- The Turkish-led consortium has filed its court answer
to corruption allegations brought by rival DNG Power Holdings, denying all.
- Instead, Karpowership wants to know why DNG had failed to report so-called corrupt approaches from government officials and a businessman associated with Minister Gwede Mantashe.
- Karpowership and DNG are vying for a 20-year energy deal with Eskom.
Karpowership SA has fired back at claims
that its potential R225-billion power supply deal with Eskom is tainted by
corruption.
Explosive allegations were made by DNG
Power Holdings, a rival bidder in the government’s Risk Mitigation Independent
Power Producer Procurement Programme (RMI4P), in a court application filed last
month.
DNG chief executive Aldworth Mbalati
alleged that the tender had been manipulated to favour Karpowership, and that
he had been the victim of a shakedown by senior government officials and a
businessman associated with Minister of Mineral Resources and Energy Gwede
Mantashe.
The tender was issued and adjudicated by
Mantashe’s department, which selected Karpowership as preferred bidder for the
lion’s share of 2 000MW to be supplied to Eskom.
But in a 59-page affidavit filed with
the Pretoria high court last week, Karpowership business development director
Mehmet Katmer turns the allegations on DNG:
"DNG takes the opportunity of
repeatedly making utterances of corruption
surrounding the tender process ... only because it was not appointed a Preferred Bidder. Yet, on its version it was aware of facts pertaining to this alleged corruption as far back as July 2020 — some 10 months ago and did nothing until its bid was disqualified."
In his original affidavit, Mbalati alleged
that he was approached by "a businessman with close ties to [Mantashe]"
in July last year. The businessman told him the RMI4P tender would soon be
released and that DNG "should be assisted by certain undisclosed parties
should it wish to be a preferred bidder and ultimately be awarded the tender".
The businessman, he said, offered to "facilitate the relationship".
This was followed, Mbalati said, by a
meeting in a Pretoria restaurant in October with two senior officials from the department.
One of the officials allegedly asked how he could "help" DNG’s bid,
and when Mbalati declined, said: "One thing you must understand is that
there is a system in this country and if you don’t work in accordance with that
system you will fail, even if your project is the best."
Mbalati alleged that when Mantashe named
the preferred bidders in March, and DNG learnt it had been disqualified, the
associate asked if he had "learned [his] lesson".
In his answer, Karpowership’s Katmer states:
"DNG claims that during these encounters, it was invited to unlawfully
collude with state officials and their associates, who had fixed the outcome of
the tender. DNG maintains that it refused to engage with these corrupt
individuals and, as a consequence, its bid was disqualified.
"The apparent implication is that
the successful bidders, who were appointed Preferred Bidders, accepted the invitation
and unlawfully colluded with corrupt state officials. This implication is
false, insofar as it relates to Karpowership."
The main principal’s
wife
The most direct evidence Mbalati had put
forward to implicate Karpowership was a forwarded SMS that read: "We’ve
got some intel from the main principal’ wife that our requested extension has
been under consideration & they my may afford bidders a 3week delay in
submission & it should be announced imminently."
Mbalati claimed that a representative of
Karpowership had approached Mantashe’s wife, Nolwandle, with a request to
extend a key deadline, set for 30 October 2020. He further alleged that this
had given Karpowership a critical advantage as it knew the extension would be
granted whereas other bidders were kept in the dark and rushed to reach the
deadline.
The extension was granted, as the
message predicted, but Karpowership has now told the court that it did not take
advantage of the extension and filed the required documents on 30 October like
everyone else. "The date and time of Karpowership's submission ... ought
to be recorded in the Department's online portal's logbook," Katmer states.
Without this piece of evidence, DNG may
struggle to make the case that the whole tender was tainted by corruption.
Nolwandle Mantashe previously told
amaBhungane she did not "have a clue of the extension you talking about"
and had not been approached by anyone about it. (Read her full
response.)
Katmer states that Karpowership’s
lawyers had requested a copy of the unredacted SMS, but that Mbalati refused to
provide it.
He adds: "I cannot comment on
whether the engagements between DNG and the state officials and [the
businessman allegedly associated with Mantashe] occurred as described. Before
reading the founding affidavit, I had no knowledge of such engagements.
"I am, however, concerned by DNG's
lack of action in relation to the allegations of corruption... DNG is only now
in the process of finalising a criminal complaint against the alleged
perpetrators. "
DNG, he says, "sat idle awaiting
the outcome of the bid process and only when its bid failed, it decided to
raise these issues".
If the events had in fact occurred, he
argues, "DNG would have immediately spoken out".
Shifting the
goalposts
Throughout his affidavit, Mbalati alleged
that numerous tweaks were made to the tender through a series of "briefing
notes", changes that shifted the goalposts for rival bidders and ensured
Karpowership’s success.
AmaBhungane’s own investigation
concluded that rules were set so as to exclude renewable energy projects and
then further revised in ways that appeared to have benefitted Karpowership’s
proposal to provide 1 220MW of gas-fired electricity.
But Katmer criticises some of the
examples that Mbalati used to demonstrate undue influence. "DNG's
narrative simply does not withstand scrutiny."
In one example, Mbalati told the court
that last-minute changes to local content requirements had weeded out the
competition as many bidders who were unable to meet the strict 40% local
content rule had already decided not to compete.
Katmer challenges this, saying that the
option to obtain an exemption from the 40% rule was available to all bidders
equally.
"Karpowership lawfully applied for,
and was granted, an exemption of this
kind by the [Department of Trade, Industry and Competition]," he states.
In another example, DNG had submitted to
court that it understood that Karpowership had failed to put up a bid guarantee
from a South African bank – a requirement of the tender which should have led
to Karpowership being disqualified. Karpowership responded by providing the
court with three bid guarantees from Investec, totaling R183 million.
The department is entitled to call in the
guarantee if it turns out that bidders breached any law or if bidders file a
non-compliant bid.
On this and other points, Katmer argues
that Karpowership submitted a fully compliant bid, and won simply because it
offered a more competitive price.
Putting lipstick on a
pig
Karpowership also takes issue with Mbalati’s
plea that the court puts DNG on the preferred bidder list.
DNG’s application had two parts: Part A
sought to interdict the department from concluding any final agreements with
the preferred bidders, while Part B made the unusual request for the court to
order that DNG’s disqualification be set aside and that it be named a preferred
bidder in Karpowership’s stead.
Katmer challenges the legal
inconsistency in DNG's plea, arguing that since DNG contends that the tender
process as a whole was tainted by corruption, it should have asked the court to
"declare the process as a whole invalid".
Instead, "DNG opportunistically seeks
an order substituting it as a preferred bidder".
"This relief is incongruous with
the claims made, and moral position adopted, by DNG in the founding affidavit,"
Katmer argues.
No admissible
evidence
Karpowership has challenged DNG to put
up more evidence, failing which it has asked the court to "censure"
DNG’s "reckless and manifestly unsubstantiated allegations" with a "punitive
costs order".
"[T]he more serious the allegation
made by a litigant, the more cogent will be the evidence required. But that is
where DNG's application is sorely lacking. It constantly ascribes corrupt
conduct to the respondents without any admissible evidence."
DNG is scheduled to file a supplementary affidavit before 9 June. The case itself will only be heard in July, precipitously close to the deadline for the RMI4P’s financial close at the end of that month.
If Karpowership concludes a contract with government, it will start supplying 1 220 MW of power from five powerships moored in Richards Bay, Saldanha and Coega. The contract, estimated to be worth R225 billion, will run for 20 years at least.