Eskom board dithers over suspending Jan Oberholzer for his part in Fidelity security contract

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Eskom’s board is divided over whether to suspend Jan Oberholzer, the utility’s former chief operating officer and now an adviser, who was allegedly involved in a controversial contract worth R500 million for the emergency procurement of security services from Fidelity.

Eskom said that although the contract was worth R500 million, it paid Fidelity R250 million. Fidelity provided more than 400 guards to protect transmission lines and power stations under threat of sabotage.

After a board meeting last week, Eskom head of security Karen Pillay was suspended for the three-month Fidelity contract from July to September 2022. 

She allegedly played a central role in putting together the scope of the contract, using information from intelligence reports by George Fivaz Forensic & Risk, which were requested by Eskom’s former chief executive, André de Ruyter.

The contract was allegedly approved without offering other security companies the opportunity to bid for the work. Eskom admitted that the contract was awarded to Fidelity without a competitive tender process.

Eskom said it was investigating all parties involved in the Fidelity deal and would ensure everyone would account for their actions.

“We are investigating the matter and will decide what should happen once the investigation ends. Eskom cannot act until we have enough evidence. Karen Pillay has been placed under suspension until the investigation ends. Eskom will not communicate further on the investigations that are currently underway until they are finalised,” it said.

The Fidelity contract was signed when Oberholzer was Eskom’s chief operating officer before he retired in May. He was then given a two-year contract by acting chief executive Calib Cassim as an operations director to oversee Kusile and Koeberg power stations.

Two sources on the Eskom board said the utility is under pressure to review Oberholzer’s position.

“His involvement in the Fidelity contract and his inability to redflag it has caused the board to be uncertain about his future at the utility,” one source said.

The second source said other board members were conflicted about the decision to remove Oberholzer from his two-year contract.

“There is a sense of loyalty in the discussions which has kept us circling around the same issue. We understand that at the time he might’ve not known about the dodgy contract, but the issue remains that Fidelity should not have received the contract because there were cheaper options. So we are divided on what to do with this case. We will wait for the investigation to conclude before we act,” the source said.

The African Security Congress, a party founded to lobby for the interests of private security guards, at a media briefing held last week, called for De Ruyter, Pillay and Obeholzer to face the music.

“Pillay should be suspended while she was being investigated, as well as operations manager Jan Oberholzer, who together with former CEO André de Ruyter, whom the party claims allegedly colluded to give Fidelity Security an uncontested tender,” it said.

Last week, during a two-day meeting of parliament’s standing committee on public accounts, chairperson Mkhuleko Hlengwa and other Scopa members called for Oberholzer to be placed on precautionary suspension as Pillay has been.

“I think there is a conflict of interest,” said Nonhlanhla Mkhonto. “If the investigation can be given to the Special investigative Unit in one way or another because I don’t understand how [Oberholzer] can’t interfere with this forensic investigation, because he is one of the role players. He is the highest person on the ladder that gave approval.” 

Scopa members also accused Cassim of ignoring a potential conflict of interest when appointing Oberholzer to oversee operations at Kusile and Koeberg power stations. 

Bheki Radebe questioned Cassim about whether he had asked Oberholzer what his role was regarding the Fidelity contract before appointing him as an adviser. 

“The reason we wanted [Oberholzer] to appear before us is because of his role as the COO [chief operating officer] in terms of all these allegations and what was done before he retired,” he said.

Scopa members also questioned Eskom’s chief procurement officer, Jainthree Sankar, about how the tender came about and why she saw fit to approve an emergency tender for such an enormous amount of money to a single provider.

Sankar said she had not been in the initial meeting with De Ruyter and Oberholzer where the level of the threat to Eskom had been discussed, adding that she had received the motivation for an emergency situation from her bosses indicating that Fidelity would be the provider.

Fidelity Services Group chief executive Wahl Bartmann confirmed on Monday that the company was awarded the three-month emergency contract to provide comprehensive security services at Eskom’s generation and transmission assets nationally. 

Bartmann said Fidelity will cooperate with any inquiry because he is confident that all due processes were followed.

“All services and solutions were confirmed, vetted and approved with the client and the services provided met the compliance stipulations,” he said.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa.