Fidelity insider reveals details about R250 million Eskom security contract

A Fidelity insider provided Daily Investor with details about the controversial R250 million Eskom security contract awarded under former CEO Andre de Ruyter.

Initial reports suggested that the utility spent R500 million over three months for security services from Fidelity following a closed tender process.

De Ruyter is accused of flouting normal tender processes to approve the deal under the guise of emergency services procurement.

The Association of Private Security Owners of South Africa (Tapsosa) made serious allegations regarding the R500 million Eskom security contract.

Tapsosa spokesperson Sindiswa Changuion said they started raising the alarm regarding the R500 million security contract in October 2022.

Changuion said private security providers were already on site and rendering the services, which Fidelity was then paid millions to do.

She added that consultations with security providers were conducted under the auspices that some intervention or extra security had to be procured.

“It was impossible for Fidelity to implement all the security services Eskom paid for within the three-month contract period,” she said.

Eskom said the Fidelity Services security contract aligned with its procurement procedure and the National Treasury directives for emergency procurement of services.

It added that the contract was established from July 2022 to September 2022 with an estimated budget of R500 million.

The scope of the contract mainly focused on critical power stations, strategic corporate sites, and the transmission network.

There were widespread allegations of corruption and fraud linked to the contract, and Eskom said it “will work with the relevant authorities on any investigation”.

Last week, Eskom placed head of security Karen Pillay on precautionary suspension “to allow space for the investigation on allegations levelled against her to continue unhindered”.

Fidelity hits back

Fidelity Services Group CEO Wahl Bartmann confirmed the group had been awarded a three-month emergency contract with Eskom.

The contract was for a comprehensive security solution consisting of a national deployment to cover Generations and Transmissions.

Bartmann dismissed the R500 million figure bandied around, saying the total contract value was approximately R250 million.

During this period, Fidelity Services Group and other service providers were already supplying other services to Eskom.

Bartmann said the contract was awarded based on their experience managing specialised services within the current national critical infrastructure industry and its national footprint.

It included land and air support with helicopter and tactical drone surveillance capabilities, specialised armoured personnel carriers, tactical intervention units, access and crowd control.

Fidelity’s Business centre, as well as National Command centres, were used for operational compliance and execution.

Contrary to Media statements and reports, Fidelity Services Group was not requested or provided intelligence services to Eskom.

Fidelity insider provides further information

A Fidelity insider, who worked on the security contract, provided Daily Investor with details about the Eskom security contract.

The insider, who asked to remain anonymous, said many security personnel only worked for two months on the contract – from the end of July to the end of September.

The personnel who worked on the Eskom security contract included casual and contract staff and permanent Fidelity SIU and ADT employees.

Daily Investor has seen communication from Fidelity which confirms the duration of the contract for some of the teams.

The teams were tasked with activities like patrolling and guarding power stations and high-risk power lines. National roads were used in many cases.

For this project, Fidelity rented many of its vehicles from Thrifty Car Hire. These were normal, soft-skinned cars and not armoured vehicles.

The rented cars were returned to Thrifty Car Hire by 14:00 on Sunday, 2 October and fuel cards were returned.

The insider said Fidelity also hired helicopters to patrol for a few hours per day, depending on weather conditions.

Many security personnel were housed in guest houses during this contract and received cash for food. They were encouraged to leave the guest houses after their latest shift on 30 September.

Fidelity experienced a few issues with the contract, which include referral letters at Hendrina and poor reporting.

The insider told Daily Investor that the staff did not receive bonuses or thank you letters despite the size of the contract.

Fidelity CEO explains

Bartmann confirmed the Fidelity insider’s information was accurate and added additional information to explain the contract.

He said although many security personnel only worked for two months, the “contract started and was extended for 3 months”.

In addition to patrolling fences and high-risk lines, the group also supplied additional services to protect critical infrastructure.

It included drones and specialised response and reaction units that formed part of the holistic service offering undertaken following an in-depth risk evaluation.

Bartmann said it was important for personnel to be near high-risk areas, which is why they were housed in nearby guest houses.

These establishments were selected depending on where staff needed to be transported to and where accommodation was available at short notice.  

He confirmed they rented many vehicles from Thrifty Car Hire but added that the company does not supply armoured vehicles.

“Additional vehicles were rented for staff transportation and operational requirements,” the Fidelity CEO said.

“We also deployed our internal fleet of armoured vehicles, which included – 1 tonners, personal carriers and riot control armoured vehicles.”

Bartmann said in addition to its own fleet of helicopters, they rented extra helicopters in certain areas. Other “specialised equipment was also used day and night”.

He said he was unaware of problems related to the contract, like referral letters at Hendrina and poor reporting.

He did not comment directly on why staff did not receive bonuses despite the contract size.

Instead, he said staff on this project were remunerated much more than the minimum wage.