Eskom makes Econ Oil U-turn

EMBATTLED power utility Eskom made an unexpected U-turn in the South Gauteng High Court yesterday when it appeared to concede that there was no evidence of corruption when it decided to set aside a multi-billion rand fuel supplier contract belonging to a black female-owned company.

In a long and bruising battle between Eskom and giant fuel supplier Econ Oil, judgment was finally reserved in the bitter showdown involving the two, moving an inch closer to bringing the controversial saga to finality.

Judge Bashier Vally, who was presiding over the matter, which was heard virtually, informed both parties that his written judgment would be hand-delivered to both parties in due course.

In the showdown, both parties’ lawyers argued why the judge should rule in their favour.

Eskom lawyers, advocate Wim Trengove SC, Carol Steinberg SC and Michael Mbikiwa SC, asked the court to review and set aside the multibillion-rand contract which Eskom awarded to Econ Oil.

Trengove and his team argued that the entity’s tender was irregular on the basis that it violated its own procurement rules.

In a surprising twist, Trengove’s main ground of argument was that the entity’s procurement team was incompetent, rather than corrupt as was previously stated by the power utility’s spokesperson and embattled chief executive.

Throughout the proceedings, there was the absence of all the corruption allegations levelled against Econ Oil since the beginning of the announcement of the cancellation of the fuel oil contract by Eskom group chief executive Andre de Ruyter in March last year.

Judge Vally probed about the legal consequence of the Bowmans report to which Trengove replied stating that the report had no legal consequence in the current matter and the review was about reviewing the decision of the entity’s board which had approved the tender.

Instead, Trengove argued that no technical evaluation was done and there were no standard financial parameters to determine the tender pricing:

“The board breached its own policy in terms of procurement processes,” argued Trengove.

In his affidavit, De Ruyter alleged that the process was jettisoned by the finance committee of the Eskom board by giving the mandate to go and negotiate, as that process resulted in Econ Oil being awarded a tender for at least 11 power stations.

Econ Oil’s advocate Hilton Epstein SC then argued that Eskom overlooked its own tender processes and therefore the review application should not be entertained as this was not Econ’s fault.

“Eskom only presented a review of a tender process. All of the grounds that Steinberg addresses the court on are not applicable, because this is not a tender.

“Eskom cannot review the board's decision without reviewing the Investment and Finance Committee’s decision.

“Eskom did not impugn the decision to negotiate, or the negotiation itself.

“The acceptance of the tender is a binding contract, not the signing thereof,” Epstein argued.

During the presentations, both parties amicably agreed that there was no interference in the negotiation processes and that no misconduct can be attributed that resulted in that outcome either on the staff at Eskom or by Econ oil.

Eskom, towards the end of last year, had initiated a court appeal that sought to stall the arbitration report by Kevin Trisk SC, which found that there exists a contract between the two parties.

The dispute arose from a tender process that culminated in Eskom’s board resolving to award a tender for the supply of fuel oil to various bidders including Econ Oil, Sasol and FFS refineries. The combined value of the award was at least R14 billion.

Econ Oil lawyer David Khan welcomed the court proceedings, stating that despite all the negative unproven allegations against Econ Oil, Eskom failed to provide evidence of the untrue defamatory allegations implicating the giant supplier.

Econ Oil’s Nothemba Mlonzi said that she was happy the matter was heard through the court, stating that she believed her company did everything according to the book.