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Article
/ 17 Jan 2020


MABUZA’S ‘DISTANT RELATIVE’ SCORED BIG

By Thanduxolo Jika and Sabelo Skiti
FacebookTwitterEmailLinkedInWhatsApp
What’s in a name: Former Eskom chair Jabu Mabuza claims that he did not know
about his relative Nomvula Mabuza’s company and her bid for a boiler maintenance
contract at Eskom. (Felix Dlangamandla/Foto24/Gallo Images)

Former Eskom board chairperson Jabu Mabuza’s name is entangled in an R11-billion
boiler tube maintenance contract at the ailing power utility, where a company of
his distant relative has emerged as one of those that made it through to the
final bidding process for the critical contract.

The relationship, and the possibility of a conflict of interest, raised
questions inside Eskom in the days before his resignation last week. 

Nomvula Mabuza’s company — IDS Industry Service and Plant Construction Africa
(IDS Africa) — was formed in April 2018, shortly after a new Eskom board was
appointed. It allegedly stands to benefit from 70% of the utility’s boiler tube
maintenance contract, if the contract it is bidding for in a joint venture with
American outfit General Electric (GE) is successful.

IDS Africa already has a contract valued at R100-million for boiler tube
maintenance at Medupi power station, which was awarded in February 2019.



Eskom has, since last year, set aside R50-billion over the next four years for
maintenance, with the bulk going towards maintaining boiler tubes. 

There were no declarations of a possible conflict of interest by either Nomvula
or Jabu Mabuza, regarding the two contracts.

Mabuza and Eskom say that Nomvula is a distant relative and that the former
chairperson never sat in on discussions and decision-making processes relating
to boiler tube maintenance contracts.

Nomvula Mabuza. (Facebook)

Several insiders and people with knowledge of the scale of the maintenance
contract at Eskom expressed surprise that IDS Africa, as a relatively new
company, would already be in the running for even a stake in such a lucrative
job.

In her IDS Africa company profile, Nomvula claims that the entity has “47 years
plant engineering experience” — a direct contradiction to her company’s
registration records.

The 35-year-old further claims that IDS Africa is working at Kusile and Medupi
power stations, “continuing the legacy started since 2013 when IDS Africa GmbH
were roped in by Mitsubishi Hitachi Europe …”

But investigations by the Mail & Guardian show that no company called IDS Africa
GmbH ever worked with Hitachi in 2013.

An IDS Industry Service and Plant Construction South Africa (IDS South Africa),
however, was registered in May 2013 with two Croation nationals — Drazan Vrca
and Marc Vrca — as its directors. It was this company contracted to Hitachi.

It appears on the website of its parent company IDS GmbH, based in Germany.

Directors of the 2018 IDS Africa are Drazan Vrca and Nomvula Mabuza.

Paperwork, including the company profile, submitted by Nomvula to the M&G in her
responses to questions, as well as responses from General Electric, show that
she conflated the credentials of her new IDS company with that of IDS South
Africa so it could tender at Eskom.

She says that the 47 years of experience is through “licenced partnership”
although she doesn’t name the partner specifically.

A source with knowledge of the Croatian IDS questioned why Vrca and Nomvula
would need to register a separate company in South Africa.

“It simply does not make sense to me because you would not need this complicated
arrangement which looks like fronting,” said the source, who left Eskom more
than five years ago. They asked not to be named as they still have close
commercial ties to Eskom.

The M&G has also established that a whistle-blower wrote to the Judicial
Commission of Inquiry into Allegations of State Capture and to Public
Enterprises Minister Pravin Gordhan in February and March last year, offering
evidence against IDS Africa.

In the letter drafted by the whistle-blower’s lawyers and seen by the M&G, it is
alleged that there has been widespread fraud and corruption regarding the
awarding of tenders at Medupi and Kusile power stations.

The whistle-blower says in the letter that IDS Africa should be investigated by
the commission as one of the companies which benefited from such fraudulent
awards.

They claim that: “During the [Medupi] tender process and in particular on the
date of award, IDS Africa had no employees and had no experience in the
maintenance of boilers… IDS Africa may, in fact, be a front.”

An insider at Eskom told the M&G that the boiler tube maintenance contract has
been stalled since December, after the tender committee resolved to scrap and
restart the process to appoint a new service provider.

Another high-level source said that although chief procurement officer Solly
Tshitangano sent a board submission asking for the process to be halted and
restarted, Eskom’s full board is yet to confirm the cancellation.

“The reasons provided were not convincing, so it was not cancelled … the
preferred bidders should be awarded soon,” the source said.

Eskom told the M&G: “The bid process has not yet been concluded as the
governance approval process is under way, therefore, information cannot be
disclosed.”

A senior Eskom insider said there were genuine concerns about the evaluation of
the R11-billion contract: “The facts are that the tender was not properly
evaluated and due diligence reports indicated that finances of recommended
suppliers are not sound.”

They added, however, that some board members felt the cancellation request was
made because Babcock International had been disqualified. Mabuza has a 26% stake
in Babcock, which he put in a blind trust.

The source suggested that the board “is not concerned about prioritising
maintenance but concerned on who should get tenders”. 

Because of the age of Eskom’s fleet — the average age of its 13 coal-powered
stations is 37 years — and a lack of maintenance in the past, plant breakdowns
happen frequently. They are the leading cause of the load-shedding which has
become a serious threat to South Africa’s economy.

Compounding this are the delays in the construction of Medupi and Kusile power
stations, which are linked to corrupt deals that saw critical design flaws and
cost overruns to the tune of R300-billion.

The current boiler maintenance contract, which has been extended three times for
a total of 18 months, was awarded to Babcock, Actom, and Steinmuller.

Last year, Eskom’s chief operations officer Jan Oberholzer and senior general
manager Andrew Etzinger ascribed the load-shedding to boiler-tube leaks on seven
units which caught them by surprise.

At the time, Eskom announced, for the first time, that it would institute stage
four load-shedding, and saw public calls for Gordhan to intervene. Since then
South Africans have been introduced to an unprecedented sixth stage of
load-shedding.

In answers sent just days before Mabuza resigned, both he and Eskom told the M&G
that they had no knowledge of Nomvula’s declarations and business dealings.

Eskom said: “Nomvula Mabuza is a distant relative. Her father and Mr Mabuza’s
father share the same great grandfather but not the same great grandmother. Mr
Mabuza is not aware of what her professional activities involve nor what
disclosure she has or has not made to Eskom.”

The utility added that: “Mr Mabuza, as matter of principle does not sit in any
meetings nor participate in any discussion or decision-making process relating
to boilers … As such the details around this tender and contract management are
not in his purview.”

Mabuza’s chief of staff Lwanda Zingwita said: “Mr Mabuza has no knowledge of a
company called IDS, what their relationship with Eskom is and has not partaken
in anything to do with such an entity. The relationship with Babcock has always
been declared and managed appropriately.”

Meanwhile, Nomvula refused to answer any questions about her relationship with
Mabuza and whether she had declared the possible conflict of interest. “What
relevance does this have to my companies? Please refer to the bid documents
submitted. I am sure that Eskom’s procurement division will assist you.”

The complex structuring and conflation of expertise and capacity between IDS
South Africa and IDS Africa seems to have got the better of General Electric,
which this week said they had partnered with the 21-month old company because of
its “specialised resources to fulfil the boiler services tender requirements”.

The company told the M&G that IDS Africa indicated that there were no potential
conflicts at Eskom. “IDS Africa was one of several suppliers identified by GE to
supply specialised resources to fulfil the boiler services tender requirements
to support black women owned and black youth owned EME/QSE’s.”

GE also noted “the affiliation to its parent company IDS GmbH — headquartered in
Germany via IDS South Africa” and said: “Based on all the information provided
at the time of the tender submission we confirmed the affiliation. GE follows a
robust due diligence process in which all possible suppliers undergo background
reviews.

“There was intent made by the parent company on potentially availing resources
for the project should it be awarded. Further questions on these details should
be directed to IDS Africa and IDS GmbH.”

Tags: Atcom, babock, Drazan Vrca, ESKOM, General Electric, IDS Industry Service
and Plant Construction Africa (IDS Africa), Jabu Mabuza, Kusile Power Station,
Marc Vrca, Medupi Power Station, Mitsubishi, Nomvula Mabuza, Pravin Gordhan,
South Africa, state capture inquiry (Zondo Commission), Zondo Commission


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