Truth to Power extract: Setting a billion rand on fire

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Chapter 15

The number leapt off the page. One single power station, Tutuka, was burning no less than 43% of all the fuel oil purchased by Eskom.

“What’s going on here? This cannot be,” I said to the board members of Eskom’s generation division during a meeting in April 2020.

There was much umming and ahing around the table. The old favourite, ‘No, you don’t understand …’ was trotted out, but I kept on hammering and probing, also in subsequent meetings.

Fuel oil is used to get the coal in the boilers burning again after an outage or a plant trip. In the jargon of power station workers, this is known as “putting fires in”. In some instances, where coal quality is particularly poor, operators add fuel oil to boost combustion. Even bearing in mind all of the trips at Tutuka, and its poor coal quality, it was simply impossible that one power station could legitimately be burning nearly half of all of Eskom’s fuel oil purchases. Bear in mind that Tutuka is only one of our 15 coal-fired power plants. One would therefore expect the percentage to be around 7 or 8, maybe 10 percent if you wanted to allow for some kind of special circumstance.

While everyone else was seemingly taking the shocking statistic in their stride, I was happy to be the little boy pointing out that the emperor was wearing no clothes. Repeatedly. 

Once, to really drive my point home, I said, “Guys, if you were truly burning this much fuel oil, Standerton would be permanently covered by a black cloud. It would look as if the Israelites were being led to the Promised Land.”

Over the course of many months I persisted in asking questions about Tutuka’s improbable fuel oil usage. I asked for analyses and comparisons, and eventually Jan came round to my point of view. Something was clearly wrong with fuel oil at Tutuka. The breakthrough only came once we appointed one of our best and brightest, Sello Mametja, as power station manager. Sello had a 15-year track record at Eskom, with 10 in various senior management positions.

At the same time as his appointment, we had started disciplinary action against one of his predecessors, an appointee of former Eskom boss Matshela Koko. Prior to Jabulane Mavimbela taking over in June 2017, Tutuka had been one of Eskom’s best-performing power stations with an energy availability factor of 84%. Within a year and a half, the EAF had dropped to 34%.

Sello agreed that something was amiss with Tutuka’s sky-high fuel oil usage and took a personal interest in investigating the matter.

In interviews with the websites News24 and Netwerk24 as well as the Sunday newspaper Rapport, he later recounted the dramatic events of 21 April 2021 that led him to solve this long-standing mystery. In the early hours of that morning, he was summoned to the power station after two units had tripped. 

He left his house in Witbank, about 120km away, at around 02:30, as power station managers are contractually obliged to be on site after more than one unit trips, no matter the time of day.

Arriving at the power station, he was informed that the fuel oil levels were low — even though they had received no less than 36 deliveries within the past 24 hours.

Sello noticed that one fuel tanker was busy unloading — or, at least, appeared to be unloading. The truck driver peered through a hatch in the tank, as if to make sure that it was empty. He told Sello that he had completed his delivery. But the quick-thinking power station boss had smelt something fishy. “I just had a feeling,” he said later.

As the truck drove off, Sello noted that the level of fuel oil in Tutuka’s tanks had barely budged. He took a split-second decision to chase after the tanker in his own vehicle, accompanied by a security official whom he had alerted. In the heat of the moment, Sello probably didn’t fully grasp the great personal risk he was taking. He didn’t know yet that he was chasing down two members of an organised crime syndicate. 

Following in a normal vehicle, Sello and the security official would have been in trouble if the driver of the hefty tanker had decided to pull some aggressive driving manoeuvres to avoid being flagged down, or if the two men inside had been armed.

Fortunately for Sello, the men in the tanker put up little resistance when he and the security guard pulled them over. “They told a whole lot of stories,” he said.

Neither this truck, nor the others that day, had delivered any fuel oil. Later, when looking at the CCTV footage from the delivery area, Sello noted that all the trucks had switched their headlights to bright, so that their number plates would be less visible. The truck drivers all wore caps or hats that were pulled over their eyes.

Tutuka was being robbed blind by a fuel oil syndicate.

The suppliers had been indulging in so-called “round-tripping”: fuel tankers would drive over the weighbridge, but never offload their cargo. The driver would collect his delivery note, exit the gate, drive around for a bit, and return later, hence the name round-tripping. Of course, the suppliers would get paid for the fuel oil that was never delivered. Do not pass go but do collect R100 million per month.

It goes without saying that this kind of corruption requires the collusion of a whole chain of power station workers. From the security guard at the gate to the weighbridge operator to the supply chain worker at the fuel depot: they all have to be in on the scheme.

It’s a South African axiom that where you have a weighbridge, you will have theft and fraud. If you need to do a forensic audit, start at your weighbridge.

After his heroism, Sello now walks around with a permanent bodyguard and wears a bulletproof vest. His wife and family are driven around by bodyguards, to protect them from the very real threat to their lives. As someone who took an annual income of R1.2 billion out of the pockets of an organised fuel oil syndicate, it’s safe to assume there is a target on his back.

His actions led to the suspension of 20 Eskom officials, while two others were arrested for fraud, corruption and theft.

Some time later, on a site visit, I talked to the person in charge of procurement at Tutuka. “Ever since we’ve implemented controls, the fuel oil levels in our tanks are far higher,” he said.

This was despite the fact that, on paper at least, Tutuka had drastically reduced its purchases of fuel oil. They bought less, but had more.

Tutuka only needed around six deliveries of fuel oil per day. But the previous management had signed a contract for 36.

Looking at the graph of Tutuka’s fuel oil usage, you could see it gradually ramp up as the criminals got greedier and greedier — and more emboldened by what they were getting away with.

If they’d had a modicum of self-control, they could probably have got away with it for far longer. But, as is almost always the case, the greed was all-consuming.

One year into my term of office, I had seen enough to realise that Standerton was the Palermo of Mpumalanga. It was the heart of organised criminal activity in the province — and our power stations were the breeding ground.

At R100 million per month, the saving in Tutuka’s fuel oil bill was staggering, but also sickening if you thought about what it implied: for years, this was the amount that had flowed out of Eskom and into corrupt coffers. Just at Tutuka, the annual cost of the round-tripping of a single commodity was a staggering R1.2 billion. 

Now remember that this was far and away not the only nefarious activity going on at the power station. And that this had been going on for several years. Add in the fact that we had 14 other coal-fired power stations, none of which were 100% untainted, and you start to get a sense of the scale of the corruption. 

If you also consider the effect that load-shedding and higher electricity prices have on the economy and the consumer, the cost to the country of embedded criminality in Eskom is truly incalculable. In the absence of law enforcement pursuing the crooks, it was left to Eskom management to play policeman in order to save taxpayers billions.

The scale of the rot was deeper and more systemic than many people realised — myself prime among them. I thought that with people like Koko, Brian Molefe and Anoj Singh out of the way, the worst was over. I was wrong. The corruption had metastasised to permeate much of the organisation.

The tale of Tutuka is also the story of two power station managers — and one of them, at least, embodies hope for the future.

Sello’s bravery saved South Africa billions. He is the kind of manager who takes immense pride in his work. On his first day at Tutuka, two months before he uncovered the fuel oil syndicate, he put on his overalls and got stuck in on ground level — to the evident surprise of his colleagues.

What he found shocked him. The plant was dirty and the ash build-up enormous. In some areas it lay 6m deep, covering doors, stairs and equipment, he told Netwerk24.

In one section, where the ash had hardened into a thick concrete-like layer, he saw a piece of metal sticking out. He ordered the area cleaned, and the layer of ash revealed its secret: a back actor used for shovelling earth had been almost completely submerged under the blanket of ash. The only telltale sign was the tip of its hydraulic shovel sticking up out of the ash like a scorpion’s tail. 

Eskom had been paying millions in rent for this “missing” piece of equipment. I could not wrap my head around the mentality that would knowingly cover a piece of yellow plant in ash — and simply didn’t give a damn.

But, gradually, Sello managed to turn the tide and clean things up. “I really love my plant,” he told Rapport. “I love walking the floor.” His efforts unfortunately didn’t translate into Tutuka performing any better. The plant remained a perennial underperformer, with its EAF hovering under 20%.

In a private-sector company, it would have been a no-brainer to shut down the plant. Its cost of production was much higher than the tariff we received, and it required enormous maintenance and capital expenditure to keep running and remain compliant with environmental regulations. And years of systemic neglect and corruption had rendered the plant beyond redemption. 

During a visit to Tutuka by Ramaphosa, Gordhan, Mantashe and Bheki Cele, the minister of police, Sello laid out in gory detail the corruption that had emasculated the plant. The president was aghast. His ministers displayed a range of reactions: Gordhan had been briefed previously, and nodded knowingly. Cele got a vindictive gleam in his eye; the lassitude of local law enforcement clearly irritated him. Mantashe shot me a significant look and I had to wonder what it meant.

Walking around the plant, I pointed out a battery of hired compressors to the president.

“How much are we paying for those?” he asked.

“Millions per month, Mr President.”

“And why don’t we fix the ones we own?”

“Because people have an interest in our compressors being broken.”

It would appear to be a moment’s work to figure out who was responsible, but so insidious and invidious was the embedded corruption, and so complicated it was to fire the suspects, that the fight against the crooks was like holding back a tsunami with my bare hands. 

Ramaphosa knew what to look for; he had been in coal-fired plants in China and Japan where he had been issued with white gloves and asked to find a speck of dust. Trudging through a slush of ash, fine coal and mud, he was able to see with his own eyes what I was up against. Fixing Tutuka was mission impossible for Sello, for Jan and for me. 

Without the ability to hire and fire at will, without the support of law enforcement, without the ability to bring in skill and discipline, and facing hostile unions, point-scoring politicians and a workforce that no longer knew what good looked like, it was clear that our best intentions weren’t going to do the job.

As for Jabulane Mavimbela, he became a case study in how tough it can be to get rid of non-performing employees in a state-owned corporation.

Jan began by removing him from Tutuka and said he couldn’t manage a power station any more. Jabulane was redeployed to an equivalent position within the group capital division, from where he undermined and opposed our plans for green energy. That is, when he wasn’t busy accusing me of racism in WhatsApp messages.

After we instituted a disciplinary hearing, he came up with formal grievances against me, Jan and Phillip Dukashe, the head of generation. By this stage, Jan and I were pretty much taking racism accusations in our stride, but I think it’s fair to say that as an African man, Phillip had not been expecting the race card to be played against him.

Racism charges had become a dime a dozen. At one stage, Eskom chair Professor Malegapuru Makgoba spoke to the Executive Forum and basically said: We need to end this nonsense — stop playing the race card when you are held accountable for poor performance.

With his Black Consciousness background, Makgoba almost takes it as a personal insult when someone tries to cover up their own incompetence with accusations of racism.

In Jabulane’s case, it was classic Stalingrad tactics. By filing these spurious grievances, he was hoping to delay his own fate.

So, as was the case with Solly Tshitangano and Sifiso Dabengwa earlier, Eskom once again had to bring in a senior advocate at great expense to hear the matter. The three of us had prepared our defence and were ready to cooperate with the process. What else can you do? 

However, at the very first sitting, Jabulane upset the applecart. To the astonishment of Advocate Fana Joe Nalane, the chair of the hearing, he claimed that the grievance procedure was unlawful and unjust. “But Mr Mavimbela, you initiated the procedure. It is, to say the least, irregular for the person who initiated the procedure to object against it?” Nalane said, clearly struggling to keep his composure.

The hearing was held on Microsoft Teams, and Jabulane blabbered non-stop. At one stage, the exasperated Nalane just held his head in his hands and said, “Mr Mavimbela, please. Explain to me why we can’t go ahead with these proceedings? Why can’t we continue with these proceedings?”

Unsurprisingly, the grievance went nowhere but it had succeeded in delaying Jabulane’s own case. He then further stonewalled the process by bringing Labour Court actions against us.

At one stage, I asked our HR department, “When do we fire this guy? Because we pay him a big salary and he does nothing …”

Sometimes I wish I was an American CEO that can just call in someone and say, “You’re fired! The security team will escort you out.”

Of course, we need fair labour practices, but there needs to be a balance.

At the time of writing, Jabulane was still clinging to his job, and still getting paid to sit at home, more than three years after presiding over the demise of one of Eskom’s best power stations.

This is an edited extract. Truth To Power by André de Ruyter is published by Penguin Random House and costs R350.