Earlier this month, law enforcement agencies achieved a
huge breakthrough in the ongoing effort to root out
corruption at Eskom.
A multidisciplinary team supported by the South African
Revenue Service carried out a meticulously planned
search and seizure operation targeting coal smuggling
syndicates operating across five provinces. Documents
were seized from individuals alleged to have committed a
range of offences including procurement fraud, tax
crimes and coal diversion. This will support the drive to
recover assets obtained from the proceeds of crime.
Coal diversion is when coal trucks carrying high-grade
coal destined for power stations are diverted to bogus
and illegal coal yards by criminal syndicates. This high-
grade coal is removed to be sold off and replaced with a
sub-standard product that is delivered to Eskom.
This latest operation follows a raid in September on an
illegal coal mine in Mpumalanga by the SAPS Illicit
Mining Task Force, where mining equipment valued at
approximately R60 million was seized. The crime of coal
smuggling lays bare the impact of corruption on people’s
everyday lives.
When I visited the Tutuka power station in Mpumalanga
last year, the plant’s management explained to me the
significant damage caused to its operations by this
inferior coal. The coal is often mixed with stones and
other materials.
They explained that the conveyor belts at the power
stations repeatedly break down because the stones
damage the belts, with the result that spare parts have to
be bought at substantial cost. The entry of poor-grade
coal into the production processes further affects power
station boilers, causing corrosion and other long-term
damage.
This is contributing to the declining performance of
Eskom’s coal-fired power stations and increased
maintenance costs. This single criminal act reduces the
country’s energy generation capacity, and directly affects
every South African household and business struggling
under the crippling effect of load shedding. This in turn is
having a detrimental effect on our economy, holding
back growth, constraining job creation and deterring
investment.
Coal smuggling and other forms of wilful damage to critical infrastructure are no less than economic sabotage, and our government is treating them as such.
That is why one of the workstreams of the National
Energy Crisis Committee (NECOM), the Energy Safety and
Security Committee, is focused on illegal coal yards, the
illegal trade in fuel and fuel oil and other forms of
infrastructure crime that contribute directly to load
shedding. This workstream is supported by a Tactical
Joint Operations Centre in Mpumalanga, where most of
our coal-fired power stations are located.
Our focus on strengthening the institutions tasked with
investigating and prosecuting these cases, and ensuring
greater cooperation and information-sharing between
them, is producing results.
Asset forfeiture is playing an important role in ensuring
that those implicated in corrupt activities are unable to
hide their ill-gotten gains from the law. In December
2022, several people were arrested and trucks used in
coal diversion seized after a number of illegal coal yards
in eMalahleni were also raided.
Since January this year there have been a total of 234
arrests emanating from the operations of the Energy
Safety and Security Committee, with the value of items
confiscated amounting to over R260 million.
A number of investigations by the Special Investigating
Unit into Eskom-related corruption continue to yield
results. To date, coal supply agreements valued at
approximately R3.7 billion have been declared invalid
through litigation, and coal supply agreements and
construction contracts valued at R10 billion have been
set-aside.
Corruption, whether it is petty bribery, procurement fraud
or large-scale misappropriation of funds, is a rot that
negatively impacts all of society. When resources meant
for the benefit of citizens and improving their lives are
stolen, the price is paid by all, especially by the poor. It is
not a victimless crime.
Our efforts to tackle this corruption are gaining
momentum. We are disrupting and unravelling the
operations of the syndicates and criminal networks that
have enriched themselves off Eskom for far too long.
There will be more arrests. There will be more seizures.
The impunity that has allowed many to believe
themselves beyond the reach of the law is a thing of the
past.
To stop the rot at Eskom, mining houses, labour, business and civil society need to work together. The media also needs to continue the work it is doing to uncover criminal acts at Eskom.
If we continue to work together, we will ensure that these
coal syndicates have nowhere to hide, that they do not
benefit from their crimes and, even if it takes some time,
that they ultimately pay for them.
With best regards,