Considering Eskom’s prolific record of power blackouts this year, perhaps it isn’t much of a surprise that it has stalled on answering questions on how it managed to pick Hitachi Power Africa as one of the winning bidders for a R20bn contract to build boilers at its Medupi power station.

This is no small matter as the spectre of corruption looms large: after all, Chancellor House (which was unmasked last year as a front for the ruling African National Congress), is a 25% shareholder of Hitachi Power Africa.

The obvious question is; how can a government department award a multibillion rand contract to an entity in which the ruling party has a blatant financial interest, yet refuse to utter a peep about the process it followed?

The FM sent detailed questions (set out below) to Eskom and several of its directors five days ago, and this query appears to have fallen into a hole. That the country’s government-owned power parastatal is refusing to explain why it awarded it largest-ever contract to a related party should be a loud warning bell.

Eskom CEO Jacob Maroga (pictured) has had a rough ride since he took the reigns this year, what with ridiculous price hikes to demand (he wanted an 18% hike next year) and rampant power blackouts to defend, and silence on the Medupi contract won’t help.

Finally, early this week, the FM cornered an Eskom spokeswoman, who said the reason it hasn’t responded was because “we don’t want to answer each question on an individual basis, we’d rather provide a detailed report” later.”

But she added, conveniently and without providing any evidence, that Eskom’s Medupi deal was “robust” and was “verified by internal and external auditors”.

However, it seems the Japanese management at the Tokyo-based are seething over the claims of shady dealing levelled at its subsidiary over the R20bn Eskom contract.

Hitachi Power Europe COO Klaus-Dieter Rennert says the furore could even deter his company from doing more business in SA.

Rennert told the FM that if it was proven that Chancellor House was indeed a front for the ANC, “this would contradict our own governance rules”.

“I feel, and the Japanese certainly feel, that we have been very badly treated. We do not appreciate being blamed for these sorts of things when all we did was take on an empowerment partner,” he says.

But though Rennert says the Japanese are concerned, “we won’t change anything yet because we have no proof that the accusations are correct or not”.

This seems an odd statement, given the degree of proof on the table. For one thing, the extensive Mail & Guardian investigation (published by the Institute of Security Studies here) provides extensive detail on Chancellor House.

To boot, earlier this year, ANC secretary general Kgalema Motlanthe admitted to the FM earlier this year that Chancellor House was “an ANC vehicle” designed to fund the party.

When quizzed about this by Business Day a few months later, Motlanthe confirmed he was quoted correctly on Chancellor House being an ANC company.

When the FM suggested to Rennert that Motlanthe’s admission at the least constituted some form of proof, Rennert said he will “consider” this information.

But he says that either way, he was not aware of the fronting claim when Chancellor House bought into Hitachi in 2005, and “we found nothing wrong”.

No matter what Rennert says, you can be sure Hitachi is working overtime behind the scenes to review the allegations against Chancellor House.

Hitachi may be worried, it is also desperate for the storm to blow over.

After all, Eskom is about to announce the winning tenders for its Bravo power station and Hitachi is favoured to nail that, too — a contract which could be worth another R20bn.

Chancellor House will come along for this ride too, and the storm for Hitachi will continue.
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