Global accounting giant Deloitte will pay back R150-million in consulting fees, Eskom and Deloitte announced in a joint statement late on Friday.
The settlement follows a two-part exposé from amaBhungane earlier this year.
The dirt on Deloitte’s consulting deals at Eskom, part 1 showed how procurement processes were manipulated to award Deloitte contracts valued at R207-million, while The dirt on Deloitte’s consulting deals at Eskom, part 2 raised uncomfortable questions about the firm’s decision to partner with Nkonki Inc, the auditing firm covertly acquired by the Guptas’ business partner Salim Essa.
When amaBhungane interviewed Deloitte in December, Deloitte Consulting managing director for Africa Thiru Pillay insisted that the firm would not settle.
“[O]ne of the toughest decisions that I think the firm has made is to go down this route of legally challenging Eskom and not settling,” Pillay told us.
“[A] lot of the people that we talked to want to know, ‘Why did you decide to go down this route?’ Because there’s rumors in the market that some of our competitors have settled… But our view was that you will have this cloud hanging over your head forever, if you go down that route.
“And secondly, from a values perspective, is it the case that we are seeking to hide something and therefore settle behind closed doors? Is that what we want to do? And the honest belief from myself and the other members of the leadership team, and that’s not the case, and therefore, we not going to go down that route.”
At the time, Pillay said negotiations had reached a stalemate over two issues: Deloitte would not agree that it was “complicit with irregular procurement” or that there “any undertone of corruption in [its] relationship with Eskom”.
In the joint statement, Deloitte admitted that it “participated in this irregular procurement process” but in exchange appears to have won a far more valuable concession from Eskom, namely that Eskom’s investigations “showed no evidence of state capture or corruption”.
This was a significant u-turn by Eskom whose then chair, Jabu Mabuza, described the contracts as “pure corruption” in an official statement issued last year.
The R150-million settlement means that Deloitte gets to keep roughly R57-million in fees. This brings Deloitte’s fees closer in line with the bid prices offered by its competitors.
A consulting industry insider that amaBhungane spoke to on condition of anonymity described Deloitte’s original fees as “feeding trough bullshit”.
Eskom was also careful to say that it benefitted from Deloitte’s services.