amaBhungane: The dirt on Deloitte’s consulting deals at Eskom, Part One By Susan Comrie for amaBhungane sajournalist amaBhungane
In 2018, an anonymous email arrived in my Inbox. It was from an employee at Eskom and they had an issue with our reporting. “It is strange that in all your articles you have never mentioned Deloitte’s role and relationships with Gupta company Nkonki …I work for Eskom and [am] saddened that your investigations are not conclusive, unless you are protecting Deloitte – it is the feeling of many here as this matter is so glaring.
On another project, the Results Management Office, Deloitte bid R88.8-million while the competing bids were R14.6-million and R13.3-million. Deloitte has not filed its response to Mabuza’s affidavit and for a month refused to respond to questions. Eventually, as the extent of our investigation became apparent, Deloitte Consulting managing director for Africa Thiru Pillay agreed to sit down with us for a three-and-a-half-hour interview.
Enter Bam, the Deloitte Africa chief executive: He previously told us that, starting in March 2016, Deloitte began approaching Eskom’s then-chief financial officer, Anoj Singh, with unsolicited proposals. In other words, Bam was saying that Deloitte was willing to gamble that it would get the contract, even carrying out thousands of hours of work with no guarantee that it would get paid.
Based on Deloitte’s own figures, this amounted to one director, one associate director, six senior managers, 10 managers, 13 senior consultants, seven consultants and four analysts – 42 people in total – working full time for five months straight.Nobody – no Deloitte director or partner – is going to sign off on a genuine ‘at risk’ R50-million; this is a ‘wink, wink, nudge, nudge’,” a consultant from a rival firm told us.
He explained: “So, what happens is we engage for example Anoj, the CFO… on a proposal and as had been done before, our proposal has an acceptance sheet at the back… and Anoj then signs that, basically saying ‘I accept your proposal and Eskom is making a commitment to you that we are going to be contracting with you.’”
Bhana agreed, saying in a WhatsApp: “Eskom process does not allow for verbal acceptances. So I would not have given verbal approval, or acceptance of a proposal without following a procurement process. Deloitte has worked for Eskom for many years and should understand the procurement process.” Deloitte knew the panel was imminent; records show that on 31 May 2016, Eskom invited Deloitte to a meeting to negotiate hourly rates for work on the panel. But instead of waiting, Deloitte delivered another three unsolicited proposals over the next week.Treasury has repeatedly warned government and state-owned entities about blowing millions on consultants. Before hiring a consultant, they should do a needs analysis to make sure that the job cannot be done in-house.
He would not comment on why he signed the acceptance forms, or whether he considered them binding, saying: “I am not in a position to answer on anything related to Eskom procurement process because I am not in their employment currently.” We asked Deloitte whether this set off alarm bells. After all, the panel was designed to allow different firms to compete for work. But Deloitte told us: “It was unclear how the panel would be used.”
Pause here for a moment and consider this: Deloitte had no contracts beyond the handful of half-completed one-pagers that Singh and Maritz had signed. Deloitte had taken no legal advice on whether these documents would stand up in court. And the bill Deloitte wanted Eskom to pay was sitting at more than R50-million.
Eskom told us it had no record of Singh, or anyone else agreeing to pay Deloitte for work done, but added that it had named Singh as a respondent in the case to force him to put a version under oath.Eskom is a victim of maladministration, fraud and corruption perpetrated by its former employees and corporates. This is a relationship between a corruptor and a corruptee,” it told us recently.
Contained in the motivations were the five projects Deloitte was already working on – a rather crucial fact that Govender seemingly failed to mention to anyone at Eskom. What other bidders were not told was that they were bidding against Deloitte for work that, in some cases, Deloitte had already completed and for which it had been promised payment.
When the scores were counted, Deloitte had scored the highest on both contracts, but also presented prices up to five times higher than its competitors. Deloitte’s prices – R79.1-million and R88.8-million – were roughly five times higher than the other bidders, which bid between R9.1-million and R16-million for each piece of work.
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