Licence to Loot : How the plunder of Eskom and other parastatals almost sank South Africa

288 Pages·2018·2.32 MB·English

by  Stephan Hofstatter

LICENCE TO LOOT
LICENCE TO LOOT
How the plunder of Eskom and other parastatals
almost sank South Africa
STEPHAN HOFSTATTER
Published by Penguin Books an imprint of Penguin Random House South Africa (Pty) Ltd Reg. No.
1953/000441/07
The Estuaries No. 4, Oxbow Crescent, Century Avenue, Century City, 7441
PO Box 1144, Cape Town, 8000, South Africa www.penguinrandomhouse.co.za
First published 2018
1 3 5 7 9 10 8 6 4 2
Publication © Penguin Random House 2018
Text © Stephan Hofstatter 2018
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without the prior written permission of the copyright owners.
PUBLISHER:Marlene Fryer
MANAGING EDITOR:Robert Plummer
EDITOR:Alice Inggs
PROOFREADER:Dane Wallace
COVER AND TEXT DESIGNER:Ryan Africa
INDEXER:Sanet le Roux
Set in 10.5 pt on 14 pt Minion ISBN 978 1 77609 312 0 (print) ISBN 978 1 77609 313 7 (ePub)
To all the whistleblowers who had the courage to tell me their stories
Contents Preface
Abbreviations
The deals and money flows in the Transnet/Eskom saga
1. Zuma’s Dubai Bolthole
2. President for Hire
3. The DRC Moment
4. What the Driver Saw
5. Trains and Planes
6. Sharing the Spoils
7. Indecent Proposal
8. Making Hay
9. Turn Off the Lights
10. Tsotsi in the Boardroom
11. Stacking the Deck
12. Engineered Emergency
13. Trillian’s Billions
14. Show Me the Money
15. Things Fall Apart
16. ‘A Brazen Thief’
17. Secrets and Lies
18. Tea Money
19. On the Run
20. Garden of Hope
Notes
Index
Preface
While on assignment for the Guardian newspaper in 2016, a photographer friend
of mine, James Oatway, took a picture of a young man – I guess he must have
been in his early twenties – collecting firewood at a dump in the veld near his
home. Behind him, barely two kilometres away, a forest of cranes and the half-
built boiler towers of Kusile, one of the world’s largest coal-fired power stations,
rise into the Highveld sky.
For me, this image encapsulates everything that’s wrong with South Africa’s
power utility, Eskom.
At a time when the world is moving away from mega projects that use
polluting fossil fuels to generate electricity, Eskom built not one but two giant
plants whose combined output would satisfy almost a quarter of the country’s
power needs. Before long these projects became bogged down in
mismanagement and corruption. The ANC made a handsome return in success
fees and dividends through its investment arm Chancellor House’s dodgy
partnership with Japanese boilermaker Hitachi, and some Eskom officials and
their families became millionaires overnight. As a result, the cost of building the
new power stations doubled to more than R300 billion. Taxpayers have been
saddled with skyrocketing electricity prices and a crippling debt burden that
threatens the economic wellbeing of the entire country, while rural communities
continue to scavenge for winter fuel.
Things went from bad to worse for villagers living near the construction
sites. Already eking out a precarious existence on sparse grasslands, many were
relocated to places where watercourses had dried up or were contaminated.
Thickets once used for firewood were cleared to make way for open-cast coal
mines. The villagers found themselves subjected to the constant din of coal
trucks thundering past their homes, choking on the toxic plumes of mine dust
that made their children ill.
Eskom’s stated mission is to build a power base that fosters shared economic
growth and development in order to ensure an even spread of prosperity. If
anything, it has achieved the opposite. Instead of investing in cleaner, localised
small-scale energy sources, Eskom has stubbornly clung to an outdated mode of
centralised power generation that favours gigantic, expensive projects that
destroy the environment. This monolithic model, coupled with rampant
mismanagement, has allowed or encouraged looting on a grand scale, ultimately
constraining economic growth and putting the entire country in hock. Today
South Africa is the most unequal country in the world. For this, Eskom must
shoulder a fair portion of the blame.
Eskom’s implosion also serves as a salutary lesson for those demanding the
nationalisation of land, mines and banks – that total state control of the country’s
productive resources, especially when clean governance remains a low priority,
is a recipe for plunder and economic ruin.
This was not an easy story to tell. The looters and their parastatal deployees
put a lot of effort into creating an elaborate smokescreen to cover their tracks.
This was mostly done by shrouding scientific or financial complexities in
impenetrable technical jargon, and trotting out red herrings to deflect attention
from their wrongdoing. When these ploys failed, they resorted to outright lies.
Sifting fact from fiction and spin became a constant hazard of the job.
An army of helpers guided me through this maze. Many still fear retribution
and will have to remain anonymous. You know who you are and the debt of
gratitude I owe you. Others, such as Grace Silaule, Mosilo Mothepu, Bianca
Goodson, Suzanne Daniels and Khulani Qoma, feature in the pages of this book.
The work of Chris Yelland, Mzukisi Qobo, Anton Eberhard and his MBA
student Marisane Thobejane was especially valuable in helping me unravel the
intricacies of this complex subject.
A special thanks goes to my colleagues at the Financial Mail, Business Day
and the Sunday Times. I’m deeply grateful to Sikonathi Mantshantsha, Mzilikazi
wa Afrika, Kyle Cowan, Rob Rose, Genevieve Quintal, Carol Paton and Sabelo
Skiti for collaborating on stories with me or comparing notes and engaging in
robust debate. Your contributions have immensely enriched my work. The same
goes for Jessica Bezuidenhout at the Daily Maverick and Geoffrey York at The
Globe and Mail.
A big thanks too to Shirley de Villiers for her invaluable insights and
encouragement, and to my editors at Penguin Random House South Africa,
Robert Plummer and Alice Inggs, for their unwavering faith, patience and
painstaking attention to detail.
Without all of you this book would not have been possible.
STEPHAN HOFSTATTER
JOHANNESBURG
JULY 2018
Abbreviations
ANC: African National Congress BEE: black economic empowerment
COSATU: Congress of South African Trade Unions CSA: coal supply
agreement DA: Democratic Alliance
DRC: Democratic Republic of Congo EFF: Economic Freedom Fighters
GCIS: Government Communication and Information System JSE:
Johannesburg Stock Exchange MEC: member of the executive council
MK: Umkhonto we Sizwe
MP: member of Parliament
NPA: National Prosecuting Authority PIC: Public Investment Corporation
PRASA: Passenger Rail Agency of South Africa SAA: South African
Airways SABC: South African Broadcasting Corporation SACP:
South African Communist Party SOE: state-owned enterprise UAE:
United Arab Emirates