South Africa tried to weaken corruption safeguards in coal phase out deal, says CEO
The South African government tried to “water down governance” around how $8.5 billion of clean energy funding will be spent, the outgoing CEO of state-owned energy firm Eskom has claimed.
In an 50-minute televised interview, Andre De Ruyter claimed the company he led for three years had been infiltrated by violent organised criminals and that it is riddled with corruption to which the police, state security services, local politicians and central government turned a blind eye.
The ruling African National Congress party responded by calling De Ruyter a “naysayer” with a “rightwing ideological posture” and said his claims about corruption were “unfortunate, irresponsible, and baseless”.
At Cop26 in 2021, the South African government announced it would receive $8.5 billion of loans and grants from rich nations to fund projects like renewable power, electricity transmission lines, electric vehicle production and green hydrogen.
Much of this money will be spent by Eskom and De Ruyter said the deal was done “by and large at Eskom’s intervention”. The agreement, known as a just energy transition partnership (JETP), formed a model for similar deals with Indonesia and Vietnam.
Since taking over Eskom in 2019, De Ruyter said he had tried to root out corruption and to start shifting South Africa’s energy system from coal to clean energy. But he said he has been opposed by criminal cartels and by sections of the government and his coffee was poisoned with cyanide in December.
Asked if Eskom was a “feeding trough” for South Africa’s governing party, De Ruyter replied: “I would say the evidence suggests that it is. I expressed my concern to a senior government minister about attempts, in my view, to water down governance around the [JETP] and the response was essentially, you know, you have to be pragmatic. In order to pursue the greater good, you have to enable some people to eat a little bit”.
De Ruyter did not say if attempts to weaken governance had been succesful. A spokesperson for Germany’s ministry for economic co-operation and development (BMZ) told Climate Home it was “aware of current issues at and around Eskom and in South Africa’s coal sector”.
The spokesperson added that donor countries promising to mobilise the $8.5bn “will jointly work with the government of South Africa to ensure that governance arrangements are in place for any funds that support the Just Energy Transition Partnership” and that every lender “will need to do due diligence around any proposed spending”.
These rich nations will have to “understand” Eskom’s and the South African government’s plans, the spokeperson said. “The continued fight of the government against corruption and crime in the energy sector is essential and also an important pre-condition to reduce the current huge level of load shedding.”
Saliem Fakir, a South African who heads the Africa Climate Foundation told Climate Home that De Ruyter’s concern was “not far fetched” and that zero tolerance on corruption was necessary to make the energy transition just.
But, he said that investments made under the JETP were likely to be closely scrutinised because it is a high-profile initiative, it is climate finance and because the funds come from abroad.
In December 2022, South Africa’s energy minister Gwede Mantashe accused De Ruyter of “actively agitating for the overthrow of the state” by forcing planned power cuts, known as “load shedding”, on South Africans. Eskom had taken these measures since before De Ruyter became chief in December 2019, as South Africa’s electricity demand often outstrips supply.
After receiving no defence from prime minister Cyril Ramaphosa, De Ruyter handed in his resignation five days later. That same day, before news of his resignation was made public, his personalised coffee mug was poisoned with a mixture of cyanide and rat poison at Eskom’s headquarters. He said this was likely to be a response to his efforts to tackle corruption, sabotage and organised crime.
De Ruyter told ETV last week that one billion rand ($50m) was stolen from Eskom every month. The company is currently 423 billion rand ($22bn) in debt, hobbling its ability to end blackouts and carry out the energy transition.
De Ruyter said there are four criminal cartels operating in the province of Mpumalanga, the north-eastern region where most of the country’s coal is dug up and burned in power plants.
He said these cartels have a hit squad of 60-70 “highly trained, well armed” people they call “soldiers” who assassinate opponents and that they pay Eskom employees to sabotage machinery when it suits their business interests.
They bribe Eskom’s buyers, who spend their money on Maserati cars which aren’t registered to their name, wear Louis Vutton clothes and wash their hands in 15-year old whiskey, he said.
De Ruyter said that “vested interests” in the value chain explain why even a gradual energy transition “is so eagerly opposed and with such vehemence”. He quoted a colleague who told him “you are being naive, you aren’t showing the comrades a way to eat”.
Fakir told Climate Home that common scams include over-charging for diesel and stealing good-quality coal and replacing it with low-quality coal or ordinary rocks.
De Ruyter said that local and national politicians, the police and security services have failed to act against these cartels, blaming either incompetence or complicity.
He said local politicians in Mpumalanga are “complicit”, that police failed to charge corruption suspects, state security were “missing in action” and at least one unnamed minister had been aware of criminality and failed to act.
He said security services had targetted him for surveillance. In October, he claimed a bugging device was found in his car. Last week, he said a contact in the inspectorate general of intelligence had told him that type of device was “one of ours, we have lots of these”.
When he travelled to Egypt for Cop27, a state security official travelled with his delegation. De Ruyter said a friend asked this man why he was there and he replied “just keeping an eye on the big guy”.
When his coffee was poisoned in December, he said the police tasked only junior-ranking police officers to investigate who had never heard of cyanide and needed doctors to explain what it was.
“Either this is monumental incomptence or they are just not interested in investigating this,” he said.
The ANC has responded to De Ruyter’s claims by urging him to lay criminal charges. If he doesn’t, the party said, they will bring charges against him for allegedly breaching anti-corruption rules.
In his interview, De Ruyter said he had informed police and advisers to president Cyril Ramaphosa of his concerns.
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