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Dear Fellow South African,
Earlier this month, law enforcement agencies achieved a huge breakthrough in the ongoing effort to root out corruption at Eskom.
A multidisciplinary team supported by the South African Revenue Service carried out a meticulously planned search and seizure operation targeting coal smuggling syndicates operating across five provinces. Documents were seized from individuals alleged to have committed a range of offences including procurement fraud, tax crimes and coal diversion. This will support the drive to recover assets obtained from the proceeds of crime.
Coal diversion is when coal trucks carrying high-grade coal destined for power stations are diverted to bogus and illegal coal yards by criminal syndicates. This high-grade coal is removed to be sold off and replaced with a sub-standard product that is delivered to Eskom.
This latest operation follows a raid in September on an illegal coal mine in Mpumalanga by the SAPS Illicit Mining Task Force, where mining equipment valued at approximately R60 million was seized.
The crime of coal smuggling lays bare the impact of corruption on people’s everyday lives.
When I visited the Tutuka power station in Mpumalanga last year, the plant’s management explained to me the significant damage caused to its operations by this inferior coal. The coal is often mixed with stones and other materials.
They explained that the conveyor belts at the power stations repeatedly break down because the stones damage the belts, with the result that spare parts have to be bought at substantial cost. The entry of poor-grade coal into the production processes further affects power station boilers, causing corrosion and other long-term damage.
This is contributing to the declining performance of Eskom’s coal-fired power stations and increased maintenance costs. This single criminal act reduces the country’s energy generation capacity, and directly affects every South African household and business struggling under the crippling effect of load shedding. This in turn is having a detrimental effect on our economy, holding back growth, constraining job creation and deterring investment.
Coal smuggling and other forms of wilful damage to critical infrastructure are no less than economic sabotage, and our government is treating them as such.
That is why one of the workstreams of the National Energy Crisis Committee (NECOM), the Energy Safety and Security Committee, is focused on illegal coal yards, the illegal trade in fuel and fuel oil and other forms of infrastructure crime that contribute directly to load shedding. This workstream is supported by a Tactical Joint Operations Centre in Mpumalanga, where most of our coal-fired power stations are located.
Our focus on strengthening the institutions tasked with investigating and prosecuting these cases, and ensuring greater cooperation and information-sharing between them, is producing results.
Asset forfeiture is playing an important role in ensuring that those implicated in corrupt activities are unable to hide their ill-gotten gains from the law. In December 2022, several people were arrested and trucks used in coal diversion seized after a number of illegal coal yards in eMalahleni were also raided.
Since January this year there have been a total of 234 arrests emanating from the operations of the Energy Safety and Security Committee, with the value of items confiscated amounting to over R260 million.
A number of investigations by the Special Investigating Unit into Eskom-related corruption continue to yield results. To date, coal supply agreements valued at approximately R3.7 billion have been declared invalid through litigation, and coal supply agreements and construction contracts valued at R10 billion have been set-aside.
Corruption, whether it is petty bribery, procurement fraud or large-scale misappropriation of funds, is a rot that negatively impacts all of society. When resources meant for the benefit of citizens and improving their lives are stolen, the price is paid by all, especially by the poor. It is not a victimless crime.
Our efforts to tackle this corruption are gaining momentum. We are disrupting and unravelling the operations of the syndicates and criminal networks that have enriched themselves off Eskom for far too long.
There will be more arrests. There will be more seizures. The impunity that has allowed many to believe themselves beyond the reach of the law is a thing of the past.
To stop the rot at Eskom, mining houses, labour, business and civil society need to work together. The media also needs to continue the work it is doing to uncover criminal acts at Eskom.
If we continue to work together, we will ensure that these coal syndicates have nowhere to hide, that they do not benefit from their crimes and, even if it takes some time, that they ultimately pay for them.
With best regards,
Issued by The Presidency