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Cliffe Dekker Hofmeyr

Attorneys

Forensic investigation into allegations of potential conflict


of interest by the Interim Chief Executive Officer of Eskom
Holdings SOC Limited
Cliffe Dekker Hofmeyr
Final Report
23 June 2017
___________________________________________________________________________________________________

Table of contents
i) List of Abbreviations ............................................................................................................. 4
ii) List of Role Players ................................................................................................................ 6
iii) List of Entities ........................................................................................................................ 9
iv) List of Exhibits ..................................................................................................................... 10

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

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


1.1 Background .......................................................................................................................... 20
1.2 Mandate and scope of assignment ..................................................................................... 20
1.3 Purpose of the report .......................................................................................................... 21
1.4 Qualifications ....................................................................................................................... 21
1.5 Limitations/Assumptions ..................................................................................................... 22

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


2.1 Introduction ......................................................................................................................... 24
2.2. Assignment scope ................................................................................................................ 24
2.3 Procedures performed ........................................................................................................ 24
2.4 Period under investigation .................................................................................................. 25
2.5 Consultations ....................................................................................................................... 25
2.6 Documentation sourced ...................................................................................................... 26

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


3.1. Background .......................................................................................................................... 29
3.2 The Constitution, no 108 of 1996 ........................................................................................ 30
3.3 The PFMA, no 1 of 1999 ...................................................................................................... 30
3.4 National Treasury Regulations/Instruction Notes ............................................................... 32
3.5 National Treasury Code of Conduct .................................................................................... 33
3.6 Corporate Governance in the Public Sector ........................................................................ 33
3.7 The PPPFA, no 5 of 2000...................................................................................................... 34
3.8 Eskom Procurement and Supply Management Procedure (32-1034) ................................ 34
3.9 Code of Ethics Procedure (32 -757) ..................................................................................... 39
3.10 Code of Ethics Policy (32 527)........................................................................................... 40
3.11 Conflict of Interest Policy (32 173) ................................................................................... 40
3.12 Declaration of Interest Procedure (32 225)...................................................................... 42

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


3.14 2017 Delegation of Authority Policy (240-62072907) ......................................................... 45
3.15 Process Control Manual (PCM) for Vendor Master Data (240-45657065) ...................... 46
3.16 PCM for External Suppliers (240-78921684) ....................................................................... 46
3.17 Eskom Supplier Integrity Pact (240-113650212) ................................................................. 46
3.18 NT Instruction Note 3 of 2016/17 ....................................................................................... 47
3.19 Memorandum of Incorporation .......................................................................................... 48

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


4.1. Legal entities........................................................................................................................ 49
4.2 Individuals............................................................................................................................ 52
4.3 Central Supplier Database ................................................................................................... 54
4.4 Mokoni Trust with reference IT00216/2016(MN) ............................................................... 54

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


5.1 Declarations made by Eskom employee ............................................................................. 57
5.2 Declarations by Impulse International (Pty) Ltd .................................................................. 67
5.3 Timeline of involvement of stakeholders in Impulse International (Pty) Ltd ...................... 69

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


6.1 Eskom DOA .......................................................................................................................... 71
6.2 Contracts awarded to Impulse International (Pty) Ltd ........................................................ 72
6.2 Procurement of services ...................................................................................................... 74

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

8. CDH Legal Finding and Recommendation 80

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i) List of Abbreviations

Below is a list of abbreviations utilised in the report:

Abbreviation Description

BODTC Board Tender Committee

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

Capex Capital Expenditure

CC Close Corporation

CE Chief Executive

CEO Chief Executive Officer

CFO Chief Financial Officer

C&I Control and instrumentation

CIPC Company and Intellectual Property Commission

Constitution Constitution of South Africa, no 108 of 1996

CPO Chief Procurement Officer

CSD Central Supplier Database

DE Divisional Executive

DOA Delegation of Authority

DCF Delegation Consent Form

DOI Delegation of Interest

EXCO Executive Committee

EXCOPS Executive Committee Procurement Sub- Committee

FD Finance Director

GE Group Executive

HR Human Resources

Interim CEO Interim Chief Executive Officer

LPO Local Purchase Order

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Abbreviation Description

Mokoni trust Mokoni trust (IT000216/2016(MN)

NDA Non-disclosure agreement

NEC New Engineering Contract

NT Regulations National Treasury regulations

Opex Operational Expenditure

PCM Process Control Manual

PFMA Public Finance Management Act, no 1 of 1999

PO Purchase Order

PPPFA Preferential Procurement Policy Framework Act, no 5 of 2000

PR Purchase requisition

(Pty) Ltd Propriety Limited

PTC Procurement Tender Committee

RFP Request for proposal

SAP system Systems Applications and Products system

SCM Supply Chain Management

SD&L Supplier Development and Localisation

VAT Value Added Tax

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ii) List of Role Players

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

Abbreviation Description of Person

Male individuals

Mr Bezuidenhout CW Bezuidenhout, Procurement Manager: Eskom Holdings

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

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

Mr Coetzee Johannes Coetzee, lawyer representing Ms Koko

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

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

Mr Fourie W Fourie, Financial Manager: Kriel Power Station

Mr Ibrahim S Ibrahim, Project Manager: Medupi Power Station

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

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

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

Mr Lefifi K Lefifi, Project Manager: Kendal Power Station

Mr Gani Asger Gani, Attorney representing Ms Choma

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

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

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

Mr Mazibuko Sifiso Mazibuko, Project Director: Kusile Power Station

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

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

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Abbreviation Description of Person

Mr Mollo P Mollo, Procurement Manager: Majuba Power Station

Tebogo Mokhutsane, Chairman: Kriel Procurement Tender Committee (Middle


Mr Mokhutsane
Manager Operating CoE)
Thulani Mtshali, Delivery Manager/Senior Manager: Kusile Power Station
Mr Mtshali
Project

Mr Mulovhedzi E Mulovhedzi, Procurement Manager: Kendal Power Station

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

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

Mr Ndila L Ndila, Procurement Officer: Majuba Power Station

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

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

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

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

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

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

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


Mr Seswai
trust)

Mr Singh Anoj Singh, Chief Financial Officer: Eskom Holdings

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

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

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

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

Female individuals

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

Ms Daniels Suzanne Daniels, Company Secretary: Eskom Holdings

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Abbreviation Description of Person

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

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

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

Suzane Ramapulane, Control & Instrumentation Manager: Majuba Power


Ms Ramapulane
Station

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

Ms Strydom Christa Strydom, Procurement Practitioner: Eskom Holdings

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

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iii) List of Entities

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

Abbreviation Description of Entity

CDH Cliffe Dekker Hofmeyr Attorneys

Eskom Eskom Holdings SOC Limited

ERI Eskom Rotek Industries SOC Limited

High Echelon Trading High Echelon Trading 94 CC

Impulse Holdings Impulse Holdings (Proprietary) Limited


Impulse International
Impulse International (Proprietary) Limited
(Pty) Ltd
Indiwize Construction Indiwize Construction (Proprietary) Limited

JKMA JKMA Investments (Proprietary) Limited

Nkonki Nkonki Incorporated

NT National Treasury

PwC PricewaterhouseCoopers Incorporated

Rotek Rotek Industries (Proprietary) Limited


Ukwakhiwa Ukwakhiwa Investments (Proprietary) Limited

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iv) List of Exhibits

Exhibit
Description of Exhibits
No.
Company and Intellectual Property Commission search results for Impulse International (Pty) Ltd
1
with registration number 2012/097222/07
Company and Intellectual Property Commission search results for JKMA Investments (Pty) Ltd
2
with registration number 2016/087062/07
Company and Intellectual Property Commission search results for Ukwakhiwa Investments (Pty)
3
Ltd with registration number 2016/072200/07
Company and Intellectual Property Commission search results for Impulse Holdings (Pty) Ltd with
4
registration number 2012/084488/07
Company and Intellectual Property Commission search results for Indiwize Construction (Pty) Ltd
5
with registration number 2012/196338/07
Company and Intellectual Property Commission search results for High Echelon Trading 94 CC
6
with registration number 2002/063138/23

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

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

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

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

Central Supplier Database (CSD) for Government reflecting registration of Impulse


11
International (Pty) Ltd

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

13 Declaration of Interest e-form dated 3 September 2015

14 Declaration of Interest e-form dated 8 June 2016

15 Declaration of Interest e-form dated 24 February 2017

16 Letter of caution dated 3 October 2016

17 Declaration of interest e-form dated 11 February 2008

18 Declaration of interest e-form dated 11 August 2008

19 Declaration of Interest e-form dated 30 July 2009

20 Declaration of Interest e-form dated 28 February 2011

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Exhibit
Description of Exhibits
No.

21 Declaration of Interest e-form dated 26 October 2011

22 Declaration of Interest e-form dated 16 May 2012

23 Declaration of Interest e-form dated 3 June 2013

24 Declaration of Interest e-form dated 3 June 2014

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

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

Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 April


27
2016 for Contract 4600061441
Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 August
28
2016 for Contract 4600061009
Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12
29
September 2016 for Contract 4600061859
Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 12 May
30
2017 for Contract 4600062251
Supplier Declaration of Interest submitted by Mr Pather (Impulse International) dated 18 May
31
2017
Eskom Vendor Registration for Impulse International (Pty) Ltd on 19 August 2014 with vendor
32
registration number 11082200

33 Contract number 4600060205 with related documentation

34 Contract number 4600061009 with related documentation

35 Contract number 4600061015 with related documentation

36 Contract number 4600058830 with related documentation

37 Contract number 4600061441 with related documentation

38 Contract number 4600061859 with related documentation

39 Contract number 4600061909 with related documentation

40 Contract number 4600062251 with related documentation

41 Contract number 4600055020 with related documentation

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Exhibit
Description of Exhibits
No.

42 Contract number 4600063626 with related documentation

43 CDH Memorandum dated 3 June 2017

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Executive Summary
1. It is evident that Mr Koko was appointed as the GE: Generation during late 2015. He was
also responsible for Technology, consisting of maintenance and engineering. He was
appointed as the Interim Group Chief Executive (CE) with effect from 1 December 2016
until the vacant post of the Group CE is filled or until he is advised otherwise.

2. Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014
and was appointed by Eskom from the 22 July 2014 as per the SAP system information to
render services to Eskom.

3. It was established that the initial contract with reference number 4600055020 was signed
between Eskom and Impulse International (Pty) Ltd on 21 August 2014 for the provision
of specialised services. The first Impulse International (Pty) Ltd invoice dated 19 August
2014 and referenced 106 was submitted for payment in respect of work done during the
period ending 17 August 2014. According to an internal Eskom procurement document
dated 15 July 2014 and named as Medupi Power Station Project the procurement was
classified as emergency procurement.

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


requirement. When an emergency arise and there is no procurement function
immediately available or there is limited time to initiate a normal procurement process
via one of the acceptable procurement methods or sourcing mechanisms, then the
emergency procurement procedure may be used to resolve the emergency situation.
This procedure is described in paragraph 3.5.2 of the Procedure document (32 1034).

5. It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and
was also appointed as a sub-contractor to render services to Eskom. We established that
10 (ten) contracts were awarded by Eskom to Impulse International (Pty) Ltd in the total
value of R 390 139 515.22 according to the SAP system. It was further established that
Impulse International (Pty) Ltd was not appointed on any Eskom panel of service
providers.

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6. The total payments received by Impulse International (Pty) Ltd as a sub-contractor to ABB
South Africa (Pty) Ltd amounts to R343 518 005.54 according to documentation provided
by Mr Pather.

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


Impulse International (Pty) Ltd on 31 March 2016. Mr Pather the CEO of Impulse
International (Pty) Ltd initially allocated 25% shareholding to Ms Choma on 31 March
2016. According to Mr Pather, 35 % shareholding was allocated to her in total in order
to ensure a favourable BEE score.

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


September 2016. She stated that she was not employed by Impulse International (Pty)
Ltd nor did she received any payment relevant to her appointment as a non-executive
director. Mr Pather confirmed that no payment was made to Ms Choma as a non-
executive director.

9. The Mokoni trust with reference IT 2000216/2016(MN) was registered on 7 July 2016 and
on 21 September 2016 Ms Choma transferred 25 % shares in Impulse International (Pty)
Ltd to the Mokoni trust where she was registered as a trustee and a beneficiary. Mr
Pather transferred 10% shareholding of Impulse International (Pty) Ltd to the Mokoni
trust on 21 September 2016.

10. The graphical representation relevant to the declaration of interest by Mr Koko and the
appointment of Ms Choma as a non-executive director and shareholder of Impulse
International (Pty) Ltd is reflected hereunder:

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11. Ms Koko and Ms Choma confirmed that Mr Koko was not informed of her appointment
as a non-executive director at Impulse International (Pty) Ltd on 31 March 2016. Mr Koko
became aware of her appointment as director and shareholder around
August/September 2016 where after he requested her to resign as a non- executive
director and relinquish her shareholding in Impulse International (Pty) Ltd. She submitted
her resignation on 20 September 2016 as a non-executive director and decided to
transfer her shares to the Mokoni trust. Mr Koko was not aware at the time of her
decision to keep the shareholding in Impulse International (Pty) Ltd via the Mokoni Trust.

12. Mr Coetzee from Strh Coetzee Attorneys confirmed that he advised inter alia Ms Koko
for the past 20 years and acted as her attorney and conveyancer. According to Mr
Coetzee, the latest business venture that Ms Koko undertook, was a town house
development situated in Buitekant Street, Middelburg under the name Three on
Buitekant. Mr Coetzee confirmed that he advised Mr Choma, Ms Choma and Ms Koko
on the restructuring and establishment of various companies, trusts and business entities
as their family attorney.

13. Mr Coetzee advised Ms Koko and Ms Choma in February 2016 to structure their business
entities and shareholding vehicles in such a manner as to optimise risk management,

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estate planning and business efficiency. Ms Koko and Ms Choma followed his advice and
they established the Mokoni and Bokoni trusts during February 2016 although both trusts
were only registered in July 2016. He confirmed that it was always the intention that
shares should not be held by Ms Choma in her own name but through trust structures and
that she should conduct business in the name of separate legal entities.

14. According to Mr Coetzee, they registered Ukwakhiwa Investments (Pty) Ltd which was
set up in February 2016. The company was not retained as a shelf company, but was
actively trading and involved in the building activities of the Three on Buitekant
townhouse project. Mr Coetzee stated that he has never met or spoken to Ms Kokos
new husband, Mr Koko.

15. Mr Coetzee confirmed that he was approached in February 2017 to file the resignation
of Ms Choma as trustee in both trusts with the Master of the High Court Mpumalanga
and the amendment of the trust deeds to remove her as a trustee was lodged with the
Master of the High Court during February 2017.

16. Mr Koko was informed in February 2017 that Ms Choma was a beneficiary to the Mokoni
trust that held 35% shareholding in Impulse International (Pty) Ltd since 21 September
2016. After he became aware of Ms Chomas shareholding, he declared her interest in
the trust, which holds 35% shares in Impulse International (Pty) Ltd, to Eskom.

17. Mr Koko declared on 24 February 2017 that his stepdaughter is a beneficiary in a trust
which owns 35% interest in the entity styled Impulse International (Pty) Ltd. This
declaration was approved by the Chairperson of the Eskom Board, Dr Baldwin Ngubane
on 1 March 2017.

18. Mr Pather did not declare the directorship or shareholding of Ms Choma to Eskom during
2016 when Impulse International (Pty) Ltd was awarded 4 (four) contracts to the
accumulative value of R193 665 807.77 during 2016 as per the SAP system information.

19. Mr Pather declared his relationship with Mr Koko on 12 May 2017 after signing a contract
(4600062251) with Eskom on 28 February 2017.

20. We received a letter from the attorney of Mr Pather on 26 May 2017 indicating that in
hindsight, disclosure should have been made and was prudent not only to safeguard the

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interest of Eskom, but also, as afore stated, to be transparent and accountable and
thereby serve the interest of the respective contracting parties as well as the public
interest.

21. The timeline hereunder reflects a summary of events/dates relevant to the declaration
on interests of Mr Koko and appointment of Ms Choma at Impulse International (Pty) Ltd.

Legend
DATE
SHADE DATE TO EVENT
FROM
Ms Choma was appointed director of
31-Mar-16 20-Sep-16
Impulse International (Pty) Ltd
Ms Choma was appointed beneficiary and trustee of
07-Jul-16 23-Feb-17
Mokoni trust
Ms Choma resigned as trustee of Mokoni trust
23-Feb-17 End of Timeline
and is sole beneficiary of Mokoni trust

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22. According to the SAP data provided by Eskom, the peak period of financial transacting
amounting to 56% of all contracts (to date) between Eskom and Impulse International
(Pty) Ltd was in year 2016 as presented below:

YEAR NO OF CONTRACT CUMULATIVE VALUE % PER YEAR


2014 1 R 10 722 228,66 3%
2015 1 R 65 854 766,64 19%
2016 4 R 193 665 807,77 56%
2017 3 R 78 355 912,15 22%
TOTAL 9 R 348 598 715,22 100%

23. According to the currently available documentation, Eskom utilised their procurement
processes as described in their procurement policy, in the awarding of contracts to
Impulse International (Pty) Ltd. There are no indication on any of the available
documentation sourced that Mr Koko was involved in the approval and awarding of
contracts to Impulse International (Pty) Ltd.

24. It appears from the available evidence, that Mr Koko was not informed regarding the
directorship and shareholding of Ms Choma in Impulse International (Pty) Ltd on the
commencement and duration thereof. There was therefore no conflict of interests to be
made by Mr Koko in 2016 regarding the non-executive directorship and shareholding of
Ms Choma in Impulse International (Pty) Ltd.

25. The available evidence support Mr Kokos version that he requested Ms Choma to resign
as a non-executive director of Impulse International (Pty) Ltd and relinquish her
shareholding in the entity after he became aware of same during August/September
2016. Mr Koko became aware of the fact that Ms Choma was a beneficiary in the Mokoni
trust in February 2017 and he declared her shareholding in the trust, which holds 35%
shares in Impulse International (Pty) Ltd to Eskom on 24 February 2017, which declaration
was approved by Dr B Ngubane.

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26. The legal opinion obtained relevant to section 75 of the Companies Act, also addresses
the conflict of interest provisions in the PFMA as well as Eskom's internal conflict of
interest policies. The opinion albeit based on the face of it and the evidence provided
that whilst there are some technical differences between the Companies Act, PFMA and
the policies in terms of their ambit and the range of persons to whom they apply,
ultimately their basic and essential principles are the same: There must be disclosure and
recusal where one (or one's related parties) are interested in the matter being considered
at a meeting or other decision-making forum, and additionally ongoing updates of
personal business interests must be made within the organisation.

27. Section 75 of the Companies Act referred to above, provides that if a director/prescribed
officer of a company acquires a personal financial interest in an agreement or other
matter in which the company has a material interest, or knows that a related person has
acquired a personal financial interest in the matter, after the agreement or other matter
has been approved by the company, the director/prescribed officer must promptly
disclose that interest.

28. Mr Koko upon becoming aware that Ms Choma is registered as a beneficiary to the
Mokoni trust in February 2017, declared her shareholding in the trust, which holds 35%
shares in Impulse International (Pty) Ltd, to Eskom as contemplated by section 75 of the
Companies Act, no 71 of 2008 and as provided for by Eskom's declaration of interest
policy.

27. The facts as set out in this report are based on a limited fact-gathering and interviewing
process. In the circumstances, without having interrogated the evidence gathered and
based on the untested statements and documentation made available to us, we are
unable on the basis of this fact finding enquiry to come to any conclusion.

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Chapter 1: Introduction
1.1 Background
1.1.1 Cliffe Dekker Hofmeyr Attorneys (CDH) was instructed by Eskom Holdings SOC Limited
(Eskom) to conduct a forensic and legal investigation in respect of various articles
published concerning the potential conflict of interest relating to the Interim Chief Executive
Officer (CEO), Mr Matshela Kokos (Mr Koko) stepdaughters shareholding in an entity
styled Impulse International (Pty) Ltd (Impulse International), the latter being a service
provider to Eskom.

1.1.2 The objective of the investigation was to ascertain whether the allegations could be
corroborated and/or substantiated by evidence including viva voce, real and/or
documentary evidence which investigation was limited to a fact-gathering and interviewing
process

1.1.3 The process of a full investigation including examination and cross-examination of witnesses
was not the process followed.

1.1.4 This report was prepared to set out the outcome of the fact-gathering and interviewing
process in order that opinions can be given and recommendations made on the way forward
having regard to the content of the report.

1.1.5 CDH informed Eskom on 28 March 2017 that it would be appointing an independent auditing
firm to assist with the forensic investigation.

1.1.6 Nkonki Incorporated (Nkonki) was appointed on 3 April 2017 by CDH to conduct a forensic
investigation concerning the potential conflict of interest relating to Mr Kokos
stepdaughters shareholding in Impulse International (Pty) Ltd.

1.2 Mandate and scope of assignment


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

1.2.2 The scope of work included inter alia to:

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


as well as the appointment and/or resignation dates of the directors in order to
establish if Ms Koketso Choma (Ms Choma) was appointed as a director and if so,
whether she resigned as a director;

Obtain the relevant information regarding all the contracts awarded to Impulse
International by Eskom;

Consult with the CEO of Impulse International, Mr Pragasen Pather (Mr Pather)
regarding the appointment and resignation of Ms Choma as a director of the company
and the detail of contracts awarded to Impulse International by Eskom;
Obtain information relevant to the shareholding of Impulse International and
declarations of interests made by Ms Choma;
Obtain detail from Eskom regarding the contracts awarded to Impulse International
and the procurement processes followed when the contracts were awarded including
the value thereof;
Obtain Mr Kokos declaration of interests for the year 2016 and 2017;
Obtain information regarding the Mokoni trust and its interests in Impulse
International; and

Any additional information should the need arise before conclusion of the
investigation.

1.3 Purpose of the report


1.3.1 The purpose of this draft report is to make known our findings emanating from the
investigation conducted as described in the scope of work above.

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

1.4 Qualifications
1.4.1 This report is to be used solely for the purpose and subject to the limitations, set out in this
section. The report serves as an information document and may not be used for any other
purpose, without our prior consent.

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1.4.2 Although we have, to the best of our professional ability, examined documentation made
available to us, the information contained in this report is subject to the following:

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


us has been assumed;

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


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

Where we have not had sight of a document following a request, we were not able to
verify its existence and assumed that a record thereof has not been kept.

1.4.3 We confirm our role as independent consultants and that our independence in conducting
this investigation cannot be limited by any party. The report in its current format is not
intended for use as submission in civil litigation, criminal litigation and disciplinary hearings.

1.4.4 Nkonki will not accept any responsibility should this report be disclosed or released to any
party, other than the intended recipient.

1.4.5 Nkonki does not accept any liability for any loss, either directly or indirectly, suffered by any
third party arising from the fulfilment of the mandate.

1.4.6 The scope of the work was limited to an investigation into allegations made in various articles
concerning the potential conflict of interest relating to Mr Kokos stepdaughters
shareholding in Impulse International.

1.4.7 Although the work performed incorporates our understanding of the law as it stands, we do
not express an opinion on the interpretation of the law or the legal effect of the facts or the
guilt or innocence of any person or party, but have merely stated the facts as they have come
to our attention. The procedures performed do not constitute an audit or a review in
accordance with International Standards on Auditing or International Standards on Review
Engagements (or relevant national standards or practices). Consequently, we do not express
an audit or legal opinion thereon.

1.5 Limitations/Assumptions
1.5.1 During our investigation, the following encumbrances were experienced:

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


International (Pty) Ltd and we accepted the documentation at face value;
We were limited to a scoping period of 1 April 2016 to 31 March 2017 to source
documentation; and
We were limited to a scoping period of September 2014 to 28 March 2017 to source
data from the Eskom SAP system.

1.5.2 We were limited to documentation and data provided by Eskom relevant to Impulse
International (Pty) Ltd. We did not source documentation or data relevant to transactions
where Impulse International (Pty) Ltd was appointed as a sub-contractor to contractors
appointed by Eskom.

1.5.3 We received documentation from Impulse International (Pty) Ltd on 23 May 2017 relevant
to contracts entered into between Eskom and Impulse International (Pty) Ltd and we utilised
the documentation in context of the investigation at face value.

1.5.4 Our analysis was limited to procurement transactions where payments were effected. We
did not include procurement transactions that were limited to PO's that had no respective
payments to corresponding invoices.

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Chapter 2: Approach
2.1 Introduction
2.1.1 Our methodology and approach to conduct this investigation is reflected hereunder.
2.1.2 We were required to:
Establish the veracity of the allegations made in articles relevant to the potential
conflict of interest regarding the Interim CEO, Mr Koko;
Ascertain whether the allegations could be corroborated and/or substantiated by
evidence including viva voce, real and/or documentary evidence.

2.2. Assignment scope


2.2.1 We were required to conduct an investigation to determine the veracity of allegations
made in various articles relevant to the potential conflict of interest of the Interim CEO
and the shareholding of his stepdaughter in the entity styled as Impulse International.
We had to review and analyse documentation, conduct consultations and analyse data
relevant to the allegations referred to supra.

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

Sourcing of documentation and data relevant to the matter;


Analysis of documentation and data sourced;
Conducting consultations with identified role players; and
Identifying the veracity of the allegations referred to supra.

2.3 Procedures performed


2.3.1 Our procedures followed included inter alia:
Information, documentation and data sourced and received during the
investigation were perused and analysed;
Consultations were conducted with Eskom employees;
Consultation were conducted with external parties;
Written communication was forwarded to and received from external parties;

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Publicly available information was sourced regarding legal entities identified during
the investigation; and
Publicly available information was sourced regarding individuals identified during
the investigation.

2.3.2 We proceeded with a view to establish the correctness of the allegation of potential
conflict of interest made against the Interim CEO.

2.3.3 The investigation focused on the analysis of documentation, information and data
relevant to Eskom and Impulse International and where considered appropriate,
supporting documentation and explanations.

2.3.4 We are, however, not able to certify that we received all the documentation that may be
in existence or that the contents of any documentation at our disposal or any statements
or information obtained by or made available to us are true and correct. If additional or
further documentation is made available after the date of this report, our findings might
change relevant to our current assignment.

2.4 Period under investigation


2.4.1 The period of our investigation extended from 1 April 2016 to 31 March 2017. In certain
instances, we considered events and/or transactions and/or data outside of this period.
The information contained in this report is based on prevailing conditions and
documentation and information sourced as at 13 June 2017. This report and information
contained herein shall not amount to any form of guarantee that Nkonki has determined
or predicted future events or circumstances.

2.5 Consultations
2.5.1 Consultations were conducted with the following Eskom employees:

Mr Abram Masango;
Mr Anoj Singh;
Mr Frans Sithole;
Mr Sifiso Mazibuko;
Ms Elsie Pule;

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Mr Thulani Mtshali; and


Mr Matshela Koko.

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

Ms Koketso Choma
Mr Pragasen Pather (two consultations); and
Ms Mosima Koko.

2.5.3 We conducted consultations with 3 (three) individuals who wanted to stay anonymous
and who alleged that they could assist with the investigation.

2.5.4 At the time of our report, we did not consult with Dr B Ngubani in order to confirm any
discussion with Mr Koko regarding the conflict of interest that was reported on 24
February 2017.

2.5.5 We attempted to arrange a consultation with Mr Watson Seswai (Mr Seswai), one of
the trustees of the Mokoni trust, but decided not to proceed as Mr Seswai forwarded
specific requirements for a consultation via his legal representative.

2.6 Documentation sourced


2.6.1 We requested documentation from Eskom which included inter alia copies of policies and
procedures, minutes of Executive Committee Procurement Sub- Committee (EXCOPS)
and Board Tender Committee (BODTC) meetings, contracts entered into between
Eskom and Impulse International, financial transaction documentation, etc.

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

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


Copies of DOAs authorised in 2013 and 2017;
Copies of declarations of interests submitted by Mr Koko for the period 2009 to
2017;
Copies of declarations of interests submitted by Impulse International (Pty) Ltd for
the period 2014 to end of March 2017;

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


Company search documentation relevant to the entities referred to in the report;
Director search documentation relevant to the individuals referred to in the report;
Copies of the following contracts awarded to Impulse International (Pty) Ltd;
Contract 4600055020: Medupi Power Station - July 2014;
Contract 4600058830: Various Power Stations - November 2015 to June
2016;
Contract 4600061441: Kriel Power Station - April 2016;
Contract 4600060205: Kusile Power Station - July 2016;
Contract 4600061009: Kusile Power Station - July 2016 - Extension on
4600060205;
Contract 4600061015: Kendal Power Station - September 2016;
Contract 4600061859: Majuba Power Station - September 2016;
Contract 4600061909: Kriel Power Station - November 2016; and
Contract 4600062251: Kendal Power Station - February 2017.
Copy of letter of award of contract MPGXC004442: Matla Power Station -
February/March 2017.
Minutes of EXCOPS meetings for the period 1 April 2016 to 31 March 2017; and
SAP data extracts related to Impulse International (Pty) Ltd including purchase
order (PO) and invoice detail for the period September 2014 to March 2017.
2.6.3 We sourced documentation from Mr Pather and Ms Koko during the investigation and
relevant to the alleged conflict of interest, including inter alia:
An organigram detailing the Impulse group of companies;
Share register of Ukwakhiwa Investments (Pty) Ltd;
Tender register of Impulse International (Pty) Ltd as at 22 December 2016;
Valuation report of High Echelon Trading 94 (Pty) Ltds property investment at 3
Buitekant Street, Middelburg;
Copies of 10 (ten) contracts entered into with Eskom with supporting
documentation;
Copies of 3 (three) purchase orders issued by Eskom to Impulse International (Pty)
Ltd with supporting documentation;

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Electronic files detailing Impulse International (Pty) Ltds company registration;


Video on Impulse International (Pty) Ltds corporate social investment (CSI);
Digital file reflecting Impulse International (Pty) Ltd structure and organogram;
Spreadsheet containing contract information;
Spreadsheet containing payment information from Eskom;
Subcontracting information relevant to ABB South Africa (Pty) Ltd;
Information relevant to various Impulse International (Pty) Ltd contracts per
location; and
Digital copies of declaration of interests made by Impulse International (Pty) Ltd to
Eskom.

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Chapter 3: Regulatory framework


3.1. Background
3.1.1 In terms of Schedule 2, Part A of the Public Finance Management Act (PFMA), no 1 of
1999, Eskom is listed as at 30 April 2015 as a major public entity and should therefore
comply with the requirements applicable to supply chain management in the public
sector. A review of the legislative framework that forms the premise of our findings has
been conducted which framework includes inter alia, the following:

The Constitution of South Africa, no 108 of 1996;

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

National Treasury Regulations/Instruction Notes;

National Treasury Code of Conduct;

Corporate Governance in the Public Sector;


Preferential Procurement Policy Framework Act, 5 of 2000;
Eskoms Procurement and Supply Management Procedure (32 - 1034);
Eskoms Private Work Policy (32 1186);
Eskoms Code of Ethics Procedure (32 - 757);
Eskoms Code of Ethics The Way Policy (32 527);
Eskoms Declaration of Interest Procedure (32 225);
Eskoms Process Control Manual (PCM) for Manage Vendor Master Data (240-
45657065);
Eskoms PCM for Source External Suppliers (240-78921684);
Eskoms Supplier Integrity Pact (240-113650212);
Eskoms Delegation of Authority Policy (240-62072907);
Compliance to the Preferential Procurement Policy Framework Act (PPPFA), no
5 of 2000;
Eskoms PCM for Source Internal and State Owned Suppliers (240-78921668);
Eskoms Practice Note and guide on the implementation of the PPPFA (240-
53207174);

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Eskoms Conflict of Interest Policy (32 173);


Eskoms Delegation of Authority Policy (240-62072907);
National Treasury Instruction SCM Instruction Note 3 of 2016/2017; and
Eskoms requirements for probity checks and proactive assurance review (240-
51036654).

3.2 The Constitution, no 108 of 1996


3.2.1 Section 217 (1) of the Constitution, no 108 of 1996 provides that "when an organ of state
in the national, provincial or local sphere of government, or any other institution identified
in national legislation, contracts for goods or services, it must do so in accordance with a
system which is fair, equitable, transparent, competitive and cost-effective."

3.2.2 Sub-section (2) thereof states that sub-section (1) does not prevent the organs of state or
institutions referred to in that sub-section from implementing a procurement policy
providing for (a) categories of preference in the allocation of contracts; and (b) the
protection or advancement of persons, or categories of persons, disadvantaged by unfair
discrimination.

3.3 The PFMA, no 1 of 1999

3.3.1 The PFMA regulates financial management in the public entities as listed in inter alia
Schedule 2 of the Act. The legislation empowers National Treasury (NT) to issue
guidelines and instructions or practice notes on various issues relating to procurement
with the aim to ensure minimum norms and standards to government.

3.3.2 As already indicated, Eskom is defined as a major public entity in terms of Schedule 2, of
the PFMA and should therefore comply with the requirements applicable to supply chain
management in the public sector. Section 3 of the PFMA provides that in the event of
any inconsistency between this Act and any other legislation, this Act prevails.

3.3.3 In terms of section 49 of the PFMA every public entity must have an authority which must
be accountable for the purposes of the PFMA. The Eskom Board is the accounting
authority for purposes of the PFMA and the Board must exercise the duty of utmost care
to ensure reasonable protection of the assets and records of the public entity.

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3.3.4 The Board must also take effective and appropriate steps against any employee of Eskom
who contravenes or fails to comply with a provision of the PFMA, who commits an act
which undermines the financial management and internal control system of Eskom or
makes and/or permits an irregular expenditure or fruitless and wasteful expenditure.

3.3.5 In terms of section 76 (4) of the PFMA, the National Treasury (NT) may make regulations
or issue instructions applicable to all institutions to which the PFMA applies concerning,
inter alia, the determination of a framework for appropriate procurement and a
provisioning system which is fair, equitable, transparent, competitive and cost effective
and any other matter that may facilitate the application of the PFMA.

3.3.6 The Board commits an act of financial misconduct in terms of section 83 of the PFMA if it
willfully or negligently fails to comply with a requirement of section 50, 51, 52, 53, 54 or
55 of the PFMA or makes and/or permits an irregular expenditure or fruitless and wasteful
expenditure.

3.3.7 In terms of section 83 (2) of the PFMA, every member of the Board is individually and
severally liable for any financial misconduct as referred to in paragraph 3.3.6.

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

(a) The manner, form and circumstances in which allegations and disciplinary in
criminal charges of financial misconduct must be reported to the National
Treasury, the relevant Provincial Treasury and the Auditor General including

(i) particulars of the alleged financial misconduct; and

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

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

(c) The circumstances in which the National Treasury or a provincial treasury may
direct that disciplinary steps be taken or criminal charges be laid against a person
for financial misconduct;

The circumstances in which the findings of a disciplinary board and any sanctions imposed
by the board must be reported to the National Treasury, the relevant provincial treasury
and the Auditor General.

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3.4 National Treasury Regulations/Instruction Notes


3.4.1 The NT Regulations published in March 2005 and promulgated in terms of section 76(4)
of the PFMA, prescribes a procurement framework giving effect to section 217 of the
Constitution. It applies to all public entities in Schedule 2, but only to the extent as
indicated in paragraph 6.1.2 and regulations 24, 25, 27 to 29 and 31 to 33.

3.4.2 Accounting authorities are required to develop and implement an effective and efficient
supply chain management (SCM) system for the acquisition of goods and services. The
SCM system is required to be fair, equitable, transparent, competitive and cost effective
and to be consistent with the PPPFA and the Broad Based Black Economic Empowerment
Act (BBBEE), no 53 of 2003.

3.4.3 All officials and other role players in SCM systems must comply with the highest ethical
standards in order to promote mutual trust and respect and an environment where
business can be conducted with integrity, and in a fair and reasonable manner.

3.4.4 The accounting authority must check NTs database before awarding contracts to ensure
that no recommended bidders, or any of its directors, are listed as companies or persons
prohibited from doing business with the public sector. The accounting authority must
further reject a proposal for the award of the contract if the recommended bidder has
committed a corrupt or fraudulent act in competing for the particular contract.

3.4.5 The accounting authority must cancel an awarded contract if the supplier committed any
corrupt or fraudulent act during the bidding process or execution of the contract, as well
as when official/other role player committed corrupt or fraudulent act during the bidding
process to the benefit of such supplier. It may also disregard a bid of any bidder if that
bidder, or any of its directors, have abused the institutions SCM system, committed fraud
or any other improper conduct in relation to such system or have failed to perform on any
previous contract.

3.4.6 Regulation 33.1 requires that if any employee is alleged to have committed financial
misconduct, the accounting authority must ensure that an investigation is conducted into
the matter and if confirmed, must ensure thereafter that a disciplinary hearing is held.
This is also a requirement in terms of section 85 (1) of the PFMA.

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3.5 National Treasury Code of Conduct


3.5.1 In terms of NT Practice Note 4 of 2003, SCM officials and other role players involved in the
SCM process should adhere to the Code of Conduct for SCM practitioners. SCM
practitioners and other role players involved in SCM processes:

must disclose conflict of interests;


may not use positions for private gain or to improperly benefit another person;
may not compromise the integrity or credibility of the SCM system through
acceptance of gifts or hospitality or any other act;
must be scrupulous in the use of public property;
must assist accounting authorities in combating corruption and fraud in the SCM
system;
always disclose interests of family members, partner or associate and withdraw
from participating in the process; and
any breach or failure to comply must be reported to the accounting authority in
writing.

3.6 Corporate Governance in the Public Sector


3.6.1 Although the PFMA as referred to above, should be considered in its entirety, sections 46
to 86 are of particular importance for financial governance issues. Accounting authorities
must ensure that accurate books and records are kept and that financial statements and
other statutory reports are prepared.

3.6.2 To ensure that public entities are achieving objectives set out in policies, corporate plans
and other planning processes, the Department of Public Enterprises has designed a
framework of compliance for the use of public entities as contemplated in inter alia
Schedule 2 of the PFMA. This policy framework for State Owned Enterprises was
published in August 2000.

3.6.3 Corporate Governance was further institutionalized by the publication of the King I Report
in November 1994. The Report was later superseded by legislation as referred to
hereunder and also the King II, King III and King IV Reports.

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3.7 The PPPFA, no 5 of 2000


3.7.1 The Preferential Procurement Policy Framework Act, 5 of 2000 (PPPFA) gives effect to
section 217(3) of the Constitution. It, among others, provides that an organ of state must
determine its preferential procurement policy and implement it within the prescribed
framework. This also provides for the promulgation of regulations. The primary aim of the
PPPFA is to address past discriminatory policies and practices in the government
procurement system.

3.8 Eskom Procurement and Supply Management


Procedure (32-1034)
3.8.1 This Procedure sets out procedures governing operational areas within the procurement
and supply chain operations managed under Group Executive: Technology and
Commercial within Eskom. It applies uniformly throughout Eskom, its Divisions, wholly-
owned subsidiaries and entities wherein Eskom has a controlling interest, operating in
terms of South African law, which are subject to the provisions of the PFMA.

3.8.2 The Procedure was compiled by Group Technology and Commercial: Risk & Governance
and it was signed off on 19 May 2014 by Mr Koko, the Group Executive (Acting)
Technology and Commercial. The revision date of this procedure was April 2017.
Although we perused the complete procedure document, reference is made in the report
to specific paragraphs applicable on the current investigation.

3.8.3 The Procedure inter alia states that the Chief Executive (CE) delegated procurement
authority to the Executive Committee (EXCO) and some authority has in turn been
delegated to the EXCO procurement Sub-Committee (EXCOPS) to approve
procurement/disposals which exceed head office operational/capital expenditure
procurement tender committee delegations. The Group Executive: Technology and
Commercial as a member of the EXCO, is appointed to lead and manage the Technology
and Commercial Group within Eskom.

3.8.4 The Delegation of Authority (DOA) Policy forms part of the approved procurement
framework and the core principle is that individual employees may be permitted by a

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


assets, goods or services, either acing in a dual, triple or as part of a tender committee.
DOAs for the procurement or disposal of assets, goods or services, must be exercised with
the recommendation and approval of another delegated and accredited procurement
practitioner as part of a dual or triple adjudication system of approval, or with approval
from a delegated Procurement & Tender Committee (PTC).

3.8.5 Sole adjudication or sole signature authorities are no longer permitted, except in the case
of Local Purchase Order (LPO) approvals granted by Cost Centre Managers, which are
processed and authorised via workflow on the SAP system.

3.8.6 A duel transaction applies to commercial transactions not exceeding R1 million in value,
excluding value added tax (VAT) and not exceeding 1 year in contract duration. Triple
adjudication applies to the approval of commercial transactions not exceeding R5 million,
excluding VAT and not exceeding a contract duration of 2 years.

3.8.7 Where the value and/or duration of a procurement or disposal exceeds the delegations
of duel and triple adjudication, the procurement or disposal must be approved by a
delegated tender committee. In all instances, a tender committee must comprise of
Eskom employees. The DOA granted to the tender committee is distinct from budgetary
approval which is obtained as part of the financial planning process. The delegation
conferred to PTCs includes the specific approvals of condonations, ratifications and
appointments of strategic and management consultants, all of which cannot be
authorised within dual or triple adjudication, irrespective of value.

3.8.8 The delegations for Head Office PTCs have been delegated by the Board and are
authorised by the Group Executive: Technology and Commercial. The Finance Director
(FD) or relevant Group Executive (GE) will give effect to the stipulated DOAs by
making nominations for the appointments of chairpersons and members to the various
site-based tender committees in consultation with the Group Executive: Technology and
Commercial and the Risk and Governance Department within Group Technology and
Commercial.

3.8.9 The procurement process starts with the identification of a need by the end-user or the
Inventory Optimiser in the case of stocked items. Irrespective of the value of the proposed

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


procurement practitioner to proceed with the transaction. The end-user generates a
purchase requisition (PR) which reflects the estimated value, duration and specification
or scope of the assets, goods or services and other information as required.

3.8.10 The Cost Centre Manager approves the PR, taking into consideration the budget, scope of
works and business need. After his/her approval, the PR will be released electronically to
the relevant procurement department.

3.8.11 Eskom approved standard forms of contract and conditions of contract are used for
placing all orders or contracts. The New Engineering Contract (NEC) suite of contracts,
the International Federation of Consulting Engineers (FIDIC) suite of contracts and
selected Eskom in-house contracts are used as conditions of purchase in Eskom. The
procurement practitioner in consultation with the cross-functional team, where
applicable, selects the appropriate contract to best mitigate the risks of the procurement
as part of the approved strategy and such selection is confirmed prior to the issue of the
tender.

3.8.12 Procurement practitioners may execute informal tendering for transactions between the
value of R30 000 up to R1 million. Three quotations must be sourced by the procurement
practitioner. A formal competitive tendering process must be followed for transactions
greater than R1 million (including VAT) and/or greater than one (1) year in duration. This
formal process may also be executed for orders or contracts less than R1 million and/or
less than one year as a result of the complexity and nature of certain contracts below R1
million or where a request for proposal (RFP) is required.

3.8.13 Procurement practitioners are the only employees in Eskom mandated to execute formal
competitive tendering processes. It is Eskoms preferred position to publicly advertise
tenders as far as possible to enable open market participation. It may be permissible to
proceed with a tender on a closed/limited basis where only selected suppliers are
targeted, provided that it is supported by an approved strategy, which motivates why use
of an open tender process is not possible or not practically feasible.

3.8.14 All contracts/orders must be loaded onto the SAP system which facilitates the monetary
and time-related control of contracts. The procurement practitioner must ensure that all

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conditions are loaded correctly and according to the original signed contract before an
End-User or any other authorised official can place orders against the contract.

3.8.15 A contract file is opened for every PR that is executed via a formal or informal tender.
Where only one supplier has been identified as being capable or available to supply the
assets, goods or services, it may become necessary to deviate from competitive bidding
and to follow the sole source process. A supplier can be appointed as a general sole source
for a specified category of assets, goods or services for a maximum period of three years.
The approval for the appointment of the supplier as a general sole source supplier for an
identified category needs to be obtained from the relevant PTC.

3.8.16 Urgent procurement may be deemed foreseeable and not necessarily immediate in need
and emergency procurement is defined as an imminent or immediate and unforeseeable
requirement. Urgent procurement must still be administered via a PR in the SAP system,
using the normal procurement methods and sourcing mechanisms. Urgent requirements
may be approved via special meetings, round robin approvals or within systems of
general or EXCO duel/triple adjudication and should be immediately prioritised by the
relevant procurement manager and the delegated approval authority.

3.8.17 When emergency arise and there is no procurement function immediately available or
there is limited time to initiate a normal procurement process via one of the acceptable
procurement methods or sourcing mechanisms, then the emergency procurement
procedure may be used to resolve the emergency situation. This procedure is described
in paragraph 3.5.2 of the Procedure document (32 1034).

3.8.18 A contract managers primary role is to be the first and single point of contact between
Eskom and the supplier during the execution and delivery phase of the contract. The
contract value and time is used to execute the contract according to the approved scope
of work or the description of the assets, goods or services according to the contract.

3.8.19 In the case of panel contracts, a task order committee may be appointed by the delegated
approval authority to oversee and approve the issuing of task orders. The specific
delegation to manage contractual claims is granted to the Eskom Agent on a Delegation
Consent Form (DCF) and must be approved by the relevant delegated approval
authority. The DCF gives the Eskom Agent the authority to duly assess, manage and

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authorise claims relating to time and money in the contract, which may arise out of
unforeseen or unplanned circumstances and which may result in amendments to the
approved scope or specifications.

3.8.20 In terms of the Procedure, the appointment of a panel of service providers must be
supported by a signed and approved strategy from a relevant PTC and approval for
contract award, which must be obtained from the relevant PTC. Appointed contract
managers are responsible for putting in place appropriate systems and controls to ensure
that:

Work/task orders are distributed fairly and equitably among the panel of service
providers;
Criteria for the selection of a particular service provider for the allocation of
work/task orders are defined and documented and made known to end-users;
The documented and approved task order approval process is utilised;
Task orders are placed against contracts with sufficient funds and time available
for the completion of work/services;
Task orders are supported by a SAP 45 number confirming the
order/commitment; and
Supplier Development and Localisation (SD&L) targets and objectives are being
monitored and tracked.
3.8.21 All invoice approvals and payments must be executed in accordance with the latest
version of Eskoms Accounts Payable Procedure. The procurement manager does not get
involved in the handling of invoices or any payment other than where he/she is assigned
to be the contract manager. All payment certificates must be issued and certified by the
contract manager. The contract may only be terminated in accordance with the
termination clauses and reasons for termination as contained in the contract.

3.8.22 Supplier registration is described under paragraph 3.8.1 of the Procedure document.
Every entity registered as a supplier on the Eskom Supplier Database are required at all
relevant times to conduct themselves in a manner fully consistent and/or in accordance
with the current Eskom Purchasing Pact with Suppliers and the General Conditions of
Supplier Registration.

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3.8.23 The delegated signing authorities for contracts are:

No Approval Authority Signing Authority

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


or GM

2 BODTC Group Executive may nominate a Divisional Executive, SGM


or GM

3 EXCO Divisional Executive may nominate a SGM or GM

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


Manager

5 Head Office and Site PTCs E-band Manager

6 Triple Adjudication Middle Manager

7 Duel Adjudication Manager

8 Non-buyers (LPOs) Cost Centre Managers

3.8.24 Paragraph 3.12.2 refers to the managing of service providers misconduct. According to
the Procedure, every service provider will at all times be treated with fairness. Where a
service providers conduct becomes unacceptable and in breach of the necessary
relationship of good faith required for purposes of maintaining and managing service
provider relationships, Eskom will implement an internal administrative process to
investigate reported acts of service provider misconduct, which may lead to a service
provider being suspended and not being allowed to conduct any business with Eskom
either directly or indirectly for a stipulated period of time.

3.9 Code of Ethics Procedure (32 -757)


3.9.1 The purpose of the Code of Ethics Procedure is to address specific ethics issues in the
workplace and provide guidance on how to address same. Ethical behaviour is defined as
desirable, acceptable conduct that will bring about what is good and right in the
interaction with others. Compliance with Eskoms Code of Ethics, Code of Ethics
Procedure and ethics related policies is required of all directors and employees of Eskom.

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3.10 Code of Ethics Policy (32 527)


3.10.1 This policy provides for the ethical standards and behaviour that are required of all
directors and employees of Eskom and its subsidiaries. The policy was compiled on 6
August 2014 and authorised by the Interim CE on 26 August 2014.

3.11 Conflict of Interest Policy (32 173)


3.11.1 This policy was compiled by M Adam: Corporate Counsel/DE: Regulation & Legal on 6
August 2014 and authorised by Mr Tsotsi: Chairman on 29 August 2014. The policy sets
out the obligations of employees and directors with regard to conflicts of interest and the
declaration and management of these interests.

3.11.2 The duty to declare is a legal obligation and ensure compliance with good governance
practices. Every employee and director has a duty to avoid conflict of interest that could
adversely influence his/her judgement, objectivity or loyalty to Eskom when acting on its
behalf.

3.11.3 In addition to the annual declaration, any conflict of interest must be declared as soon as
the employee or director know that it has arisen, which requires that an amendment to
the annual declaration be submitted within 5 (five) working days of knowing that such
conflict has arisen.

3.11.4 Even if there are no conflicts of interest, the prescribed electronic form must still be
completed and submitted by the directors and employees with a task grading of nine (9)
and above.

3.11.5 Employees and directors should disclose their interests in a particular field of business,
even if it is not directly related to a specific contract/tender being considered by a
committee or the Board or a committee of the Board, especially where strategies
pertinent to that area of business are being discussed.

3.11.6 The fact that an employee or a director declared the conflict of interest, does not mean
that it has been addressed and the conflict must further be managed responsibly. Where
there is a conflict of interest (actual, potential or perceived), it is required that the
employee or director must refrain from being part of any deliberations, document

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preparations, execution or meetings and must not have access to information dealing with
that particular matter. Also, the employee or director must not participate in any decisions
relating to the matter.

3.11.7 Employees may not have a personal or other interest in an Eskom contract, whether as a
supplier, an advisor, or by virtue of being a director or owner of a business, or in any other
capacity. The policy further states that this includes third-party related transactions with
an indirect link to an Eskom contract (for example, having a personal or other interest in a
business that has an interest in a Supplier to Eskom).

3.11.8 Failure to comply with the obligations set out in this policy amounts to a breach of this
policy and could amount to misconduct as defined in Eskoms Disciplinary Code and
Procedure. Such failure may further amount to a contravention of the common law, the
PFMA or the Companies Act, no 71 of 2008.

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

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

b) directors and employees having private business interests in entities that do,
or might do business with Eskom;

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


receive funding or any form of aid from Eskom; and

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


Eskoms interests.

3.11.10 In terms of paragraph 3.3.9 of the policy, the knowing or knows when used of a person in
relation to a particular matter, means that the person either:

(a) had actual knowledge of the matter; or

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

i) had actual knowledge;

ii) Investigated the matter to an extent that would have provided the person with
actual knowledge; or

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iii) taken other measures which, if taken, would reasonably be expected to have
provided the person with actual knowledge of the matter.

3.11.11 Paragraph 3.3.17 defines the related and inter-related person(s) and control relevant to
declaration of conflict of interest. Persons are considered to be related if they inter alia:

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

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

3.11.12 Persons who are considered to be inter-related, means persons who are related to one
another in a linked series of relationships, such that two or the persons are related in a
manner contemplated in subsection (1) and one of them is related to the third in any such
manner and so forth in an unbroken series.

3.11.13 According to the policy, managers and directors need to be aware that their seniority
results in perceptions of conflict more readily and their conduct is therefore subject to
greater scrutiny.

3.11.14 Managers are responsible for ensuring that employees renew their declarations at the
beginning of each financial year and ethics co-ordinators within each division are
responsible for monitoring submissions by employees. The submissions are done at the
end of each month from April to July to ensure 100% divisional submission for the target
group by end July each year. Declarations submitted by Eskoms EXCO must be approved
by the CE and the submissions monitored by the Ethics Office.

3.12 Declaration of Interest Procedure (32 225)


3.12.1 According to this procedure document, every Eskom employee has a duty to avoid a
conflict of interest. It is therefore required to have a process in place for declaring and
effectively managing any conflicts of interest in order to uphold organisational integrity
and good corporate governance. This procedure was compiled on 6 August 2014 by the
Ethics Manager and authorised by the Interim CE on 26 August 2014.

3.12.2 According to this procedure, a conflict of interest arises when ones personal interests,
personal financial interests or any other interests, affect, or could be perceived to affect,

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or has the potential to affect, ones objectivity and discretion and/or the objectivity and
discretion of another in performing Eskom duties or making decisions on behalf of Eskom.

3.12.3 A personal interest is defined as an interest that may be an actual or potential, direct or
indirect interest of an employee or a director, or of a related person or an inter-related
person or other associate of the employee or director, in any business, entity, undertaking,
or investment, as a shareholder, director, associate, member, advise/consultant,
prescribed officer or in any other capacity.

3.12.4 Declarations are done on a prescribed electronic form available from the e-forms website
and signed off by the relevant manager in accordance with each divisions delegation of
authority. Even if there are no conflicts of interest, the prescribed electronic form must
be completed and submitted by employees with a TASK grading of 9 (nine) and above.

3.12.5 The obligation in terms of the procedure is to declare all interest regardless of whether
they are conflicting, directorships, memberships, details of any related or inter-related
persons or other associate that does business with Eskom and all material personal
interests, whether a conflict exists or not.

3.12.6 Employees should disclose interests in a particular field of business, even if it is not directly
related to a specific contract or tender being considered by a committee or the Board or
a committee of the Board.

3.12.7 Any conflict of interest must be declared as soon as the employee know that it has arisen,
in addition to the annual declaration of interest. If an employee fails to disclose a conflict
of interest and any other employee who is aware of the conflict, he/she must then declare
the conflict of interest to his/her senior manager or the Ethics Office.

3.12.8 Where a conflict of interest exists, the employee must refrain from being part of any
deliberations, document preparations, execution of meetings and must not have access
to information dealing with that particular matter. The employee must also refrain from
participating in any decisions relating to the specific matter.

3.12.9 Paragraph 3.1.4.1 of the Procedure address the monitoring of conflicts of interest and
states inter alia that the relevant manager and/or committee chairman must assess
whether there are any conflicts of interest with regard to his/her employees or committee

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

3.12.10 The Commercial Division is required to ensure that processes are adequate for the
effective declaration and monitoring of conflicts of interest, selection of buyers, the
rotation of buyers, the choice of procurement methods and the selection of potential
suppliers.

3.12.11 Employees should refrain from directly intervening in any procurement issues outside the
normal procurement processes or lines of authority. Users should be involved in the
technical evaluation of suppliers before a tender is awarded.

3.13 2013 Delegation of Authority Policy (240-62072907)


3.13.1 This policy was compiled by M Adam, the Corporate Counsel/Divisional Executive
Regulation and Legal on 31 May 2013 and authorised by Mr Tsotsi, the Chairman of Eskom
Board. The policy was effective from 1 April 2013 and the review date of the policy was
March 2016. The policy was codified in two parts, namely the DOA policy principles and
Annexure A, the DOA delegations.

3.13.2 The DOA addressed the delegation from the Board to executives and also addressed
further delegations by the executives to employees in Eskom in terms of a standard
Group/Divisional delegation.

3.13.3 All authority reflected in the policy could be exercised after an appropriate procurement
process has been executed by a procurement practitioner assigned by Group Commercial.
The Technology and Commercial Group was responsible for the procurement process and
execution thereof.

3.13.4 The policy states that all sole source, condonation, ratification and modifications
exceeding 20% in terms of time and value, had to be approved by the appropriate
procurement committees and reported to the EXCOPS if within the group/divisions. The
sole source transactions had to be reviewed by the SD&L Department.

3.13.5 Dual and triple adjudication systems replaced sole adjudication systems with this revised
DOA and sole adjudication was no longer applicable at any level of delegation.

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3.14 2017 Delegation of Authority Policy (240-62072907)


3.14.1 This policy was compiled and signed by Ms Daniels: Group Company Secretary on 16
January 2017. It was authorised by Dr B Ngubane, the Chairman of the Board on 17
February 2017. In terms of this policy, all authority set out in same, must only be exercised
after an appropriate procurement process has been executed by a procurement
practitioner assigned by the Procurement and SCM Department.

3.14.2 The commercial processes must be fair, equitable, transparent, competitive and cost-
effective according to the policy. According to the policy, regional or site tender
committees means committees that are established by the Chief Procurement Officer
(CPO). The committees consist of at least 3 (three) members, collectively with technical,
commercial and finance representatives or skills to approve procurement for a site or
business unit (Site Committee) or across sites (Regional Committees) and must include a
representative from the Procurement and SCM Department and take into account equity
and transformation in its composition.

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


the CPO at Head Office responsible for procurement matters.

3.14.4 All transactions with dual and triple adjudication must be reported to the committee
authorised to deal with that level or decision for oversight. Transaction trends must be
analysed and investigated to identify and manage risks and compliance on transactions
lower than R5 million and all transactions reported to procurement committees below the
divisional tender counsels, must be reported to the next level committee for oversight.

3.14.5 The procurement within Eskom, is subject to the Procurement and SCM policy, with
reference number 32-1033 and procedure with reference 32-1034.

3.14.6 Groups/Divisions are required to develop DOA requirements in line with the applicable
limits specified in this policy and no Group/Divisional DOA may be in conflict with the
Eskom DOA nor may it delegate powers that are outside the parameters of this policy.

3.14.7 According to this policy, one aspect of good governance relates to an effective decision-
making process and a clear DOA contributes to the applicability of an effective decision-
making process.

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3.14.8 We were informed on 2 May 2017 that new divisional procurement and tender
committees came into effect and that EXCOPS had ceased to exist on 31 March 2017.

3.15 Process Control Manual (PCM) for Vendor Master


Data (240-45657065)
3.15.1 This Manual was compiled by the Master Data Steward and authorised on 6 November
2014 by the Senior General Manager: Shared Services.

3.15.2 The document was intended to provide a view of all the key elements of the process
including business roles, key risks and controls, technology requirements, process
requirements, reporting requirements and process measures.

3.16 PCM for External Suppliers (240-78921684)


3.16.1 The content of this PCM is relevant to process and additional technical information
relevant to the key elements of the process as described in 3.15. This process comprises
of the analysing, assessing and selecting of external suppliers, their goods and services
based on certain specifications and requirements to achieve operational improvements
and support business strategic objectives.

3.17 Eskom Supplier Integrity Pact (240-113650212)


3.17.1 This pact was compiled by the Policy and Procedure Manager on 29 June 2016 and
authorised by the Group CPO on 29 June 2016. This pact is between Eskom and its
suppliers that prescribes the ethical behaviour that brings about good and appropriate
consequences and outcome in the interaction with others. This document was intended
to replace Supplier Code of Conduct and to supplement all other relevant Commercial
and Ethics related policies/codes/procedures.

3.17.2 Eskom expects every supplier to act ethically and with integrity at all times. Eskom
suppliers are required to read this pact and sign and submit the Integrity Declaration Form
(Annexure A) whenever they participate in any Eskom tender/enquiry or when any
contract modification is affected.

3.17.3 In terms of paragraph 3.2.3 it is stated that suppliers will thus be required to complete
the Declaration of Interest Form (incorporated in Annexure A-Integrity Pact Declaration)

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wherein they are required to disclose any interest that an Eskom employee/director may
have, whether financial, private or personal, in its business and/or any
affiliation/relationship which affects, or may affect, or may be perceived to affect, the
decision-making during tender award. Should a supplier later become aware of a conflict
of interest (family, business and/or social relationship) between its owners members /
directors / partners / shareholders and an Eskom employee/director with respect to a
tender in which it participated, supplier is required to disclose the interest/relationship to
Eskom and submit whatever information may be required regarding the parties involved.

3.17.4 According to paragraph 4.2 of the pact, all Eskom employees/directors are required to
complete an annual delegation of interest (DOI) wherein they are required to declare
all interests, regardless of whether they are conflicting directorships, memberships,
details of any related or inter-related persons or other associate that does business with
Eskom and all other material personal interests, whether a conflict exists or not. In
addition to this annual declaration, employees or directors are required to declare
additional DOI and non-disclosure agreement (NDA) if involved in a tender evaluation
and/or adjudication and/or negotiation process.

3.17.5 Annexure B of the pact refers to the reconsideration of supplier registration status and
the procedure for such reconsideration.

3.18 NT Instruction Note 3 of 2016/17


3.18.1 The objective of this Instruction Note is to provide guidance on measures to prevent and
limit the abuse in the SCM system. It is required that an accounting authority must
establish a system that deals with the management of complaints and/or allegations of
abuse in the SCM system.

3.18.2 The Instruction Note further address the deviations from normal bidding processes. In
terms of paragraph 8.1 the accounting authority must only deviate from inviting
competitive bids in cases of emergency and sole supplier status. Emergency procurement
may occur when there is a serious and unexpected situation that poses an immediate risk
to health, life, property or environment which calls an agency to action and there is
insufficient time to invite competitive bids.

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3.18.3 Sole sourcing procurement may be done when there is evidence that only 1 (one) supplier
possesses the unique and singularly available capacity to meet the requirements of the
institution.

3.18.4 The accounting authority must further ensure that contracts are not varied by more than
20% or R20 million (including VAT) for construction related goods, works and/or services
and 15% or R15 million (including VAT) for all other goods and/or services of the original
contract value.

3.19 Memorandum of Incorporation


3.19.1 The Board may, other than the statutory committees of the Audit Committee and the
Social and Ethics Committee, establish Standing Committees and Ad Hoc Committees in
terms of section 72 of the Companies Act, no71 of 2008. Meetings of a committee of
the Board, are governed by the provisions of this Memorandum of Incorporation
(MOI) regulating the meetings and proceedings of directors.

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Chapter 4: Stake holders


4.1. Legal entities
4.1.1 We sourced publicly available information of entities and individuals identified during the
investigation as reflected hereunder:

Impulse International (Pty) Ltd

4.1.2 We sourced information from the Company and Intellectual Property Commission
(CIPC) relevant to the above mentioned entity and it established that the registration
number of the entity is 2012/097222/07 (see Exhibit 1).

4.1.3 The search results for Impulse International (Pty) Ltd reflected that it was duly registered
with the CIPC as a close corporation (CC) in 1997 with registration number
1997/006976/23 and subsequently converted to a private company on 5 January 2012
with registration number 2012/097222/07 and the business status was reflected as in
business.

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

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


Date
Director Name ID Number Director status Date Resigned
Appointed
Pragasen Pather 6403075179051 Active 05-Jun-12 Not applicable
Koketso Choma 9009120583085 Resigned 31-Mar-16 20-Sep-16
Frederick de Lange 8211195046086 Resigned 07-Jun-12 07-Jun-12

JKMA Investments (Pty) Ltd

4.1.5 The search results for JKMA Investments (Pty) Ltd reflected that it was duly registered
with the CIPC as a private company on 25 February 2016 with registration number
2016/087062/07 and business status was reflected as in business (see Exhibit 2).

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

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status:

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


Date
Director Name ID Number Director status Date Resigned
Appointed
Ali Denewade 8608146215183 Active 25-Feb-16 Not applicable
Koketso Choma 9009120583085 Active 25-Feb-16 Not applicable
Jose Lete 8611126058185 Active 25-Feb-16 Not applicable
Moira Ndlovu 8909120323088 Active 25-Feb-16 Not applicable

Ukwakhiwa Investments (Pty) Ltd

4.1.7 The search results for Ukwakhiwa Investments (Pty) Ltd reflected that it was duly
registered with the CIPC as a private company on 23 February 2016 with registration
number 2016/072200/07 and business status was reflected as in business (see Exhibit 3).

4.1.8 The search results reflected the following detail pertaining to its directors and respective
status:

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


Date
Director Name ID Number Director status Date Resigned
Appointed
Koketso Choma 9009120583085 Active 23-Mar-16 Not applicable
Sylvia Maila 9109070219084 Resigned 23-Feb-16 23-Mar-16

Impulse Holdings (Pty) Ltd

4.1.9 The search results for Impulse Holdings (Pty) Ltd reflected that it was duly registered with
the CIPC as a private company on 15 May 2012 with registration number 2012/084488/07
and business status was reflected as in business (see Exhibit 4).

4.1.10 The search results reflected the following detail pertaining to its directors and respective
status:

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


Director
Director Name ID Number Date Appointed Date Resigned
status
Pragasen Pather 6403075179085 Active 15-May-12 Not applicable

Indiwize Construction (Pty) Ltd

4.1.11 The search results for Indiwize Construction (Pty) Ltd reflected that it was duly registered
with the CIPC as a private company on 1 November 2012 with registration number
2012/196338/07 and business status was reflected as in business (see Exhibit 5).

4.1.12 The search results reflected the following detail pertaining to its directors and respective
status:

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


Director
Director Name ID Number Date Appointed Date Resigned
status
Pragasen Pather 6403075179085 Active 15-May-12 Not applicable

High Echelon Trading 94 Close Corporation

4.1.13 The search results for High Echelon Trading 94 Close Corporation reflected that it was duly
registered with the CIPC as a private entity on 12 August 2002 with registration number
2002/063138/23 and business status was reflected as in business (see Exhibit 6).

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

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


Director
Member Name ID Number Date Appointed Date Resigned
status
Mosima Choma 7112270300086 Active 18-Feb-03 Not applicable

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4.2 Individuals
4.2.1 We conducted searches in order to determine whether identified individuals were
appointed as office bearers in legal entities.

Mr Pather

4.2.2 According to searches conducted, Mr Pather holds directorship in the following entities
(see Exhibit 7):

Pragasen Pather ID number 6403075179051


Entity Name Registration number Status Date Appointed
Impulse Holdings 2012/084488/07 Active 15-May-12
Impulse Energy 2012/086687/07 Active 18-May-12
Impulse Mining 2012/086690/07 Active 18-May-12
Impulse International 2012/097222/07 Active 05-Jul-12
Impulse Nuclear 2012/181908/07 Active 08-Oct-12
Indiwize Construction 2012/196338/07 Active 01-Nov-12
Impulse Professional Quantity Surveyors 2014/133233/07 Active 17-Oct-14
K2015056893 (South Africa) 2015/056893/07 Active 24-Feb-15
Impulse Supertrans 2015/139211/07 Active 05-May-15
Impulse Water Holdings 2015/139253/07 Active 05-May-15
Impulse Sourcing 2015/322039/07 Active 08-Sep-15
Impulse Power 2016/375225/07 Active 29-Aug-16
Impulse Legacy 2016/477732/08 Active 03-Nov-16
Indiwize 2010/112529/23 Active 27-Jul-10

Ms Choma

4.2.3 According to searches conducted, Ms Koketso Choma (Ms Choma) holds directorship
in the following entities (see Exhibit 8):

Koketso Choma ID number 9009120583085


Registration
Entity Name Status Date Appointed
number
Ukwakhiwa Investments 2016/072200/07 Active 23-Mar-16
JKMA Investments 2016/087062/07 Active 25-Feb-16

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Mr Koko

4.2.4 According to searches conducted, Mr Koko holds directorship in the following entities
(see Exhibit 9):
Matshela Koko ID number 6903095350087
Registration Date
Entity Name Status Date Resigned
number Appointed
Rotek Industries (Pty) Ltd 1964/003378/30 Active 27-Jun-12 Not applicable

Eskom Rotek Industries SOC Ltd 1990/006897/30 Active 27-Jun-12 Not applicable

Technology Services International 1995/009705/30 Resigned 24-May-12 24-May-13

Ms Koko

4.2.5 According to searches conducted, Ms Mosima Koko (Ms Koko) holds directorship in the
following entities (see Exhibit 10):

Elizabeth Mosima Koko ID number 7112270300086


Entity Name Registration number Status Date Appointed Date Resigned
Arengo 48 2004/026158/07 Active 14-Oct-04 14-Sep-04

Silver Falcon Trading 208 2005/012809/07 Active 20-Jul-05 Not applicable

Pacific Breeze Trading 299 2005/030709/07 Active 28-Oct-05 Not applicable

Thubalihle Trading Enterprise 1996/040303/23 Active 23-May-01 Not applicable

Rural Hardware 106 2001/075109/23 Active 28-Feb-02 28-Feb-02


High Echelon Trading 94 2002/063138/23 Active 18-Feb-03 21-Oct-03
Central High Trading 18 2002/087123/23 Active 15-Nov-02 15-Nov-02

Kokbesthakho Building Construction 2001/016838/23 Resigned 15-Mar-01 18-May-05

Lapenta Trade 86 2006/204699/23 Resigned 08-Oct-07 Not applicable

Cedar Point Trading 4 2006/016065/07 Active 03-Jul-06 Not applicable


High Echelon Trading 94 2005/043348/07 Active 09-Dec-05 Not applicable
Lionsden Holdings 2015/118008/07 Active 25-May-16 Not applicable
Turnkey Finishings 2015/250382/07 Active 03-Aug-15 Not applicable
Lawandla Group 2016/207754/07 Active 02-Jun-16 Not applicable

Lefe Blue Mountain Lodge 2016/227133/07 Resigned 08-Jun-16 Not applicable

K2014112892 2014/112892/07 Active 11-Jun-14 Not applicable

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4.3 Central Supplier Database

4.3.1 The Central Supplier Database (CSD) for Government reflects that Impulse
International (Pty) Ltd was registered as a supplier with supplier number MAAA0234986
(see Exhibit 11).

4.4 Mokoni Trust with reference IT00216/2016(MN)


4.4.1 It was established that Ms Choma was a trustee of the Mokoni trust duly registered with
the Master of the High Court Nelspruit on 7 July 2016. She was also a capital income
beneficiary of the Bokoni trust with reference IT00217/2016(MN).

4.4.2 Ms Choma, resigned as a trustee of the Mokoni trust according to a letter of resignation
dated 23 February 2017. During a consultation, Ms Choma provided a non-executive
shareholders agreement between Mr Pather and the Mokoni trust duly signed by both
parties, but undated. Further to this, she also provided a shareholders resolution dated
and signed 21 September 2016 where it was resolved that:

250 ordinary shares held by Ms Choma have been transferred from Ms Choma to
the Mokoni trust;
100 ordinary shares held by Mr Pather have been transferred by Mr Pather to the
Mokoni trust;
The 1 000 authorised shares of Impulse International (Pty) Ltd were allocated as
follows:
350 ordinary shares were allocated to the Mokoni trust;
650 ordinary shares were allocated to Mr Pather; and
Ms Choma was no longer a shareholder of Impulse International (Pty) Ltd as
she transferred her shares to the Mokoni trust.

4.4.3 We did not source a document confirming the shareholding of 35% allocated to Ms
Choma. We were however informed by Ms Koko, Mr Pather and Ms Choma that the
latter held 35 % shareholding in the Mokoni trust. Mr Koko declared on 24 February 2017
to Eskom that his stepdaughter held 35% shareholding in the Mokoni trust. Mr Pather
submitted a declaration to Eskom dated 18 May 2017 that the step daughter of Matshela

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Koko is Koketso Choma who is a beneficiary of a trust that holds 35 % shareholding in


Impulse International (Pty) Ltd.

4.4.4 During the investigation, 3 (three) separate lists of questions were forwarded to Mr
Pather to which he responded. We also consulted with Mr Pather on 17 May 2017 and
23 May 2017. Mr Pather in his response to questions dated 19 April 2017, stated inter
alia that:

Impulse International (Pty) Ltd has been doing business with Eskom since 2014,
long prior to him becoming acquainted with Mr Koko and prior to Ms Chomas
securing any shares in Impulse International (Pty) Ltd;
He was aware that Ms Choma is the daughter to Ms Koko and the step-daughter
to Mr Koko;
He confirmed the appointment of Ms Choma as non-executive director at Impulse
International (Pty) Ltd from 5 April 2016 and indicated that she was introduced to
him (Mr Pather) by Ms Koko;
Mr Pather acknowledged that Ms Choma resigned as non- executive director of
Impulse International (Pty) Ltd with effect from 20 September 2016;
According to Mr Pather, Mr Koko had no influence or involvement in the
procurement process relevant to the appointment of Impulse International (Pty)
Ltd; and
Ms Chomas relationship with Mr Koko was declared to Impulse International (Pty)
Ltd and Ms Chomas relationship with Mr Koko was not declared to Eskom by
Impulse International (Pty) Ltd, as Mr Pather believed there was no duty on
Impulse to declare such relationship at the time of Ms Chomas appointment.

4.4.5 According to the Mokoni trust agreement three (3) trustees were appointed, namely Mr
Johannes Coetzee (Mr Coetzee), Ms Choma and Mr Watson Seswai (Mr Seswai). The
beneficiaries in the trust referred to income and capital beneficiaries. The trustees
entered into a deed of amendment of the Mokoni trust on 23 February 2017 as Ms Choma
resigned as a trustee of the Mokoni trust.

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4.4.6 We received correspondence from Mr Coetzee, the legal representative of Ms Koko


relevant to the registration of the Mokoni trust and the advice given to Ms Koko regarding
shareholding (see Exhibit 12).

4.4.7 We drafted a graphical presentation of Impulse International (Pty) Ltd shareholding and
the shareholding transferred to Mokoni trust referred to supra.

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Chapter 5: Declaration of Interest


5.1 Declarations made by Eskom employee
E-form declarations

5.1.1 We were provided with the declaration of interest e-forms submitted by Mr Koko for the
past eleven (11) years (2007 to 2017). For purposes of this investigation, we focused on
the declaration of interest e-forms submitted during the period 2015/2016 and
2016/2017.

5.1.2 Mr Koko submitted a declaration of interest e-form on 3 September 2015 wherein he


declared his directorship in Eskom Rotek Industries (ERI) and his membership in the
Engineering Society. The declaration was approved by Mr Brian Molefe (Mr Molefe)
for the period 19 November 2015 to 14 July 2016 (see Exhibit 13).

5.1.3 Mr Koko submitted a declaration of interest e-form on 8 June 2016 again declaring his
involvement in ERI. His declaration was approved by Mr Molefe for the period 8 June
2016 to 14 July 2016 (see Exhibit 14).

5.1.4 Mr Koko submitted a declaration of interest e-form on 24 February 2017 declaring his
step daughter, Ms Chomas, involvement in Impulse International (Pty) Ltd. He declared
that my stepdaughter is a beneficiary in a Trust which owns 35% interest in Impulse (Pty)
Ltd.

5.1.5 He declared that the circumstances under which a conflict of interest could be created,
was if the company does business with Eskom. This declaration was approved by the
Chairperson of the Board, Dr Baldwin Ngubane (Dr Ngubane) on 1 March 2017 (see
Exhibit 15).

5.1.6 According to a letter signed by Mr Molefe dated 3 October 2016 issued to Mr Koko
wherein it was stated that all Eskom employees must declare their interest (s) at the
beginning of every financial year (1 April) on the e-form. It was further stated that Mr
Koko failed to complete declarations for 2007 and 2010 and he was informed that any
repetition of similar contraventions would lead to disciplinary measures instituted in

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terms of Eskoms Disciplinary Code and Procedure (see Exhibit 16).

5.1.7 We therefore also perused the declarations as submitted by Mr Koko for the remaining
period, namely 2007 to 2014 and noted that he submitted the following declarations:

Year Date Detail of declaration Approver ID Exhibit

1 2007 11 February No declaration Mothibbi 17


2008

2 2008 11 August Declared Business Damesba 18


2008 involvement of Ms
Veletins
Koko Turnkey Group
(Pty) Ltd

3 2009 30 July 2009 Declared Business Damesba 19


involvement of Ms
Veletins
Koko Turnkey Group
(Pty) Ltd

4 2010 28 February No declaration Damesba 20


2011

3 2011 26 October Declared that he took Damesba 21


2011 part in procurement
and human resource
processes, but had no
interest to declare

4 2012 16 May 2012 Declared that he took Marokadl 22


part in procurement
and human resource
processes, but had no
interest to declare

5 2013 3 June 2013 Declared that he took Marokadl 23


part in procurement
and human resource
processes, but had no
interest to declare. Mr
Koko declared his
wifes involvement in
Basil Read.

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6 2014 3 June 2014 Mr Koko declared his Lennonsj 24


wife interest in Basil
Read

5.1.8 During a consultation with Mr Koko on 16 May 2017 he stated inter alia his knowledge
about the relevant Eskom policies and procedures and stated that all Eskom employees
must make an annual declaration of interest. They must make a further declaration of
conflict of interest as and when one becomes aware of an alleged/perceived conflict.

5.1.9 Mr Koko declared during a consultation on 13 June 2017 that he received the letter
referred to above and that same contained incorrect information in that referral was
made to him as the Head of Eskom Enterprises and that he failed to submit a declaration
for 2010. He confirmed that the declaration dated 28 February 2011 was indeed
applicable on 2010. This letter was also not only forwarded to him, but was forwarded to
various employees.

5.1.10 A stated by Mr Koko on 16 May 2017, he had no conflict of interest to declare up to August
/September 2016 as he only became aware that Ms Choma was appointed as a non-
executive director and awarded shareholding in Impulse International (Pty) Ltd during
August/September 2016. Ms Choma at the time, did not participate in any commercial
activities relevant to Impulse International (Pty) Ltd. After becoming aware of Ms
Chomas involvement in Impulse International (Pty) Ltd, Mr Koko requested her to resign
as a director and to relinquish her shareholding in the entity.

5.1.11 Mr Koko explained further that Ms Choma was getting to the end of her contract at
PricewaterhouseCoopers (PwC) and she wanted to make a decision regarding her
career. Mr Koko asked Ms Choma to resign from Impulse International (Pty) Ltd as a
director and to relinquish her shareholding in the company in August/September 2016.
Ms Choma and her mother, Ms Koko agreed that she would resign and relinquish the
shareholding. At the time, he was of the opinion that her involvement in Impulse
International (Pty) Ltd might create a perceived conflict of interest for him as the entity
was a service provider to Eskom and also taking into account his appointment as a GE:
Generation. He did not follow up whether she (Ms Choma) indeed resigned as a director

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and whether she relinquished her shares in Impulse International (Pty) Ltd.

5.1.12 Mr Koko wanted Ms Choma to resign as a director and to pull out of Mokoni trust during
August/September 2016 when he became aware of her involvement in Impulse
International (Pty) Ltd. Ms Koko indicated during that a discussion in February 2017 she
made Mr Koko aware of the shareholding by the trust and he was unhappy with it. Ms
Choma was then removed as a trustee on advice of Ms Kokos lawyer and was only a
beneficiary to the trust.

5.1.13 Mr Koko had a discussion with his wife in February 2017 during which she informed him
that Ms Choma was a trustee in Mokoni trust and that the trust held shareholding in
Impulse International (Pty) Ltd. Mr Koko wanted as much distance as possible from
Impulse International (Pty) Ltd and therefore insisted that Ms Kokos appointment as a
trustee be terminated.

5.1.14 Mr Koko felt uncomfortable at the time with the trustee status of Ms Choma in the Mokoni
trust as it held shareholding in Impulse International. Ms Koko however informed him in
February 2017 that she sourced legal advice from an attorney, Mr Coetzee and that Mr
Koko would not be compromised if Ms Choma was appointed only as a beneficiary in the
Mokoni trust and not as a trustee. He was informed that the status of Ms Choma was
changed to that of a beneficiary of the Mokoni trust.

5.1.15 According to Mr Koko he established that an Impulse International (Pty) Ltd Board
resolution was taken on 22 March 2016 to appoint Ms Choma as a non-executive director
where after she was appointed as a director on 6 April 2016. A Board resolution was taken
on 22 September 2016 regarding her resignation as a director and Ms Choma resigned on
6 October 2016 as a director from Impulse International (Pty) Ltd.

5.1.16 According to Mr Koko, Ms Choma, her mother and her biological father are business
partners and Mr Koko is not involved where Ms Choma makes decisions regarding her
career or business involvement.

5.1.17 Mr Koko stated that on 3 (three) separate occasions his wife was involved in business with
specific entities and he asked her to resign from the respective entities. He explained the
instances where his wife became involved, namely Group 5, Basil Read and Builders

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Warehouse via a project of Murray & Roberts. In all three instances, he asked her to either
leave or resign. He did not confirm whether Ms Chomas relinquished her shareholding
in Impulse International (Pty) Ltd in August/September 2016.

5.1.18 According to Mr Koko, he had no influence of the appointment of Impulse International


(Pty) Ltd by Eskom in each of the 9 (nine) contracts awarded to the entity (at the time of
the consultation, only 9 (nine) contracts were available to us). He established that Impulse
International (Pty) Ltd was appointed in 2014 by Eskom as a vendor and their first contract
was awarded by Medupi Power Station. He was introduced to Mr Pather by his wife and
became aware of various community projects including the project at Lephalele which
was a water purification project done for an antenatal clinic, a project in Mozambique and
a mobile clinic in Diepsloot which were facilitated by Mr Pather and Impulse International
(Pty) Ltd.

5.1.19 Mr Koko stated that he and Mr Pather discussed social initiatives and at times they
communicated. According to Mr Koko, the information published regarding their alleged
telephonic communication, was incorrect. He compared the detail of the phone call times
and dates with his itemised billing and it did not correspond. Mr Koko made available the
itemised billing of his cell phone with number 082 859 9334. We established that 2 (two)
calls were made on 31 January 2016 from this number (082 859 9334) to 082 857 6011
being the cell phone number of Mr Pather. The calls were respectively made as per the
schedule hereunder:

No Date and time Duration

1 31 January 2016 at 19h53 7 seconds

2 31 January 2016 at 19h56 52 seconds

5.1.20 Mr Koko informed us that he has another cell phone with number 071 679 4381 which is
utilised by his wife, Ms Koko. He applied to get access to the itemised billing for this
phone, but at the time of this report, the billing was not yet available to us.

5.1.21 As a GE: Generation he was not a member of EXCOPS or a tender committee. The 2017
DOA gave procurement authority to the CE and the 2013 DOA did not make provision for

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procurement authority to the CE. He established that most of the contracts awarded to
Impulse International (Pty) Ltd was awarded by the Group Capital Division and only two
(2) contracts were awarded by the Generation Division to Impulse International (Pty) Ltd
at Kendal and Matla Power Stations. The threshold amounts of the contracts determined
the procurement processes to be followed in terms of the relevant DOAs.

5.1.22 We sourced two documents reflecting the signature of Mr Koko where Impulse
International (Pty) Ltd was appointed by Eskom to render services (see Exhibit 25 and
Exhibit 26).

5.1.23 According to Mr Koko, he was appointed as the GE: Generation on 1 October 2015 and
the Technology Division formed part of his portfolio. The Commercial Division at the time
reported to the Chief Financial Officer (CFO).

5.1.24 Mr Koko stated that there was no conflict of interest to declare relevant to Impulse
International (Pty) Ltd during 2016 as no conflict of interest existed according to him.
After he was informed that his step-daughter was a beneficiary in the Mokoni trust, it was
decided that he should declare this perceived conflict of interest which he did. He had a
discussion with Dr Ngubane relevant to the perceived conflict of interest dated 24
February 2017. He informed Dr Ngubane that his step-daughter held shareholding in
Mokoni trust who in turn held shareholding in Impulse International (Pty) Ltd.

5.1.25 Various newspaper articles were published wherein it was stated that the step-daughter
of Mr Koko, who graduated as a chartered accountant, was appointed as a director at
Impulse International (Pty) Ltd and that she held shareholding in Impulse International
(Pty) Ltd as a trustee of the Mokoni trust. We established that Ms Choma is currently an
accountant who has complied with all the requirements of registering as a chartered
accountant, but that her registration is currently pending.

Appointment of Ms Choma as director and shareholder

5.1.26 We forwarded a list of questions to Ms Choma to which she responded and we consulted
with Ms Choma as represented by Advocate Barry Roux SC and briefed by Mr Asger Gani
(Mr Gani) on 26 April 2017. During the consultation, she declared inter alia that:

She was approached by Mr Pather who is the CEO of Impulse International (Pty)

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Ltd and it was on a recommendation by her mother, Ms Koko that she was
appointed as a non-executive director at Impulse International (Pty) Ltd;
Her directorship started on 6 April 2016, but her application to be registered as a
director was already submitted on 31 March 2016;
She was appointed as a beneficiary to the Mokoni trust on 6 April 2016, which
trust holds 35% shareholding in Impulse International (Pty) Ltd;
She did not know if Impulse International (Pty) Ltd declared the relationship to
Eskom as she was a non- executive director and was not involved in the day-day
running of the business;
She confirmed that Impulse International (Pty) Ltd made payments to a company,
Ukwakhiwa Investments (Pty) Ltd wherein she is the sole director and
shareholder;
The CEO of Impulse International (Pty) Ltd transferred money into Ukwakhiwa
Investments (Pty) Ltd for the purchase of property which is owned by High
Echelon Property Investment (Pty) Ltd;
Indiwize Construction (Pty) Ltd is a shareholder in the Mokoni trust;
Mr Pather is the CEO in Indiwize Construction (Pty) Ltd and Indiwize Construction
(Pty) Ltd is a shareholder in Ukwakhiwa Investments (Pty) Ltd and is the company
that made a capital investment in Ukwakhiwa Investments (Pty) Ltd;
Mokoni trust is also a shareholder in Ukwakhiwa Investments (Pty) Ltd; and
Money was paid to Ukwakhiwa Investments (Pty) Ltd for the purchase of property
in High Echelon Property Investment (Pty) Ltd.

5.1.27 Ms Choma confirmed that Mr Koko became aware of her directorship around August/
September 2016 during an informal discussion. Mr Koko, Ms Koko and Ms Choma decided
that she must resign in September 2016 and end her relationship with Impulse
International (Pty) Ltd as a director and shareholder.

5.1.28 Ms Choma confirmed that she resigned as a director and moved her shareholding to the
Mokoni trust as she felt that she had done nothing wrong as she was not involved in any
Eskom related work.

5.1.29 We consulted with Ms Koko on 9 May 2017 who confirmed inter alia that:

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She met Mr Pather late in 2014 or early 2015 and she introduced her daughter, Ms
Choma to Mr Pather around March 2016;
Her daughter was appointed as a non-executive director of Impulse International
(Pty) Ltd;
Her daughter was a shareholder of Impulse International (Pty) Ltd and she was
guiding and advising her daughter to retain the shareholding in Mokoni trust, but
the trust was not registered at the time when Ms Choma became involved in
Impulse International (Pty) Ltd;
She decided not to inform Mr Koko of Ms Chomas involvement as a director or
shareholder of Impulse International (Pty) Ltd as there was no need for her to
inform him at the time and she lost previous business opportunities as a result of
his position within Eskom.
During August/September 2016 she and her daughter had a discussion with Mr
Koko and he was informed about the involvement of Ms Choma in Impulse
International (Pty) Ltd. Mr Koko asked Ms Choma to resign as a director and to
relinquish her shareholding in the company. Ms Choma resigned as a director,
however Ms Koko advised her daughter to transfer the shareholding into Mokoni
trust and to keep the shareholding,
Mr Koko was not aware of the Mokoni trust and she made him aware of the trust
in February 2017. Mr Koko was very unhappy about the fact that he was not aware
that the shareholding was held by a trust and they had a tough discussion around
the trust as her view was that the shareholding being owned by a trust, removes
the control or the involvement of the directors. Ms Choma at that stage was no
longer a director;
She believed that there was no conflict of interest and the conflict was perceived;
She managed the situation by putting the shareholding in a trust, because it
removes the face, it removes the control and perceptions, but Mr Koko was really
not happy about it;
In February 2017 when her husband became aware of the trust, they had a
discussion and she told him that her lawyers view is that her shareholding should
be held by a trust and Ms Choma has no control within the business. Mr Koko was

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unhappy with it and she consulted with her lawyer again who said they can further
remove Ms Choma as a trustee and she can just stay on as a beneficiary;
It was then decided between them that Mr Koko should declare a perceived
conflict of interest to Eskom which he did;
She told Mr Koko that they had to strike a balance, declare the shareholding or the
ownership by a trust then they have to deal with concerns as she achieved what
she needed to achieve;
She was guiding Ms Choma and advising her on business transactions; and
In 2016 they also registered Ukwakhiwa

5.1.30 We consulted with Mr Pather of Impulse International (Pty) Ltd on 17 and 23 May 2017
and he confirmed the appointment of Ms Choma as a non-executive director at Impulse
International (Pty) Ltd. Mr Pather stated that she resigned as a director and that her
shareholding was initially 25% in Impulse International (Pty) Ltd and that it was later
increased to 35 % and kept in the Mokoni trust. He stated that Impulse International
(Pty) Ltd made no payments to Ms Choma in the time that she was appointed as a
director.

5.1.31 He stated that an amount of R16 million was paid by Impulse Holdings (Pty) Ltd as an
investment to the entity styled Ukwakhiwa Investments (Pty) Ltd. He explained during
the consultation on 23 May 2017 that the R16 million was part of a R38 million he had to
pay as part of his 45% shareholding in Ukwakhiwa Investments (Pty) Ltd through Indiziwe
Construction (Pty) Ltd and it was paid via a loan account between the two companies.
We did not receive documentation relevant to the loan account/s.

5.1.32 We received a letter dated 17 May 2017 from Coetzee (Mr Coetzee, an attorney,
confirming that he advised Ms Koko on various legal matters and attended to the
conveyancing matters of Mr Choma and his various companies and entities. It is stated
in the letter inter alia that Ms Koko and Ms Choma followed his advice and established
the Mokoni and Bokoni trusts during February 2016. Both trusts were only registered in
July 2016 and it was always the intention that shares should not be held by Ms Choma in
her own name, but through trust structures and that she should conduct business in the
name of separate legal entities.

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5.1.33 According to Mr Coetzee, Ms Koko was advised that any existing and future ventures
should be conducted via trading companies of which the Mokoni and Bokoni trusts should
obtain and keep the shareholding. They registered a company Ukwakhiwa Investments
(Pty) Ltd in February 2016 for that purpose. Ukwakhiwa Investments (Pty) Ltd was
actively trading and involved in the building activities of the 3 Buitekant townhouse
project consisting of 140 townhouses of which 57 have been completed and all
infrastructure installed.

5.1.34 Mr Coetzee stated that he never met Mr Koko and the latters position at Eskom and
possible contracts with Eskom were never considered or taken into account when he gave
the advice as to how the companies and trusts should be structured. The restructuring
and establishment of the trusts were based purely on sound risk management and
business principles according to Mr Coetzee.

5.1.35 Mr Coetzee further stated that he was approached in February 2017 to file the resignation
of Ms Choma as trustee in both trusts with the Master of the High Court Mpumalanga.
The amendment of the trust deed to remove Ms Choma was lodged with the Masters
Offices during February 2017. He also confirmed that the Mokoni trust and Indizwe
are shareholders in Ukwakhiwa Investments (Pty) Ltd.

5.1.36 We prepared a graphical representation of the information hereunder and as referred to


above.

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5.2 Declarations by Impulse International (Pty) Ltd


5.2.1 We sourced copies of the contracts awarded to Impulse International (Pty) Ltd by Eskom
in order to ascertain whether the service provider (Impulse International (Pty) Ltd made
any supplier declarations of interest.

5.2.2 The tabulation below illustrates all contract numbers associated to the vendor number
11082200 denoted as "IMPULSE INTERNATIONAL" on the Eskom SAP system and
information provided to us by Mr Pather. The table further provides start and end dates
per contract and the total registered contract value:

Ref Contract Number Start of Contract End of Contract Contract Doc Value
1 4600055020 22 July 2014 31 January 2015 R10 722 228,66
2 4600060205 25 March 2016 19 August 2016 R63 445 861,52
3 4600061009 20 August 2016 28 March 2017 R79 244 640,00
4 4600061015 17 August 2016 28 February 2017 R19 800 000,00
5 4600058830 04 December 2015 30 January 2019 R65 854 766,64
6 4600061441 12 October 2016 30 September 2019 R31 175 306,25
7 4600061859 01 January 2017 31 December 2019 R 42 711 873,90
8 4600061909 09 January 2017 09 June 2017 R14 292 438,25
9 4600062251 01 March 2017 31 August 2017 R21 351 600,00
10 4600062636 1 May 2017 30 April 2020 R41 540 800,00
GRAND TOTAL R 390 139 515,22

5.2.3 It should be noted that the above mentioned value does not indicate the amount-
cumulative purchase orders (POs) or invoices values registered on the SAP system for
the vendor in question, but the budget amount against the contract at the time of
registration on the SAP system.

5.2.4 We have also noted that there are various POs within the SAP system that we have
received from Eskom with no allocation to contract numbers, despite being captured and
allocated to the 11082200 Impulse International vendor number. The tabulation below
provides the relevant data:

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Ref SAP PO Ref Number PO Amount Invoice Amount Paid


1 3070310598 R 1 965 889,50 R1 965 889,50
2 4502278900 R 29 442 000,00 R412 834,80
3 4502343269 R 1 905 750,00 R1 626 952,32
4 4502394584 R 1 702 750,00 R1 552 710,24
5 4502496496 R 2 270 333,33 Not Paid
6 4502507299 R 408 864,12 R408 864,12
TOTAL R 37 695 586,95 R5 967 250,98

5.2.5 This table provides the registered PO amounts captured on the SAP system and respective
invoice amounts also retrieved from the SAP system.

5.2.6 We were able to source 5 (five) declarations of interest from Eskom and Mr Pather as per
the schedule hereunder:

Ref Date of declaration Contract relevant to Date of contract Exhibit


the declaration signed no
1 12 April 2016 4600061441 12 October 2016 27
2 12 August 2016 4600061009 16 August 2016 28
3 12 September 2016 4600061859 16 February 2017 29
4 12 May 2017 4600062251 28 February 2017 30
5 18 May 2017 4600061909 12 December 2016 31

5.2.7 Mr Pather did not declare the involvement of Ms Choma as a director or shareholder in
Impulse International (Pty) Ltd in the first three declarations despite the fact that she was
appointed as a non-executive director on 31 March 2016. A declaration relevant to
contract number 4600062251 was submitted dated 12 May 2017 almost 3 (three) months
after the contract was signed. The declaration relevant to contract number 4600062251
stated that Yes the director of the Supplier is an acquaintance of Mr Matshelo Koko, the
CEO of Eskom. Due to Mr Kokos recent appointment as CEO, he may be participating in
the procurement process. The declaration submitted on 18 May 2017 was made almost
5 (five) months after the contract was signed. The declaration reflected that:

1. The director of the supplier is an acquaintance of Mr Matshela Koko. Due to Mr Kokos

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recent appointment as the Acting CEO, he may be participating in the procurement


process.

2. In addition, the step daughter of Matshela Koko is Koketso Choma who is a beneficiary
of a trust that holds 35% shareholding in Impulse International (Pty) Ltd.

5.3 Timeline of involvement of stakeholders in Impulse


International (Pty) Ltd
5.3.1 We drafted a graphical presentation of the timeline relevant to the contractual history of
Impulse International (Pty) Ltd and the Mokoni trust as reflected hereunder:

5.3.2 The contract detail and related financial information represented above, has been
extracted from the Eskom SAP system. We have provided that each line denoted by a
SAP Contract prefix represents an Impulse International (Pty) Ltd contract that has been
extracted from the Eskom SAP system. This information is provided below:

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5.3.3 It should be further noted that the other 3 (three) lines represented on the timeline with
non-SAP Contract prefixes are specific timeline events that are related to:

DATE EVENT
23-Feb-17 Ms Choma resigned as a trustee from Mokoni trust
21-Sep-16 35% Shares of Impulse International (Pty) Ltd was transferred into the Mokoni trust
24-Feb-17 Mr Koko declared a conflict of interest regarding the Mokoni trust

5.3.4 There are 3 (three) shaded areas contained within the timeline graph which are denoted
as follows:

DATE
SHADE DATE TO EVENT
FROM
Ms Choma was appointed director of
31-Mar-16 20-Sep-16
Impulse International (Pty) Ltd
Ms Choma was appointed beneficiary and trustee of
07-Jul-16 23-Feb-17
Mokoni trust
Ms Choma resigned as trustee of Mokoni trust
23-Feb-17 End of Timeline
and is sole beneficiary of Mokoni trust
5.3.5 The timeline reflects that we have received 5 (five) declarations made by Impulse
International (Pty) Ltd that have been marked on the timeline (denoted by a on the
timeline):

The date per contract of declarations signed by Impulse


Ref Contract
International (Pty) Ltd
1 4600061009 12-Apr-16
2 4600061441 12-Aug-16
3 4600061859 12-Sep-16
4 4600062251 12-May-17
5 4600062636 18-May-17

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Chapter 6: Impulse International (Pty) Ltd


6.1 Eskom DOA
6.1.1 The Eskom Delegation of Authority Policy (240-62072907) approved in 2013, forms part
of the approved procurement framework and individual employees may be permitted by
a written delegation of authority to bind Eskom into contracts of purchase/sale regarding
assets, goods or services, either acting in a dual or, triple adjudication or as part of a
tender committee.

6.1.2 The DOA policy states the following relevant to procurement:

2.2.12.1 The Commercial processes should be fair, equitable, transparent,


competitive and cost effective. All authority can only be exercised after an
appropriate procurement process has been executed by a Procurement
Practitioner assigned by Group Commercial.

2.2.12.2 The Technology and Commercial Group is responsible for the procurement
process and execution.

2.2.12.3 All Sole Source, Condonation, Ratification and Modifications exceeding 20%
in terms of time/value must be approved by the appropriate Procurement
Committees and reported to the EXCO Procurement Committee if within the
group/divisions. All Sole Source Transactions must be reviewed by the
Supplier Development and Localisation Department.

2.2.12.13 All transactions to procurement committees below the EXCO subcommittee


must be reported to the next level committee for oversight.

6.1.3 The approval authority for the day to day running of the operations of Eskom Divisions
(delegation of operational and management authorities) resides with the FD, GE and DE
subject to the directions and conditions required by the Chief Executive. The approval
authority for effective delegation of operational matters resides with the CE, GE and DE.

6.1.4 DOAs for the procurement of services, must be exercised with the recommendation and
approval of another delegated and accredited procurement practitioner as part of a dual

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or triple adjudication system of approval, or with approval from a delegated PTC. The
delegation to PTCs includes the specific approvals of condonations, ratifications and
appointments of strategic and management consultants.

6.1.5 A supplier can be appointed as a general sole source for a specified category of assets,
goods or services for a maximum period of three years and the approval needs to be
obtained from the relevant PTC.

Acquisition of operational expenditure and the provision and


acquisition of services

6.1.6 Transactions from R5m to R50m for a maximum of 5 years to be recommended by the
Commercial Senior Manager or higher and approved by the Regional or Site based
procurement committees established by the CPO.

EXCO Dual and Triple Adjudication

6.1.7 Transactions up to R50m for a maximum of 3 years (EXCO dual adjudication) to be


recommended by the CPO and procuring GE, and approved by any 2 EXCO members
excluding the procuring members.

6.2 Contracts awarded to Impulse International (Pty) Ltd


6.2.1 Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014
and was appointed by Eskom from the 22 July 2014 as per the SAP system information to
render services to Eskom (see Exhibit 32).

6.2.2 It was established that a contract with reference number 4600055020 was signed
between Eskom and Impulse International (Pty) Ltd on 21 August 2014 for the provision
of specialised services. The first Impulse International (Pty) Ltd invoice dated 19 August
2014 and referenced 106 was submitted for payment in respect of work done during the
period ending 17 August 2014. According to an internal Eskom procurement document
dated 15 July 2014 and named as Madupi Power Station Project the procurement was
classified as emergency procurement

6.2.2 It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and
was also appointed as a sub-contractor to render services to Eskom. We established that

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10 (ten) contracts were awarded by Eskom to Impulse International (Pty) Ltd in the total
value of R390 139 515.22 according to the SAP system. Mr Pather provided us with the
details of another contract (4600062636) and submitted a copy of the contract and
supporting documentation to us.

Impulse Procurement Information Eskom Procurement Information


Ref Contract Procurement Contract Doc Exhibit
Procurement Method
Number Method Value Reference
1 4600060205 RFQ R 63 445 861,52 Emergency 33
2 4600061009 RFQ R 79 244 640,00 Sole Sourcing 34
3 4600061015 Tender Award R 19 800 000,00 Emergency/RFQ 35
4 4600058830 Tender Award R 65 854 766,64 Sole Sourcing 36
5 4600061441 Tender Award R 31 175 306,25 Invitation to Tender 37
6 4600061859 RFQ R 42 711 873,90 Invitation to Tender 38
7 4600061909 RFQ R 14 292 438,25 Sole Sourcing 39
8 4600062251 RFQ R 21 351 600,00 Sole Sourcing 40
9 4600055020 RFQ R 10 722 228,66 Emergency 41
10 4600062636 Tender Award R 41 540 800,00 Invitation to Tender 42

6.2.3 Eskom provided us with supporting documentation relevant to the contracts reflected in
the schedule hereunder:

Contract numbers End User


1 4600055020 Medupi Power Station - July 2014
2 4600058830 Various Power Stations - November 2015 to June 2016
3 4600061441 Kriel Power Station - April 2016
4 4600060205 Kusile Power Station - July 2016
5 4600061009 Kusile Power Station - July 2016
6 4600061015 Kendal Power Station - September 2016
7 4600061859 Majuba Power Station - September 2016
8 4600061909 Kriel Power Station - November 2016
9 4600062251 Kendal Power Station - February 2017

6.2.5 Mr Pather also provided us with the detail of sub-contracting work that Impulse
International (Pty) Ltd did for ABB South Africa (Pty) Ltd. The table hereunder reflects 6
(six) contracts as provided by Mr Pather:

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Ref Contract number Start date End date Value


1 ABB_TCP 01 February 2016 31 December 2016 R47 000 000,00
2 LOI 12 July 2016 28 February 2017 R76 675 743,20
3 Not Available 01 March 2017 17 June 2017 R111 648 376,97
4 2202053035 02 May 2016 31 August 2016 R4 392 960,00
5 Not Available 01 August 2016 30 June 2017 R60 507 607,08
6 LOI+ Letter 01 January 2017 31 March 2017 R43 293 318,29
Grand Total R 343 518 005,54

6.3 Procurement of services


6.3.1 The review and analyses of the contract supporting documentation for Impulse
International (Pty) Ltd, as received from Eskom, identified the procurement processes
followed and role players involved within the procurement of services from Impulse
International (Pty) Ltd.

6.3.2 Below we provide detail on each of the contracts identified relevant to the period 1 April
2016 to 31 March 2017. We however sourced copies of contracts awarded to Impulse
International (Pty) Ltd since 2004 when it was appointed as a vendor.

Contract Procurement
Ref Number Power Station Methodology Contract Value Threshold DoA Policy Level
R5M- Medupi Projects R5M-R100M
4600055020 Medupi Emergency R10 722 228,66
1 R100M Tender Committee
Kusile Projects R100M Tender
4600060205 Kusile Emergency R63 445 861,52 R100M
2 Committee
Kusile Projects R100M Tender
4600061009 Kusile Sole Source R79 244 640,00 R100M
3 Committee
Kendal R0-R50M Tender
4 4600061015 Kendal Emergency R19 800 000,00 R0M-R50M Committee
Mancom Procurement Tender
R100M
5 4600058830 Various Sole Source R65 854 766,64 Committee
Invitation to Kriel Main R100M Tender
6 4600061441 Kriel Tender R31 175 306,25 R100M Committee
Invitation to Majuba <R50M Tender
7 4600061859 Majuba Tender R42 711 873,90 R50M Committee
Kriel Power Kriel Main PTC R100M Tender
8 4600061909 Station Sole Source R14 292 438,25 R100M Committee
Kendal Power Kendal R0-R50M Tender
4600062251 Sole Source R21 351 600,00 R0M-R50M
9 Station Committee
Matla Power Invitation to Matla Procurement Tender
4600062636 R47 771 920,00
10 Station Tender R0M-R50M Committee

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6.3.3 We sourced a legal opinion relevant to the applicability of section 75 of the Companies
Act, no 71 of 2008 insofar as it relates to the facts of this investigation (see Exhibit 43).

6.3.4 We identified one (1) contract entered into between ERI and Impulse International (Pty)
Ltd during 2015, being contract number 4600058830. The contract was initially awarded
with a contract value of R65 854 766.64. It was modified and extended for an additional
12 (twelve) months and the additional extended contract value was R29 442 000.00. The
total value of the contract was R95 296 766.64. Mr Koko declared his interest as a
director in ERI during 2015.

6.3.5 Mr Koko stated during the consultations conducted, that he was not involved in any of
the commercial processes relevant to the appointment of Impulse International (Pty) Ltd.

6.3.6 We sourced data in respect of 46 POs captured on the SAP system related to Impulse
International (Pty) Ltd. It was established that the existence of a PO does not constitute
a payment and we sourced POs, purchase requisitions and invoice data from the SAP
system. We therefore specifically analysed payment transactions to Impulse
International (Pty) Ltd that have been processed to the level of paid invoices only as this
constituted a completed procurement transaction.

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7. Conclusions
7.1. It is evident that Mr Koko was appointed as the GE: Generation during late 2015. He was
also responsible for Technology, consisting of maintenance and engineering. He was
appointed as the Interim CE on 1 December 2016.

7.2 Impulse International (Pty) Ltd was registered as a vendor to Eskom on 19 August 2014
and was appointed by Eskom from the 22 July 2014 as per the SAP system information to
render various project management and support services to Eskom.

7.3 It is evident that Impulse International (Pty) Ltd rendered services directly to Eskom and
was also appointed as a sub-contractor to render services to Eskom. We cumulatively
established that 10 (ten) contracts were awarded by Eskom to Impulse International (Pty)
Ltd in the total value of R 390 139 515,22 as reflected in the schedule hereunder:

Ref Contract Number Start of Contract End of Contract Contract Doc Value
1 4600055020 22 July 2014 31 January 2015 R10 722 228,66
2 4600060205 25 March 2016 19 August 2016 R63 445 861,52
3 4600061009 20 August 2016 28 March 2017 R79 244 640,00
4 4600061015 17 August 2016 28 February 2017 R19 800 000,00
5 4600058830 04 December 2015 30 January 2019 R65 854 766,64
6 4600061441 12 October 2016 30 September 2019 R31 175 306,25
7 4600061859 01 January 2017 31 December 2019 R42 711 873,90
8 4600061909 09 January 2017 09 June 2017 R14 292 438,25
9 4600062251 01 March 2017 31 August 2017 R21 351 600,00
10 4600062636 1 May 2017 30 April 2020 R41 540 800.00
Grand total R 390 139 515,22

7.4 Mr Koko declared his directorship in ERI and also his membership in the Engineering
Society on 3 September 2015. His declaration was approved by Mr Molefe. Mr Koko
declared his involvement in ERI again on 8 June 2016 and the declaration was also
approved by Mr Molefe. Mr Koko declared on 24 February 2017 that his stepdaughter is
a beneficiary in a trust which owns 35% interest in the entity styled Impulse International
(Pty) Ltd. This declaration was approved by the Chairperson of the Eskom Board, Dr B
Ngubane on 1 March 2017.

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


Impulse International (Pty) Ltd on 31 March 2016. Mr Pather, the CEO of Impulse
International (Pty) Ltd allocated 25% shareholding to Ms Choma on 31 March 2016.

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


September 2016. She was not employed by Impulse International (Pty) Ltd nor did she
receive any payment relevant to her appointment as a non-executive director. Mr Pather
confirmed that Ms Choma did not receive a salary/payment as a non-executive director
to Impulse International (Pty) Ltd.

7.7 The Mokoni trust with reference IT 2000216/2016(MN) was registered on 7 July 2016.
On 21 September 2016 Ms Choma transferred 25 % shares in Impulse International (Pty)
Ltd to the Mokoni trust where she was registered as a trustee and a beneficiary at the
time.

7.8 Mr Pather transferred 10% shareholding of Impulse International (Pty) Ltd to the Mokoni
trust on 21 September 2016.

7.9 On 23 February 2017 Ms Choma was registered as only a beneficiary to the Mokoni trust.

7.10 Ms Koko and Ms Choma confirmed that Mr Koko was not informed of her appointment
as a non-executive director at Impulse International (Pty) Ltd on 31 March 2016. Mr Koko
became aware of her appointment as director and shareholder around
August/September 2016 where after, he requested her to resign as a non-executive
director and relinquish her shareholding in Impulse International (Pty) Ltd. She submitted
her resignation on 20 September 2016 as a non-executive director and decided to
transfer her shares to the Mokoni trust on 21 September 2016. Mr Koko was not aware
at the time of her decision to keep the shareholding in Impulse International (Pty) Ltd.

7.11 Mr Koko was informed in February 2017 that Ms Choma was a beneficiary to the Mokoni
trust that held 35% shareholding in Impulse International (Pty) Ltd since 21 September
2016. Ms Koko advised Ms Choma to stay on as only a beneficiary to the Mokoni trust.

7.12 During 2016, Mr Koko submitted his declaration of interest as required by Eskom and
declared conflicts of interests referred to in the report. He did not declare the
directorship or shareholding of Ms Choma during 2016 and he stated that he was not

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aware of same. When he became aware, he requested her to resign as a non-executive


director and to relinquish her shareholding.

7.13 Mr Koko became aware that Ms Choma is registered as a beneficiary to the Mokoni trust
in February 2017 and he declared her shareholding in the trust, which holds 35% shares
in Impulse International (Pty) Ltd, to Eskom.

7.14 Mr Pather did not declare the directorship or shareholding of Ms Choma to Eskom during
2016 when Impulse International (Pty) Ltd was awarded 4 (four) contracts to the
accumulative value of R193 665 807.77 as per SAP system information.

7.15 However, Mr Pather declared his relationship with Mr Koko on 12 May 2017 after signing
a contract (4600062251) with Eskom on 28 February 2017. We received a letter from the
attorney of Mr Pather on 26 May 2017 indicating that in hindsight, disclosure should
have been made and was prudent not only to safeguard the interest of Eskom, but also,
as afore stated, to be transparent and accountable and thereby serve the interest of the
respective contracting parties as well as the public interest.

7.16 According to the currently available documentation, Eskom utilised their procurement
processes as described in their procurement policy, in the awarding of contracts to
Impulse International (Pty) Ltd. There are no indications on any of the available
documentation that Mr Koko was involved in the approval and awarding of contracts to
Impulse International (Pty) Ltd.

7.17 According to the SAP data provided by Eskom, the peak period of financial transacting
amounting to 56% of all contracts (to date) between Eskom and Impulse International
(Pty) Ltd was in year 2016 as presented below:

Year Number of contracts Cumulative value % per year


2014 1 R 10 722 228,66 3%
2015 1 R 65 854 766,64 19%
2016 4 R 193 665 807,77 56%
2017 3 R 78 355 912,15 22%
Total R 348 598 715,22 100%

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7.18 The legal opinion obtained relevant to section 75 of the Companies Act, also addresses
the conflict of interest provisions in the PFMA as well as Eskom's internal conflict of
interest policies. The opinion albeit based on the face of it and the evidence and the
evidence provided that whilst there are some technical differences between the
Companies Act, PFMA and the policies in terms of their ambit and the range of persons
to whom they apply, ultimately their basic and essential principles are the same: There
must be disclosure and recusal where one (or one's related parties) are interested in the
matter being considered at a meeting or other decision-making forum, and additionally
ongoing updates of personal business interests must be made within the organisation.

7.19 Section 75 of the Companies Act referred to above, provides that if a director/prescribed
officer of a company acquires a personal financial interest in an agreement or other
matter in which the company has a material interest, or knows that a related person has
acquired a personal financial interest in the matter, after the agreement or other matter
has been approved by the company, the director/prescribed officer must promptly
disclose that interest.

7.20 Mr Koko upon becoming aware that Ms Choma is registered as a beneficiary to the
Mokoni trust in February 2017, declared her shareholding in the trust, which holds 35%
shares in Impulse International (Pty) Ltd, to Eskom as contemplated by section 75 of the
Companies Act, no 71 of 2008 and as provided for by Eskom's declaration of interest
policy.

7.21 The facts as set out in this report are based on a limited fact-gathering and interviewing
process. In the circumstances, without having interrogated the evidence gathered and
based on the untested statements and documentation made available to us, we are
unable on the basis of this fact finding enquiry to come to any conclusion.

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8. CDH Legal Findings and


Recommendations
8.1 CDH has obtained a legal opinion from Senior counsel and a number of anomalies and
unanswered questions arose which are set out below:

8.1.1 First issue

8.1.1.1 Mr Koko was the Eskom GE: Generation from late 2015 to the end of November 2016.
He was appointed as the Eskom Interim GCE with effect from 1 December 2016. Quite
evidently, he occupied senior positions in Eskom. The mere ipse dixit of Mrs Koko and
Ms Choma that when Ms Choma was appointed as a non-executive director at Impulse
International, and acquired a shareholding therein, Mr Koko was not informed
thereof. There is no indication that the mere ipse dixit of Ms Koko and Ms Choma
was scrutinised or tested.

8.1.1.2 On 25 March 2016, Impulse International commenced with the execution of a contract
with Eskom, which value was in excess of R63 million. The suggestion that Mr Koko
was not informed that Ms Choma had not only been appointed a director but also
acquired an equity interest in Impulse International (without any reference to any
purchase price for that equity interest) would require further testing through a
mechanism such as cross-examination.

8.1.1.3 On Mr Koko's version, he only became aware of Ms Choma's appointment as a director


of and her acquisition of a shareholding in Impulse International during
August/September 2016, whereafter he requested her to resign as a non-executive
director and relinquish her shareholding in Impulse International. By this stage,
contracts worth approximately R162 million had been concluded between Impulse
International and Eskom whilst Ms Choma was involved with Impulse International (as
a shareholder and non-executive director). It does not appear that the question of Mr
Koko's knowledge of those contracts was canvassed with him at all, nor is there any
explanation of why Mr Koko saw fit to ask Ms Choma to resign as a director of Impulse
International and to divest herself of her shareholding therein. In other words, on his

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version, Mr Koko's request of Ms Choma must have been based on his knowledge of
the contractual relationships between Eskom and Impulse International. This being
the case, there is no explanation at all why Mr Koko did not, as required by Eskom's
conflict of interest policy, immediately (or at least within five days) declare this
conflict. At the minimum, this issue needs to be canvassed further.

8.1.1.4 Furthermore, if Mr Koko was aware of the contracts which Impulse International had
with Eskom when he requested (on his version) Ms Choma to resign as a director of
Impulse International and to divert herself of her shareholding therein, he would then
have been aware that her shareholding in Impulse International would have had
economic value. There is no explanation regarding the terms upon which he expected
her to relinquish her shareholding, nor to whom.

8.1.1.5 In addition, there is no explanation at all for Mr Koko not having then confronted Mr
Pather for an explanation of why Impulse International did not make disclosure of the
conflict or perceived conflict of interest having regard to Ms Choma's role in Impulse
International. Even if Mr Koko had an innocent state of mind at the time, there can
be no explanation for Mr Pather not having made full disclosure to Eskom. And, the
appropriate course of action at that time (on Mr Koko's version of the facts) would
have been for Mr Pather to have been confronted about his non-disclosure of the
conflict of interest, either by Mr Koko himself or at the behest and instance of Mr
Koko.

8.1.1.6 Finally, Mr Koko states that he was not aware that Ms Choma then decided not to
relinquish her shareholding in Impulse International, but rather to transfer that
shareholding into the Mokoni Trust, of which she was both a trustee and a beneficiary.
In other words, she simply moved the shares from a direct holding to an indirect
holding. Again, on an issue which would have had some significance, there is no
explanation for Mr Koko not having followed up with Ms Choma on his request that
she relinquish her shareholding.

8.1.2 Second issue:

8.1.2.1 At the time when Ms Choma transferred 25% of her shareholding into the Mokoni
Trust, the Mokoni Trust was awarded a further 10% shareholding. The coincidence

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in timing thereof would require further investigation and certainly an explanation.


This is because at the very point in time when (on Mr Koko's version) one would have
expected Ms Choma to have relinquished her shareholding in Impulse International,
she instead transferred it into the Mokoni Trust and simultaneously through the
Mokoni Trust acquired a further 10% shareholding in Impulse International. It seems,
at least prima facie, that the real intention at the time was for Ms Choma 's equity
interest in Impulse International to be held indirectly (through the Trust) and that this
is why she would have transferred her 25% shareholding into the Mokoni Trust, rather
than as a result of a request by Mr Koko that she relinquishes her shareholding in
Impulse International.

8.1.2.2 The further issue which arises is on what commercial terms was the additional 10%
shareholding in Impulse International transferred to the Mokoni Trust? This has not
been canvassed.

8.1.3 Third issue:

8.1.3.1 On Mr Koko's version, he was informed in February 2017 that Ms Choma was a
beneficiary to the Mokoni Trust which held a 35% shareholding in Impulse
International since 21 September 2016.

8.1.3.2 It would appear that Mr Koko's version is that he only then declared her interest in
the Mokoni Trust to Eskom. And he did so through the submission of a declaration of
interest e-form in which he declared that Ms Choma "... is a beneficiary in a Trust
which owns 35% interest in Impulse ..." and further that the circumstances under
which a conflict of interest could be created was "if the company does business with
Eskom."

8.1.3.3 This declaration in itself is troubling. There appears to be no full declaration of the
extent of Impulse International's contractual relationship with Eskom, its value and
that most of the contracts were awarded after Ms Choma had become involved with
Impulse International nor is there any declaration that Impulse International was in
fact doing business with Eskom. In other words, the declaration (having regard to the
content of the CDH Report) suggested that a conflict of interest could arise, without a
full disclosure that a conflict of interest had already arisen.

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8.1.3.4 There is also no indication by Mr Koko of why he did not enquire further from Ms
Choma as to her failure to have relinquished her shareholding when he requested her
to do so during August/September 2016. Nor is there any indication of whether he
queried the basis upon which, on the contrary, her shareholding was transferred into
the Mokoni Trust (of which she is a beneficiary).

8.1.4 Fourth issue:

8.1.4.1 As stated earlier, on his own version, Mr Pather did not declare Ms Choma's interest
in Impulse International to Eskom during 2016. During this period, Impulse
International was awarded four contracts with a combined value of approximately 193
million by Eskom.

8.1.4.2 In addition, most of the contracts awarded to Impulse International were either
emergency or sole sourcing contracts, without a tender process having been followed.
Now, whilst there is justification in particular circumstances for contracts to be
concluded on that basis, it seems rather too coincidental that after Ms Choma became
involved with Impulse International, the number of contracts it acquired from Eskom
had gone from an initial contract (concluded during 2014) to a further 9 contracts with
a total combined value of R380 million. In addition, there would have been the
substantial sub-contracts, in excess of R260 million, which were awarded to Impulse
International after Ms Choma became involved with Impulse International.

8.1.4.3 The response from Mr Pather regarding his failure to make disclosure of Ms Choma's
interest in Impulse International was simply a statement that "in hindsight, disclosure
should have been made and was prudent ...". He does not explain why something as
obvious as the need for such disclosure was not thought of at the appropriate time.

8.1.4.4 The substantial increase in value of contracts awarded to Impulse International from
the moment Ms Choma became involved with Impulse International needs to be
canvassed.

8.1.5 Fifth issue:

8.1.5.1 Mr Koko stated that in August / September 2016, when he became aware that Ms
Choma was a director of Impulse International and a shareholder therein, he

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requested her to resign as a director and to relinquish her shareholding. He could


only have done so (if he did indeed do so) because the position was obviously
untenable.

8.1.5.2 By February 2017, when on Mr Koko's version he had learned that Ms Choma did not
truly relinquish her shareholding in Impulse International, but had (through the
Mokoni Trust) in fact increased here shareholding therein, Mr Koko's sense of disquiet
ought logically to have increased. After all, not only did Ms Choma ignore his request
of August/September 2016, but she sought to hide her shareholding interest in
Impulse International through the transfer of her shares to the Mokoni Trust.

8.1.5.3 And, through this period, the award of contracts by Eskom to Impulse International
increased. At that point, Mr Koko states that his course of action was to declare a
conflict of interest in the manner which he did earlier. But, one would have expected
significantly more from him having regard to what occurred after he purportedly
requested Ms Choma to resign as a director of Impulse International and relinquish
her shareholding therein during August/September 2016.

8.1.5.4 In short, there is, prima facie, a contradiction between Mr Koko's reaction in February
2017 when he learns (on his version) that the Mokoni Trust holds 35% of the shares in
Impulse International and his purported reaction in August/September when (on his
version) he first learns of Ms Choma's interest and involvement in Impulse
International.

8.1.6 Sixth issue:

8.1.6.1 Finally, there is the substantial issue of why, even if he only did become aware of Ms
Choma's interest and involvement in Impulse International during August / September
2016, Mr Koko took no steps to declare the conflict or perceived conflict of interest
forthwith (or at least within five days).

8.1.6.2 Mr Koko was required to do so in terms of Eskom's policy. he failed to do so. This
issue needs to be further canvassed.

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8.2 CONCLUSION

8.2.1 There are sufficient anomalies in the explanation actually given by Mr Koko and further
many unanswered questions from the explanations given by Mr Koko, Mrs Koko, Ms
Choma and Mr Pather for Eskom simply to be satisfied that the matter can be closed.

8.2.2 These anomalies and unanswered questions, and Mr Koko's failure to have made a full
disclosure during August/September 2016 (on his own factual version of events) requires
the matter to be taken further.

8.2.3 There are sufficient issues which arise which would warrant disciplinary proceedings to
be instituted against Mr Koko. This would be in the interests of both Mr Koko and Eskom
since, through the interrogative process of a disciplinary proceeding (with the leading of
evidence forensic consideration of documents and the cross-examination of witnesses)
the anomalies and unanswered question can be fully canvassed.

8.2.4 If there are proper answers and explanations from Mr Koko and any other witnesses he
calls on his behalf, then the issue can properly be closed off and no further steps need be
taken against Mr Koko. However, the disciplinary proceedings may well exacerbate
Eskom's concerns and illustrate that the anomalies are real anomalies and that there are
no satisfactory answers to the unanswered questions. This could then lead to Eskom
taking further action against Mr Koko, depending on the outcome of and
recommendations made through the disciplinary proceedings.

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