Police arrested two senior ex-managers at Eskom and a number of other suspects over allegations of fraud, corruption and money laundering at the Kusile power plant.

The detention of the Eskom officials is the first by judicial authorities carrying out President Cyril Ramaphosa’s pledge to end corruption that’s stalled growth in the economy.

The debt-laden utility has turned to the government for bailouts to remain solvent as it confronts massive cost overruns at two partially completed plants — Kusile and Medupi — and its other ageing facilities struggle to produce enough power to meet demand.

Investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations

The arrests were made earlier on Thursday in three provinces by the Hawks’ Serious Commercial Crime Investigation team, a special unit of the police, and the National Prosecuting Authority, the agencies said in a joint statement. The unidentified Eskom managers, two business managers and representatives of seven companies will appear in the Johannesburg regional court later today, they said.

“Investigations began when suspicions were raised into the construction of two large projects at Medupi and Kusile power stations,” Hawks spokesman Hangwani Mulaudzi said in the statement. “There was apparent gross manipulation of contractual agreements between contractors, Eskom employees and third parties at Kusile.”

Money laundering and corruption

The apprehended people are being investigated for alleged fraud, money laundering and corruption, according to the statement. Kusile, Eskom’s newest facility, remains under construction after years of delays and cost overruns.

The investigations found that contracts were manipulated by senior managers through Eskom’s procurement system, “de-scoping of the contract at Kusile without justification and with conflict of interest by Eskom employees”, the agencies said.

A contract for R745-million was approved in 2015 for the construction of two air-cooled condenser units at Kusile and “it’s alleged that the appointed companies, other related entities and individuals shared approximately R30-million among themselves,” they said. — Reported by Paul Burkhardt, with assistance from Jacqueline Mackenzie, (c) 2019 Bloomberg LP