Public Enterprises Minister Lynne Brown.

Public Enterprises Minister Lynne Brown.

Public enterprises minister Lynne Brown has instructed Eskom to begin legal action against consultancy firms McKinsey and Trillian Capital Partners over their involvement in disputed contracts at the country’s state-owned electricity company.

According to a report by Bloomberg, Brown ordered Eskom to start taking legal steps against the consultancy firms as well as suspended Acting Chief Executive Matshela Koko and Chief Financial Officer Anoj Singh, who is on special leave, her spokesman, Colin Cruywagen, said by phone.

Business Day reported on Friday that three other senior managers may also face misconduct charges.

Questionable deals

McKinsey in July said its reviewing documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian; a company linked to the politically connected Gupta family, made 1.6 billion rand ($120 million) in fees and expected to make another 7.8 billion rand, according to amaBhungane and Scorpio, two investigative journalism groups. The U.S. firm hasn’t engaged in corruption or paid bribes, it said in an emailed response to questions.

Singh was placed on leave in July after he was linked to a series of questionable deals involving the Gupta family, who are friends with President Jacob Zuma. Koko was suspended pending an investigation into contracts awarded to a company where his stepdaughter was a director. He had denied wrongdoing.

Irregular expenditure

Eskom is spending tens of billions of dollars on new power plants that are years behind schedule and is at the centre of allegations that the Guptas, who are in business with Zuma’s son, used their relationship with the president to win state business.

The company disclosed R3 billion of irregular expenditure in its financial results on July 20, a figure which its auditors said they couldn’t independently confirm. Zuma and the Guptas have denied wrongdoing.

South Africa’s biggest opposition party has already filed charges of fraud, racketeering and collusion against McKinsey and said it plans to approach the U.S. Department of Justice about the work the consultancy did for Eskom.

Source: Bloomberg