“A, , SCORPIO © Inkululeko SA Media NPC Co Reg: 2014/199607/08 11 August 2028 Good day to the Eskom spokesperson, | am a journalist for Scorpio’s investigative team at Daily Maverick. For the last six weeks | have been investigating the policies and procedures that govern Eskom’s procurement processes, with afocus on the SAP system and the Central Supplier Database (CSD) of National Treasury. The investigation is based on: * Historical Eskom documents, most notably documents 32-1033 and 32-1034; * Various revisions to the above documents as initiated by the B28 programme, launched in 2010; * A leaked sound-olip of a conversation between a supplier and an Eskom employee, the result of a confirmed “phone tap” by contracted Eskom security (dated February 2022); * Leaked screen-grabs of the SAP and CSD system, from an anonymous whistle-blower who resigned from his/her senior position in Eskom procurernent in 2021; * Leaked slides frorn presentations to senior Eskom executives by internal working groups, frorn the sarne anonyrnous source as above; * Leaked spreadsheets ditectly exported from the SAP system, from the same anonymous source as above; * Leaked internal Eskorn ernails dated 2019, frorn the same anonyrnous source as above. Wherever possible, copies of the above source matetial wll be provided to you so as to facilitate answers to our questions. InkululekoSA Media NPC- Reg: 2014/199607/08- Directors: $, Charalambous, B. Bric, | Abed ianAugust 2023 Our questions to you are: 1. The link below contains a sound-file of a telephone conversation between an alleged Eskom employee by the name of “Gerald” and an alleged Eskom supplier by the name of “Andre,” dated 17 February 2022. The source of the leak of the sound-file is a former senior executive of Eskom (not the primary whistle-blower as referred to below). The source confirms that the sound-file is the result of a “phone-tap” conducted by internal Eskom security: A textual summary of the conversation between Andre and Gerald is also included as. follows: “How does the order work, what do you need me to do?” Around two minutes into the seven-minute telephone call, the supplier asked the pivotal question. Up until then, ina conversation that never pretended to be anything other than what it was, the two men had been feeling each other out. They already knew each other's names so it clearly wasn't the first time they'd spoken — the supplier was “Andre” and the inside Eskom man was “Gerald” — but now was the moment to get into the details of the scam. “They're gonna send you an RFQ,” said Gerald, referring to a fundamental item in Eskom’s procurement system, the request for a quotation. “The RFQ will give you the scope of work.” Apparently, thanks to Gerald, Eskom already had a vendor number for Andre’s company, which was linked into the CSD, the central supplier database overseen by National Treasury. What Andre needed to do next, explained Gerald, was send Eskom a quote, which would generate an order. “And then after that you buy the stuff you need to supply, and then you supply Eskom. After you supply, you invoice Eskom. They will pay you fourteen days after invoicing.” “Okay,” said Andre, “but what's in it for me? How am | going to score out of this?” “Sorry?” responded Gerald. Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 a) b) ¢) d) “IT mean, how much is for me? How much money can | make with this?” “Per order, you will make R300,000.” “And what's it gonna cost me?” “To buy the stuff... R150,000.” “So | make at least R150,000 per order, profit?” “No, no, no, profit is R300,000.” “That's money,” said Andre, impressed. “That's money.” Gerald, for his part, was now also warming up to the theme. “Ja,” he said. “Per order. The total order value, né, will be R800,000." And 0, at last, Andre was getting the full picture. Although he would only lay out R150,000, which was the price of the actual consignment, he would put in an order for more than five times that amount, which Gerald would push through the system. From the total R800,000, Andre would keep R450,000. The remainder, a further R350,000, would be split between Gerald and his line management. “Yes,” explained Gerald, “because you must also take care of the other players. You must take care of the procurement manager and stuff like that, you agree?” As it turned out, Andre agreed wholeheartedly. He asked Gerald when they could begin. The answer, according to Gerald, was by the end of the week. Does Eskom confirm or deny the authenticity of the above sound-file? If Eskom denies the authenticity of the sound-file, on what basis does it do so? If Eskom confirms that the sound-file is indeed authentic, does it confirm or deny that it is the result of a “phone-tap” conducted by contracted Eskom security? If Eskom denies that the sound-file is the result of a “phone-tap” conducted by contracted Eskom security, is there an alternative explanation as to its source? Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 nD e) If Eskom confirms that the sound-file is the result of a “phone-tap” conducted by contracted Eskom security, have the full identities of “Andre” and “Gerald” been established? f) If the full identities of “Andre” and “Gerald” have not been established, can Eskom provide an explanation as to why? g) If the full identities of “Andre” and “Gerald” have been established, have internal disciplinary procedures been instituted against them? Can Eskom expand on/provide details of these procedures? h) If the full identities of “Andre” and “Gerald” have been established, has a criminal complaint been laid against them? Can Eskom expand on/provide details of the status of the criminal complaint? . The screen-grab from the SAP system that follows (top of page 5) has been provided by the primary anonymous whistle-blower, a former Eskom employee who — up until 2021 — held a senior role in procurement. “Please see below some SAP buyer roles via which buyers procured goods/services through the SAP system,” the whistle-blower explained in an email, before pointing out that Eskom staffers had been “fraudulently... hiding behind these ‘ghost’ vehicles to procure whatever.” Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. Abedian‘August 2023 PGr [=| Name and Surname ¥| Telephone ~ 208 299 302 118 002 894 aac 491 787 giz DO NOT USE 813 DO NOT USE gia DO NOT USE 816 DO NOT USE 817 DO NOT USE aig DO NOT USE gig DO NOT USE 823 DO NOT USE 842 DO NOT USE 853 JDo NotUs 477 993 734, 876 887 905 DO NOT USE 307 Do Not Use 908 923 011 800-3508 B89 Do1 DUMMY £00 DO NOT USE £08 Do NotUse 116 213 109 As to why these vehicles were characterised as “ghosts,” the source was explicit: “The buyer group (.e. PGr) should have an actual person's name and surname (the standard way of creation), and should be unique (one to one relationship) to a specific person's identity (in procurement). This was taken in 2020 and these roles have most definitely made purchases.” a. Dees Eskom confirm or deny the authenticity of the above-screen grab? b. if Eskom denies the authenticity of the screen-grab. on what basis does it do so? Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 5. Srkic, |. AbedianAugust 2023 c. If Eskom confirms the authenticity of the screen-grab, can it confirm or deny that the PGr should have an actual person’s name or surname and should be unique to a specific person's identity in procurement? d. If Eskom confirms the authenticity of the screen-grab, can it confirm or deny that the above buyer groups have made purchases? e. Is Eskom aware of the problem of “ghost buyers” in general? f. If Eskom /s aware of the problem of “ghost buyers” in general, approximately how many have been identified on the SAP system and what corrective steps have been taken? 3. Our primary source’s allegation is that Eskom’s procurement policies and procedures (based on documents 32-1033 and 32-1034) have become irrelevant to most staffers — far from stamping out corruption, he/she alleges, the layers of cross-departmental oversight and the complexity of the system have been abetting enterprise-wide malfeasance. a. Does Eskom confirm or deny this allegation? b. If Eskom denies the allegation, on what basis does it do so? The problem, according to the whistle-blower, is well-known to Eskom’s principal stakeholder, the Department of Public Enterprises. Daily Maverick understands that in 2019 there were recommendations made by a ministerial task team to improve the procurement processes, with internal Eskom working groups assigned to take on the task. c. Does Eskom confirm or deny that the various procurement problems are well-known to the Department of Public Enterprises? d. Does Eskom confirm or deny that a ministerial task team was set up in 2019 to improve the procurement processes? A slide from a presentation by one of these working groups to senior Eskom managers at the time (see below, top of page 7) was provided by the whistle-blower, along with his allegation that “nobody seems to want to take ownership of the good recommendations made thus far.” Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023, Common Recommenda Informal Tenderin ns by all 3 report: Low-value tendering, LPO @E€Eskom Below overview of recommendations are from the 3 detailed recommendation reports for the 3 procurement mechanisms (as per the 32-1034 Procurement Procedure) which were under study between 2019-2020. v Procurement Processes/ PCMs (1, 2) are woefully inadequate, ¥ Procurement Procedure recommendations: many flaws, omissions and contradictions (ALL the proof is in the reports, even further emphasized by Buyer survey responses), yY Bottleneck recommendations (CSD, templates/ checklists, etc.), v Recommendations listed for monitoring and meaningful KPIs, ¥ System recommendations (SAP & its configuration, CSD, OLT, etc.) A conservative cost savings study have been done, which can realize millions of Rands in savings, if recommendations are implemented. e. Does Eskom confirm or deny the authenticity of the above slide? {. If Eskom denies the authenticity of the slide, on what basis does it do so? g. If Eskom confirms the authenticity of the slide, does it confirm or deny that procurement processes in the informal tendering/low-value tendering/LPO space were (in 2019) “woefully inadequate"? h. Does Eskom confirm or deny, as per the allegation of the whistle-blower, that “nobody seems to want to take ownership of the good recommendations made thus far”? i. If Eskom denies the above, can details be provided be provided as to who has taken ownership/what processes have been put in place to act on the recommendations? Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianSugust 2023 4, The below soreengrab is allegedly from the Gertral Supplier Database (CSD) of National Treasury C10 Minutes 2020.01.27 (Screenshot from CSD system with first 3 generated Suppliers for “grass cutting” services) CENTRAL SUPPLIER eres DATABASE erring an In his email explaining the context to the above, the primary whistle-blower noted the following: “There were procurement instructions written which forced (Eskom} generation procurement staff (ie. buyers) to, once a purchase requisition (a need) was created for goods/services, search for the goods/services on the government enabled CSD — using the informal tendering process (less than R1 million). “Once a list of potential suppliers/ven dors was populated at the bottom of the screen, the buyers were forced (from instructions, procurement policy) to request for a quote (RFQ) from the first 3 or 10 suppliers (the procedure and instruction note/s were still contradicting on the number in 2021/22). In below case, the buyer was forced to get a quote from ‘Afrika Crimes Solutions’ and ‘Metsing Cartridge’ for grass cutting services! ?1 Inkululeko SA Media NPC. Reg: 2014/199607/08 - Directors: §. Charalambous, &. Brkic, | AbedianAugust 2023 The whistle-blower continued that “based on the lowest price and the BBBEE levels, the purchase order [PO] was awarded.” These criteria, he explained, and “the fact that buyers were, up until 2021 at least (still are?), required to use the CSD database, is one of several reasons why Eskom is still paying large amounts of money for... knee guards, toilet paper, milk, mops etc. (as it falls under R1 million, and hence requires the informal tendering process to be followed).” a. Does Eskom confirm or deny the authenticity of the above screen-grab? b. If Eskom denies the authenticity of the screen-grab, on what basis does it do so? c. Has either Afrika Crime Solutions or Metsing Cartridges been awarded a contract to cut the grass at one of Eskom’s facilities? d. During the period to which the screen-grab refers (early 2020) was the RFQ in the CSD applicable to the first 3 suppliers or the first 10 suppliers? e. Are Eskom buyers currently required to use the CSD? f. If the answer to the above is “yes,” is the RFQ in the CSD currently applicable to the first 3 suppliers or the first 10 suppliers? g. If the answer to the above (question “e”) is “yes,” does Eskom confirm or deny the whistle-blower’s allegation that this is one of several reasons why Eskom “is still paying large amounts of money for... knee guards, toilet paper, milk, mops etc. (as it falls under R1 million, and hence requires the informal tendering process to be followed)"? h. Has Eskom put any corrective measures in place to deal with the informal tendering process as it applies to the CSD? 5. The whistle-blower's following batch of emails opened with a shot of the SAP system's so-called “initial screen,” where, according to the instructions, there is a prompt to “create [an] RFQ”. Here, as the source pointed out, the Eskom buyer is faced with a choice of six options for “purchasing organisation description” when, in his opinion, there should be no choice at all — the only organisation that is doing any purchasing, he insisted, is Eskom itself (see screen-grab top of page 10): Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 Task: Create RFQ (SAP ME41/ Initial Screen) From screenshot below, the Buyers have to select 0002: Eskom Holdings. \t needs to be pointed out that there are uncertainty around the other existing options and why it is there in the first place (e.g. “Einkaufsorg. 0001,” “Eskom Foundation,” “Eskom Pty Ltd,” etc.). It does not currently make sense why there are so many options, since Eskom (only) is the purchasing organisation, since the Eskom Buyers (and contractors) are performing the procurement/ buying processes. Edt Header Item Envtonment System Help « eee Anes Create RFQ : Initial Screen 2B 2 [Reference to Req [)Reference to Outine Agreement RFQ Type bat Language Key RFQ Date Quotaten Deadine RFQ eter iganatnal Data Purch. ergantzsion __[0002) Eskom Holdings Eskom Foundation Eskom Pty Ltd Rotek Roshcon Purchasng Group 05€ ( Datask Data for thems ram Category Dehery Date fn Does Eskom confirm or deny the authenticity of the above screen-grab? b. If Eskom denies the authenticity of the screen-grab, on what basis does it do so? If Eskom confirms the authenticity of the screen-grab, can an explanation be provided as to why there are six choices for “purchasing organisation description”? Next came a screen-grab that displayed confusion and inconsistency in purchasing group roles, with a total of 1,340 entries that had apparently been uploaded at random — the names of individual buyers appeared above or below the names of Eskom power stations and even entire Eskom divisions, such as generation and transmission, which each had their own purchasing group code (see top of page 11): 10 Inkululeko SA Media NPC- Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkig, |. AbedianAugust 2023 “peers caaenaing aa = ae feos | tre unig Por odes ta1sncom 2721 seie | Definon and be consistent in. eiseres wonsemm | SEIESLT Cm temrnatree | Description approach se format employee unique number name + yy aeorig ag aemaonietrnepeonmet | alu ume ey Enea tae mas igh en crac i eerie Soy Ensure each PGr role contains an appropriate, and correct, telephone ames ett — d. Does Eskom confirm or deny the authenticity of the above screen-grab? e. If Eskom denies the authenticity of the screen-grab, on what basis does it do so? f. If Eskom confirms the authenticity of the screen-grab, can an explanation be provided as to why power stations and entire divisions, such as generation and transmission, have been assigned a purchasing group code? In the following three screen-grabs, the same pattem emerged. First there was a screen- gab that demonstrated a dozen purchasing group roles with the entry “do not use”; then there was a screen-grab with misspelled town names, an entry titled “avoid this one” anda single purchasing group role for both the Medupi and Kusile power stations (neither of which should have been there); and finally, a list of 15 names that had been duplicated, meaning that each of these Eskom buyers had two unique purchasing group codes (please see the three screen-grabs on page 12 & 13): 11 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianAugust 2023 Por Description Telephone Fax Number Comments on Description 1 KEBONESKOSANA 118006717 +2786535 8425 Name and surname 2 GENERATION _06227/341285 Division 3 BELLVILLE TX Area and division 4 ‘TRANSMISSION 132979161 +2713 2979100 Division 108 S.H ABDULLA 115167946 866038310 Capital first name(s) and surname 252 ANITARICKHOFF 031 710-5436 +2731 7105357 Name and surname 253 VSATHNARAYAN 031 710-5411 +2731 7105357 Capital first name and surname 812 DO NOT USE 813 DO NOT USE 814 DO NOTUSE 816 DO NOT USE 817 DO NOT USE Why Is there a Purchasing Group called 'DO 818 DO NOT USE NOT USE' and why are so many PGr unique 819 DO NOT USE numbers linked to it? Seems like ghost profile 823 DO NOTUSE (decreased traceability) 842 DO NOT USE 905 DO NOT USE 907 Do Not Use E00 DO NOT USE 208 299 302 118002894 +27 86 663 0801 aac Why are there even a blank purchasing group 491 ‘option to begin with? And why so many 787 different unique PGr numbers linked to it? 876 ‘Seems like ghost profiles (decreased 887 traceability) 853 Do NotUs 177993731 +2717 799 3732 ‘Another variation of the ‘Do not use’ PGr 957 AVOIDE 117112534 Avoid this one 334 BLOAMFONTEINTX 514042157 +2751.404 2602 Spell checker? Dor Dummy ‘Same comment for blank and ‘do not use" 478 GOODS_RECIPIENT 118001111 118001111 This should not be a purchasing group 34 KUSILEANDMEDUPI 118004753 +27 11800 3442 Which one is it? Medup! already has one (832) 12 Inkululeko SA Media NPC- Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, I. AbedianAugust 2023, Por Description Telephone _FaxNumber Comments on Description 72 118 006 207 +27 86 661 4315 aeons lez 116213 051 {rae 118005021 865 608 373 sanbeoat 346 136932233 +2786 5604373 saa 317105 319 +2731 7105357 = less 116213037 865779482 ns lac 116298 238 +2785 5367158 aa = lesz 116213 000 aa ica 232 117112517 +2786 6642903 Saaumeaae 328 118 713 641. +2736 668 2903 ame parser 310 118005 685 +2711 8003111 —— 670 (011 800-5685 +27 11 800 6102 ls7a 317105 319 +2731 7105357 same person? eas 116213036 865779482 919 124213455 +27 12.421 4882 = 13 120213455 +27 12421.4882 lasc 116258 166, eae lc2s 116 238 166 301 (011 800-5898 +27 11 8003111 au on (011 800-5898 +27 11 8006102 313, 118002772 +2711 8003111 ama 678 (011 800-2772 +2711 8006102 206 4370032 378. +27 86538 2765 ey 208 4370032 378. +2786 538 2765 lesa 132963655 132963507 a ros 132963655 132963507 lsoc 136933 395 +2786605 5704 ae a8 164575603 866055 708 saa, 317105 319 +2731 7105357 350 317105 509 +2786 7241597 Same person? Same PGr roles with different PGr unique numbers... g. Does Eskom confirm or deny the authenticity of the above three screen-grabs? h It Eskom denies the authenticity of the above three screen-grabs, on what basis does it do so? if Eskom confirms the authenticity of the above three screen-grabs, can explanations be provided for the entries “do not use,” avoid this one,” the single purchasing group code for Medupi and Kusile and, finally. the 15 individual buyers each with two. purchasing codes? With the respect to the 15 buyers with two purchasing group codes, has corrective action been taken against any of the individuals identified? 6. According to the whistle-blower, the duplication of names is a problem that extends across the entirety of the SAP system — he/she also sent us a pair of screen-grabs that demonstrated the pattem as it applies to Eskom’s suppliers. The difference here is that some of the suppliers have been entered into the system as many as four times. And significantly, as our whistle-blower noted with respect to the second screen, what we were seeing was just “a small selection of the 10,000-plus Eskom vendors”. Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. Abedian‘August 2023, “Same vendors, different vendor numbers,” the whistle-blower commented. “Is this not the outcome of a corrupted and weakened SAP system?” (See the two screen-grabs below): cous ure no dupate Regstered Suppers on the ekom Vendor Look eter sae star ‘Sipe names with (ferent vender Mumba + =a — a ee ea oe = see a eee = cme oma seat erection of 10 000 ‘911 TOWING a POLOKWANE “911 TOWING SERVICE CENTRE 11044256 9000. + Eskom Vendors. sare | moc = score ta a = AANDFEN ZA 4082 ‘CHATSWORTH ‘000 ‘There are many cases AANDFEN 2A ws? ‘GuATSWoRTH 9000 where the same Supplier sear te a =| peptenenin AANDIDE 2A aa ‘WADEVILE ‘2000 Numbers (highlighted in AANDJDE ma 422 WADEVILLE ‘9000 yellow) suet a aa = seer aoe = , AANO WHO a 1686, JOHANNESBURG "AAND W HOME IMPROVEMENTS 11080973 9000 mp AANTUNES ZA, 1400 DRIEHOEK GERMISTON ‘3000 Database, and ensure not pemee| Bt | ee cet =| Seow seu a |e [aoe <2 crated inte fa pace see ae eee = a. Does Eskom confirm or deny the authenticity of the above two screen-grabs? b. If Eskom denies the authenticity of the above two screen-grabs, on what basis does it do so? 14 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianAugust 2023 c. If Eskom confirms the authenticity of the above two screen-grabs, can an explanation be provided as to why some suppliers have been entered into the system as many as four times? d. Ifthe above, as the whistle-blower alleges, is just “a small selection of the 10,000- plus Eskom vendors,” does Eskom confirm or deny that duplication of vendor/supplier numbers is “the outcome of a corrupted and weakened SAP system’? e. If Eskom denies the above, on what basis does it do so? f. If Eskom confirms the above, has any action been taken to clean up the vendor database? 7. Next, the whistle-blower provided us with a series of spreadsheets — directly exported from the SAP system — that demonstrated, from the earliest years of the B2B programme, how taxpayers’ funds had been put to questionable and practically unaudited use. Back in March 2011, for example, an individual staffer with the purchasing group code “346” had spent R975,000 on either 1,500 or 1,5-million envelopes — it wasn’t clear from the SAP data how many envelopes had actually been purchased. What was clear, however, was that R800,000 had been spent on Ad envelopes and a further R175,000 on AS5 envelopes, the latter adomed with Eskom's logo. The problem of irregular zeroes — in other words, where the quantity of the item multiplied by the value per item did not match the total spend — was repeated further down in the same spreadsheet, when it came to a total spend of R805,000 ona combined purchase of golf shirts and golf caps in September 2011. Was it 5-million caps and 4,95-million shirts, as it stated in the spreadsheet, or 5,000 of the former and 4,950 of the latter, as would have made sense from the calculations? Also, even if it was the latter, how did this fit with Eskom’s core deliverable, which was no more and no less than keeping the lights on? (See spreadsheet on top of page 16): 15 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. Abedian‘August 2023 ‘ge aosroti mies eee Les Does Eskom confirm or deny the authenticity of the above spreadsheet? |f Eskom denies the authenticity of the above spreadsheet, on what basis does it do 0? c. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how/why — seemingly throughout the spreadsheet — the quantity of ‘the item multiplied by the value per item does not appear to match the total spend? d. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how a combined spend of R805,000 on golf shirts and golf caps aligns with the organisation's core deliverable? Over the next eight years, as evidenced by a different spreadsheet, the situation would show no signs of improvement. In August 2015, for instance, three exorbitant requisitions for “emergency food” would be entered by a buyer with the purchasing group code “840” — ina matter of weeks the purchase orders would all go through, despite the fact that all three quantities were listed as “1,000” while both the values per item and total values were listed as R124,000, R135,250 and R124,000 respectively. Equally inexplicable was the fact that this particular spreadsheet, which contained only a dozen line items, showed requisition dates — in random order — from 2011, 2012, 2015 and 2019. And if the dates on the SAP spreadsheet made no sense, the bunching together of purchase categories made even less sense: aside from the “emergency food” purchases there were purchases for “alcohol testers,” “additional sockets for gym” and a grouping of three purchases, made over two days in April 2019 by two different purchasing codes, for a total of R2,069-million in “grass cutting services”. (See spreadsheet on top of page 17): 16 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. Abedian‘August 2023 2emuso0 2200590 mips mus e. Does Eskom confirm or deny the authenticity of the above spreadsheet? f. If Eskom denies the authenticity of the above spreadsheet, on what basis does it do so? g. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how/why all three quantities of “emergency food” were listed as “1,000” while both the values per item and total values were listed as R124,000, R135,250 and R124,000 respectively? h. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how/why the dozen line items showed requisition dates — in random order — from 2011, 2012, 2015 and 2019? i. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how/why there was a grouping of three purchases, made over two days in April 2019 by two different purchasing codes, for a total of R2,069-million in “grass cutting services”? A third spreadsheet from the SAP system showed the exact same pattern — ie., the entry of random dates stretching in no particular order from 2011 to 2019, with no rhyme or reason on the categories. Here, an entry of R29,48-million for “consultant services” — which, firstly, should have been categorised as a “formal tender” and, secondly, held no information on the name of the consultancy nor on what the services were for — appeared directly above eight separate entries (on the same day, in August 2019) for vegetable orders from McCain’s at a total of R295,650. (See spreadsheet on the top of page 18 below): 17 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianAugust 2023 oneas9o aana[—— j. Does Eskom confirm or deny the authenticity of the above spreadsheet? k. If Eskom denies the authenticity of the above spreadsheet, on what basis does it do so? |. If Eskom confirms the authenticity of the above spreadsheet, can an explanation be provided for how/why there was an entry of R29,48-million for “consultant services” — which, firstly, should have been categorised as a “formal tender” and, secondly, held no information on the name of the consultancy nor on what the services were for? 8. What this all meant for the citizens of South Africa, according to the whistle-blower, was. not just random and exorbitant spending on items that had little or nothing to do with Eskom’s core function, but also massive and entrenched inefficiencies when it came to the functions that the power utility had been mandated to perform — for example, the scheduled and urgent fixes on its aging fleet of coal-fired power stations. Here, in a series of internal emails that the whistle-blower shared with us, the CSD of National Treasury returned again to the fore. “At Eskom,” noted our whistle-blower by way of introduction to these emails, “there is a total disconnect between the processes and the various enabling tools (SAP, CSD, etc).” From the contents of the correspondence, his point was perhaps an understatement. 18 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianAugust 2023 On 16 October 2019, an email was sent from an Eskom manager to two staffers and cc’d to another ten staffers (due to the fact that it may compromise the safety of the individuals concerned, the identities of the different managers/senders of the emails have been excised). “We have a number of challenges with the CSD system,” the first email began, “and the [instruction] related to issuing RFQs to feeder areas local to the [power stations]. These issues are hampering our task, [are] leading to unhappiness in the communities local to the power stations and are [creating] risks of not having spares available when required.” In a string of bullet points, the manager then laid out the various problems, beginning with the observation that suppliers were uploading addresses onto the CSD “for all areas local to every power station” — which, of course, had resulted in Eskom approaching suppliers that were “not physically living or operating in the area.” As large of a system leak as this point evinced, however, it was the second bullet point that echoed and affirmed one of our whistle-blower’s primary allegations: “The CSD commodity list is not aligned with Eskom commodity lists. This results in the buyer not always approaching the right suppliers or... missing suppliers that are in fact qualified to supply.” (See email at the top of page 20): 19 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 From: Sent: 16 October 2019 08:29 AM To: ce: Subject: Issues with CSD System Good morning Guideman, We would like to get approval to register all these suppliers on the Eskom Vendor Master to alleviate this risk. Does Eskom confirm or deny the authenticity of the above email? If Eskom denies the authenticity of the above email, on what basis does it do so? If Eskom confirms the authenticity of the above email, are there any allegations contained therein with which the organisation disagrees? If so, please expand. d. If Eskom confirms the authenticity of the above email and does not disagree with any of the allegations contained therein, have any corrective steps been taken to deal 2 with said allegations? If so, please expand. Aweek later, on 23 October 2019, a similar internal email was sent to an entirely different set of Eskom staffers, from an entirely different manager — this time, the concerns were specific to what was known as “Gx,” shorthand for the generation division. 20 Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B, Brkic, |. AbedianAugust 2023, “The issues with the CSD database are not going away,” stated the manager. “It is becoming more of an issue.” There were two primary concems, according to this particular manager, the first to do with “engineering” — where, again, vendors were being registered on the database without proper vetting — and the second to do with “process” — where something called “practice note 2" was identified as the glitch in the system. (See below): From: Sent: Wednesday, 23 October 2019 08:38 To: Ce: Subject: FW: Issues with CSD System Hiall, Please could you follow the e-mail thread below. 3 aE Ihave also attached an e-mail from another buyer. From an Engineering point of view we cannot just allow vendors to be registered on our Eskom database without vetting, specifically on level one plant. e. Does Eskom confirm or deny the authenticity of the above email? f. If Eskom denies the authenticity of the above email, on what basis does it do so? g. If Eskom confirms the authenticity of the above email, are there any allegations contained therein with which the organisation disagrees? If so, please expand. h. If Eskom confirms the authenticity of the above email and does not disagree with any f the allegations contained therein, have any corrective steps been taken to deal with said allegations? If so, please expand. As for “practice note 2” in the above email, the whistle-blower provided us with an internal email from three months before (9 July 2019) that had laid it all out. a1 Inkululeko $A Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. Abecian“A, , SCORPIO © Inkululeko SA Media NPC Co Reg: 2014/199607/08 11 August 2028 Good day to the National Treasury sp okesperson, | am a journalist for Scorpio’s investigative team at Daily Maverick. For the last six weeks | have been investigating the policies and procedures that govern Eskom’s procurement processes, with afocus on the SAP system and the Central Supplier Database (CSD) of National Treasury. The investigation is based on: * Historical Eskom docurnents, most notably documents 32-1033 and 32-1034 {in which National Treasury is extensively mentioned); * Various revisions to the above documents as initiated by the B28 programme, launched in 2010; * A leaked sound-clip of a conversation between a supplier and an Eskom employee, the result of a confirmed “phone tap” by contracted Eskorn security (dated February 2022); * Leaked screen-grabs of the SAP and CSD system, from an anonymous whistle-blower who resigned from his/her senior position in Eskom procurement in 2021; * Leaked slides frorn presentations to senior Eskom executives by internal working groups, frorn the sarne anonyrnous source as above; * Leaked spreadsheets directly exported from the SAP system, from the same anonymous source as above; * Leaked internal Eskorn ernails dated 2019, frorn the same anonyrnous source as above. InkululekoSA Media NPC- Reg: 2014/199607/08- Directors: $, Charalambous, &.Brkic, | AbedianAugust 2023 Wherever possible, copies of the above source material will be provided to you so as to facilitate answers to our questions. Our questions to you are: 1. The link below contains a sound-file of a telephone conversation between an alleged Eskom employee by the name of “Gerald” and an alleged Eskom supplier by the name of “Andre,” dated 17 February 2022. The source of the leak of the sound-file is a former senior executive of Eskom (not the primary whistle-blower as referred to below). The source confirms that the sound-file is the result of a “phone-tap” conducted by internal Eskom security: a/Library/Mobile Documents/com~apple~CloudDocs/AUDIO-2022-02-17-13-36-55.m4a A textual summary of the conversation between Andre and Gerald is also included as follows: “How does the order work, what do you need me to do?” Around two minutes into the seven-minute telephone call, the supplier asked the pivotal question. Up until then, in a conversation that never pretended to be anything other than what it was, the two men had been feeling each other out. They already knew each other's names so it clearly wasn't the first time they'd spoken — the supplier was “Andre” and the inside Eskom man was “Gerald” — but now was the moment to get into the details of the scam. “They're gonna send you an RFQ,” said Gerald, referring to a fundamental item in Eskom's procurement system, the request for a quotation. “The RFQ will give you the scope of work.” Apparently, thanks to Gerald, Eskom already had a vendor number for Andre’s company, which was linked into the CSD, the central supplier database overseen by National Treasury. What Andre needed to do next, explained Gerald, was send Eskom a quote, which would generate an order. “And then after that you buy the stuff you need to supply, and then you supply Eskom. After you supply, you invoice Eskom. They will pay you fourteen days after invoicing.” “Okay,” said Andre, “but what's in it for me? How am | going to score out of this?” Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 a) b) ° “Sorry?” responded Gerald. “I mean, how much is for me? How much money can | make with this?” “Per order, you will make R300,000.” “And what's it gonna cost me?” “To buy the stuff... R150,000.” “So | make at least R150,000 per order, profit?” “No, no, no, profit is R300,000.” “That's money,” said Andre, impressed. “That's money.” Gerald, for his part, was now also warming up to the theme. “Ja,” he said. “Per order. The total order value, né, will be R800,000." And so, at last, Andre was getting the full picture. Although he would only lay out 150,000, which was the price of the actual consignment, he would put in an order for more than five times that amount, which Gerald would push through the system. From the total R800,000, Andre would keep R450,000. The remainder, a further R350,000, would be split between Gerald and his line management. “Yes,” explained Gerald, “because you must also take care of the other players. You must take care of the procurement manager and stuff like that, you agree?” As it turned out, Andre agreed wholeheartedly. He asked Gerald when they could begin. The answer, according to Gerald, was by the end of the week. Does National Treasury confirm or deny knowledge of the above sound-file? If National Treasury confirms knowledge of the above sound-file, does it confirm or deny that it is the result of a “phone-tap” conducted by contracted Eskom security? Is National Treasury aware of any disciplinary procedures or criminal complaints that have been brought against the parties to the conversation in the sound-file? Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023 d) Does National Treasury have any general comments on the contents of the sound-file as it applies to the role of the CSD in facilitating alleged corruption of this nature? 2. Our primary source's allegation is that Eskom’s procurement policies and procedures. (based on documents 32-1033 and 32-1034) have become irrelevant to most staffers — far from stamping out corruption, he/she alleges, the layers of cross-departmental oversight and the complexity of the system, specifically as regards the overlaps with National Treasury's CSD, have been abetting enterprise-wide malfeasance. a. Does National Treasury confirm or deny this allegation? b. If National Treasury denies the allegation, on what basis does it do so? The problem, according to the whistle-blower, is well-known to Eskom’s principal stakeholder, the Department of Public Enterprises. Daily Maverick understands that in 2019 there were recommendations made by a ministerial task team to improve the procurement processes, with internal Eskom working groups assigned to take on the task. c. Does National Treasury confirm or deny that the various procurement problems are well-known to the Department of Public Enterprises? d. Does National Treasury confirm or deny that a ministerial task team was set up in 2019 to improve the procurement processes? A slide from a presentation by one of these working groups to senior Eskom managers at the time (see below, top of page 5) was provided by the whistle-blower, along with his/her allegation that “nobody seems to want to take ownership of the good recommendations made thus far.” Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, 8. Brkic, |. AbedianAugust 2023, Common Recommendations by all 3 Informal Tendering, Low-value tendering, LPO Below overview of recommendations are from the 3 detailed recommendation reports for the 3 procurement mechanisms (as per the 32-1034 Procurement Procedure) which were under study between 2019-2020. v Procurement Processes/ PCMs (1, 2) are woefully inadequate, v Procurement Procedure recommendations: many flaws, omissions and contradictions (ALL the proof is in the reports, even further emphasized by Buyer survey responses), ¥ Bottleneck recommendations (CSD, templates/ checklists, etc.), vy Recommendations listed for monitoring and meaningful KPIs, v¥ System recommendations (SAP & its configuration, CSD, OLT, etc.) A conservative cost savings study have been done, which can realize millions of Rands in savings, if recommendations are implemented. e. Does National Treasury confirm or deny the authenticity of the above slide? f. If National Treasury denies the authenticity of the slide, on what basis does it do so? g._ If National Treasury confirms the authenticity of the slide, does it confirm or deny that procurement processes in the informal tendering/low-value tendering/LPO space were (in 2019) “woefully inadequate"? h. Does National Treasury confirm or deny, as per the allegation of the whistle-blower, that “nobody seems to want to take ownership of the good recommendations made thus far"? i. If National Treasury denies the above, can details be provided be provided as to who has taken ownership/what processes have been put in place to act on the recommendations? 3. The below screen-grab is allegedly from the Central Supplier Database (CSD) of National Treasury (see top of page 6) Inkululeko SA Media NPC - Reg: 2014/199607/08 - Directors: S. Charalambous, B. Brkic, |. AbedianSugust 2023 C10 Minutes 2020.04.27 (Screenshot from CSD system with first 3 generated Suppliers for “grass cutting” services) CENTRAL SUPPLIER = pl us emptiant In his email explaining the context to the above, the primary whistle-blower noted the following: “There were procurement instructions written which forced (Eskom} generation procurement staff (ie. buyers) to, ones a purchase requisition (a néed) was created for goods/services, search for the goods/services on the government enabled CSD — using the informal tendering process (less than Al million). “Once a list of potential suppliers/ven dors was populated at the bottom of the screen, the buyers were forced (from instructions, procurement policy) to request for a quote (RFQ) from the first 3 or 10 suppliers {the procedure and instruction notefs were still contradicting on the number in 2021/22). In below case, the buyer was forced to get a quate from ‘Afrika Crime Solutions’ and ‘Metsing Cartridge’ for grass cutting services|?! The whistle-blower continued that “based on the lowest price and the BBBEE levels, the purchase order [PO] was awarded.” These criteria, he/she explained, and “the fact that Inkululeko SA Media NPC. Reg: 2014/199607/08- Directors: §. Charalambous, &. Brkic, | Abedian