The Kusile corruption case shows former Eskom executive Matshela Koko allegedly tried to use his politically connected businessman friend to launder a bribe payment.

Now OUTA has looked at the businessman’s network, and found a powerful group that reaches the energy sector, the ANC and state security networks.

The case of corruption, fraud and money laundering charges arising from a 2015 Kusile power station contract was back in the Middelburg regional court on 23 March 2023 and postponed to September.

At the centre of the case are two accused: Koko and businessman Thabo Owen Mokwena, who were good friends and studied at the same university, but reportedly fell out over the contract.

Koko was Eskom’s acting Executive for Technology and Commercial at the time, the division in charge of Eskom procurement. Mokwena was the politically connected player he allegedly brought in to benefit as a sub-contractor and process a bribe payment.

OUTA pieced together information from the NPA’s draft charge sheet and from documents from other sources, looking at the network around Mokwena.

Mokwena’s connections are powerful: he is the deputy chair of the presidential task team overseeing the reorganisation of the State Security Agency and is connected to the ANC’s Chancellor House Holdings.

His partners in his Kusile contract included prominent players in the energy sector.

This case illustrates how crucial successful prosecutions are in unravelling and disabling state capture networks.

The Kusile contract, the guilty pleas and the fines

The criminal case arises from the 2015 award of the Kusile control and instrumentation (C&I) contract to Asea Brown Boveri (ABB) South Africa (Pty) Ltd, part of the ABB group based in Switzerland. The NPA describes the C&I as “the electronic ‘brain’ of the power station”.

ABB has already admitted to paying bribes to secure the contract.

In December 2020, ABB repaid Eskom approximately R1.56 billion (recorded in Eskom’s Integrated Report 2021).

On 2 December 2022 the United States Department of Justice signed a plea agreement with ABB South Africa, in which ABB agreed to pay more than $315 million (worth about R5.544 billion at the time) to resolve an investigation into violations of the Foreign Corrupt Practices Act, stemming from the bribery of a “high-ranking official” at South Africa’s state-owned energy company. In terms of this agreement, ABB agreed to fines and reparation payments in various countries, and promised cooperation in prosecutions. In December 2022, as part of the international agreement, ABB paid reparations of over R2.5 billion to the National Treasury’s Criminal Asset Recovery Account (CARA) (see the Treasury’s accounts for 31 December 2022). Also in December, the Swiss Attorney General reported that ABB was fined 4 million Swiss francs (about R75 million) for setting up the bribery scheme; the Swiss said ABB won contracts at least $200 million (worth about R2.4 billion at the time) and paid bribes of at least 1.3 million Swiss francs. ABB reported that the settlements were worth $327 million (about R5.755 billion) and that it hoped to soon reach a final resolution with German authorities.

These settlement agreements underline the illegality of the circumstances around the ABB contracts and shed more light on the appointments of the sub-contractors.

Koko and Mokwena

Koko is accused number 1 in the Kusile criminal case. Mokwena is accused number 8 and his businesses, Leago EPC (Pty) Ltd and Leago Consolidated (Pty) Ltd are accused 9 and 10. They were arrested and charged in October 2022.

Koko and Mokwena were good friends who studied at the same university. Koko was a best man at Mokwena’s wedding at Summer Palace in September 2013; a report on the wedding includes a picture of Koko as one of the best men at the wedding.

The charge sheet alleges that during 2013, there were rumours that Eskom planned to terminate its C&I contract with Alstom and look for a new supplier.

ABB wanted the contract and set up a “capture team” lead by group vice-president Sunil Vip as the “Sale Shark”. ABB knew it needed a BEE partner but that it was “vital to select the ‘right’ BEE partner. The major criterion for the selection of such a partner was its political connectivity”, says the charge sheet.

ABB started to befriend Koko and, in April 2014, Koko introduced Mokwena to ABB.

In May 2014, Eskom issued the tender.

In June 2014, ABB invited Mokwena to a meeting to discuss potential co-operation between ABB and Mokwena’s company Leago EPC. In October 2014, the ABB bid went in and, in March 2015, Eskom signed with ABB.

Despite what the US plea agreement refers to as Leago EPC’s “poor technical qualifications and lack of experience”, ABB appointed it as a sub-contractor in May 2015, to handle site services skills development and industrialisation for the C&I contract for R96.1 million. ABB paid Leago 10% (R9.6 million) immediately after signing; this was apparently intended as a bribe to pay to Koko. The same month, ABB signed a second contract with Mokwena’s company Leago Consolidated for the provision of five engineers for 12 months at a cost of R5.8 million.

However, Mokwena allegedly failed to pass on the money to Koko as intended by ABB, so Mokwena and Koko fell out. ABB’s attempts to mediate failed.

Apparently as a result of this fallout, Koko allegedly set up an arrangement using his wife Mosima Koko and step-daughters Koketso Aren and Thato Choma and businesses including Impulse International (Pty) Ltd (all co-accused in the case) to become hidden sub-contractors to collect on payments, using variation orders on the contract.

Legal fights over money

Both sets of sub-contractors fought with Eskom over contract payments.

In 2019, Mokwena’s Leago EPC brought legal action against ABB and Eskom for a declaratory order on this contract for an outstanding claim of R4.426 million. Eskom’s Integrated Report for 2019/20 notes that it cancelled contracts with Impulse International and the company brought a civil claim against Eskom, which responded with a counter claim to recover all monies paid. The outcomes on both cases are unknown.

Why was Mokwena so important?

Mokwena has financial expertise and political connections that reached the State Security Agency, the Department of Mineral Resources and Energy, boards of state-owned entities, the government’s main pension fund and the ANC’s Chancellor House.

Publicly, he has spoken out against corruption. He was on the cover of Leadership magazine’s October 2016 issue. In the article, Mokwena said: “Leaders in society must have integrity, and must instil a sense of confidence in the people we lead.” Leadership reported that “Mokwena abhors what he calls ‘conspicuous consumption’, where so-called leaders live a lifestyle defined and described by flashy cars and living large. ‘This tendency is fueled by corruption, it is often the result of unscrupulous tenders, and income out of no effort or ability, where a person does not know what it means to sweat and earn a living. It is based on dubious means of amassing wealth or quick cash, this lifestyle is, unfortunately, becoming a dream of many black youths in our country,’ he says.”

OUTA found that Mokwena appears to be linked to two ID numbers, both listed as valid by the Department of Home Affairs, with dates of birth exactly a year apart and linked to the same address. The Companies and Intellectual Property Commission records show he is an active director of 23 companies.

Mokwena’s describes himself as a specialist in economic development, finance and strategy. His qualifications listed by one of the boards he was on are: a Master’s degree in Finance: Financial Strategies from Oxford University; a Master’s in Economic Development (Wits University); an Honours degree in local government (University of Durban-Westville); a Bachelor of Social Science degree (UCT); a Certificate in Private Equity (Oxford); a Certificate in Infrastructure Development and Finance (Saïd Business School, Oxford University); and a Certificate in Economic Challenges for African Development (London School of Economics).

From 1998 to 2005, he was CEO of the South African Local Government Association (SALGA), appointed at the age of 28.

In 2005, the City of Cape Town awarded a contract to Thabo Mokwena Consulting without going out on tender, which the City said at the time was due to his specialised knowledge and the City’s haste to be the first to develop a jewellery city. However, the project never happened and, the City subsequently obtained a default judgment against him for R1.2 million and laid criminal charges against him (see here and here). It’s not known whether or how this matter was resolved. The City’s mayor when the contract was awarded was Nomaindiya Mfeketo; she later moved on to a position as the Deputy Speaker of Parliament and, in 2010, Mokwena worked as her advisor.

During 2019, he was an advisor to then Minister of State Security Ayanda Dlodlo (see here). His website says he was an advisor to an unnamed Minister of Minerals and Energy, and has served as a board member of state-owned entities PetroSA, the South African Rail Commuter Corporation (now Prasa) and the now defunct Electricity Distribution Industry.

In January 2021, President Cyril Ramaphosa said in a reply to Parliament that Mokwena was appointed deputy chair of the new Ministerial Implementation Task Team set up on 28 July 2020 after the review of the State Security Agency by the High-Level Review Panel. “The MITT is chaired by the Deputy Minister for the State Security Agency (SSA), Mr Zizi Kodwa, who is the political champion for the task team. The Deputy Chairperson is Mr Thabo Mokwena, who has qualifications in economics, corporate finance and strategy. Mr Mokwena has experience as an Accounting Officer for SALGA,” said the President. “The mandate of the MITT is to unpack the recommendations of the Panel into a concrete plan of action and coordinate the implementation of the recommendations. It will develop a comprehensive strategy and business case for implementation. The MITT will also ensure the review of white paper, and finalise the General Intelligence Laws Amendment Bill (GILAB) legislation.” There is no public update on this team’s work. Kodwa, who is no longer the deputy minister, was subsequently found to be compromised by a financial transaction with an EOH director, a matter of concern to the State Capture Commission.

From 2018 until at least March 2022, Mokwena was a trustee on the board of the Government Employees Pension Fund (GEPF), appointed by the Department of Public Service and Administration as the employer-nominated trustee although it is not clear if he was employed by the department at the time. The GEPF claims to be the largest pension fund in Africa and the annual report for 2021/22 says it has assets of R2.3 trillion. Throughout his time on the board, Mokwena was a member of the board’s investment committee and the finance and audit committee, and was paid a total of R2.1million by GEPF.

Mokwena is well connected in the energy sector and with politically exposed people.

His business Leago Consolidated was originally set up by Collin Matjila and Manne Dipico. Mokwena, Matjila and Dipico are still co-directors in Ponelo Pele Holdings (Pty) Ltd. Matjila was the first chairperson of SALGA when Mokwena was the SALGA CEO. Matjila was Eskom’s acting CEO from April 2014 to October 2014 (during the time the Kusile tender was issued) and remained an Eskom director until December 2014, and was subsequently linked to the Guptas, including signing a R43 million business breakfast deal between Eskom and the Guptas’ newspaper The New Age (see here). Dipico is the former Premier of the Northern Cape, and was a director of the Nuclear Energy Corporation of South Africa (NECSA) from 2006 to 2012.

Mokwena’s co-directors in Leago EPC, all appointed on 20 January 2014 and part of Leago when it signed up with ABB, included the late Smunda Shadrack Mokoena, Nchaupe Bright Laaka and Segotsane Hendrick Seopa. Smunda Mokoena is believed to have played an active role in the negotiations between Leago and ABB. He was CEO of the National Energy Regulator (NERSA) from 2005 to 2010 (Matjila was the NERSA chair at the time), and was the NERSA chairperson from October 2021 until his death in March 2022. Seopa is a mining engineer who is now the manager of the privately owned Kelvin power station in Johannesburg.

Mokwena has links to the ANC’s Chancellor House Holdings, through his business Mokwena and Mokoena (Pty) Ltd, set up in November 2016. One of the other directors is Mogopodi Mokoena, the former DG in the Office of the Premier of Gauteng and the current managing director of Chancellor House Holdings, the ANC’s investment company which controversially had a 25% shareholding in Hitachi Power Africa contracted by Eskom in 2007 to supply steam generators for Medupi power station (see here). Mogopodi Mokoena is a director of United Manganese of Kalahari (Pty) Ltd (UMK) and director of Majestic Silver Trading 40 (Pty) Ltd, which co-owns UMK. Both companies are tied closely with the ANC. UMK has donated funds to the ANC (see here and here and here) and is linked to a Russian oligarch (see here).

Mokwena’s properties

Mokwena owns various properties, including:

A property in Morningside Manor, bought in April 2002 for R1.1 million, using a bond.
A Bryanston property bought in June 2013 for R5.2 million, using a bond.
A luxury guesthouse in Bronkhorstspruit bought by Leago Consolidated in June 2015 for R4.450 million in cash (bought weeks after ABB allegedly paid Leago EPC the R9.6 million to pass on to Koko which was not handed over). This guesthouse is the registered address of a company Kwena Maribane Leisure and Accommodation (Pty) Ltd with Mokwena’s wife and a family member as the directors.
A property in the Vaal Marina resort bought in July 2016 for R2.6 million in cash through the business Thabo Owen Mokwena Inc. This company was set up just 17 days before the transaction and it seems that the sole purpose was to obtain a property through it. In March 2020, Midvaal municipality obtained a judgment against this company for R7 748 over outstanding rates.
A property in Bryanston apparently bought in May 2018 by buying the close corporation MFWN Investments which had owned the property but had it seized by the bank.

What’s next

The criminal case is back in the Middelburg court on 4 September 2023. Since the first appearance in October 2022, the case has been postponed several times for investigation.

OUTA will be watching, to see whether any other Leago directors are added to the accused in the dock, to see whether Koko and Mokwena turn on each other and what evidence ABB provides during the trial.

This article appeared on the OUTA website.

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