Eskom and PwC bury the hatchet over ‘capital scrubbing’ project
PwC has agreed to pay R43 million to Eskom to settle a high court case launched by the utility in 2021 to recover funds paid to the consulting firm in the so-called ‘capital scrubbing’ project.
This goes back to 2016 when Eskom engaged PwC to assist in identifying capital projects that could be scrapped, delayed or trimmed down. Eskom initially hoped to save R30-40 billion in capex over five years.
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By 2017, Eskom had increased the capex savings target to R65 billion, and a risk-based contract was signed with PwC, which would earn fees on a sliding scale of 5% to 7.5% of savings identified. PwC brought in BEE partners Nkonki and Aurecon to share in the work.
The project was terminated early, with Eskom issuing a letter of demand for repayment of R95 million after a forensic report found that Eskom’s internal staff had already done all the hard work. AmaBhungane reported that several of the targeted savings were questionable but agreed to by Eskom staff under pressure from head office.
The latest settlement involves consulting firms and Eskom. In 2018, McKinsey agreed to pay Eskom R1 billion without admitting liability for violations of procurement laws. In 2020, Deloitte agreed to pay R150 million for improperly awarded contracts after Eskom launched legal proceedings to recover fees five times higher than competitors’. Trillian featured prominently in the Zondo reports and was ordered by the courts to repay Eskom R600 million in 2020.
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PwC is the latest to repay funds to Eskom, following evidence from the Zondo Commission that Eskom had not received the required approvals from the National Treasury.
Says PwC in a statement: “PwC participated in good faith in what it believed was a compliant bidding process for the award of the capital scrubbing engagement. However, the State Capture Commission found the capital scrubbing contract between PwC and Eskom to be irregular due to Eskom’s non-compliance with relevant procurement laws. The court proceedings followed this finding. There was no evidence that any partner or staff member from PwC was involved in any unlawful or irregular conduct in the bid for or award of the capital scrubbing engagement. Similarly, there was no finding of any wrongdoing against PwC made by the court regarding the civil dispute between PwC and Eskom.
“We are pleased to have finally concluded this longstanding civil dispute. This process allowed us to reflect and learn some important lessons.”
Eskom says under the settlement terms, the disputed contract has been set aside, and “PwC will pay Eskom a sum of R43 million in a full and final settlement of Eskom’s claim against PwC.
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“This settlement is a significant milestone in our ongoing action plans to enhance governance and accountability.”
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The settlement is the result of the utility’s commitment to dealing with issues raised by the Zondo Commission, says Eskom CEO Dan Marokane. “Management’s commitment in dealing with cases arising from the findings of the Zondo Commission has been instrumental in achieving this outcome, and it underscores our dedication to restoring integrity within Eskom.”
Read: Eskom’s hard-won recovery tested by cities owing R95.4bn
Eskom says it will continue to focus on implementing generation recovery, strengthening governance, and tackling crime and corruption while future-proofing the organisation to enable energy security, growth, and long-term sustainability to benefit South Africa and sub-Saharan Africa.
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