Allegations of massive fraud related to Eskom’s ill-starred Medupi and Kusile power station projects have begun to emerge from the collapse of First Strut, the Mail & Guardian reported.
Central to the claims is steel fabrication company Cosira, which construction group First Strut bought in November 2012 from the Da Silva group in a deal funded with a R385-million bond issue.
Cosira was subcontracted by prime contractor Alstom to supply and construct the turbine halls at Medupi and was a joint venture partner for the turbine hall desulpherisation plant at Kusile.
Medupi has been dogged by delays and concern that key tenders may have favoured the business interests of the ANC – which, through Chancellor House, has an interest in boiler supplier Hitachi.
First Strut, which trades as First Tech, applied to put Cosira into business rescue on June 13 this year.
Six days later, First Strut’s gay chairperson and financial director, Jeff Wiggill, was found shot dead next to his Bentley in Protea Glen, Johannesburg.
His murder precipitated the collapse of First Strut and indications are emerging that Wiggill presided over what is – separate to the Cosira transaction – shaping up to be the largest corporate fraud and loan default in South African history.
First Strut director Andris Bertulis applied to liquidate Cosira. In his affidavit, Bertulis alleged that since taking control of the company First Tech had uncovered significant misrepresentation of its assets.
“As an illustration, a deeper look into one of the applicant’s projects, the Medupi project, revealed that the loss there was not the original R27-million … but rather a current projected loss of roughly R140-million.
“What’s coming out of that is the huge amounts of debt. I mean, they are talking in the region of R3.5-billion.”
The Bertulis affidavit alleges that lawyers engaged by First Strut analysed Cosira’s books during April 2013 and, on that basis, revised the company’s value down from a claimed positive R183-million to a total negative of R323-million.
Da Silva group chief executive John da Silva denied any wrongdoing. He said they had not been given an opportunity to respond to Bertulis’s claims.
“You’ve got to understand one thing: initially, when that affidavit came out … the rest of the [First Strut] group was still intact and Mr Bertulis was going around looking for any financial issue that the group had on Cosira.
Da Silva referred further queries to his lawyer.
Eskom declined to comment, referring all queries to Alstom.
A spokesperson for Alstom declined to answer detailed questions, but issued a statement noting: “Alstom did not purchase raw steel from Cosira, but a supply and construction service, for which Alstom paid a composite fee based on market-related pricing. Cosira has delivered all the steel and materials it was contracted to supply to the Medupi site. In light of recent developments, Alstom as the main contractor … has stepped in wherever possible to ensure timely completion of the deliverables and mitigate any material impact on the projects. Further questions should be directed to Cosira.”
An investigation has raised questions about the pricing of steel for the Eskom contract and the artificial insertion of middlemen between steel fabricators and steel suppliers such as Macsteel and Trident.
The M&G has established that, in March 2009, coinciding with the Eskom contracts, Cosira set up a shelf company called Copper Moon Trading 653, with two directors: Monique Fisher and Molemo Kgomo.
Fisher was until then the personal assistant to one of the senior Cosira executives. Kgomo was married to Cosira director Molefe Kgomo.