Long arm of Sars breaks corrupt Eskom coal syndicates

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JEREMY MAGGS: The South African Revenue Service [Sars] has led a government search and seizure operation against several alleged members of coal smuggling syndicates, including former Eskom employees. So here’s the question, just how important is all of this in the fight against the practice that is responsible in part for crippling power stations, and that has led to more blackouts.

Crime and security analyst, Calvin Rafadi, is with us. How significant, firstly, is this search and seizure operation in the grand scheme of the fight against coal smuggling in South Africa?

CALVIN RAFADI: Yes, indeed. This is a very serious and worrying crime that this has been ongoing at Eskom. Remember the last time we spoke, I think we suggested that the police can also use what we call an Anton Piller [Order], especially with the SIU [Special Investigating Unit], because it gives them the right to do the search and seizure, because in procurement, you need to follow the money.

So you follow the money, you follow the devices that these people are in communication on, and then it can lead you now to the actual corruption, because we always say that sabotaging Eskom derives from the procurement. So we applaud and thank Sars on the positive move that they’ve made and indeed, this will yield a lot of results and we will see this corruption being rooted out of Eskom and less load shedding in the future.

Read: Sars targets coal-smuggling syndicate across five provinces

JEREMY MAGGS: How big a dent has this particular action made, do you think?

CALVIN RAFADI: One can say it has made a good impact and I’m sure even the criminals are now very worried about the ongoing raids because with criminals, what they do is they always think who’s next, who’s next? So they know that if they touch whatever they touch as per usual because they used to act with impunity. Now, if they know that that is a hot plate, they’ll all shy away and run from this thing.

But at the same time, we also kindly ask for Sars to also look at the informal tendering, LPO’s, local purchase orders of the so-called component part in the C&I, the control and instruments, meaning your turbine and boilers, because according to the PFMA [Public Finance Management Act], the same process that they used to procure for the coal, it also applies with this particular critical part in the power station.

Listen/read: Eskom’s sabotage rot still at the core

JEREMY MAGGS: Calvin Rafadi, can you give me a sense, or could you elaborate on how these coal smuggling syndicates have been allowed to flourish with such success without any real action being taken against them until now?

CALVIN RAFADI: Yes, Jeremy, like I said, they were acting with impunity. There was no punishment at all. But remember, these people, the way they operate is some would get this particular coal from I would call it redundant mines, and some will get it and mix it, the low grade, and mix it with rocks and with some metals.

Also, whilst we are on that, Eskom uses low grade coal. Just a point of correction, I saw Sars saying, no, it’s only higher grade converted to a low grade. No, indeed they use a low grade. The only problem is when they mix it with other components like rocks and metals. But the people who enable all this particular crime are the guys, we call them the buyers, within Eskom, meaning the employees together with their management.

Because every order at Eskom, you have to get your local purchase order on the invoice, and it has to be signed off before the payments [is] as goods received.

Now remember, some of this coal, it’s never been received at Eskom. They never even saw the gate at the coal yard or even at the weight bridge.

Some they even see that they are light going into the weight bridge, but they are mixed with rocks. Some they manipulate, they go in and then they go out.

But the employees, together with some of the security personnel, they enabled this particular crime. Now it shows that we are yielding good results, and it also means that what [André] de Ruyter has alluded to, we applaud him as been a decisive leader to warn us that this is the crime, this is the cartel that is happening, but follow the money as well.

With Sars, we also know that if they follow the money, they’ll also confirm that the so-called Maserati’s and luxury cars that these people are driving, and they were buying. So it yields good results.

Read: Welcome to Eskom, ‘SA’s largest organised crime network’

JEREMY MAGGS: One of the problems, of course, is a lack of apparent leadership at Eskom right now, no chief executive, we’ve seen the chairman of the company resigning in the past couple of days. We have involvement of former Eskom employees in the syndicates themselves. It obviously suggests an internal structural problem within the utility, but given the leadership vacuum, surely this can just simply start up again.

CALVIN RAFADI: Ja, indeed. Issues at play here are poor business planning. Eskom is a business itself and once the leadership is not decisive, and then we stand to see a lot of corruption not dealt with. Just one of the modules that I’m busy studying under organisational behaviour, there’s what we call the milkshake case study.

Now, the milkshake case study, I wish all the leaders could read this because it tells you the morale of the employees, employees who just clock in, clock out without taking their job seriously. Management can see the rot but not reporting.

Read:
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That’s why we repeat and also call on Mr Mpho Makwana to say, be the honourable man. Mr de Ruyter has at least given us something to work on and it’s yielding results. So be the honourable man. Like even with Judge Edwin Cameron, you see how he saved South Africa from a Facebook rapist.

So let him follow suit and say, you know what, this is what is happening within Eskom. Then we are able to eradicate the problems as they arise.

JEREMY MAGGS: Calvin Rafadi, thank you very much for joining me on Moneyweb@Midday.