Fraud accused charged Eskom R6.4-million

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Debt-ridden Eskom, which has saddled the country with load-shedding, gave R6.4 million of contracts to a company deregistered for value added tax (VAT).  

Leon Marshall Koopman is facing 25 counts of fraud, or alternatively 25 counts of theft, for not paying VAT to the South African Revenue Services (Sars) for about 10 years after he deregistered his company, MLK Consulting Services CC, for tax in 2007.

Koopman allegedly did not inform clients that he was no longer tax compliant, according to the state’s charge sheet.

The summary of the charge sheet, which was presented to the Johannesburg specialised commercial crimes court by prosecutor Debbie Zinn, said that MLK Consulting Services was registered in January 1997. “It is unknown what business, if any, was conducted by the [close corporation],” reads the National Prosecuting Authority’s (NPA) charge sheet.

It stated that Koopman registered the company, in Sandton, Johannesburg, for VAT in April 1997. 

“The accused was the representative vendor. In other words, he was responsible for performing the duties of the vendor as required by the VAT Act,” the state alleges.

 “The accused continued to trade and entered [into] contracts with Eskom, but fraudulently failed to submit VAT 201 returns [tax forms] for the tax periods October 2000 to August 2010,” the state says.

“The matter was referred to the tax and customs enforcement investigation by the debt department [at Sars] because MLK Consulting Services deregistered for VAT but used the same VAT number to enter into contracts with Eskom amounting to R6 483 261.14.”

It says Koopman charged Eskom an amount of R796 189.96 for VAT, but this was not declared to Sars by the accused. “Sars suffered actual prejudice in the total amount of R335 282.30 as a result of the accused’s conduct,” the state alleges.

A source close to the investigation said that although Eskom should have had mechanisms to check whether the companies it does business with are tax compliant, the NPA had only charged Koopman for the tax violations because, on the face of it, the alleged fraudster received his Eskom contracts fairly. 

“We don’t go after the interest; Sars must recover it on its own. [We have] charged the accused, in his personal capacity, for fraud, (25 counts), alternative counts of theft (25 counts), second alternative count of contravention of section 58(d) of the VAT Act — failure to pay over to Sars,” said the source, who asked to remain anonymous.

But Koopman might not serve much jail time, if any, should he be convicted of the charges against him. 

“These charges fall under the penalty provisions of the VAT Act and carry a sentence in the form of a fine or imprisonment not exceeding 24 months per count,” the source explained.

The 25 charges of fraud or theft related to the 25 transactions Koopman’s company conducted with Eskom. The highest amount of tax Sars was allegedly defrauded of was R29 688.22 in June 2008, and the lowest was R4 281.27 in July of the same year. 

It is unclear what work Koopman’s company did for Eskom, but it could have been vehicle repair work because some of the transactions, listed in a document in the charge sheet, mention car model names such as Sentra, Jetta and Kadett in the invoice descriptions. 

Koopman was expected to enter his plea on 19 January at the specialised commercial crimes court, sitting in Palm Ridge. But the matter was postponed to February after his lawyer was ill. 

Koopman remains out on bail until his next appearance. 

Meanwhile, Eskom said this week that it has a “cash flow crisis” when it announced that the City of Tshwane — which houses the executive arm of the state as well as many foreign embassies — owes it a “bulky” R1.4 billion as of Wednesday.

In a statement released by the power utility’s Gauteng spokesperson, Amanda Qithi, Eskom said Tshwane failed to settle its R780 million December debt, after paying only a portion of its R660 million debt for the previous month. 

“Despite several engagements with the [City of Tshwane] to encourage it to settle its November 2022 account by 31 December 2022, the bill remains outstanding. Eskom approached the department of cooperative governance and traditional affairs to mediate in the resolution of the [city’s] poor payments that continue to spiral out of control,” Qithi said.

“Eskom has previously reported on the [City of Tshwane’s] erratic payments on its bulk account. On 5 January 2023, the power utility again made the same plea to the [city] to settle its long outstanding invoice of November 2022, in a meeting between the two entities, but to no avail.”

She added that the Public Finance Management Act empowered state institutions and companies to recover what was owed to them, which is why Eskom had approached the cooperative governance department to mediate between the parastatal and the local government. 

“Eskom does not have the financial capacity to finance the [city’s] operations and calls on the city to do right by its residents and pay the bulk electricity account to enable Eskom to continue supplying electricity to the city,” said Qithi.

The state-owned electricity company has come under huge political pressure in recent weeks over its failure to generate enough power to meet demand, leading to extensive load-shedding to avoid tripping the national grid. The Mail & Guardian reported on 17  January that a tense encounter had taken place the previous day, when Eskom’s top brass was called to a parliamentary caucus meeting.

The ANC, according to highly placed insiders privy to the meeting, told Eskom’s executives and board members that Eskom was sabotaging the governing party ahead of next year’s general elections through the repeated rolling blackouts being implemented by the parastatal.