Eskom lost R11 billion to corruption and irregular, fruitless, and wasteful expenditure

Following a damning Auditor-General (AG) report, Eskom pledged to tackle past misconduct and improve governance, saying it anticipates further corruption revelations and arrests.

This includes partnerships with the Special Investigating Unit (SIU) and law enforcement agencies to address malfeasance at the company.

On Tuesday, 11 February, the AG briefed the Standing Committee on Public Accounts (SCOPA) on Eskom’s audit outcomes.

The AG’s report revealed that Eskom received a qualified audit opinion, as the utility’s financial statements contained material misstatements, indicating incomplete or unreliable financial reporting.

In particular, the AG identified widespread irregular, fruitless and wasteful expenditure, which led to billions in losses for the utility. This included the following.

• Irregular expenditure in 2023/24 – R4.1 billion 
• Fruitless and wasteful expenditure – R1 million
• Losses due to criminal conduct – R6.7 billion

The AG also identified control deficiencies in Eskom’s management. The utility failed to address internal control weaknesses, leading to persistent financial mismanagement and regulatory non-compliance.

Specifically, the regulator highlighted procurement mismanagement at the utility, as Eskom could not provide evidence that tenders followed fair and competitive processes.

For example, around R16 billion in coal contracts violated preferential procurement rules.

In addition, the briefing stated that disciplinary steps were not taken against officials responsible for irregular spending.

The AG said Eskom failed to report cases of corruption and financial misconduct to law enforcement.

The day after the AG presented her briefing to SCOPA, the SIU briefed the same committee on investigations it conducted into Eskom’s affairs.

In a press release on Friday, 14 February 2025, Eskom welcomed this briefing, saying it increased its understanding of the scale of the utility’s challenges and the action to address them.  

“The Eskom partnership with the SIU and other law enforcement agencies is premised on holding accountable those implicated in wrongdoing, recovering financial losses, and strengthening governance processes,” the utility said.

The SIU’s investigation spans almost a 20-year period from 1 January 2003 to 2 December 2022.

“We are applying the same effort as we did to end load-shedding to ending years of governance and accountability failings, and it is a task like no other,” said Eskom CEO Dan Marokane. 

“We are creating a sustainable and investable Eskom through the focussed execution of our action plans to address historical misconduct, reinforce governance, and foster ethical business conduct.”

In addition to Eskom’s partnership with the SIU and the appointment of specialist forensic expertise to address historical issues, the utility has also established a new, strengthened executive team.

The utility said this team has the appropriate skills and leadership to drive adherence to internal controls, risk management and the Public Finance Management Act (PFMA). 

“A resourcing drive to adequately capacitate the finance, internal audit and forensics functions to address key skills lost over the years has now commenced,” Marokane said.

Eskom chairperson Mteto Nyati said Eskom’s efforts are driven by its commitment to using public money efficiently.

He said this would be done by strengthening governance and our management controls by appointing the right people to the right roles to drive an ethical, high-performance culture coupled with consequence management.

He added that the utility’s partnership with the SIU and other organs of state is crucial in ensuring that all forms of criminality that impact its ability to effectively and efficiently deliver on its mandate are dealt with decisively.

Therefore, as part of its drive to enhance governance and combat corruption, Eskom has restructured its forensic, security, and investigative functions under the newly established Group Investigations and Security division.

This division now reports directly to the Eskom CEO. 

In addition, a dedicated Project Management Office has been created to analyse data-driven findings, oversee internal and external investigations, and clear the backlog of cases in coordination with law enforcement agencies.

“Eskom remains committed to rooting out corruption and strengthening its governance framework,” the utility said.

“We will continue to provide support and the necessary information to ensure that all pending cases are resolved promptly.” 

“As investigations continue across Eskom and its related suppliers, we anticipate further corruption revelations and arrests.”