Edition: June / Aug 2017
Much more needs to be revealed about goings-on in the
Molefe . . . questions, questions
Further, Eskom’s argument offers insufficient ground to keep secret the background to the arbitration. Neither is there an obvious reason that those involved with the arbitration, and its terms of reference, need also remain a mystery; even to government which, through the Department of Public Enterprises, is its shareholder.
What must be put to rest is any suspicion that “private arbitration” is a euphemism for a quiet discussion effectively between Molefe and representatives of the Gupta family, newly the main owner of Tegeta. It would be easy for Eskom, if it wanted, to dispel any doubts.
What must be
The doubts arise from perusal of the share contract in which Glencore agreed to donate Optimum to Tegeta subject to two conditions. The first was that Eskom agrees to waive the R2bn in penalties against Glencore. The second was that Eskom releases Glencore from its guarantee for all obligations owed by Optimum (in business rescue) to Eskom.
These conditions were clearly met because the contract proceeded to implementation. Moreover, this was probably because Eskom had waived its R2bn claim against Glencore and released Glencore from its guarantee obligations for zero consideration. In that event, what was there to be arbitrated between Eskom and Tegeta?
Glencore’s donation to Tegeta of its shareholding in Optimum, reputedly at the insistence of Mineral Resources minister Mosebenzi Zwane, implies that Eskom wrote off a R2bn asset for which Glencore was good. This was a result of Eskom’s abandonment of the Glencore obligations without having demanded any alternative value or security.
A write-off of R2bn would obviously be reduced by the amount settled in the “private arbitration”, if indeed there was such an amount and Tegeta has indeed paid it. Even had Tegeta paid say R500m, it would still leave a R1,5bn write-off. Add to this the R650m in an advance payment by Eskom to Tegeta, allegedly for coal to be supplied by Optimum, and it seems pretty evident that Eskom was keen to pursue the Tegeta deal with unbridled enthusiasm.
Little is left to the imagination.