DA to lay criminal charges after BBBEE Commission confirms fake Gupta-linked companies' BEE certificates

25 September 2019

The Democratic Alliance (DA) welcomes the explosive findings by the BBBEE Commission that Gupta aligned companies used fraudulent BEE certificates to secure contracts and payments from Eskom. These findings follow a complaint laid by the DA over two years ago.

The 18-month in-depth investigation by the Commission is another window into the murky, abusive and corrupt world of State Capture by Gupta companies, pliable Eskom officials and the side-line enablers in the corporate sector to give a veneer of legitimacy to their smoke and mirror dealings.

The DA held the belief that the BEE certificates supplied to Eskom by Tegetta, Optimum and Trillian were fraudulent as none of the companies could be considered micro-enterprises with a turnover of less than R10 million per year.

These certificates were given a stamp of authenticity by a BEE verification agency called ‘BEE Matrix’ who relied on auditors, Sizwe Nstaluba Gobodo for shareholding information. Eskom Executives then accepted these fraudulent certificates at face value, despite concluding prior contracts with these companies worth billions of Rands, which would have excluded them from being micro-enterprises.

The Commission found the following:

The strength of the black shareholding of Optimum Coal Mine was taken at face value from third party information supplied by auditors, Sizwe Ntsaluba Gobodo. It is not known how they allocated 50.04% shareholding to Optimum when it held such a high shareholding through an Indian based, overseas company who are not South African citizens. Optimum also relied on shares held by Duduzane Zuma through his investment company, Mabengela Investments to boost its black ownership without ever being independently verified.

Trillian Consulting had misrepresented annual turnover for its BEE certificate as it had received R10 million in payments in 2016 and had invoiced Eskom for R30 million by the time it submitted a deposed affidavit that it was a micro-enterprise with a turnover of less than R10 million. The BEE certificate was also submitted after the payment by Eskom had been made, calling into question how this was allowed in violation of Eskimo’s procurement policies.

Trillian Consulting had 0% black ownership despite Eskom's flawed and possibly illegal policy of only doing business with businesses of 51% black ownership.

Given the timing of the registration of Trillian Consulting as a company and vendor to Eskom, indications are, that it was created as an opportunity to obtain a status of a start-up that would qualify it for an automatic BEE Level 4 status to facilitate payments made to them.

Tegetta Resources had concluded a contract with Eskom in March 2015 for R3.8 billion and in the same year had received payments from Eskom to the value of R100 million and yet was allowed to present a BEE certificate to Eskom classifying them as a micro-enterprise with turnover under R10 million per year.

BEE Matrix, a verification agency through one of its professionals who is a charted accountant, Simone Mitchell, issued certificates to Tegetta and Optimum that were not factual and in violation of the BEE Act, as well as signing certificates as an auditor and then as a commissioner of oaths to verify the false and misleading information with respect to black ownership and financial turn over for each business which allowed them to qualify as micro-enterprises.

In 2017, BEE Matrix and Simone Mitchell were found by the BEE Commission to be guilty of exactly the same offences, yet no remedial action was taken with respect to both infractions. It further appears that BEE Matrix no longer exists and has been deregistered.

The DA will now take the following steps to ensure that those responsible will be held accountable for this sham:

- Lay criminal charges against Tegetta, Optimum and Trillian for misrepresentation of their BEE status and for providing false information to Eskom in terms of Section 130 of the Broad-Based Black Economic Empowerment Act.

- Lay criminal charges against Anoj Singh, Prish Govender, Edwin Mabelane and A. Nteta who were aware of the value of the contracts to Trillian, Tegetta and Optimum, who failed to report misrepresentation to the Commission in terms of Section 130 (2) of the Act.

- Lay charges against Simone Mitchell in terms of Section 130 of the Act for misrepresentation of Tegetta and Optimum’s BEE status. The DA will also lay complaints with the Independent Regulatory Board for Auditors (IRBA) and South African Institute for Chartered Accountants.

The big question that has not been answered is, how did BEE Matrix and these Gupta Companies come into contact and what were they paid to willfully misrepresent the facts?

This is another nail in the coffin in the Gupta empire and a piece of the puzzle in State Capture.

It is also a reminder of how BEE has been abused by the elite and politically connected to lock out competition, inflate costs and entrench patronage networks. This is why DA Leader, Mmusi Maimane, has called for the current model of BEE to be scrapped and for it to be replaced by a new model of genuine redress and inclusive growth that creates a shared future that all South Africans can be proud of.

Issued by Dean Macpherson, DA Shadow Minister of Trade and Industry, 25 September 2019