Swiss company ‘admitted to inflating prices in Kusile project’ – DFA

Swiss company ‘admitted to inflating prices in Kusile project’ - DFA

A Swiss robotics company, Asea Brown Boveri, has reportedly admitted to inflating prices to install a control and instrumentation system at the Kusile power station.

It has been reported that former Eskom CEO Matshela Koko played a role in awarding the R2.2 billion tender to ABB. File picture

A SWISS robotics company, Asea Brown Boveri (ABB), has reportedly admitted to inflating prices to install a control and instrumentation (C&I) system at the Kusile power station.

The revelations were made in the company’s report to the German prosecuting authorities in April 2020. ABB admitted to the inflation of prices to the US-based international Debevoise & Plimpton, which conducted an internal investigation.

It has been reported that former Eskom CEO Matshela Koko played a role in awarding the R2.2 billion tender to ABB.

The awarding of the contract was allegedly manipulated, with ABB employees accused of colluding with Koko to ensure that it appointed Impulse International as its subcontractor to undertake some of the cabling work while knowing that Impulse was not fully equipped or qualified to finish the work.

The deal resulted in ABB paying Impulse International R549 million in 2016 and 2017, when Koko’s stepdaughter, Thato Choma, was a shareholder of Impulse.

Koko was arrested last year, along with several representatives from ABB’s local and European divisions who ensured that the company was awarded the tender in the project. He was charged with corruption, fraud and money laundering.

Other accused include former SA Local Government Association boss Thabo Makwena, Koko’s wife, Mosima Koko, and his stepdaughters, Koketso Aren and Choma.

It has been reported that ABB inflated prices for Impulse, as a subcontractor.

However, it has been reported that the company allegedly agreed to implicate targeted individuals in the alleged corruption involving Eskom and the Kusile power station.

This seems to be a strategy to protect ABB from facing the law and prosecution at all costs.

This was after the company’s internal report revealed that ABB was the one that benefited from the inflated prices.

In the letter sent to German prosecuting authorities on May 8, 2019, ABB stated that the Impulse prices were in many cases well above the market, in some cases between 300% and 600%. It said this gave rise to the suspicion that excessive prices were paid to Impulse.

However, in the report, ABB said it has since come to light that the prices agreed between ABB and Impulse were only slightly above the market average.

“This proves in any event, a comparison with the cost of Dynamic Instruments (DI), the subcontractor whose services were taken over by Impulse, among others,” read the letter.

According to this comparison, Impulse prices were approximately 121% of the prices charged by DI.

In ABB’s relationship with Eskom, on the other hand, the agreed prices were 864% higher than the prices agreed with Impulse.

“The prices were originally agreed between Eskom and ABB for activities under the C&I agreement and also applied to the VOs (to the extent that the position is applicable in each case). It follows that it was not Impulse that earned from the VOs overcharging, but ABB itself.”

Asked for comment on the letter, ABB corporate communications manager Eike Christian Meuter said the company had no comment on the topic.

The NPA’s Investigating Directorate spokesperson, Sindisiwe Seboka, said: “We cannot be drawn into a trial by media as we can see we are being lured to do. The docket for starters has not been disclosed to the defence, thus we will not confirm or respond to matters currently before the court,” she said.

It has also been revealed that Impulse had better schedulers than ABB could ever have.

This information was revealed by a former ABB employer in South Africa and the State witness Goetz-Dietrich Wolff during the interview meeting conducted at the ABB offices on December 12, 2018.

During the interview, Wolff ABB legal counsel Dirk van Zyl stated that Impulse also provided competition to DI, which was good for the project.

“There was therefore the good and the bad on Impulse. The main issue was that the reason to appoint them was bad because it was to fulfil the instructions of Eskom management.

“In addition, Impulse assisted in the circumvention of ABB’s complex human resources red tape in that the project team used Impulse to urgently appoint people they required.”

Last year, ABB agreed to pay R2.5bn in punitive reparations to South Africa after being fraudulently awarded a multibillion-rand contract.

It was reported last week that there was a smear campaign to see Koko behind bars. This was after it was alleged that the NPA and ABB had tampered with the evidence to implicate Koko.

Source: https://www.dfa.co.za/south-african-news/swiss-company-admitted-to-inflating-prices-in-kusile-project-fd32d3df-12bf-45c2-a6b8-7f39df3a5d7e/

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