationship as well. How many times have you met Eric Wood?

Mr Singh: Uhm, very often.

Mr Gordhan: To discuss?

Mr Singh: Business related stuff like the stuff that we’ve been discussing.

Mr Gordhan: Many of your people that you work with at Eskom actually said you give instructions continuously. That business that could actually be done by professionals at Eskom must actually go via Trillian so that Trillian can earn some money – putting it in a mild way – from Eskom. Of course you’re going to deny that.

Mr Singh: I categorically deny giving that instruction.

Mr Gordhan: I think the public should know about these things. My last set of questions Chair is around finances. The financials that you read out earlier on were from the 2015/16 financial year where you showed an IBIDA of R32 billion and so on.

Mr Singh: 2015/16 and 2016/17.

Mr Gordhan: So why does Eskom find itself in a liquidity crisis now?

Mr Singh: I think it’s more associated with the issues relating to state capture, corruption, and so on and so forth?

Mr Gordhan: Which are lies anyway, what’s the problem?

Mr Singh: I think it’s more of the issue around perception.

Mr Gordhan: The issue of perception?

Mr Singh: No no, I am not saying that sir. I am saying that the investors have the right to assume that these things are happening.

Mr Gordhan: So you are calling investors fools to believe in perception?

Mr Singh: No. I am saying that…

Mr Gordhan: Is there some basis in fact on which investors base what they say?

Mr Singh: I think we try to present today through this evidence to explain the process we have undertaken through these transactions. I think…

Mr Gordhan: No no no. The question Chair is; is there any basis in fact in the idea or practice of state capture that investors are in fact taking note of, or is it all fiction?

Mr Singh: I think they are taking note of all these things which are happening quite rightly…

Mr Gordhan: In Eskom.

Mr Singh: In Eskom and through the country.

Mr Gordhan: But you just said there’s nothing happening in Eskom.

Mr Singh: No, I said the perception of.

Mr Gordhan: No, that’s why I am asking you. Let’s be clear. You mean the investors which you go on roadshows and meet, I am sure they are all keen to hear your answer about how you evaluate your interactions with them. I have had many myself. Are you saying that those investors don’t know what they are talking about?

Mr Singh: No sir.

Mr Gordhan: Are they believing falsifications about what’s happening in Eskom and that in fact there is no basis to believe that corruption and state capture is a major factor in Eskom?

Mr Singh: No sir. I am not saying that.

Mr Gordhan: Then what are you saying?

Mr Singh: I am saying that they have the right to believe those perceptions.

Mr Gordhan: Are there facts, not perceptions. Are there facts on which they are engaging?

Mr Singh: I haven’t engaged with them directly on any of these matter sir. The last time I engaged with the investors was probably before July.

Mr Gordhan: In March 2016 I met PIMCO representatives in London and the one thing they said to us clearly; “We might buy other bonds in South Africa, corporate and government. We will never by Eskom bonds”. That’s March 2016. As you call it, that’s fiction? PIMCO doesn’t know what they are talking about?

Mr Singh: No I wouldn’t say that.

Mr Gordhan: The largest bond holder in the world doesn’t know what it’s talking about. Only Anoj Singh knows what he’s talking about. Does PIMCO know what it’s talking about or only Anoj Singh knows what he is talking about?

Mr Singh: I think PIMCO does know what it’s talking about sir.

Mr Gordhan: Thank you. Now how many downgrades have there been in your time at Eskom?

Mr Singh: Two if I recall correctly sir. Well actually one.

Mr Gordhan: One? That’s into double junk territory.

Mr Singh: I think so.

Mr Gordhan: If you go and check it out it will be two. And of course rating agencies don’t know what they are talking about too?

Mr Singh: I wouldn’t say so.

Mr Gordhan: Fitch, S&P, Moody’s? Their matrices are all wrong?

Mr Singh: I wouldn’t say so sir.

Mr Gordhan: Their concerns about corporate governance in Eskom, procurement practices in Eskom, corruption amongst the board and senior management of Eskom unfounded, it is nonsense, they should believe Anoj Singh nothing is happening at Eskom?

Mr Singh: Based on the objective evidence we have provided today sir…

Mr Gordhan: I am not talking about today. Let’s focus generally. You’ve been in Eskom for two and half years. That’s one small file, and you know it as well as I do. Our ratings agencies are basing their ratings on facts and clear understanding of the trajectory, financial, economic, and governance of Eskom or are they dreaming?

Mr Singh: I think on the governance issues they certainly are taking a leaf from media reports and the like…

Mr Gordhan: Only media reports?

Mr Singh: Media reports and interactions with management and so on and so forth.

Mr Gordhan: Which includes you and your former friend Mr Molefe.

Mr Singh: I haven’t interacted with them since July so they wouldn’t have interacted with me relating to these issues.

Mr Gordhan: So do ratings agencies have a basis to be concerned about the goings in Eskom?

Mr Singh: Yes.

Mr Gordhan: Thank you. Why do local banks until Sunday refuse to lend money to Eskom?

Mr Singh: For similar reasons.

Mr Gordhan: And yet you’ve been telling us for the last six hours that everything is fine in Eskom until you were suspended.

Mr Singh: I didn’t say everything was fine in Eskom sir.

Mr Gordhan: No no. Few aberrations. Ja, we understand that. But everything else is fine. Anoj Singh was in total control of the finances. Nothing wrong happened under his watch. Every contract was sound unless he saw it or didn’t see it. That’s your story because everything else is deflected to the Treasury, to the BTC, to memos that went there without you knowing, meetings taking place without you been invited, blame Suzanne Daniels, blame everyone else, but Anoj Singh straight man?

Mr Singh: Sir as I said to you before if there was accountability that needs to be taken I will take it…

Mr Gordhan: Of course you must take accountability. There have been downgrades on your watch; liquidity problems on your watch; you have been part of bringing Eskom down to its knees – the biggest utility on the African country, the fourth or fifth biggest in the world. You’ve been part of the team that brought it to its knees.

Mr Singh: Sir I think I demonstrated that in the two years that we were there we certainly improved the liquidity, improved the profitability…

Mr Gordhan: Improved where? You went up like that and came down very fast.

Mr Singh: Sir coming down was …

Mr Gordhan: Nothing to do with Anoj Singh?

Mr Singh: Well I was suspended on the 31st of July 2017.

Mr Gordhan: That’s a couple of months ago between friends. You know what I mean, not that we are friends. Just in case we misunderstand each other. So we have a liquidity problem, we have lack of confidence from investors, people wouldn’t buy your bonds, and I am sure the Deputy President of the country didn’t encourage the kind of changes we have now seen on the board and so on just because someone had the perception that something was wrong eh? You must be genuinely concerned? But you still as Anoj Singh don’t want to make any concessions to us that X and Y was corrupt in South Africa, I, M, and N in Eskom; that A and B were wrong governance practices; that many of the members of the board from 2011 were in fact captured; no concessions?

Mr Singh: If that was in my direct knowledge I would have responded.

Mr Gordhan: Yhooo! Wow. It’s going to encourage more people to send smses to us now you see. You should get a video of your evidence here today and ask yourself; “Is this really you?” I mean you are literally taking us for fools, and that is not even our view, that I mentioned earlier on until I saw the smses and other messages coming through. What does it mean to have a going concern problem as far as auditors are concerned? Explain to the public that is watching.

Mr Singh: You should be able to meet your liability for the foreseeable future which is in the auditors terms around 18 months.

Mr Gordhan: 18 months?

Mr Singh: Yes sir.

Mr Gordhan: So by the end of this financial year what is required to be declared a going concern from your knowledge?

Mr Singh: I think we would have probably needed to secure at least around 50% of the funding which is around R60 billion a year so I would think around R30 billion.

Mr Gordhan: The immediate seems to be in the area of 10, and by the end ladies and gentlemen of this financial year or the new one – 2018/19 – it’s going to be around R40 billion and yet we say for the last six, seven hours, around your watch everything should actually be awarded a Nobel prize? Thank you Chair.

Mr R Tseli (ANC): Mr Singh you seem to have a short memory and I am sure since we started with this interaction this morning, the events that some of the colleagues spoke about at least give you an idea or reminds you that some of the clauses or sections of the PFMA you have floated is 53 A: “A member of an accounting authority must disclose to the accounting authority an direct or indirect personal business interest that the member of any spouse, partner, or close family member may have in any matter before the accounting authority”. Surely what we have been dealing with since morning suggests that this is one of the sections that have been floated. What’s your take on that?

Mr Singh: Sir if as Adv Vanara had put it, if we take the purported emails at face value then yes there may have been a contravention of that section. But on my version of the emails, invoices, I would suggest that there is no contravention of that section.

Mr Tseli: Earlier on while you were interacting with Adv Vanara about your Dubai visits of which you insisted were not necessarily private visits. Professional visits because a certain Al-Balushi had an interest in terms of some of the business happening in the country. You insisted there’s nothing to do with the Guptas. I’m sure you remember that. My question is, if these visits were professional, and not private, why would a private person pay for these visits?

Mr Singh: Sir, I did distinguish between professional and personal visits. Professional visits in my earlier response related to the work that I had been doing for Eskom and Transnet in terms of visiting ratings agencies as well as investors in the Middle East. The interactions with Mr Al-Balushi would be part of the private visits.

Mr Tseli: So you agree these visits were private?

Mr Singh: Yes.

Mr Tseli: It goes back to what I was saying earlier about section 53 A, disclosing to the entity your business interests. Did you do that at some stage?

Mr Singh: No. there was actually no business interests that were consummated. It was actually around discussions, advice, and so forth and so on that we were engaged in.

Mr Tseli: You claim that the R1.6 billion guarantee that was provided by Eskom to Tegeta helped to mitigate job losses and socio-economic risk. Were you concerned about these job losses and socio-economic risk while OCM was owned by Glencore?

Mr Singh: Sir I would assume that the organisation would have been concerned about this. At the time, this transaction happened in December, and I was appointed in August. I am not too sure what the organisation's view was prior to that.

Mr Tseli: I am not talking about the organisation, I am talking about Anoj Singh, the CFO of the SOE.

Mr Singh: Sir we would be concerned for job losses in any company as a SOE because one of the objectives that we have is to ensure we preserve jobs.

Mr Tseli: So why didn’t you assist Glencore or the business rescue practitioner in the same manner you did Tegeta?

Mr Singh: Because as I mentioned before sir, one of the criteria we used was to understand whether Glencore was going to supply coal at the same price or not. And the business rescue practitioners at the time as I recall were not willing to supply coal at R150 per ton. It is one of the reasons why they put the business into business rescue, because it was not profitable.

Mr Tseli: In your testimony you admit that Eskom paid Trillian R495 million since 2016. Do you admit that the money needs to be recovered somehow from Trillian and McKinsey?

Mr Singh: Sir as I alluded to earlier in my testimony, work was done, the amounts were accrued in terms of the contract. The amounts needed to be paid. How Eskom go about trying to recover the money from McKinsey and Trillian as this stage I am not too sure. But maybe a legal person will be able to provide you with a fuller analysis on that question.

Mr Tseli: When we interacted with McKinsey sometime last year, they indicated that they are ready to pay back the money. What’s your take on that?

Mr Singh: As I alluded to earlier, if McKinsey is of the view they need to pay back the money, they should do so.

Mr Tseli: But you agree?

Mr Singh: Agree with?

Mr Tseli: That Eskom did not derive value for money with all these monies as I have indicated; R495 million. We are not talking about thousands – R495 million.

Mr Singh: Sir the statement that I have provided goes into some level of detail to explain how Eskom derived value through the MSA with McKinsey, so I do not agree that there was no value derived.

Mr Tseli: The medium term coal mandate that you spoke about earlier that you used to negotiate and conclude the contracts. Can you talk more about this medium term coal mandate?

Mr Singh: It is a mandate that was adopted by the board in 2008. It was adopted post the coal crisis – you will recall that there was a shortage of coal in 2008 - and the reason for that shortage was as I understand it, there was a number of coal contracts that came up for renewal at the same time, as well as the fact that the export price of coal was quite high. So local suppliers were favoring exporting coal rather than supplying Eskom coal locally. That was one of the reasons that prompted the DPE at the time to try and classify coal as a strategic resource.

Mr Tseli: If you were the CFO then because this medium term coal mandate was agreed upon by the board sometime in August 2008 before you arrived. If you were the CFO then, would you have advised the company to go the route of this mandate where more than R100 million contracts can be awarded to a company without having gone the tender route?

Mr Singh: I think there would have been a need for the organisation to put in some measure to stabilise the organisation post the coal crisis. I think one of the things that we would have done was to terminate the 2008 coal mandate earlier once the crisis was overcome if you want to call it that. I think the board in its wisdom terminated the 2008 coal mandate in September 2017 I think it was.

Mr Tseli: So you still don’t see anything wrong with this mandate where over R100 million contracts can be awarded to companies without going the tender route, so there’s nothing wrong?

Mr Singh: I did say that there is something wrong with it, and that is why the board terminated the mandate in 2017. What I did say was in 2008 there was a coal crisis, and there could have been a need for the 2008 mandate to be put in place to alleviate the crisis. But post, maybe in 2010 or 2012 for example, the 2008 mandate should have been reviewed and a new mandate put in place. I would respond and say yes there was a problem with the mandate and it should have been reviewed earlier rather than in 2017.

Mr Tseli: Let’s go back to your Dubai visits. Since you became CFO, how many times have you been there?

Mr Singh: CFO of Eskom or Transnet?

Mr Tseli: CFO of Eskom.

Mr Singh: As I said earlier, I have been there a number of times. I can’t recall the number of times that I have been there.

Mr Tseli: On private visits?

Mr Singh: Private or business.

Mr Tseli: Okay. As much as you have indicated, you don’t even recall meeting the Gupta’s there at any given stage?

Mr Singh: As I said, in passing I did meet them, but I did not have any formal meeting with them at any stage.

Mr Tseli: I want to conclude Chair. But I must equally indicate my disappointment. Earlier on some of the Honourable members have said we have been receiving quite a number of smses from people who thought the former CFO will assist this Committee to probe the floating from procurement processes and also to try and expose acts of corruption in the entity. People are disappointed I must tell you with the manner in which you have been responding to questions we have been posing since morning. But nevertheless it is up to us to see how best we conclude this particular matter. But I must indicate that really we are disappointed like the rest of people sending us smses. Thanks Chair.

Mr S Swart (ACDP): You said “I can go on record to say I have not received a bribe of any sort or taken a bribe from anybody. I think as it relates to the gifts, I will be submitting a tell all document so let’s just wait for that and we will see where that lands up”. You have also explained that that document is the submission, but there’s no mention in that submission of any gifts you might have received?

Mr Singh: I think the question that was posed at the time by the journalist referred to the trips as gifts. I think that was the context to which that question was asked.

Mr Swart: And you still deny that any of those trips were paid by any Gupta related person, or Sahara or anything like that notwithstanding the invoices that have been shown to you, you still deny that?

Mr Singh: Yes sir.

Mr Swart: Now our standard of proof here is a balance of probabilities that’s your word against all those other invoices. Why should we believe you? You understand the problem that we’ve got when it gets to credibility, where it places you, and overwhelming amount of evidence that is building around you, and that is why I plead with you like Mr Gordhan pleaded with you to give us a full explanation. You see it is very clear to me, and I have done a study of the Transnet documents as well and the involvement of yourself, Mr Molefe in assisting Gupta related companies – Mr Essa, and we will get to that in the subsequent Transnet inquiry. But then we see Mr Molefe going across to Eskom after the previous CFO Ms Molefe seemed to be an obstruction. For example, failing to sign the TNA Breakfast contract, and she was fired. A while later we have Mr Molefe going across as the CEO and subsequently you go as the next CFO. And the pattern that is developing is of the whole process of facilitating Tegeta, facilitating the TNA, and also facilitating the whole narrative of state capture. You obviously deny that. What I have to put to you as others have is that there is overwhelming evidence in the public domain and that you are going to have face in this forum and other forums. Are you defending the Helen Suzman Foundation court case against you in your personal capacity, have you file a notice of opposition?

Mr Singh: Yes we will defend that.

Mr Swart: And you have noticed that the Minister of Finance and National Treasury is supporting that application. Do you not see that the cards are falling as Mr Gordhan indicated, do you still stick to your version, and it’s very elaborate and there is a lot of documentation there that nothing untoward was done under your watch whether by omission or commission?

Mr Singh: Sir I can only speak to the evidence that is before us, and that is why I relate today.

Mr Swart: Okay let me take you through the documentation. When Mr Molefe arrived at Eskom, at that stage OCM was negotiating on the hardship clause relating to Hendrina. There was progress made on that regard. He confirmed in his evidence that the request for revised Hendrina coal supply was being favorably considered by Eskom before his appointment. Suddenly that is then stopped by Mr Molefe. He might have had good reasons, but again it plays into the narrative of him wanting to benefit Tegeta, and that was the finding of the Public Protector (PP). You recall that because you made a representation to the PP. the PP said Eskom bent over backwards to accommodate Tegeta. Do you still believe that Eskom did nothing to benefit Tegeta unfairly?

Mr Singh: In terms of policies and process that we needed to comply with, we have complied with the policies and processes.

Mr Swart: On the first of July 2015, so we understand that OCM was having financial difficulties. July 2015, OCM secures additional funding from Glencore to enable it to continue supplying Eskom. Suddenly there’s a problem because the plan to get Tegeta to take over is going to fail because OCM now has its own funding and can continue. So what happens on the 16th of July? Eskom serves a notice to claim historical penalties out of the blue, never having mentioned it in the past. Eskom then imposes a penalty. The pressure starts to build on OCM. In August the department suspends the mining operations at OCM with no lawful basis. The pressure increases. The PP says it can only be interpreted that Eskom wished to exert pressure on OCM and OCH. We see the allegation that former board chairperson Mr Ngubane is alleged to have approached Minister Ramatlhodi to suspend the licenses of OCM. Are you aware of that? It is denied by Mr Ngubane, but is there any reason why that former Minister would lie and say he was approached to put more pressure on OCM?

Mr Singh: I am not aware of that sir.

Mr Swart: I’m sure you’ve read of that in the media.

Mr Singh: Yes I have.

Mr Swart: There is a contention. Immediately that Minister is then fired and replaced by Mr Mosebenzi Zwane who then plays a greater role in facilitating the Tegeta deal. Are you aware of that? Organised and facilitated in Switzerland. And you indicated the role that DMR also played on this. Do you see the pressure building up, do you understand the narrative?

Mr Singh: Via the narrative through the media, I am aware of that

Mr Swart: Well I am putting that these are facts, facts that are on affidavits, facts that are being disclosed by media houses, and these are facts that are on affidavits in the court case that you have to answer.

Mr Singh: Firstly in terms of the facts that you mentioned relating to Glencore never being aware of the penalties prior to July I think it is probably disingenuous to conclude that was a fact. I think they were negotiating the revised contract with the board in November, December 2014 which required the penalties to be waived and the price to be increased. So for them to say that they never knew that the penalties existed is…

Mr Swart: I am sure you will have the opportunity to respond in affidavits to that response. All I am sketching is a chronological time frame of how the pressure was increased. What I couldn’t understand was that when the whole deal was put together and the guarantee which we know there were illegalities related to the guarantee such as the approvals that you admitted were not obtained; secondly, the prepayment, why that prepayment? And you say there was no problem with the prepayment of R659 million, do you still believe that there was no problem with that prepayment?

Mr Singh: Firstly, I am not too sure where I admitted that approvals were not obtained.

Mr Swart: The board. It never went to the board – the BTC. Are you correct in that?

Mr Singh: The guarantee?

Mr Swart: No. I am talking about the first guarantee. It was not lodged with the BTC…

Mr Singh: No, with the board. You admitted that.

Mr Swart: But you said for some reason it was not lodged. Is that correct?

Mr Singh: No no, there was a difference. In my statement I said I had the requisite authority from the board to issue the guarantee. Then the question was asked, why it was not reported, and I explained the reasons for that.

Mr Swart: But it should have been?

Mr Singh: It should have been reported.

Mr Swart: Well that is basically what I am saying.

Mr Singh: But there was authority for me to issue the guarantee.

Mr Swart: No, I appreciate that and thank you for that.

Mr Singh: Secondly, in terms of the R659 million whether it was okay or not, I think certainly it followed all the processes and procedure, and it was issued. The R659 million was made in terms of the 2008 coal mandate which allowed for prepayments to occur. I have mentioned other prepayments that were made to cost plus mines and other coal miners under the coal mandate. We got commercial value for it, so again in terms of the policies and processes that we needed to comply with we complied with those policies and processes.

Mr Swart: Why was it paid to Tegeta and not the business rescue practitioners as it should have because at that stage the mine was under the business rescue practitioner and not Tegeta?

Mr Singh: I would hazard to say the business rescue practitioners did not have a bank account of their own.

Mr Swart: No I am sorry, that’s nonsense. You know it was part of the purchase price.

Mr Singh: No no no.

Mr Swart: They laid a complaint with the Hawks. It was never investigated.

Mr Singh: The question that you posed on why not the business rescue practitioners, the business rescue practitioner manages the business on behalf of the owner. They never have bank accounts of their own. It would have to be paid to Optimum.

Mr Swart: They weren’t even aware of the evidence. Let’s just put it that way. Mr Marsden’s evidence was that he was surprised about that payment in total and he then made this statement to the Hawks where he made a criminal complaint. You still say that payment was in order.

Mr Singh: From an Eskom perspective the payment was in order. A contract existed between Tegeta and Eskom. So who was I supposed to pay? If I paid the business rescue practitioner or if I paid OCM, I would exactly in the Trillian/McKinsey problem that we just said is so bad as well.

Mr Swart: Well we differ on that aspect and I’m sure the criminal authorities will be investigating that. Sadly as Mr Marsden indicated it was only about a year later when the Hawks approached him, but there seems to be an increased interest more recently. But one of the things I found very interesting, I couldn’t understand how Tegeta was going to benefit from buying the OCM to provide Hendrina at R150 per ton. How could they, because there was something that had to be done to ensure that they would make a profit. The only way they could do that was to ensure that Eskom canceled or didn’t renew contracts to Arnot so that OCM could then be used for Arnot at an increased price. Do you agree that OCM was then sold to provide coal at Arnot?

Mr Singh: I don’t recall that, but if you say so then we will take it as so.

Mr Swart: But you indicated earlier that you were part of that committee that sat when you arrived there to look at the contracts that were coming to an end, and the contracts that weren’t going to be renewed. And let’s have a look at them if I might remind you; the Exxaro cost plus contract to supply Arnot that came to an end might legitimately have been an expensive one – R1000 – and you considered not extending that. That was on the 31st of December 2015. The second Arnot contract, this time with Mafube. That was a joint venture between Exxaro and Anglo American. That coal was mined just north of the N12 highway and supplied via conveyor belt system to Arnot. The Denton’s report, you remember the Denton’s report? Was that the report that you didn’t want to give out according to Mr Qhoma who gave evidence here – the communications guy. He said you were not prepared to release the Denton’s report. You only wanted to release a redacted version. Is that correct?

Mr Singh: Me personally as in Anoj Singh?

Mr Swart: You working together with the board. But his evidence was he mentioned you by name. Your lawyers were sitting there. I am sure they can vouch for that.

Mr Singh: No sir. I deny that categorically.

Mr Swart: But according to Denton’s report, it shows that in July 2015 Mafube produced the cheapest coal at R132 per ton. Do you remember that or not?

Mr Singh: I do not sir.

Mr Swart: But you were supposed to look into these issues when you did the due diligence on the Tegeta contract because this is one of the contracts that came to an end.

Mr Singh: Sir as I mentioned earlier in my testimony, the operational issues relating to …

Mr Swart: Sorry Mr Singh. We are running late, I am tired. You are the Financial Director you have to accept responsibility. You also indicated that you chaired or sat on this committee that dealt with these contracts. What was the scope of this committee that dealt with the ending of these contracts? You would get operational people that would come and report to you, but you had to take those decisions yourself.

Mr Singh: The committee that we are talking about was a primary energy steering committee. It was established way after the transactions you mentioned currently about Exxaro and so forth. It was established in early 2016 so it would not have had sight of all the contracts that you’ve mentioned. Again I am standing to correction but I think so.

Mr Swart: I’ll give you the benefit of the doubt in as far as that committee is concerned. But the point I want to make is, the Mafube contract with the conveyor belt system to the Arnot power station had been operating since 2004 and had delivered 1.4 million tons per year to Arnot. The contract was to go on until the end of 2023. The Exxaro spokesman Mr Mzila Mthenjane said “The contract came to an end. Eskom’s decision to terminate the contract without reason in December 2015”. Everything happened in December 2015. That’s the answer I was looking for because that contract should have run on. Suddenly there’s an emergency at Arnot – emergency supplies – you can deviate from the contract provisions. You can get Optimum coal at a much increased price to go to Arnot. And that’s what happened because at the end of January 2016 30 ton coal trucks were running from OCM to Arnot. And that is where Tegeta got the increase. And instead of getting R150 per ton for Hendrina, they were suddenly getting R420 odd for supplying Optimum coal to Arnot. That is one of the reason the PP said Eskom bent over backwards to accommodate Tegeta, and you don’t seem to grasp. You’ve got a lot of documentation, I went through it and I am grateful but you only tell half the story because there is another side of which you could say was the operational people or you had no knowledge of it. Remember in terms of the Companies Act you have to accept fiduciary duty, and you’re not just a normal Director, you are a CFO. And let me just remind you, Section 76 – Standards of Directors conduct – that you are to act in good faith and for a good purpose in the best interest of the company with a degree of care, skill, or diligence that may be expected of a person having the general knowledge and skill of that Director. That means you Mr Singh, you as a Chartered Accountant, not a normal person. You have a higher standard that is expected of you and we – this Committee – would submit to you that you failed dismally and we see the developments and we see that you tried to portray that Eskom had improved on your watch, but it’s just flies on everything and the evidence that we’ve heard. Take the Trillian contract, we had the Trillian people coming here and telling us the work was not necessary. You must have read that evidence. They said they were upset. They said Eskom could have done that work themselves. The G9 Forensics investigation in Trillian – “Trillian became the illegitimate beneficiary of funds on the back of a turnaround project which McKinsey was supposed and contracted to undertake”. This is the G9 Forensics investigation, are you aware of it, you might not have read it?

Mr Singh: I am aware of it.

Mr Swart: Let’s just see what their conclusion is. “It is our considered opinion that in respect of whether Trillian provided the services or not. Mr Anoj Singh was in direct contravention of several fundamental tenets of the Eskom procurement policy”. That is directly against you.

Mr Singh: Then I would respectfully submit as well that are you aware of the fact that G9 has retracted that report?

Mr Swart: Well that adds to the evidence that is against you. In addition you’ve got the Trillian people coming here and telling us that the work was not necessary and in fact saying that the R600 million paid by Eskom to Trillian should be repaid. Did you follow that evidenced at all?

Mr Singh: The only curious comments that I have to make relating to the evidence by the Trillian employees is that they were part and parcel of a programme that was deployed within Eskom and during the period of their servicing Eskom, none of them saw fit to report to the steering committee that oversaw their work that one; they are attending Eskom every day and not doing anything. They did not bother to inform myself or the Group Executives that they were reporting to. They were actually at Eskom everyday just coming and eating, and then going home because that’s what it amounts to. I find that very hard to believe and it’s actually curious. They were a number of Eskom employees if you look at the entire MSA – there were 150 odd Eskom employees that were deployed across all the work streams that were undertaken by McKinsey and Trillian. None of those individuals came to me and said “Trillian is here and they are not doing anything”. So on the objective evidence that was before me, and in my own personal interactions, as I said to you before as it is quoted in my evidence, the funding plan for the 15/16 corporate plan was two pages. How do you execute a borrowing programme in excess of R200 billion with a borrowing plan of two pages?

Mr Swart: I understand that and I accept what you’re saying, but we also have Ms Bianca Goodson that came and indicate that she would sit with Mr Matshela Koko and would speak to him and express her frustrations at the supply development programme of Trillian that there was nothing happening, and McKinsey would say “You are getting your cut, don’t complain” and that put her to tears. Are you saying that is something that should not be looked at?

Mr Singh: No not at all. I think those concerns were raised with us and I think if you look at one of the minutes of the steering committee that was established to manage the project. That was one of the concerns that we raised with McKinsey. I think it was the first or the second steerco that we raised those concerns with McKinsey.

Mr Swart: Can I just ask you now, Mr Gordhan had asked you at length about the financials, and it’s a great concern to us, and I am sure it should be of you as well and all people that are watching is the financial state of Eskom and the risk it poses to our whole economy, the fiscus, and the guarantees, and you indicated that in your term there had been a turnaround, and yes, diesel was used far less and there were some positive aspects. But let us just look some of the financials up till 2017; 85% decline in pre-tax profit, would you agree with that?

Mr Singh: Agreed.

Mr Swart: R1 billion was your pre-tax profit down from R5 billion the previous year. Would you say that is on an asset base that is estimated to be R710 billion. Isn’t that appalling? That is not an improvement, that is actually shocking, it is scandalous in fact.

Mr Singh: Our response to that as explained in the results presentation was that yes it’s a concern in terms of the drop from five to one, but from an Eskom perspective and rating agency perspective, rating agencies are more concerned about cash profits. The difference between five and one is by and large the increase in interest and depreciation. From a depreciation perspective, that’s a no cash cost, also the increase in taxation which was primarily differed taxation so it was not a cash cost. Hence we measure particularly an organisation such as Eskom which is a relatively a capital intensive business on IBIDA which is earnings before interest, taxation, and amortisation which effectively showed increases as well as that IBIDA increase has to be reflected in your cash generated from operations because that then effectively assures that whatever profits you are generating is actually converted to cash. And if you compare the cash generated from IBIDA and the cash generated from operations, they relative dovetail.

Mr Swart: Thank you. And that’s a complex explanation which I accept, but at the end of the day, I as a lame person read R1 billion from R5 billion, and that’s what I accept. So to me it’s not an improvement at all. The R20 billion cost saving, was that mainly because of lower sales meant primary energy costs were down and there was less diesel used than coal, is that not the main challenge that your energy costs were down?

Mr Singh: The energy costs were down. In my view the R20 billion cost savings were in 2017, and that was by and large of coal cost savings. In 2015/16 the R17 billion was largely attributable to the reduction in diesel usage. Again you may say its volume related but a small portion of that is volume related. 90% is related to the improvement of the energy availability in 2015/16, and then in 2016/17 the biggest chunk of that is related to the increase in productivity of the cost plus mines.

Mr Swart: The interest costs ballooned by 82% during that year. Is that correct?

Mr Singh: It did increase.

Mr Swart: And it’s massive according to the financial statements. That’s not an achievement. That’s dismal.

Mr Singh: Yes, but there’s a reason for that sir.

Mr Swart: Of course. You are offering reasons for all this, but put it all together and it shows a dismal financial situation.

Mr Singh: Well if you look at my statement, my opening pages basically said that when I got there the financial situation at Eskom was a concern, and it still is a concern. In fact it exacerbated by NERSA’s recent decision of a 5% tariff increase.

Mr Swart: Well I think it has aggravated by the action of the board and management at Eskom. That to me, and don’t blame NERSA because this is a continual problem that NERSA is blamed for not giving a sufficient increase. That increase has to be passed on to the consumer when Eskom is wasting funds. Let’s just look at the irregular expenditure – R3 billion which was up from R348 million the previous year – so don’t blame NERSA when Eskom is wasting the money. Would you agree with that?

Mr Singh: Sir I would to an extent think there is a case to be made relating to irregular and fruitless expenditure, but by and large if you look at an entity as large as Eskom I find it difficult as a finance person to understand how an entity as large as Eskom can survive with a 2.5% increase in one year and a 5% tariff increase in another. By and large over two years if you combine the two years you get a 7% tariff increase. On average that is a 3.5% tariff increase per year when general inflation in the country is about 6%. Notwithstanding the fact that fruitless and wasteful expenditure and all these things need to be looked at, but the reality of the situation is that the interest cost that Eskom is incurring has to be serviced. And the interest cost is a direct function of the new build problem. As the Minister of Finance has said, there needs to be a new funding model for Eskom.

Mr Swart: I agree with you that the whole scenario and model of Eskom has to be reconsidered because demand has changed and everything has changed. What was your reason for contacting President Zuma at the SONA to discuss the state of renewables, why would you not have discussed that with your Minister, what did you expect the President to do?

Mr Singh: We did not contact the President…

Mr Swart: I might have misunderstood you, but you indicated that you were asked the question; “Have you ever had a discussion with President Zuma” and you indicated that you had a discussion with him on this issue. So it begs the question, what else did you… you understand that when we are speaking about the involvement of President Zuma, the involvement of the Gupta family, it opens the question that what else did you discuss with President Zuma?

Mr Singh: As I mentioned before, I did not request the meeting, I was requested to attend the meeting which I did. I provided my input and that was it.

Mr Swart: I seem to miss that evidence, was it at Parliament, at the SONA?

Mr Singh: No. I said following the SONA where the President had announced that Eskom would be signing the power purchase agreement with some of the Independent Power Producers (IPPs) Eskom still was reluctant to sign the power purchase agreement. The Minister of Energy, the Minister of Public Enterprises engaged, we engaged both of them. I am not too sure whether it was the Minister of Energy or the Minister of Public Enterprises that arranged a meeting with the President, and we then went to brief the President around Eskom’s problems relating to the signing of the power purchase agreements.

Mr Swart: Was Minister Lynne Brown aware of that discussion?

Mr Singh: I think Minister Brown and Minister Joemat-Pietersen were actually present at that meeting.

Mr Swart: Because we’ve got other evidence of previous board chairman Mr Zola Tsotsi being summoned to President Zuma’s house in Durban and given certain instructions. You might have heard of that evidence as well. Did that ever happen to you?

Mr Singh: No.

Mr Swart: To anyone you are aware of?

Mr Singh: No.

Mr Swart: You indicated in the questioning by journalists in quite a dismissive fashion. You used the word “Soap Opera-fixation”. What did you mean by that? It seems that all this evidence that is in the public domain, the Gupta leaks it is all fiction in your mind. Is that what you say?

Mr Singh: No. I think the comment was made relating to the specific allegations that were being levied against myself relating to Trillian-McKinsey transaction, the guarantee, the prepayment, the G9 report, the Oliver Wyman report, and all of these other media reports that sensationalized the whole issue compared to the evidence we provided today.

Mr Swart: But you haven’t provided all those reports in your evidence.

Mr Singh: Well…

Mr Swart: Are you referring to all those reports as fiction? Those media reports were based on those reports.

Mr Singh: As I am saying, if you look at the G9 report for example, it was issued but as I understand it I think it has been withdrawn if you want to call it that. It was issued for one purpose and was used for another purpose completely. That is the context in which we made the comment. What we are saying is if you look at what perception the media is creating versus what the paper trail is suggesting is that there is a disjuncture between the two.

Mr Swart: National Treasury recommended a forensic audit, you appeared before Parliament and there was a whole discussion around the issues and your difference of approach. I don’t know if you were there but the approach of Eskom versus National Treasury was a huge debate about the Tegeta coal contracts. Were you part of those discussions in Parliament?

Mr Singh: I recall attending a Scopa meeting where we were required to speak about the PwC report if I recall correctly. I think that was the only meeting where I was present where National Treasury and Eskom were debating or presenting relating to Tegeta.

Mr Swart: The PWC report had red flagged Tegeta already. That report in an earlier contract, yet that PwC report seems to have been ignored by Eskom when they engaged Tegeta. Are you aware of that?

Mr Singh: If I recall correctly again the first PwC report was done as part of an internal audit review. Internal audit had come to the conclusion that they did not have the technical expertise to undertake this review and therefore outsourced it to PwC, and when the PwC selection was made, it selected Tegeta as well as four other mines. They had raised certain red flags. Management had I think addressed some of them. This PwC report was done way before I got there. I only got to know about the PwC report when National Treasury wrote to us and said “Can we have a copy of this report?” at that stage I engaged with the internal audit team and asked them for the report, they submitted the report, and then I engaged with the primary energy team and asked them what they did with all the findings. And that’s when the primary energy team resolved the findings. Subsequent to that we got PwC backing to confirm that the findings that have been fixed by management were indeed fixed.

Mr Swart: One of the issues that was a concern was the standard of coal from the Brakfontein colliery, and you indicated earlier to us that at one stage Mr Koko suspended the delivery of Tegeta Brakfontein coal because it was not up to standard. That had been a problem right from the word go. But then the scientists were suspended. Are you aware of that there is a scientist that is still on suspension – Mr Mark Van der Riet?

Mr Singh: As part of the submissions to Scopa I think we did allude to those facts, but as I said, I think those happened as I just got there. So I was not part and parcel of the actual exercise.

Mr Swart: But it is not in your submission to us today. Those issues relating to Tegeta and the problems with the Brakfontein mine. That history, you didn’t think it necessary to mention to us?

Mr Singh: No not really.

Mr Swart: But you took great pains to explain why it was necessary, and why it was justifiable to have the Tegeta mines involved. You took a lot of trouble to explain that but you didn’t give the full history of the PwC report, the problems with Brakfontein colliery, the fact that Mr Koko himself suspended them for a short while but within five days they were reinstated. And Eskom’s top scientist, Ms Charlotte Ramavhona – another top scientist – they were suspended. Are they still on suspension?

Mr Singh: Sir I am not too sure…

Mr Swart: They are. Let me tell you they are still on suspension. Is that not a concern, maybe its Human Resources, your top scientists have been suspended for casting aspersions on a Gupta related Tegeta coal from Brakfontein?

Mr Singh: Sir I’ll be of limited use to provide a response to that question. Maybe you can pose it to Mr Koko.

Mr Swart: But it adds to the overwhelming evidence of the support that Tegeta got from Eskom, do you not agree?

Mr Singh: I could agree if I was part of the exercise that suspended them and why…

Mr Swart: Are you disputing that they have been suspended?

Mr Singh: No sir I am not. I was the one that told you that they were suspended.

Mr Swart: No. You never told us they were suspended.

Mr Singh: No I did not, you are correct.

Mr Swart: You told us that the license of Brakfontein was suspended.

Mr Singh: The Coal Supply Agreement, yes.

Mr Swart: But why has no one at Eskom told us the status of those two top scientists that are still on suspension? It is almost two years.

Mr Singh: Well in terms of the documentation, it covers the topics that I was requested to cover. In terms of the submission to Scopa that related specifically to the PwC report that was disclosed to Scopa at the time.

Mr Swart: My colleagues are saying that I should wind up so I need to just confirm and say to you that whilst you have assisted me with lengthy documentation, there is far more. There is so much more and it plays into everything that we have suspected from the word go as to the narrative that is put out that the overwhelming and growing body of evidence has been built. It suggest that “President Zuma, certain ministries, and the board and executives of SOC’s and in this case Eskom has been used to benefit the interest of connected individuals and entities, and most prominently the Gupta family. Treasury recommends a forensic audit to establish why Eskom gave and continues to give preferential treatment to Tegeta by not enforcing key conditions of the coal supply contracts, and why Eskom through its former Chief Executive Brian Molefe gave assurances that the Brakfontein colliery supplied and continues to supply coal that is not in accordance with the coal supply agreement despite ample evidence that there was noncompliance”. That is what the scientists have said. That I believe, and support what Mr Gordhan said about the breaches. The PP found serious breaches of the PFMA as set out. In addition to that Mr Singh that clause that I read to you from the Companies Act requires a higher standard from you, the fiduciary duty, you as a Chartered Accountant as I read that to you, and I would agree with Mr Gordhan that an application should be brought against all Directors involved in what has happened at Eskom to have the boards including yourself delinquent Directors.

03:00:09
The Chairperson: Thank you Honourable Swart. Honourable Gungubele.

Mr M Gungubele (ANC): Thank you Honourable Chair. Good evening Mr Singh. Let’s go to December around the guarantee. What was the object of this contract? In articulating that, also share what gave rise to this contract.

Mr Singh: Sir the nexus of the contract emanated from security of supply risk that was identified by the Group Executive Generation Mr Koko relating to OCM going into business rescue.

Mr Gungubele: Security risk?

Mr Singh: Security of supply.

Mr Gungubele: Can you elaborate on that?

Mr Singh: The meaning of security of supply risks Honourable member is the non-availability of coal.

Mr Gungubele: Which station was under threat?

Mr Singh: That was the Hendrina power station.

Mr Gungubele: Who was supplying that station?

Mr Singh: I would think there were a number of mines supplying, but the security…

Mr Gungubele: List them.

Mr Singh: I don’t have them off hand at this stage sir.

Mr Gungubele: Those are the things we are trying to interrogate. Remember this is in your submission so the questions are asked relating to your submission. It is your responsibility to make sure that you are ready to answer all the questions related to what you submit. Security risk, supply to Hendrina power station. I am simply asking an elementary question, who was supplying those?

Mr Singh: With all due respect, I do not know the answer to that question as it is an operational question.

Mr Gungubele: But you came to engage us on that.

Mr Singh: Because I was requested to do so sir.

Mr Gungubele: Okay. I am sure you get my point. You came to engage us on that and you put that as one of your sections on which you want to engage us and you don’t know as we speak which mines were supplying that station. But let’s leave it there. So, what then was the purpose of the contract?

Mr Singh: As I was explaining, it was to mitigate the potential shortage of coal for the Hendrina power station that was identified by the Group Executive Generation. The solution was outlined in a memo from DMR, particularly the Director General that effectively said that they were doing a whole lot of stuff to enable the acquisition by Tegeta of Optimum to be concluded…

Mr Gungubele: Just a point sorry. If you can slowly walk with us. How was this hoped to be achieved? if you can give practical steps so that we are clear security identified, now here is a contract, this is how in a more practical and crude way it was intended to be achieved. Give us specific examples how was this intended to be resolved in specific terms.

Mr Singh: If you look at the intention of the letter of Mr Koko, he identified the risk of OCM being in business rescue and that was one of the things that he highlighted because if they were in business rescue and not supplying coal to Eskom there wouldn’t be supply.

Mr Gungubele: Walk with us now. What method was going to be used to solve that?

Mr Singh: In his mind he needed to raise this with DMR for them to assist in any way they could with the competition commission approval, DMR approvals that are required to conclude the transaction between Tegeta and Glencore for the purchase of Optimum.

Mr Gungubele: How did Tegeta become relevant in this scenario?

Mr Singh: They were the potential purchases of OCM.

Mr Gungubele: Based on what?

Mr Singh: I would assume that the business rescue practitioners had identified them as a potential buyer.

Mr Gungubele: That is exactly the point where I want you to get. So you assume that the business rescue practitioner did what?

Mr Singh: Identify a potential buyer which was Tegeta.

Mr Gungubele: It was identified by business practitioner?

Mr Singh: I would assume so sir.

Mr Gungubele: You are assuming?

Mr Singh: Yes.

Mr Gungubele: Okay. Now I guess we move from the basis that the business rescue practitioner identified Tegeta as a potential buyer. Let’s walk together there. It was a potential buyer of what?

Mr Singh: Of OCM

Mr Gungubele: Remember the heading says: “Prepurchase of coal”. It doesn’t say “Prepurchase of Optimum”. Can you explain that?

Mr Singh: Sir the basis for the transaction was never to purchase optimum. It was to ensure that we prepay Tegeta for supply of coal from Optimum. Tegeta would then use those proceeds to settle the liabilities that existed within OCM to ensure that OCM was a going concern and would come out of business rescue.

Mr Gungubele: So if I am listening to you, you are not talking about Tegeta buying Optimum am I right?

Mr Singh: This transaction is not relating to Tegeta buying Optimum, no.

Mr Gungubele: But how did Tegeta end up buying Optimum in the process?

Mr Singh: One of the things that DMR had identified in their letter was that there was some historic liabilities that needed to be addressed, and in their response they suggested that if Eskom could consider a prepurchase of coal for a period of one year to the value of about R1.6 billion, that would assist the potential buyers to settle these liabilities.

Mr Gungubele: That would assist Optimum buyers?

Mr Singh: Yes.

Mr Gungubele: Who became Optimum buyers in this instance?

Mr Singh: Tegeta.

Mr Gungubele: So Tegeta which was primarily meant to supply coal through Optimum ended up becoming a buyer of Optimum am I correct?

Mr Singh: Yes sir.

Mr Gungubele: And this is based on the proposal by the practitioner am I correct?

Mr Singh: As I understand, it says it was supported by the practitioner.

Mr Gungubele: But that’s what you said by the way. Am I correct?

Mr Singh: Yes sir.

Mr Gungubele: That is according to paragraph 2.2.2 of AS-3 am I correct?

Mr Singh: That’s correct.

Mr Gungubele: What if the practitioner says no such proposals were made, what would be your response?

Mr Singh: I would have to say I have to go with what is written in the documents.

Mr Gungubele: As a CFO, Mr Swart spoke about your fiduciary duties, this according to your submission to Mr Koko is based on a proposal by the practitioner. I want to go on record and say the practitioner will say no such proposal was made by them. And the sought of obligation that was given to you, if you exercised your fiduciary duties as a CFO you would have been able to pick that up. And I am putting as a matter of fact that the practitioner will say no such proposal was made by them. How did you miss that as a CFO?

Mr Singh: As I said, from my perspective you do place reliance on our colleagues. I was not party to…

Mr Gungubele: You are going back Mr Singh. To put your responsibility on the shoulders of other people. I am saying to you… By the way remember I want to, if you disagree with me, as a CFO the position of the finances of this institution – what is potential, negative, or positive – the person who is supposed to be a thought leader there is yourself. Am I correct?

Mr Singh: That is true sir.

Mr Gungubele: So any behavior whenever you look at it as a CFO, you look at it from the point of its financial implications am I correct?

Mr Singh: Yes sir.

Mr Gungubele: So whatever behavior that happens, your expertise is to look at it from its financial impact. Now I am saying, here is an exercise by Mr Koko making a submission basing on the fact that the practitioner made a proposal and I am putting it on record that the practitioner will say that was never done. They made no such proposal. I am saying you as CFO, knowing the financial implication of this, don’t you think if you do your due diligent work you were supposed to discover this because you knew who the practitioner was by that time am I correct?

Mr Singh: I was not aware of the practitioners at the time sir.

Mr Gungubele: Let me check if I understand you. OCM was under rescue am I correct?

Mr Singh: Yes sir.

Mr Gungubele: Did you know that?

Mr Singh: Yes I knew that at the time.

Mr Gungubele: But you didn’t know under whose care?

Mr Singh: No sir.

Mr Gungubele: All that you knew was that they are under rescue?

Mr Singh: Yes sir.

Mr Gungubele: Surely you must agree that is a joke hey. It doesn’t make sense. I have been listening to you, it makes sense to you for the purpose of giving your own answers. And then I agree, I agree with whoever said you are not taking this inquiry serious. It cannot happen that the CFO knows that such an important company like OCM is under rescue, and you don’t know under whose hands that rescue is. But you are also participating in your capacity as a CFO for conclusion of this deal. Remember you said it is yourself who gave an advice on the guarantee in your capacity as the office that you are holding. In doing so you said you come to a view that there is a need for a guarantee for the prepayment. And now all the things are analysed, there are suspensive conditions, and the Koko document is the basis for the whole process right? The only way in my view you could have been able to analyse the risk and actually quote the proposal is when you would have gone through all the necessary details of this document. Amongst others is the proposal by the practitioner, and you don’t know that the practitioner did not know anything about this submission? Let’s go on record, you don’t know. That’s the first disgrace in as far as your work is concerned. At least you admit to that. The next point is that in paragraph 3.4.2 of your AS-3; OCM, BRP, and Koornfontein were supposed to give security am I correct?

Mr Singh: Which paragraph?

Mr Gungubele: When you talk about suspensive conditions amongst other things in the arena of your suspensive conditions, it is in your paragraph 3.3.2. Can you read your history, “Where a security was supposed to be given” Can you go to that?

Mr Singh: Yes 3.4.2.

Mr Gungubele: Do you agree with that?

Mr Singh: Yes.

Mr Gungubele: Good. It was supposed to be given by these institutions. If I say to you they had no knowledge of that, what would be your comment?

03:15:32
Mr Singh: I think this would have been something which would have been negotiated.

Mr Gungubele: I am saying “If I say to you they had no knowledge of that” what would you say?

Mr Singh: I guess it would be news to me as well sir.

Mr Gungubele: Don’t you think in exercise of your due diligence as CFO you were supposed to go to that extent?

Mr Singh: Maybe I should have sir.

Mr Gungubele: Thank you very much. Let’s move again. In other words, under those circumstances it doesn’t make sense to say those institutions would have given commitment to Tegeta. In other words whatever Tegeta would be saying in the process of concluding this deal would not be based on anything if 1) the practitioner never made any proposal, 2) these institutions never made these commitments because they knew nothing about the submission, so whatever Tegeta was saying was not based on anything. What would be your comment?

Mr Singh: Sir I understand and know that there is a practice within Eskom that whenever a coal supply agreement is concluded, there must be 1) evidence of a mine or 2) evidence of a supply agreement.

Mr Gungubele: Mr Singh I just want us to be acquainted. We are talking about Tegeta. You’re dealing with Tegeta based on underlying principles. Amongst other principles of factors is the fact that OCM, BRP, Brakfontein – Whatever that company, let me check that name – would have actually given security. These are elements of the suspensive conditions. Tegeta’s proposal in whatever form they were making, they would have based it on this. And I am saying if as a matter of fact – I am putting it on record – that these companies did not know. So the Tegeta proposal would be baseless from the onset in the long ab initio. What would be your comment?

Mr Singh: As I said there is a standing practice in Eskom that for any coal to be supplied to Eskom you need to have; 1) a coal mine; 2) an agreement in place that allows you to have access to coal.

Mr Gungubele: An agreement between who and who?

Mr Singh: the supplier of the coal and yourself, and then you can own supply to Eskom. So as I was alluding to earlier, it is my view, and Mr Koko can confirm this tomorrow that there existed an agreement between OCM and Tegeta.

Mr Gungubele: Just hold it there. Again I am going to make this submission, if I say to you during that time no sale agreement was signed, what would you say?

Mr Singh: Again I would say that it is my understanding that that is the practice.

Mr Gungubele: Let’s not talk about your understanding and the practice. I am saying if I say to you during that time, no sale agreement was signed, what would be your comment

Mr Singh: I would say i would accept that.

Mr Gungubele: Hey! I am just walking with you on this guarantee. If you look at this 3.1.11; “During this time it can be argued that an update was sent in early December confirming that no deal had been concluded. Do you remember that interaction?

Mr Singh: No sir.

Mr Gungubele: I’ll tell you why I am asking these questions as we move. Now, you see what is interesting in this process Mr Singh, you in your submission accept that “based on your risk analysis”. Now the question is, if you knew none of these things, which areas were you assessing your risk, what then informed the basis for your risk proposal? Don’t you think these were fundamental to be known in your risk analysis?

Mr Singh: The responses that are contained in the statement are from a financial risk perspective so…

Mr Gungubele: No no, I know the question I am asking. I always insist that you must answer the question I am asking. I have raised issues of omission with you here, and I am asking you don’t you think knowledge of these situations that I have shared with you now were critical as elements of your risk analysis?

Mr Singh: Holistic risk analysis, yes I agree, but from a financial risk perspective, no sir.

Mr Gungubele: These things have financial implication. There is no other question. So at least you know you agree. So in whatever proposal of risk you are making, you are proposing them not knowing these. Let’s proceed with you. Now the question that comes is that what was the basis then of Tegeta ending up; 1) qualifying to buy OCM. What were the circumstances in practical and complete terms that made it possible for Tegeta against this background to buy OCM?

Mr Singh: Sir with all due respect I can’t respond to that question because I was not part of the negotiating process between Tegeta and Glencore.

Mr Gungubele: You had no interest?

Mr Singh: I was not part of the negotiation.

Mr Gungubele: No no. You are articulating a set of “not being part”. The question I am asking is that you had no interest?

Mr Singh: From an Eskom perspective, no.

Mr Gungubele: Mr Singh, you said you advised Eskom yourself based on the risk analysis you made to give a guarantee. All the elements of this guarantee involve the state of Tegeta amongst other things if not in the main. The state of Tegeta and the viability of Tegeta naturally cannot be said they were critical for you to give a credible advice to Eskom. Do you agree?

Mr Singh: I think the credible advice we gave was…

Mr Gungubele: No. I am saying “Don’t you think the state of Tegeta, financial and otherwise was critical to know so that the advice you give Eskom is a credible one?

Mr Singh: I would assume so.

Mr Gungubele: Thank you. At least you agree with that. Now, that’s why then I am asking the question; how did they against background I have just explained to you – no sales agreement, no deal concluded in early December, the practitioners not knowing about the proposal by Matshela Koko, and OCM and other relevant companies not knowing that they were supposed to play a role in the suspensive conditions – against that background, how did it then become possible then for Tegeta to buy Optimum?

Mr Singh: I wouldn’t know that because I wasn’t part of the negotiations between Glencore and Tegeta.

Mr Gungubele: You were supposed to know.

Mr Singh: I would respectfully suggest that it was not me because I was not negotiation the transaction between Glencore and Tegeta.

Mr Gungubele: Let’s say for comic sakes – I think someone must say that when he interacts with you – let’s say you were not part of this process, did you not have a role on the financial implications of this exercise?

Mr Singh: I did.

Mr Gungubele: I am saying let’s say for comic purposes because to me for you not to play a role here is comic. Let’s say you had no role in this exercise, you were not involved in this exercise. The question I am asking now is don’t you think you had a role on the financial implications of this exercise?

Mr Singh: Yes I did sir.

Mr Gungubele: So how did you play that role?

Mr Singh: Firstly sir, we assessed the net prism value of the transaction as you can see on the table there it's R238.9 billion. We looked at the financial risks associated with the guarantees; as we mentioned before we had taken security over the assets. Also when we understood that there was a timing risk between the…

Mr Gungubele: But you know what you’re doing now, I insist. We are getting to this story because I was asking you a simple question. Knowing that you had to play a role in the financial implications of this exercise, here is Tegeta ending up buying Optimum. I am asking, what made it possible?

Mr Singh: I wouldn’t know that sir.

Mr Gungubele: You don’t know?

Mr Singh: Yes.

Mr Gungubele: Okay. I think on this guarantee you can agree with me it’s a fuss. You know what interests me? The critical elements that are factors for you to constitute a risk based analysis so as to propose the guarantee you were disconnected to all of them but anyway you made the proposal to them. Fine. That’s how bold you are. I am going to go to the 11th of April, you do make bold proposals. On the 11th of April you were not there at night am I right?

Mr Singh: Yes sir.

Mr Gungubele: On the second you accept the task to do again the risk analysis am I right?

Mr Singh: Sorry on the second?

Mr Gungubele: There’s a resolution and then you are asked to do risk analysis am I correct?

Mr Singh: On the 12th.

Mr Gungubele: To do an analysis of all the implications and viability of everything am I correct?

Mr Singh: I was asked to do a discount, security…

Mr Gungubele: You were asked to do all the things that help to say whether this resolution is a sound resolution am I correct?

Mr Singh: That was not my interpretation of what was asked of me.

Mr Gungubele: What was your interpretation?

Mr Singh: It was to provide a commercial rationale for the transaction which I then provided to the BTC.

Mr Gungubele: Wait, wait, wait. What is the difference between a sound basis for this resolution and commercial rationale, what is the material difference?

Mr Singh: In my view sir, the commercial rationale would be a much narrower assessment of the transaction as it relates to commercial …

Mr Gungubele: Is Eskom not supposed to take resolutions on sound basis?

Mr Singh: Sir I would respectfully submit that Eskom had taken a resolution already.

Mr Gungubele: But what they did intelligently so, they knew you had a role to play. They did not implement the resolution before asking you to do the work you did on the 12th am I right?

Mr Singh: Agreed, and then I reported to them on the 13th.

Mr Gungubele: So the point I am making is that the fact that you were not there when the resolution was taken is no longer an issue because those who took the resolution took it on condition that you were going to do the work you were supposed to do on the 12th so that they can be convinced if indeed the resolution can walk on sound basis. Comment?

Mr Singh: Sir my comment is that the very same people that took the resolution on the 11th were provided with the information that I had gathered on the 12th in a meeting on the 13th which they then accepted.

Mr Gungubele: So you are saying to us on the 12th you were able to … Where is that page with the things you secure?

Mr Singh: Page 26.

Mr Gungubele: Let’s go there. Paragraph 98 am I correct?

Mr Singh: Correct.

Mr Gungubele proceeded to read the paragraph.

Mr Gungubele: All these elements are to constitute as sound basis for the resolution to demonstrate that a mind was applied before this resolution is implemented. Do you agree? You say on the 12th you were able to negotiate 3.5% discount, obtain adequate and appropriate security for the transaction, and provided commercial rationale. In other words you saying to this meeting that all these interfaces you made here, remember none of these people expected to meet you on the 12th. Do you agree?

Mr Singh: I would assume so.

Mr Gungubele: You were going to initiate these interactions based on what you were being asked to do, and you are saying on the 12th you did this work and finished it?

Mr Singh: Yes sir.

Mr Gungubele: Is it possible?

Mr Singh: Yes sir.

Mr Gungubele: Okay. By the way at some stage you were asked to give minutes of these meetings. What was your response?

Mr Singh: I did respond to say there were no minutes of these meetings.

Mr Gungubele: Okay. At least there is something do, you can tell us with whom you negotiated the discount. Is that okay?

Mr Singh: I think it was either Ronica Ragavan…

Mr Gungubele: It can’t be either. You negotiated with somebody. Let’s forget about minutes. You negotiated with somebody and obtained a discount.

Mr Singh: The discount was negotiated by Ms Nteta.

Mr Gungubele: Chair I want us to go on record on that. This is very important. If you cannot tell us the minutes, at least tell us the specific person. So you are saying it’s Ms?

Mr Singh: I think it was Ms Ayanda Nteta.

Mr Gungubele: Do you think? That’s tricky. You were actually involved in a discount negotiation. It is not a supposition. Actually it occurred. You cannot think it was. Tell this meeting who it was. I don’t want you to say who you think it was.

Mr Singh: I can categorically state that the 3.5% discount was agreed to between Eskom and Tegeta which was reduced to a contract signed between Eskom and Tegeta.

Mr Gungubele: Long before the 12th the discount would have been secured. Do you agree?

Mr Singh: No sir.

Mr Gungubele: You are going on record?

Mr Singh: As far as I am concerned yes.

Mr Gungubele: We will have to verify that thank you. At least we agree now that you are saying its Ayanda Nteta who negotiated the discount.

Mr Singh: If I remember correctly yes.

Mr Gungubele: That is on record that is actual?

Mr Singh: If I recall correctly, yes sir.

Mr Gungubele: Number two is you obtained adequate and appropriate security for the transaction. Can you tell us about that activity which led you to secure that?

Mr Singh: I think here we engaged with Tegeta to understand what their net asset value of the organisation was…

Mr Gungubele: Who did you engage with in Tegeta?

Mr Singh: Either Mr Nath or Ms Ragavan.

Mr Gungubele: No no no. You engaged. You. There was no intermediary between you and these people. Who did you engage with to obtain adequate and appropriate security for the transaction?

Mr Singh: I think it was Ms Ronica Ragavan.

Mr Gungubele: Who did you engage?

Mr Singh: Ms Ronica Ragavan.

Mr Gungubele: So remove think because that’s what you did. Am I correct?

Mr Singh: Yes sir.

Mr Gungubele: The third point; provided a commercial rationale for the transaction. How did you do that?

Mr Singh: That was an exercise that we conducted to, well we didn’t actually quantify the benefit when we went to the meeting on the 12th. What I merely did was to say to the committee was to say if we were to burn diesel it would be significantly higher compared to producing energy from coal.

Mr Gungubele: If somebody says the guarantee, and I think Pravin said this if I am correct that the guarantee was maybe for show to Baroda to assist Tegeta to buy Optimum. What would be your comment on that?

Mr Singh: In my response earlier I said it would be quite remote for a bank to take a guarantee that would not be negotiable, not transferable, that is subject to a suspensive condition and provide funding associated with that.

Mr Gungubele: But you cannot deny or accept that?

Mr Singh: I don’t have first-hand knowledge of that sir.

Mr Gungubele: Did you come across any information that on the records of the PP the same R659 million is paid to OCM. Do you know that information?

Mr Singh: Based on the report of the PP, yes.

Mr Gungubele: How did you hear about it?

Mr Singh: On review of the PP report.

Mr Gungubele: What did you do after getting that?

Mr Singh: Nothing sir.

Mr Gungubele: You did not raise eyebrows?

Mr Singh: If you think about the original letter that was sent to us by the department that said…

Mr Gungubele: No no Mr Singh, you did not raise eyebrows?

Mr Singh: Hence I am trying to explain why I didn’t.

Mr Gungubele: Why didn’t you? If you give people R659 million as a prepayment for coal and that money is paid in the account of OCM.

Mr Singh: Firstly you will recall that the PP report came out way after the prepayment was made and the prepayment was settled through the delivery of coal. So from an Eskom perspective, the prepayment was recovered by the full delivery of coal.

Mr Gungubele: Now where I am sitting, on the basis of your risk analysis, the basis of your analysis is hollow based on the questions I have said. Fortunately you have accepted a number of those issues which were key in making a sensible basis for your risk analysis and proposal towards the guarantee. Now, you came to Eskom in which year?

Mr Singh: 2015.

Mr Gungubele: What was the state of finances in Eskom during that time? Because naturally as the CFO you must have done a walk through quickly, maybe in a day or two you looked at the statements, expenditure, financial performance, cash flow, balance sheet, and all those things. Quickly looking at all those things, what was the state of Eskom when you arrived?

Mr Singh: I think as I mentioned in the statement, the financial sustainability of Eskom was significantly in question.

Mr Gungubele: Why was it in question?

Mr Singh: Poor profitability, escalating cost of primary energy, tariff decisions from the regulator being unfavorable, the new build programme being under funded, and liquidity problems existing within Eskom.

Mr Gungubele: You must have put together a plan within Eskom. Did you?

Mr Singh: Yes. That was the plan we put together for the corporate plan.

Mr Gungubele: Where is that plan?

Mr Singh: It does exist within Eskom.

Mr Gungubele: How long will it take for you to share it with the Committee?

Mr Singh: We can provide it. I will just need to source it.

Mr Gungubele: By when? You can download it to your email.

Mr Singh: The corporate plan is not a public document.

Mr Gungubele: Is this public?

Mr Singh: The corporate plan?

Mr Gungubele: Are you saying you can’t share the corporate plan with this Committee?

Mr Singh: No. I am not saying that sir. All I am saying is it is not a document that is on the website because it is not a public document.

Mr Gungubele: Now how can you share it with us?

Mr Singh: I will source from Eskom and make it available.

Mr Gungubele: When can the Committee get it?

Mr Singh: Thursday at the latest.

Mr Gungubele: Why Thursday, why not tomorrow because it is there?

Mr Singh: We will source it tomorrow and provide it to you sir.

Mr Gungubele: Thank you. Tell me, that was 2015 am I right?

Mr Singh: Yes.

Mr Gungubele: 2016, 2017. That’s two years am I correct?

Mr Singh: Yes sir.

Mr Gungubele: What were your achievements?

Mr Singh: I think we have alluded to that in statement which I tabulated…

Mr Gungubele: Those are your achievements?

Mr Singh: Yes sir.

Mr Gungubele: You don’t have to look at them in the statement. It’s only me who needs a record because those are your achievements so tell us.

Mr Singh: Increase in IBIDA, increase in cash generated from operations, fully funded new build programme, improvement in liquidity, significant cost savings, reduction in primary energy costs, reduction in diesel usage, and an increase in the EAF for energy availability factor.

Mr Gungubele: I am not sure if you heard Mr Gordhan. Where we are sitting Eskom is under threat for creditors to recall what is due to them because of the state of Eskom financially. How do you reconcile what you say and with what I have just said now?

Mr Singh: I think the threat of recall of the debts relates to not by and large the financial state of Eskom but related to the governance issues in Eskom itself.

Mr Gungubele: No matter what it is related to, the point I am making is that the person who is supposed to watch the financial performance of Eskom – the head of that is yourself am I correct?

Mr Singh: Yes sir.

Mr Gungubele: And when talking about recall of money which you are supposed to have been watching. The point I am making to you is that do you agree that financially Eskom is worse off now than when you arrived in 2015?

Mr Singh: I would say it’s probably not. I think the steps that government has taken to address the governance concerns of the lenders will go a great way to alleviate the liquidity concerns that currently exists. I think the biggest challenge that Eskom currently faces as I mentioned before is trying to deal with the lower than anticipated tariff increase that they got from NERSA in the last two years.

Mr Gungubele: In your way of thinking, allow me to call it comic again, you believe that since 2015 when you came Eskom is financially better?

Mr Singh: As I said, the only reason I would say…

Mr Gungubele: No no. this is a straight question; better or not?

Mr Singh: I said it's better.

Mr Gungubele: Thank you Chair.

The Chairperson: Thank you Honourable Gungubele. Honourable Nobanda.

Ms G Nobanda (ANC): Thank you Chair. I was beginning to think you don’t want me to ask questions. Mr Singh, when we started, your fist comment – you went to page 32, topic five. As you were going, the first thing you said was “The McKinsey-Trillian relationship was a complex relationship”. Can you explain the complexity of that relationship?

Mr Singh: I think what I meant to say was that it is a relatively simple relationship. It is one of main contractor and subcontractor. I think what complicated it was the issues that emanated subsequent to that associated with payments without contract, whether work was done, whether work was not done, the assertions from the Trillian employees, the assertions from McKinsey, the Budlender report, the G9 report, those are the things I was referring to that created the complexities around the McKinsey-Trillian transaction.

Ms Nobanda: Okay. It is understood that McKinsey reported to you directly in relation to the MSA agreement. Is this true?

Mr Singh: They reported via the steering Committee that was established to manage the implementation of the MSA. I chaired the steering Committee.

Ms Nobanda: So they didn’t report directly to you, and only to you?

Mr Singh: No ma’am.

Ms Nobanda: What role did you play in direct payments by Eskom and Trillian?

Mr Singh: I did not play any role in terms of the direct payments to Eskom, or Trillian to Eskom.

Ms Nobanda: So as the CFO there was no role for you within that transaction?

Mr Singh: As I explained earlier in my testimony, the Eskom procedures and processes do allow for direct payments to subcontractors. If there was a concern that was raised or a concern that needed to be raised or addressed by the CFO I would assume that would have been raised to me that I would have attended to but no concerns were raised to me once these payments were made.

Ms Nobanda: In your view, was the MSA with McKinsey necessary?

Mr Singh: In my view, yes I think it was significantly necessary. I think if you look at some of the achievements that are listed in the last two financial years, a significant portion of them emanated from the MSA itself and the initiatives under the MSA.

Ms Nobanda: So in your view you are saying it was necessary, and it being according to you that the MSA would address the issues that you raised from page 13 to 18?

Mr Singh: In some way, shape, or form, yes ma’am.

Ms Nobanda: Did that MSA address those issues?

Mr Singh: In the two years that the team was on the ground, it did. We did see an improvement in the energy availability factor, we did see an improvement in the liquidity, we able to manage the primary energy cost to acceptable levels, we stopped the usage of diesel, and we saw the increase in profitability as measured by IBIDA as well as cash.

Ms Nobanda: So if it addressed the issues, why then did you end up facilitating its cancellation?

Mr Singh: I think the exact reasons are outlined in the statement itself. The first reason was the spiraling cost of this contract. When we chaired the steerco and understood the extent to which the contract was accruing value based on the benefits that were being derived by Eskom the projection to the time the contract actually reached its maximum value would be an amount to at least R9-10 billion that would have been needed to be paid under the MSA. Yes there would have been significant value derived by Eskom probably in excess of R100 billion worth value. But for me the concern was that we were going to pay R10 billion under professional services contract that was placed on a sole source basis, also that the subcontractor arrangement with McKinsey and Trillian was terminated at that time. McKinsey couldn’t find an appropriate subcontractor. And there were other concerns that we raised in the steerco relating to previous programmes of this nature and how we were going to ensure that those shortcomings that were experienced in those programmes were not repeated in this programme. But there was an intention for us to terminate the McKinsey contract and issue the work streams that were contained in the MSA to a broader range of service providers so that we not only have one McKinsey but have a number of McKinsey’s with a number of a number of potential BEE partners they would come with and not just Trillian.

Ms Nobanda: So if that was your intention then why didn’t it happen?

Mr Singh: I think obviously the whole issue of me being suspended, McKinsey being canceled, the Trillian thing being canceled, and this whole issue of using consultants under this circumstance became problematic in Eskom.

Ms Nobanda: When is the exact date of cancellation of the MSA?

Mr Singh: The date on which we signed the agreement was sometime in February 2017.

Ms Nobanda: When was the initiation date?

Mr Singh: The date on which we signed the agreement was December 2016.

Ms Nobanda: How much was McKinsey paid for the services with the Eskom 2016/17 corporate plan?

Mr Singh: I would estimate it to be in the region of about R50 or R60 million.

Ms Nobanda: With that R50 million, just now when Honourable Swart was asking you said the corporate plan was a two page document so how do you justify Eskom paying that much money for a two page document, is it in line with your PFMA and all the rules you had to follow?

Mr Singh: I think what I tried to convey to the Committee was that the previous year’s plan was a two page plan. When we engaged with McKinsey and Trillian to prepare the corporate plan with us, the funding plan was then around 22 pages, and it was a substantially significantly substantive document that was prepared in that year and that is the document that we will provide in response to the Honourable members question to provide the corporate plan for 2015/16.

Ms Nobanda: Mr Singh when you responded to this question, your words were “What would we expect of a two page document” and we all raised eyebrows because we were asking ourselves “If Eskom can pay that much money for a two page, what else is there that Eskom can pay?” Either it means they can pay anything and everything that comes their way. Your words exactly, it’s just that we can’t go back to the recording yet. You said “It is a two page document plan. What did we expect?” What exactly did McKinsey do on the project?

Mr Singh: The outline of the McKinsey work stream is included in the section here. By and large they were looking at the Medupi and Kusile claims, they were looking at the primary energy cost, they were looking at the energy availability factors in terms of improving generation and fleet performance. I think those were the main areas. The areas that Trillian was looking at was together with them in all those areas together with the cash unlocking streams.

Ms Nobanda: The R50 million to R60 million payment to McKinsey for the said work, would you say it was justifiable?

Mr Singh: I think it was certainly justifiable.

Ms Nobanda: And from December 2016 to February 2017, how many months is that?

Mr Singh: No ma’am. You asked the date for the MSA, and that was terminated in February 2017, and the inception date was December 2015. Then there was another contract that was entered into for the corporate plan that dealt with the corporate plan deliverables. These were two distinct contracts.

Ms Nobanda: So for the corporate plan they were paid R50 million to R60 million?

Mr Singh: Yes.

Ms Nobanda: Okay. Eskom has money Yoh! Can you explain your relationship with Trillian owners and associates when you were at Eskom and during your time at Transnet?

Mr Singh: As I explained before, with Regiments I met Litha once or twice. Mr Niven Pillay I interacted with on one or two transactions, but my main point of contact was Mr Wood. When I moved to Eskom, again my main point of contact was Mr Wood.

Ms Nobanda: What is your relationship with Mr Wood?

Mr Singh: Again as I said before, it is relatively a professional relationship. We don’t have a personal relationship. We speak now and again. But that’s it.

Ms Nobanda: But he was your main contact there. If he was your main contact at Transnet and then again at Eskom, you must have had a certain relationship. It can’t just be that you talk every now and then, or you don’t talk.

Mr Singh: No no. I am saying now we talk now and again. But when we were working on transactions our interactions were quite frequent and I would suggest that my interaction with Mr Wood or Mr Sagar was no different to any of the other interactions that I was having with Deloitte, or KPMG, or Ernst and Young, or the Ratings Agencies, or the banks for that matter.

Ms Nobanda: Do you know a Ms Mosilo Mothepu?

Mr Singh: Yes ma’am I know her.

Ms Nobanda: What is your relationship with her or what was your relationship?

Mr Singh: We met on a few occasions by virtue of the fact that she was working for Regiments and then Trillian.

Ms Nobanda: What is your response to the claim that you helped Trillian score deals by sharing inside info?

Mr Singh: I categorically deny that. I don’t, have not, and did not share any inside information with any supplier as it relates to any tenders that they were involved in. the only information that I do recall sharing with McKinsey or Trillian or Regiments for that matter were elements of the corporate plan which I would do in the normal course business with banks, Ratings Agencies and the like, but that would have been after they sign a nondisclosure agreement.

Ms Nobanda: Why do you think she would make such a claim about you?

Mr Singh: As I alluded to earlier in response to one of the questions, if any of these individuals whether they work for Trillian or McKinsey or Deloitte then if there were those concerns I think it was incumbent of them to raise it directly with us, or if they were uncomfortable raising it with us there was the tip offs line that was available for them to raise those concerns, there was a Group Chief Executive where they could raise those concerns, there was the board where they could raise those concerns. There was a number of avenues where those concerns could be raised but none of those avenues were taken at the time.

Ms Nobanda: I understand that there are avenues that she could have raised, but why do you think made her to raise such claims? Somebody cannot just wake up one morning and decide to tell the world that you are selling information or that you gave information.

Mr Singh: As I said to you, I didn’t deny providing information to Trillian. I didn’t provide inside information as she alluded to. I did provide copies of the corporate plan to ratings agencies, banks and the like. So maybe she misunderstood the nature of the information that I was providing, I am not too sure.

Ms Nobanda: Thank you Chair.

The Chairperson: Thank you Honourable Nobanda. Honourable Dlamini.

Mr M Dlamini (EFF): Mr Singh you know I think you are dishonest, incompetent, and a liar, and I intend to prove that to you tonight. Let’s start with the lies that you told Lynne Brown that you did not pay Trillian any money. Lynne Brown said based on the submission that you made you told her that you did not pay any money to Eskom, and your chairperson Khoza came here and said you lied. Both of them said you lied. What is your response to that?

Mr Singh: Sir we have addressed this concern.

Mr Dlamini: We spoke to your friends. I am talking to you now. We need answers now.

Mr Singh: We addressed this concern earlier in the evening. As I said to you, the conclusion that I had misrepresented had been made while I was on suspension. I was not there, they had not addressed it with me personally. I explained to Honourable Mazzone the circumstances and the responses to the questions, and…

Mr Dlamini: Let me ask you again, did you say to them that you did not pay Trillian?

Mr Singh: In specific responses to the questions, that’s the response that we provided.

Mr Dlamini: You said to them you did not pay Trillian?

Mr Singh: Yes. We did not pay Trillian because we did not have a contract with them.

Mr Dlamini: Yes. That’s what you said. I don’t want a response or any explanation. Now, as things turned, did Eskom pay Trillian?

Mr Singh: Yes.

Mr Dlamini: So you are a liar. That has been established. They were correct that you lied, and that has been established and you are still continuing to lie. Let’ go to the next one. The R585 million payment that you made to Tegeta, are you aware that during the course of the day before the meeting at night that approved this R585 million, the Tegeta group were dismissed by the banks when they were asking for this R585 million?

Mr Singh: I was not aware at the time.

Mr Dlamini: Are you aware now?

Mr Singh: Through the PP report and media reports, yes I am aware of that.

Mr Dlamini: Okay. So you only became aware from the PP report that they were actually dismissed by the banks? Is that what you are saying?

Mr Singh: Yes.

Mr Dlamini: Okay tell me, are you saying the decision to pay this R585 million was based on the issues of securing the supply of coal, was that based on facts or was that an opinion?

Mr Singh: I think there was some assessment that was conducted in terms of the winter plan that the primary energy team would have conducted, and it indicated a shortfall of two million tons or something in that order.

Mr Dlamini: Was it facts or opinion that’s what I am asking?

Mr Singh: I am saying that a calculation was conducted, so from that perspective I would say its factual based on the calculation that was conducted.

Mr Dlamini: And you were satisfied with that information that indeed this was to secure the supply of coal?

Mr Singh: As I said, the calculation was done. I did not have sight of the calculation. It was done by the primary energy team and it indicated a shortfall in supply during winter.

Mr Dlamini: Ja, but that was given to you on an investigation that you had to report back. Were you satisfied that the assessment was factual, so it was a correct one, and that’s why you gave your own report?

Mr Singh: I did not say that I received the calculation. The calculation was conducted by the primary energy team that identified the shortfall of two million tons. That was presented to the BTC on the 11th which interrogated it and was satisfied that there was a shortfall and requirement for us to prepurchase coal.

Mr Dlamini: So you’re talking of things you don’t know. It was not submitted to you, you have never seen it?

Mr Singh: No.

Mr Dlamini: During 2015 when we came to Eskom as the Portfolio Committee on Energy, yourself, Koko and Brian were presenting your recovery plan of Eskom that you were operating on an 80-10-10 basis; 80% production and output, 10% planned, and 10% unplanned. Is that how you recovered Eskom when you guys came to Eskom?

Mr Singh: Yes sir.

Mr Dlamini: Now you are saying the R585 million which was to secure the supply of coal, you are saying in your report here that Eskom procures 120 million tons a year so that Eskom can be productive, is that correct?

Mr Singh: Correct.

Mr Dlamini: Out of the R585 million that you wanted to secure the supply that was supposed to prevent load shedding, what is the figure as compared to that 120 million ton?

Mr Singh: I think the contract with Tegeta was for 1.2 million tons.

Mr Dlamini: So you’ve got close to 180 million tons available and then you go and hold meetings at night, you rush to do reports because you were trying to get 1.2 million tons to save Eskom, is that what you are saying?

Mr Singh: No sir, the 120 million ton is an amount you would purchase over the entire year. It’s an annual purchase, not that we have 10 million ton stockpiled somewhere.

Mr Dlamini: Okay. So for Tegeta, what is the duration linked to this R585 million?

Mr Singh: That contract was for six months, from April to September. But I think they completed the delivery of coal in August.

Mr Dlamini: So for six months you needed on the 120 million tons you got for the year. So in six months the whole Eskom was going to collapse, you needed that injection of 1.2 million?

Mr Singh: Based on the calculations that were conducted for the winter plan assessment, yes.

Mr Dlamini: The ones that you did not see?

Mr Singh: Yes sir.

Mr Dlamini: What are break even projections in terms of your purchase of coal that you know that this is our break even and once we have this coal we will be able to move?

Mr Singh: Sir I think the operations guys would be better placed to answer that question.

Mr Dlamini: But as CFO you should know the break-even because that’s what informs how you plan and do checks and balances in terms of how much you are going to spend to run that company

Mr Singh: Yes, at a macro level I do, but at a micro level I don’t.

Mr Dlamini: Ja, but that’s why I am asking because here you are telling me that you are spending R50 billion a year on coal. On the R50 billion that you spend, you had to rush and spend R585 million to Tegeta because the whole R50 billion that you had to use was not going to help you, Eskom was going to collapse if you did not spend that R585 million, you had over R50 billion to use?

Mr Singh: I don’t think it was a case that Eskom was going to collapse, but there would have been a security of supply risk at Hendrina power station and that was what the winter analysis indicated.

Mr Dlamini: So you are still adamant that the 6% of Tegeta’s contribution to the whole 120 million ton is the one that saved Eskom?

Mr Singh: No sir. I think it was basically getting an understanding…

Mr Dlamini: When did you pay this money after you were told on the 12th that you must do whatever investigation you were doing?

Mr Singh: I think it was paid on the 13th.

Mr Dlamini: So on the 12th they gave you this, and on the 13th you were ready to pay?

Mr Singh: Sir I think the feedback to the BTC happened on the 13th in relation to the three things they asked me to do, and they provided me with the approval to conclude a security agreement, we concluded the security agreement, and post that I think it was paid on the 15th or so.

Mr Dlamini: Okay I have dealt with your lies now let me deal with the issue that you are dishonest. Brian Molefe, you worked with him at Transnet.

Mr Singh: Yes sir.

Mr Dlamini: Is he an honest guy?

Mr Singh: Yes sir.

Mr Dlamini: Is he a credible person?

Mr Singh: Yes.

Mr Dlamini: When you both moved to Eskom there was a general perception that you and him were taking instructions from politicians in terms of what you need to do, and what business you need to award contracts. Is that perception correct?

Mr Singh: No sir.

Mr Dlamini: Would you agree with me that in the interest of making sure that the SOCs operate, politicians must stay away from them? In the interest of governance. Do you agree with me?

Mr Singh: Yes sir

Mr Dlamini: Do you agree with me that politicians must not be involved especially in the executive positions of SOCs so that they can be able to operate?

Mr Singh: Yes sir.

Mr Dlamini: Okay. Brian Molefe left Eskom and came back. You said he is a credible guy. Was he good for Eskom?

Mr Singh: Yes I think he is a good leader.

Mr Dlamini: I am talking specifically for Eskom, was he a good leader?

Mr Singh: Yes he was.

Mr Dlamini: When he came back on the 12th of May 2017, how did you feel about that? There was huge rally there, you were dancing, were you part of that rally welcoming him?

Mr Singh: No.

Mr Dlamini: But how did you feel about him coming back to Eskom?

Mr Singh: Well on the day that he had decided he was leaving Eskom I did tell him…

Mr Dlamini: No no. On that day when he was returning?

Mr Singh: I am explaining to you that on the day he left I said to him that it was a bad decision to leave.

Mr Dlamini: But you can’t explain on what I didn’t ask. I asked you on the day of returning.

Mr Singh: I was glad that he was back.

Mr Dlamini: You were glad that he was back. Why?

Mr Singh: Because I think he was good for the organisation as I explained and he would provide the necessary leadership.

Mr Dlamini: Alright, what is a politician?

Mr Singh: I guess individuals like yourselves sir.

Mr Dlamini: The people that get deployed to parliament – political activists by their organisations?

Mr Singh: Yes.

Mr Dlamini: When Brian Molefe returned to Eskom he was coming from Parliament. Are you aware of that?

Mr Singh: Yes sir.

Mr Dlamini: But you just told me that in your own view it is good that politicians don’t get involved in the executive running of a SOC, so what made you happy when a politician came back to be the CEO of the company?

Mr Singh: Sir I would assume that he would have resigned his position in Parliament.

Mr Dlamini: So he was no longer a politician when he came back?

Mr Singh: I would also argue…

Mr Dlamini: What is a politician?

Mr Singh: Sir I would also argue that he was actually a politician when he was also at Transnet.

Mr Dlamini: So he was only a politician for three months, and when he came back he was no longer a politician?

Mr Singh: No sir, I am trying to say that he is an ANC member.

Mr Dlamini: Is he a politician?

Mr Singh: I would hazard to say no.

Mr Dlamini: But he came to Parliament. And you said people who are politicians are people like us. Once he came he was an MP.

Mr Singh: I think he was only here for three months.

Mr Dlamini: So to be a politician how many months must you serve in Parliament?

Mr Singh: And he resigned sir.

Mr Dlamini: So when we resign we stop being politicians? You are dishonest, and I don’t know what’s to smile about that. This is an organisation that employees 41 000 people, are you aware of that?

Mr Singh: Yes I am.

Mr Dlamini: And you are playing games with it. I told you that you are a dishonest person. When I asked you your views about politicians, now when a politician comes back you are happy about it. Let’s go to the issues of your incompetency. You are saying under your leadership you paid about R6 billion to companies without contracts is that correct?

Mr Singh: Sir that analysis was conducted, but it was for the year…

Mr Dlamini: It was conducted by who?

Mr Singh: Some consultants.

Mr Dlamini: Its right in the Auditor-General’s (AG) report, but it’s not in your audit report. It's not a finding in your audit report?

Mr Singh: No sir.

Mr Dlamini: Let me tell you what is in your audit report; irregular expenditure moved from R106 million to R4 billion. Can you tell us what happened when you moved from R100 million to R1 billion, what did you do about it?

Mr Singh: We certainly undertook an exercise to raise awareness to PFMA compliance. That awareness actually resulted in the increase in the number because there was a significant amount of training that was undertaken.

Mr Dlamini: So you raise awareness because you want to stop irregular expenditure and then it just increases?

Mr Singh: Well the fact that you make people aware of what irregular expenditure is, it actually results in them reporting more irregular expenditure. So whenever you train someone you would expect that there would be an increase in the number of contraventions and once they get trained and understand how to prevent them there would be a decrease in the number of contraventions.

Mr Dlamini: So you made people aware, you trained them, and then from R1 billion it moved to R2 billion?

Mr Singh: Yes sir.

Mr Dlamini: And then what happened there?

Mr Singh: I would assume..

Mr Dlamini: Do you know what the major transactions that made this irregular expenditure were?

Mr Singh: It was disclosed in the financial statements, I think…

Mr Dlamini: But I am asking you.

Mr Singh: Yes sir.

Mr Dlamini: I want you to tell this Committee now.

Mr Singh: I think the biggest one was the “Shaik transaction” that was mentioned in the financial statements. Which was a contract that was entered to in 2012 or 2013, R1.5 billion in irregular expenditure and about R700 million in fruitless and wasteful expenditure if the numbers are correct from the statement. (04:19:13)

Mr Dlamini: From three to four?

Mr Singh: I think again Shaik was one of them, and I don’t recall the others.

Mr Dlamini: Wasteful expenditure. R93 million to R500 million. What happened there?

Mr Singh: Part of that was a carry-over of Shaik from the previous year.

Mr Dlamini: Okay let’s go back to Dubai. What is the name of your travel agent?

Mr Singh: Travel Excellence.

Mr Dlamini: Your travel agent issued an invoice to Sahara and you were made aware of it, and you’re saying Sahara did not pay your invoice. Did you ask you travel agent why Sahara paid your invoice?

Mr Singh: The travel agent did not issue an invoice to Sahara. The invoices that were presented today were from the hotel.

Mr Dlamini: Where did they come from? The whole thing was arranged by your travel agent. Did you ask your travel agent what was happening?

Mr Singh: Not as yet.

Mr Dlamini: When were you made aware of this invoice, was today the first time?

Mr Singh: Basically as I testified earlier, it was the first time we have looked and interrogated that invoice.

Mr Dlamini: How much was the cost of your trip to Dubai at that time that was arranged by your friend?

Mr Singh: The one that was presented to us was about R60 000.

Mr Dlamini: R60 000?

Mr Singh: Yes sir.

Mr Dlamini: I think Honourable Gordhan asked if you knew how many downgrades you got while you were at Eskom.

Mr Singh: I think he pointed out there were two.

Mr Dlamini: But I am asking you, do you know?

Mr Singh: I thought there was one but I think the Honourable member is probably correct.

Mr Dlamini: When you were asked about this travel you said part of it you were meeting rating agencies. Which ones are these in Dubai?

Mr Singh: Standard and Poor.

Mr Dlamini: Eric Wood, you say you knew him when you were still at Transnet?

Mr Singh: Yes sir.

Mr Dlamini: Salim Essa you were still at Transnet when you got to know of him?

Mr Singh: Yes sir.

Mr Dlamini: Vikash, you were still at Transnet?

Mr Singh: Yes sir.

Mr Dlamini: The Gupta brothers, were you still at Transnet?

Mr Singh: By and large, yes sir.

Mr Dlamini: Litha of Regiments, were you still at Transnet?

Mr Singh: Yes sir.

Mr Dlamini: And then you moved to Eskom?

Mr Singh: Yes sir.

Mr Dlamini: While you were at Transnet did Eric Wood do business with Eskom?

Mr Singh: I think they did sir.

Mr Dlamini: But you know, you must not think because I don’t think you have a capacity to think. The fact that you can pay R1.6 billion to McKinsey and Trillian and then they come back tomorrow and say they can pay back that money, it is a sign that it is a company that is not run by people that can think. So let’s leave the thinking. I am asking you, Eric Wood at that time…

Mr Singh: I was not at Eskom so I don’t know.

Mr Dlamini: But you got to Eskom and you had the privilege of going through their contracts, did they have work before you went to Eskom?

Mr Singh: I did not have the privilege of going through their contracts sir.

Mr Dlamini: So you did not go through the contracts of McKinsey when you were in Eskom, you did not see any of them?

Mr Singh: No.

Mr Dlamini: But you know they were paid by Eskom?

Mr Singh: No no. Let me understand your question correctly, are you asking; “When I got to Eskom did I review the contracts of Regiments?”

Mr Dlamini: No, not review. To have access to their contracts just to see when they started working at Eskom.

Mr Singh: No I didn’t.

Mr Dlamini: Have you seen their contract with Eskom, the one that that you said was terminated?

Mr Singh: Yes I did.

Mr Dlamini: When did it start?

Mr Singh: It was signed in December 2015.

Mr Dlamini: And you were in Eskom?

Mr Singh: Yes.

Mr Dlamini: Is that their only contract?

Mr Singh: Yes, and the corporate plan contract was signed by Mr Koko.

Mr Dlamini: No no, but I am saying is that the only contract that they have that was signed in 2015 December?

Mr Singh: No, the corporate plan was also signed.

Mr Dlamini: When was it signed?

Mr Singh: It was signed in September 2015.

Mr Dlamini: When did you arrive at Eskom?

Mr Singh: August 2015.

Mr Dlamini: So you know someone at Transnet who never had a contract with Eskom, and then you move from Transnet to Eskom. A month later the same person that you know has got a contract with Eskom. Is that a coincidence or what, or were they just looking for work and then just a month when you arrived they started getting contracts at Eskom?

Mr Singh: No, I think the Trillian contract for the corporate plan was as a result of McKinsey getting the main contract. And McKinsey was in Eskom since 2010 or 2011. They have been in that environment for a very long time.

Mr Dlamini: What is Salim Essa’s company, was he part of Trillian?

Mr Singh: I am not aware.

Mr Dlamini: You are not aware?

Mr Singh: I was going to say that I know that he was a shareholder of Trillian but I am not aware of any other companies.

Mr Dlamini: Okay let’s leave that. Impulse International is owned by Matshela Koko’s step daughter. It had a contract of R1 billion with Eskom. Are you aware of that?

Mr Singh: Through the media reports, yes sir.

Mr Dlamini: When were you made aware by media reports?

Mr Singh: I think it was when the first reports …

Mr Dlamini: When was that?

Mr Singh: I can’t recall sir, but it must have been …

Mr Dlamini: As CFO, when the media stated that and you were made aware, what did you do, did you go and check this Impulse International within Eskom?
Mr Singh: Yes, I think it was not me. It was the Group…

Mr Dlamini: No no, I am asking you. Did you go and check as a CFO to see what is happening in my company? Here is an acting CEO, there is an allegation that his daughter has got a contract over R1 billion that you have already paid by the way. And when the media made you aware, did you go and check whether that contract exists?

Mr Singh: Yes we did check. The contract existed.

Mr Dlamini: And then?

Mr Singh: And then I guess Mr Koko was put on suspension. The Acting Chief Executive at the time instituted an investigation that was conducted into Impulse International.

Mr Dlamini: Did you ask Mr Koko since you were colleagues if he was aware of this thing?

Mr Singh: No I did not.

Mr Dlamini: Why? I mean he is your colleague. You’ve just spent a billion Rand to his step daughter.

Mr Singh: I think he was placed on suspension at the time and we were not allowed to engage with Mr Koko.

Mr Dlamini: Ingrid Tufvesson, they say it's Lynne Brown’s partner, she had a contract as well of R1.2 million - E-smart solutions – do you know anything about it?

Mr Singh: No sir.

Mr Dlamini: You have never heard of it, it’s the first time you are hearing of it?

Mr Singh: I have heard about this in the media but I do not recognise the name.

Mr Dlamini: This company E-smart solutions doesn’t have work with Eskom?

Mr Singh: I wouldn’t know sir.

Mr Dlamini: What do you mean you wouldn’t know, you can’t check?

Mr Singh: I think the allegations surfaced when I was on suspension so I would not have had the ability to check it at the time.

Mr Dlamini: Finally, did you meet the guy who resigned today, they are too many of them. They are all not honest. He was the Head of HR or something, Prish Govender. Did you meet Prish when you were suspended in some Hyde Park hotel in Johannesburg?

Mr Singh: Yes I did sir.

Mr Dlamini: Why, what was the conditions of your suspension?

Mr Singh: At the time that I met him sir, I was not on suspension, I was on special leave and there were no restrictions at the time on me meeting Eskom employees. Yes I do agree that once I was on suspension there would have been a requirement for me not to meet Eskom employees or suppliers without permission.

Mr Dlamini: Thank you Chairperson.

The Chairperson: Thank you Honourable Dlamini. Honourable Mnganga-Gcabashe.

Ms L Mnganga-Gcabashe (ANC): Thank you Chairperson. Good morning Mr Singh. In December you gave us the copies of your submission and it was announced that there were 400 pages. During our recess we went through that submission and I discovered that together with the attachments, that is about 600 pages. I can see here now that you have a stack of documents. You provided us with certain attachments but you did not provide with us with other important documents. Adv Vanara was able to isolate some important ones, but we will come back to that. I just want for you to firstly explain to us how many senior managers and middle management that reported to you when you were CFO at Eskom?

Mr Singh: In term of general managers I had about seven.

04:31:09
Ms Mnganga-Gcabashe: Senior or middle management?

Mr Singh: I would be guessing if I told you ma’am.

Ms Mnganga-Gcabashe: Estimation?

Mr Singh: Maybe 35.

Ms Mnganga-Gcabashe: So that’s the team of your branch or department at Eskom. On the submissions you gave us, and today’s interaction with yourself it became clear that there were a number of supply chain processes that were not followed on a number of projects at Eskom. As a result you received some and deemed some to be irregular expenditure in terms of the finance of those projects and payments thereof. You were saying earlier on with the Advocate that you had to depend on a number of official that were working with you in that department. Did you take any steps against those officials that were involved in irregular expenditure in those projects that were deemed and classified as irregular expenditure?

Mr Singh: Yes, I actually did, together with the head of Audit and Forensics which is the internal audit function within Eskom. When I got there the People and Governance (P&G) committee was very concerned relating to the number of disciplinary inquiries that were significantly in excess of three months, six months, and nine months so there was a requirement and instruction from the committee for us to address that quite urgently. We addressed that and reduced that quite significantly and reported back to the P&G committee. A big portion of those related to the PFMA contraventions. We also instituted a requirement that there would be no condonation of PFMA contraventions without 1) an improvement plan relating to the process weakness that existed that resulted in the PFMA contravention, and 2) an indication of whether disciplinary action was taken, and if no disciplinary action was taken then why.

Ms Mnganga-Gcabashe: What punitive measures were taken to be specific, and to how many?

Mr Singh: I would have to source that information for you ma’am. I don’t have that information on hand.

Ms Mnganga-Gcabashe: Can you estimate for us?

Mr Singh: I would really be guessing ma’am

Ms Mnganga-Gcabashe: You don’t even recall one or two?

Mr Singh: It was certainly more than one or two or three in the first instance that I mentioned. I think that would be in the region of about 15 to 20.

Ms Mnganga-Gcabashe: What type of punitive measures did you take?

Mr Singh: That again would have been in the domain of HR. HR would need to discipline the individual in question. We will have to get that information from Eskom.

Ms Mnganga-Gcabashe: But as a line manager you are informed of the decision taken against your official, whether some were fired or suspended.

Mr Singh: The PFMA contraventions and those issues that I mentioned don’t emanate from finance individuals, they emanate from line individuals that manage the contract, that place the contract. They may emanate from procurement or HR individuals for example so those contraventions don’t necessarily emanate from finance stuff itself.

Ms Mnganga-Gcabashe: I understand that but I am focusing on the finance stuff that authorise invoices in terms of payments that were made.

Mr Singh: In terms of the finance stuff itself, I don’t think there were any disciplinary action taken against the individuals that authorised invoices. As I said before there is an acceptable process within Eskom that enables subcontractors to be paid directly. It is called a partnering process and there are certain rules that apply as to how that would happen.

Ms Mnganga-Gcabashe: Let’s come to yourself now sir. Are you familiar with this booklet sir? (PFMA booklet).

Mr Singh: Yes ma’am.

Ms Mnganga-Gcabashe: How often do you read it?

Mr Singh: I would say probably once in three months or once in four months.

Ms Mnganga-Gcabashe: This is a guide for you as a finance person and as a highly qualified financial guru who has a CA. You should always come closer to this so that you don’t jeopardise your profession, and your experience and skills in the process of implementing your duties. So I take it that you know this bible throughout from the first chapter to the end. But if you don’t remember it every day you have to consult with the relevant chapters of your daily duties. Would you agree with me?

Mr Singh: Yes ma’am. Not only that, but we also have specific individuals within the organisation that are tasked with PFMA compliance.

Ms Mnganga-Gcabashe: Together with your Company Act and Treasury regulations that are based on the PFMA, and lastly the very important bible of our country – the Constitution – in relation to how we govern our country and how we spend the monies that are governed by us on behalf of the nation. Its famous, it’s called public purse. Let me just take you through the sections that are more relevant; your guarantees that you issued on R1.68 billion that in terms of section 66 of the PFMA it only gives the board as the only competent to authorise issuance of a guarantee, and the board did not do that in relation to Eskom. Would you agree with that?

Mr Singh: Honourable member I do not agree. The PFMA does make allowance for a schedule three public entity such as Eskom to delegate that authority to individuals within the organisation, and in this case the authority that was given to me by the board enabled me to execute any aspect transaction, and that was confirmed by the Company Secretary as well.

Ms Mnganga-Gcabashe: How come then the investigations that were done internally within your legal department found that you were not authorised by the board to take such an action? The board did not approve for you to take such an action.

Mr Singh: I am not aware of such an investigation that was undertaken by legal. The Head of Legal that was the Company Secretary at the time Ms Daniels confirmed to me that indeed possess the appropriate authority. She again confirmed the specific authority with the bank when the guarantee was placed with the specific bank. And I have attached in the documentation a legal opinion that was obtained that I did possess the legal authority to issue a guarantee.

Ms Mnganga-Gcabashe: When were you suspended, can you please remind me?

Mr Singh: Special leave I think it was end of July, and then formal suspension was third week of September.

Ms Mnganga-Gcabashe: Where were you during August? Were you from special leave and then back to work and then you got suspended?

Mr Singh: No.

Ms Mnganga-Gcabashe: It was a special leave followed by suspension?

Mr Singh: Special leave converted to suspension.

Ms Mnganga-Gcabashe: Do you know Mr Abdul Azziz Laher?

Mr Singh: Mr Laher, yes.

Ms Mnganga-Gcabashe: Do you know him?

Mr Singh: Yes.

Ms Mnganga-Gcabashe: Is it a him or her?

Mr Singh: Him.

Ms Mnganga-Gcabashe: Okay, thank you. Are you aware that he is your Group Compliance Manager?

Mr Singh: Yes he is.

Ms Mnganga-Gcabashe: Are you aware that internally they have conducted certain investigations and they fall under legal department?

Mr Singh: Yes.

Ms Mnganga-Gcabashe: Do you agree that they fall under legal department?

Mr Singh: Yes.

Ms Mnganga-Gcabashe: Their opinion dated 10th August 2017, are you aware that opinion is the one that says you were not authorised by the board to authorise the issuance of the guarantee of that said amount?

Mr Singh: No ma’am, I am not aware of that.

Ms Mnganga-Gcabashe: Then I take it that you are aware that you have conducted some irregularities and you performed certain tasks without authorisation because if you didn’t, why did you resign before you get fired, because you are innocent, why do you have to resign immediately?

Mr Singh: That was my contention as well. I was waiting for charges to be put me but charges were not put to me. I actually offered to resign in September, which was rejected by the company. I then said fine if you guys are investigating, we will wait for charges. No charges were coming. I even requested that of the ex-Chairman and then government issued a statement to say “Leave immediately” so I left immediately.

Ms Mnganga-Gcabashe: Are you aware of what the PFMA says about officials of public entities who committed such an offense or found in breach of that clause?

Mr Singh: Relating to which breach ma’am?

Ms Mnganga-Gcabashe: The one that I have referred to, the issuance of guarantees.

Mr Singh: I think there is a sanction relating to financial misconduct which would attract a jail sentence if I am not mistake.

Ms Mnganga-Gcabashe: Let me remind you; “That you will be found guilty of an offense and liable on conviction to a fine or imprisonment to a period not exceeding five years”. Does that sound familiar?

Mr Singh: Yes ma’am.

Ms Mnganga-Gcabashe: I want to say to you that your company did find you guilty and made certain recommendations for you to be charged as it says here on the PFMA, and it says the GCFO is guilty of an offense and liable on conviction to a fine or imprisonment to a period not exceeding five years in terms of section 86 (3) of the PFMA. Criminal charges will be required to be laid against the GCFO to give effect to this provision of the PFMA as I read it out to you. In terms of the Treasury regulations 32.2.1 which is part of regulations issued by National Treasury in terms of section 76 of the PFMA on 15th March 2005, the board must advise the AG, Eskom executive authority which is the Minister of Public Enterprises, and National Treasury of any criminal charges it had laid against any person in terms of section 86 of the PFMA”. That is the recommendation to the board about yourself sir. Do you still maintain that there were no wrong doings from your part at Eskom?

Mr Singh: As it relates to the guarantee, I was assured that I did have the necessary or requisite authority to issue the guarantee by the Group Company Secretary and Legal at the time Ms Daniels. That was again reconfirmed in a submission to the bank at the time. So for all intensive purposes I was under the impression at the time that I had and possessed requisite authority to issue the guarantee. If there is a contrary view at this stage we will have to deal with that.

Ms Mnganga-Gcabashe: But there were other opinions that were arrived at by other consultants hired by Eskom as the Advocate earlier on alluded to. And they arrived at a similar conclusion if not the same, based on the PFMA regulations. With that, I take it that deep down in your heart, mind and good soul you are aware that you breached certain regulations of the PFMA but you are really as my other colleagues have indicated seated there under oath still misleading us in relation to your contribution towards the irregular expenditures at Eskom. Would you maybe as a last chance have a change of heart and accept certain responsibility and apologise, this is the opportunity for you to do so because we have all reminded you of what transpired at Eskom?

Mr Singh: I think ma’am in terms of me still misleading the Committee, having done everything I have done in terms of providing the documentary evidence to suggest that my role in these transactions were, I think they were factual. If at this point in time there is contrary evidence to suggest there was wrongdoing on my part, I am happy and willing to engage with that finding. As I said to you I was not aware of Mr Laher’s assessment that was conducted. The company had not provided that to me. If there is as you say a transgression of the PFMA, I am happy to engage with the company further. In terms of an apology, to the extent that we have, or I have in some way, shape, or form contributed to the downfall of Eskom, I do apologise sincerely. Not only to the Committee but to the citizens of this country by and large. I have tried to do my best in terms of being able to turnaround and create an environment that is sustainable for Eskom into the future. If I failed in that then I do apologise in failing in that duty.

Ms Mnganga-Gcabashe: Thank you Chairperson.

The Chairperson: Thank you very much Honourable Mnganga-Gcabashe. I am not going to keep you for too long here. I have just a few questions that won’t take 15 minutes provided we are given the satisfactory answers. Mr Singh because the PFMA is giving you permission that you can take decisions without maybe consulting the board members or anyone else, you took advantage of that and you were taking decisions on your own, on everything, and every contract that comes your way to Eskom, and signed any contract. According to what Honourable Mnganga-Gcabashe has just read from the PFMA, you responded by saying the very same PFMA is giving you permission not to go that route that she is reading. Do you agree with me that you took advantage of that clause and took decisions on your own without involving anybody else?

Mr Singh: I respectfully disagree with you. I did not abuse the provisions of the PFMA, and I certainly did not take decisions on my own. As outlined in the document, decisions were taken by the relevant delegated authority in each of the cases.

The Chairperson: Can you tell us how many overseas bank accounts you have?

Mr Singh: As I have alluded to earlier in the testimony, I do not have any overseas bank accounts, and I have made that declaration to the South African Reserve Bank on enquiry.

The Chairperson: How much money did you transfer to overseas banks that belong to Eskom or do you think that if there is any money that belongs to Eskom that you have transferred to overseas accounts, would you suggest anyone that we should approach so that we get that money back?

Mr Singh: Well I am not aware of any money that is due to Eskom from overseas bank accounts, but we do make payments to overseas bank accounts at Eskom, and they would be many of them whether they be suppliers or repayments of loans, interest and the like. But I am not aware of any amounts that needs to be refunded to Eskom from those overseas suppliers.

The Chairperson: All those transactions were legal?

Mr Singh: In my view, yes ma’am.

The Chairperson: I just want to bring to your attention that you signed a binding term sheet that now Eskom is sitting with a R400 million that they have to pay. Do you remember that?

Mr Singh: That’s the document that Adv Vanara had provided to me.

The Chairperson: You only knew about it when Adv Vanara was giving it to you?

Mr Singh: No. I was aware of it when I signed it as well.

The Chairperson: Now that you are aware of the economic situation within the company, what do you think about the binding term sheet that you signed?

Mr Singh: Other than the concerns that were raised by the legal team that were reviewing the contract, I think the terms and conditions of the contract was explained to the IFC by the Treasury at the time. They believed that the transaction was of value to Eskom, and hence we pursued the transaction. So madam Chair as I understand it from one of the documents that Adv Vanara had presented to us, the Eskom team is still negotiating with the potential provider of the funding. So I am assuming this given the fact that I have not been there since July that the term sheet is still up for negotiation as well.

The Chairperson: I have just sent a document to you, there is a letter written in that. Can you read that for the Committee? It is a letter coming from Mr Pamensky. It is also one of the Gupta leaked emails that have come out.

Mr Singh proceeded to read the letter.

The Chairperson: Do you know anything of that email?

Mr Singh: No ma’am.

The Chairperson: You don’t know anything of that email, you have never met any document that has got that letter?

Mr Singh: No ma’am.

The Chairperson: Thank you very much for your response. Let me take the opportunity to thank everyone that is here. Members you have done very good work over the holidays. You were not relaxed. Thank you for the legal team and Mr Singh for coming to the inquiry.

The meeting is adjourned.