Eskom said it has dramatically overhauled its internal procurement controls following a corruption investigation that revealed how station-level buyers allegedly exploited an informal purchasing system to siphon millions from the state.
Paper trail that gave fraudsters cover
Before Eskom moved to shut it down, a little-known internal mechanism called the local purchase order system was quietly haemorrhaging public money at its power stations, according to the utility’s own account.
Station-level buyers held direct authority to source goods from suppliers of their choosing, with limited oversight and no centralised vetting.
Dan Marokane, Eskom’s group chief executive, said this was a gap that corrupt officials allegedly exploited extensively between 2021 and 2023.
It was within this system that the Special Investigating Unit (SIU) uncovered how officials at Kusile and Matla power stations approved wildly inflated orders for electrical relays.
Components available on the open market for between R180 and R450 were allegedly being procured at R50 000 each, costing Eskom close to R74 million.
A preservation order has since been granted by the Special Tribunal, freezing 17 properties valued at R76.5 million and seven luxury vehicles linked to businessman Siyabonga Moses Goodwill Nkosi and a network of family trusts.
But while the freezing of assets made headlines, what emerged from Eskom’s briefing was a more detailed picture of just how entrenched the problem had allegedly become, and how far the utility claims to have gone to dismantle it.
From 2 000 dodgy orders to 300
By August 2023, Eskom said nearly 2 000 local purchase orders were being processed monthly across its power stations, representing approximately R1.3 billion in expenditure, much of it with limited scrutiny.
Marokane described the scale of the problem plainly.
“What we had in the business of the power stations during that time was what we call informal tendering, which was local purchase orders to be placed by buyers,” he said.
Management responded, Eskom said, by stripping purchasing authority away from station-level buyers, escalating approval first to general managers and then further up to group executives.
“By the beginning of January this year, the number of 2 000 in August 2023 had moved to just over 300.
“That’s how we dropped it,” Marokane confirmed.
In monetary terms, the utility said that 300 represented around R190 million in expenditure. This is a steep reduction from the R1.3 billion at the height of the alleged abuse.
Vetting suppliers and targeting those still inside
Beyond reducing the volume of orders, Eskom said it has also overhauled how it screens suppliers.
Previously, buyers could identify and approach suppliers directly, a practice the utility acknowledges created fertile ground for collusion.
Eskom said it has since migrated to using the Central Supplier Database maintained by National Treasury, which enables pre-screening of suppliers and ongoing compliance checks.
The CEO was direct about what the SIU’s findings meant for accountability. “Yes, there are staff members who are implicated in the process,” he said.
“The SIU report details elements that enable us to take the appropriate consequence management for those who are still within the business. Those who left, the SIU deals with them.”
That distinction is significant. It means that while the SIU pursues those who have already exited the utility – including through the asset preservation order linked to Nkosi – Eskom is simultaneously managing an internal disciplinary process against employees who remain on its payroll.
The utility did not disclose how many staff members are implicated or at what level of the organisation they sit.
Ating chairman of the Eskom Board, Mteto Nyati, added two further reforms that are still being rolled out.
“One is to move over to electronic purchasing and to automate the systems,” he said, “and the other is proactive assurance during the purchasing, not post-purchasing, to try and improve the anticipation of problems.”
He confirmed that proactive auditing had already begun, while the full digital procurement system remained under development.
Board knew, and says it acted before the SIU report landed
A pointed question at the briefing was whether Eskom officials were effectively enabling corruption.
Nyati did not deflect. He acknowledged that corruption within the utility was not, in the board’s view, a leadership-level anomaly but something that ran through multiple tiers of the organisation.
“It exists at middle management, supervisory and even at the operational level,” he said. “It’s endemic not only to Eskom companies but also to private companies and also in our social ranks.”
Critically, he maintained that the procurement reforms now visible were not a reaction to the SIU’s public findings, but preceded them.
The board, he said, had been aware of and actively monitoring those changes throughout.
Nyati was careful to draw a timeline that placed the board on the right side of the problem. He argued that the crimes identified in the SIU report predated procurement reforms that Eskom had already begun implementing independently.
“The time scale that this crime was committed goes back to before we started doing changes to the way we do procurement,” he said.
Executives stressed that SIU’s collaboration was not adversarial but cooperative, with the investigating unit helping Eskom identify systemic gaps that internal controls had missed.
Nyati framed the board’s posture as one of full accountability.
“The board has supported those actions and is fully aware of them and monitoring them on a regular basis,” he said.
He emphasised that the reforms now in place were specifically designed to ensure that the kind of fragmented, low-level procurement abuse exposed in the relay case could not recur at scale.
