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How senior Eskom manager Danie Odendaal’s brother bagged contracts worth over R2bn

2020-01-20 00:30

The latest round of load shedding, which hit South Africans a fortnight ago, was partly due to the failure of equipment designed and built by a firm whose owner is related to a senior manager at the utility.

Following the surprise load shedding, which came against President Cyril Ramaphosa’s assurances that there would be no power cuts until at least January 13, Eskom appointed Rula Bulk Materials Handling on an emergency basis to help fix the broken conveyer belt at Medupi Power Station.

Two Eskom executives told City Press that the conveyer belt which broke at Medupi was designed and built by the same Rula Bulk, a company owned by Roelf Odendaal, whose brother is Eskom’s engineering general manager Danie Odendaal.

Danie was suspended in December 2018 amid allegations of conflict of interest regarding Rula Bulk’s contracts at the power utility.

He remains suspended pending the finalisation of his disciplinary hearing.

This week, an anonymous dossier surfaced, accusing Rula Bulk of capturing Eskom engineering

Asked if Rula Bulk had designed and built the Medupi conveyor belt which failed recently, prompting officials to escalate load shedding from stage one to stage two, Rula Bulk chief executive and managing director Roelf said: “Yes, Rula is one of three contractors that supplied conveyor belt plants and systems to Medupi, which comprise many conveyors of different kinds.

He said the conveyor belts which Rula supplied had been in use for more than seven years and transported close to 100 million tons of coal.

“There has been one incident which occurred due to the removal of the safety protections by Eskom operators. Different reasons cause different belts to trip, but this happens mostly due to lack of maintenance. Rula has assisted with repairs on one of the Medupi belts. The task was completed in less than a week,” he said, adding that the conveyor was not responsible for load shedding.

It was this load shedding that saw former Eskom chairperson Jabu Mabuza resigning from the parastatal after Deputy President David Mabuza accused its board of misleading Ramaphosa that the lights would remain on until mid-January.

In 2015, the Saturday Star reported on the Odendaal family conflict of interest at Eskom.

At the time, Rula was reported to have received 24 contracts from the power utility since 2009. Rula Bulk has been paid more than R2 billion over the past decade.

This week, an anonymous dossier surfaced, accusing Rula Bulk of capturing Eskom engineering.

The dossier alleged that Danie, his two engineer sons, Chris and Roelf Junior, and Andries Wiid, a bulk materials handling corporate specialist, allegedly manipulated Eskom’s systems and passed on sensitive information such as tender scopes, designs and price calculations to Roelf.

In turn, Roelf allegedly used the information to prepare his company’s bids, the dossier claims.

A former Eskom executive said “the suspicion was that after engineers had prepared the scope, Danie would (allegedly) take it and hand it over to [his] brother. He leaked the scope to [him]. It put the brother in a position to quote.

“Remember, once you understand the scope, it puts you in a position to tender correctly.”

Two months ago, Eskom’s procurement officials identified a number of red flags across the supply value chain.

A current executive at Eskom said: “Obviously, Danie and Roelf are not stupid. They (allegedly) resisted direct procurement fraud. But anecdotal evidence suggests that Roelf would have received sensitive and confidential tender information in advance.

“Otherwise how do you explain the fact that his company received so many tenders from the division in which his brother is a general manager?

“Rula Bulk’s bids were always on the money, correctly priced and ticking all the boxes.

“That company certainly received most civil engineering and bulk handling contracts,” they said.

Two months ago, Eskom’s procurement officials identified a number of red flags across the supply value chain.

A document circulated to Eskom executives at a procurement and supply chain meeting in November last year shows that officials identified the weakening of “structures and governance to enable state capture” and the “deliberate delay in the implementation of procurement legislation to create a fertile ground for state capture” as red flags.

Other identified red flags, according to the document which was discussed at the meeting, include that “some buyers deliberately allow contracts to expire without testing the market so as to benefit existing suppliers. The abuse of single-source and emergency procurement in order to avoid competition and the manipulation of procurement strategies and evaluation processes unfairly benefits certain suppliers.”

RULA’S BULK PAYDAY

In November 2014, a coal silo collapsed at Eskom’s 4 110MW Majuba Power Station in Volksrust, Mpumalanga.

The associated coal conveyor system was damaged in the process.

Rula Bulk was awarded a R100 million contract to rebuild the silo and the accompanying conveyor system.

An investigation by Eskom found that there was no negligence on the part of employees.

The engineer deliberately kept quiet about the structure which was hanging precariously so that it could be deemed an emergency and thus direct the building project to Rula
An anonymous dossier

However, the anonymous dossier has accused a senior civil engineer of deliberately letting the silo collapse in order to orchestrate an emergency procurement that would benefit Rula Bulk.

“One of the major tasks among the engineer’s responsibilities is to provide technical integrity of all silos and structures, and to give advice to the organisation on the status quo.

“The engineer failed to produce a report alerting [the executive committee] to the dangers of the Majuba silo, but instead plunged the country into load shedding, thus presenting the opportunity to not go out on a bidding process under the guise of an emergency.

“The engineer deliberately kept quiet about the structure which was hanging precariously so that it could be deemed an emergency and thus direct the building project to Rula.”

The dossier accused two Eskom employees of “fabricating and authorising” the modification of a conveyor belt at Tutuka Power Station in Standerton, Mpumalanga.

“The duo fabricated and authorised an illegal modification of a submerged scraper conveyor worth millions of rand at Tutuka Power Station.

“It is reported that there was absolutely no need to modify Tutuka’s submerged scraper conveyor. Even if there was, the open bidding process which was supposed to have been followed was not.”

That work was also given to Rula Bulk.

In 2016, Rula Bulk also benefited from a R500 million contract for the construction of the Camden Power Station ash dam.

WHAT RULA BULK SAYS

Roelf poured cold water over suggestions that his company had captured Eskom’s engineering division.

To our knowledge, Danie Odendaal has never been involved in the tenders and has definitely never been part of any tender negotiations.
Roelf Odendaal

“Every contract that was awarded to Rula followed a specific ethical protocol of scrutiny through regular and transparent processes where many Eskom employees were involved, and competitive tender negotiations which can be substantiated by the minutes of the meetings.

“All contracts awarded to Rula were based on an open public tender process and Rula always had to compete against three to six and sometimes more competitors.”

Not one contract which Rula received was not placed through Eskom procurement, legal and commercial processes, Roelf said. He said he did not declare his relationship with Danie because his brother was not involved in negotiating tenders.

“The declaration form clearly states that declarations are applicable if individuals are directly involved with tenders and tender negotiations.

“To our knowledge, Danie Odendaal has never been involved in the tenders and has definitely never been part of any tender negotiations.”

Roelf confirmed that Rula had received many contracts from Eskom and that the value of the projects which the company had received could very well be more than R2 billion. But he insisted that all the tenders were received fairly and legitimately.

Of the Majuba silo, he said: “Rula was awarded the Majuba silo repair project through an open tender. Not only did Rula repair the silo with the mechanical plant, but Rula received an award from Eskom for the best capital expenditure project of the year for being on time, in budget and [complying with] all safety standards.

About the Tutuka conveyor, he said: “Rula was one of the companies involved in the modifications of the submerged scraper conveyor some years ago, through an open tender process. Tutuka still uses Rula parts as part of its submerged scraper conveyor system.”

Eskom confirmed that the utility had awarded a number of contracts to Rula Bulk over the past decade.

“Eskom is assessing the value due to the fact that Rula Bulk was awarded various contracts over the years, [dating back] 10 years, [and because] these contracts were modified. We cannot, at this stage, provide a specific value as this needs to be investigated further.”


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March 29 2020