Westinghouse, the company that lost a R4-billion tender for critical nuclear maintenance at the Koeberg power plant, has in effect accused two senior Eskom officials of “pickpocketing” the award from them at the last minute.
Westinghouse makes the astonishing claim that all levels of Eskom’s tender decision-makers had signed off on the award to the firm, only for interim chief executive Collin Matjila and board tender committee chairperson Neo Lesela unilaterally to take a recommendation for rival bidder Areva to Public Enterprises Minister Lynne Brown to sign off.
Brown on Thursday confirmed that they had brought her a recommendation for “the European company” – an apparent reference to Areva.
If Westinghouse is correct that the tender decision had been in its favour and not Areva’s, the implication may be that Brown, who has only been in the job for three months, was misled.
But Eskom spokesperson Matshela Koko disputed the claim that a preference for Westinghouse had been overturned and told amaBhungane that both the executive committee and the final decision-maker, the board tender committee, had chosen Areva.
“There is no resolution, no minutes that reflect that Westinghouse was chosen. The board subcommittee took the decision to award the contract to Areva … We will go to court and dispute Westinghouse’s position … The tender was awarded to Areva in a fair, equitable, transparent and cost-effective manner.”
Affidavits allude to last-minute scheming
Westinghouse’s claim is contained in court affidavits filed on Thursday in support of an attempt to interdict Eskom from concluding the contract with Areva until it has given Westinghouse full access to the record of decision.
The Westinghouse officials who deposed the affidavits cite four confidential sources – three of them “senior people within Eskom” and one “connected to the ministry of public enterprises” – who told them about the 11th-hour machinations behind the hard-fought tender.
AmaBhungane has seen a Facebook status update, posted publicly by Lesela on August 15 – the Friday that she and Matjila met the minister – in which she says she “was taken to hell and back this afternoon”.
“What a week, what a day, what an evening. My threshold for stress was put to the ultimate test, and just for good measure, was taken to hell and back this afternoon just as I was coming up for air. I am grateful for my health and positive outlook on life. It is these two things that kept a threatening breakdown at bay,” Lesela posted.
Eskom announced the award to Areva that evening.
Eskom dithered for four years
The tender has been on and off since 2010, with Eskom seemingly unable or unwilling to make a decision in favour of either bidder.
As four years have gone by, some senior Eskom officials have become increasingly concerned about the nuclear safety ramifications of not concluding the maintenance contract.
AmaBhungane reported previously that Eskom’s tender evaluation team had twice recommended Westinghouse for the bulk of the contract – first in 2011 and again in 2013 – only for politically appointed decision-makers to intervene.
At the insistence of the board tender committee, a subcommittee of the board of directors, both Areva and Westinghouse participated in a competitive negotiation process in July this year in a bid to break the impasse.
Matjila chaired the board tender committee from 2011 and was replaced by Lesela when he was appointed interim chief executive in April this year.
Technical team recommends Westinghouse, again
According to the Westinghouse affidavits, Eskom’s technical team recommended the company for the third time in four years when they appeared before Eskom’s “excops”– a committee of senior managers – on August 6.
Matjila, as interim chief executive, was supposedly one of those present at this meeting.
One of Westinghouse’s unnamed sources, Source A, “was in the excops meeting of August 6 2014 at which the tender was considered, and thus had access to the report evaluating the bids and the recommendation of excops to the board tender committee”.
Next the recommendation went to the board tender committee, which met on Wednesday August 13, chaired by Lesela and attended by four other board members.
According to two other “senior Eskom sources” cited by Westinghouse, Source 1 and 2, the board tender committee also approved the recommendation in favour of Westinghouse.
Source 2 allegedly told Westinghouse’s political adviser, Itumeleng Mosala, the following day that “Westinghouse had won the tender, with all internal decision-making processes within Eskom having been exhausted”.
So what happened in the 48 hours between this decision in favour of Westinghouse and the announcement in favour of Areva?
Nobody knows, but both Source 1 and 2 – who are “senior within the management of Eskom and privy to decisions of excops, the board tender committee and the full board” – were unaware of any moves to overturn the decision until it was announced on the Friday evening.
According to Mosala, Source 3, who is apparently close to the public enterprises department, briefed him that “the minister had been verbally briefed by Mr Collin Matjila and Ms Neo Lesela – both of Eskom – in Pretoria on August 15 2014, presumably at the minister’s office”.
New minister satisfied with ‘assurance letter’
Brown confirmed that Matjila and Lesela had visited her, but she was adamant that this was only after Eskom had taken its decision and the purpose of the meeting was to provide her with an assurance letter that the tender process was correct and above board.
The minister said she could not remember the exact date, but recalled that the pair had conveyed to her that the matter was urgent, as they could not send out the letters to the successful and unsuccessful bidders before she had accepted the assurance letter.
This timing would agree with the allegations by Westinghouse that the meeting took place on August 15, the same day that Westinghouse received a letter rejecting its bid.
Brown said she was satisfied with the assurances given to her. She said Matjila had told her the decision had been made by secret ballot and that “the European company won”.
Areva is French and Westinghouse is Japanese-owned but is based in the United States.
Brown said Lesela had offered to show her the ballot slips but she had declined to see them.
“I was only interested in whether the process had been followed correctly, not in who won,” Brown said. The minister said she would be happy to present her version of what happened in court.
Mosala says in his affidavit that both Source 1 and 2 told him that Matjila has “throughout the tender process been a vocal opponent of Westinghouse being awarded the tender, and has often referred to the fact that this is not a desired political outcome”.
According to Mosala, who met one of the sources for a drink on the Friday evening, still expecting the impending announcement to be in Westinghouse’s favour, the shell-shocked source told him: “You guys have been pickpocketed.”
Attempts to reach Matjila and Lesela for comment were unsuccessful.
Allegations open to doubt
When this report was produced, amaBhungane did not have the benefit of access to Eskom’s detailed response to Westinhouse’s interdict application.
Following the filing of Eskom’s answering affidavit by senior executive Matshela Koko, it has become clear that some of the Westinghouse allegations, based on hearsay information from un-named sources inside Eskom, are open to doubt.
In particular, Westinghouse’s sources appear to have got their timing wrong in relation to the meeting with the minister.
In addition, their claim that the final Board Tender Committee (BTC) meeting approved Westinghouse is contradicted by an extract of the draft BTC minutes.
Documentary evidence disclosed by Eskom shows that a letter informing Minister Lynne Brown of the award to Areva was received by the ministry on August 13, and the minister told amaBhungane her staff had confirmed the meeting with BTC chairperson Neo Lesela, acting chief executive Collin Matjila and board chairperson Zola Tsotsi took place on Wednesday, August 13, not on Friday, August 15.
The claim that all levels of Eskom’s tender decision-makers had signed off on an award to Westinghouse, only for Matjila and Lesela unilaterally to take a recommendation for Areva to Brown, is not sustained by the evidence disclosed so far by Eskom.
The evidence confirms that technical and management committees below board level repeatedly recommended Westinghouse, but also shows that external consultants reporting to the Board Tender Committee favoured Areva.
Eskom has so far failed to disclose the full minute of the BTC meeting of August 12, and has only filed a draft extract showing an approved resolution in favour of Areva.
The full minute is likely to throw light on the discussion at board level, in particular the “secret ballot”, but is unlikely to challenge the assertion that the BTC in the end chose Areva.
As a result of the allegations by Westinghouse, amaBhungane drew particular attention to the Facebook posting by Lesela on the evening of August 15 – and its deletion.
Lesela has thus far declined to explain her actions, but they should be viewed in the light of the amended facts recorded in this update.
Since the new evidence became available, Westinghouse has abandoned the interdict but has pursued an urgent review of the Eskom decision in which it pertinently refrains from making or pursuing any allegations about Lesela.
This story has been updated.
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.