DA exposes possible fraudulent BEE certificates used by Gupta companies
26 February 2018
The DA can reveal that three Broad Based Black Economic Empowerment (BBBEE) certificates from Tegeta Resources and Exploration, Optimum Coal Mining and Trillian Consulting are possibly fraudulent.
These three Gupta companies submitted certificates to Eskom during the course of 2016 to secure contracts, meet internal procurement requirements and, in the case of Trillian, to ensure payment authorisations.
The DA obtained the B-BBEE certificates after an application was made to Eskom in terms of the Promotion of Access to Information Act (PAIA).
An analysis of the certificates reveals that:
1. Tegeta did not fit the profile of a micro-enterprise as its income exceeded the annual turnover of less than R5 million required for companies in this category. A note to shareholders shows its company assets were valued at R11 million. It also had Eskom contracts with a combined business value of R2,2 billion.
2. An affidavit rates Trillian Consulting as a micro enterprise with 0% black ownership. However, Salim Essa’s 60% share constituted the black ownership portion of Trillian. Trillian and McKinsey were paid R1,6 billion between April 2016 and February 2017 for consulting work done between 2015 and 2016. Three days after Trillian’s certificate was issued on 14 April 2016, R495 million was paid to Trillian for ‘consulting services’ and R30,7 million for a corporate plan for Eskom. Trillian, based on this revenue stream, would be disqualified as a micro-enterprise.
3. Tegeta and Optimum’s black ownership figures represented on the BEE certificates were most likely incorrect. President Jacob Zuma’s son, through his Mabengela Investments, owned 28.5% of Tegeta while Salim Essa’s Elgasolve owned 21.5%. Oakbay Investments (Gupta-owned) and Fidelity Enterprises (foreign-registered in UAE), which made up the remaining shareholding of 50%, would be 0% black owned. Available evidence shows there was no black female ownership of 5,13% for Tegeta despite being listed on the certificates as such.
The Optimum coal transaction exposes contradictions in Eskom’s approach in which it demanded that Exxaro complies with the B-BBEE component. Eskom kept calling for a meeting with Exxaro “in an effort to understand how they plan to comply with the 50%-plus policy requirement”.
It is clear that these B-BBEE certificates and affidavits from Gupta owned companies may have been an attempt to artificially meet B-BBEE requirements.
The Gupta entities’ actions, combined with Eskom’s and BEE Matric’s willingness to blindly accept these, may constitute criminal behaviour and must be urgently investigated.
Despite this, Eskom have maintained, in a November 2016 statement, that Tegeta was above 50% Black owned requirement.
The DA will report this likely fraudulent behaviour to the B-BBEE Commission for investigation. The commission is empowered, in terms of the B-BBEE Act 46 of 2013 to investigate complaints received on any matter concerning broad-based black economic empowerment.
The DA will also ensure that these documents are made available to the State Capture enquiry headed up by Deputy Chief Justice, Judge Raymond Zondo as these were used in the commissioning of State Capture.
The DA will use every avenue available to us to ensure that these serious allegations are fully investigated and if necessary, that those involved in fraudulently overstating B-BBEE compositions, are held to account.
Issued by Dean Macpherson, DA Shadow Minister of Trade and Industry, 26 February 2018
