From: Wessel van Zyl wesselvz@esor.co.

za
Subject: FW: Esor Construction media queries RE Eskom Kusile project
Date: 22 November 2019 at 12:27
To: Pieter-Louis Myburgh plm@dailymaverick.co.za

Hi Pieter-Louis

Thanks for the brief discussion and allowing Esor the opportunity to respond by
extending the deadline.

Esor identified Limpopo as a growth node for construction and strategically increased
the footprint in the Province That started in early 2015, through engagements with and
signing-up Enterprise Development Companies. Opened office in Polokwane in
August 2015 and in spending around 1% of awarded revenue, being R20 million,
during 2016 and 2017 on CSI initiatives that were focussed on Education and that
was mainly spend on Babinatlou to refurbish schools in that Limpopo Province.

Esor did contract Babinatlou to effect improvements to schools in the Limpopo

Province. This was based on subcontract agreements signed and monthly progress
certificates agreed and paid. Through our association at Kusile we were introduced to
Mr Maphoko Hudson Kgomoeswana as he was already involved in school
construction in Limpopo.

Esor was not aware of any relationship between Babinatlou and the mentioned
Eskom employees at the time.

Earlier this year Esor’s attorney and I met with Mr John Neaves, an investigator with
the SIU. He was investigating various individuals in charge of procurement at the
Kusile Power Station including, inter alia, Mr Babinatlou.

It emerged from discussions with Mr Neaves that Mr Babinatlou had collected not only
a sum of R20 million from Esor but significantly more from other contractors on the
same pretext of using the funds to upgrade the same three schools that Esor’s
contribution was intended to be applied towards. It became apparent that Esor was a
victim of a scam. Whilst we had conducted an inspection of at least one of the
schools where various upgrades appeared to be taking place, it subsequently became
clear from further investigation that this “school project” was an elaborate scheme.
We had instructed our attorneys to investigate an action against Mr Babinatlou to
recover the full R20 million contribution made by Esor. This investigation occurred but
was delayed due to the business rescue process which made funds for litigation
particularly limited. The company has now emerged from business rescue and has
again instructed its attorneys to proceed with the action. We anticipate a summons
being served on Babinatlou in the next fourteen days for the recovery of the full R20
million.

Claims process
It is important to explain the claims process that is a contractual requirement within
the FIFIC contract document and the relevance of a sub-clause 3.5 determination.

Sub-Clause 3.5 [Determinations] reads as follows: “Whenever these Conditions

provide that the Engineer shall proceed in accordance with this Sub-Clause 3.5
to agree or determine any matter, the Engineer shall consult with each Party in
an endeavour to reach agreement. If agreement is not achieved, the Engineer
shall make a fair determination in accordance with the Contract, taking due
regard of all relevant circumstances. The Engineer shall give notice to both
Parties of each agreement or determination, with supporting particulars. Each
Party shall give effect to each agreement or determination unless and until
revised under Clause 20.”

Eskom appointed a Third Party Engineer to manage the relationship on-site between
the Employer (Eskom) and the individual Contractors.
Any and all correspondence would be directed to the Engineer who would approve or
request additional information to enable the Engineer to make a determination/award
(3.5 determination). This would only be done once the Engineer is satisfied that he
can substantiate the merits and determine the value of the settlement amount.

In Esor’s case and relevant to the “disruption claims for labour loss”, Esor gave notice,
within the parameters of the Contract, for the Contractor’s entitlement to additional
compensation due to various reasons, not limited to additional works, acceleration,
Employer instructions to work at multiple work faces etc. That notice requires the
Engineer to investigate the merits and make a 3.5 determination.

Esor’s claims were determined by the Resident Engineer (enclosed for

reference and merits) quoting:

“The Resident Engineer carried out a detailed review, which involved extensive
sampling of the costs related to the Contractors’ claim…”
“The review of the Contractor’s cost ledgers confirmed that the Labour costs had
been incurred.”
“Following a forensic auditing of the Contractor’s wage records the Resident Engineer
concluded that ……”.

Total disruption claims submitted by Esor for the Terraces Underground Facilities
contract, including claim for R52 million still being assed, amounted to R412 million of
which only R185 million was determined and paid to date, a loss of R227 million.
Clearly not a position any Contractor could sustain and not in any way compensating
Esor for actual costs which were conceded to have been incurred as quoted from 3.5
determination and clearly not excessive and favourable to Esor. In fact, the non-
resolution and substantial shortfall in compensating Esor for actual losses contributed
to Esor filing for Business Rescue during 2018.

The Engineer followed the process and accessed the claims, called the parties
(Employer and Contractor) to consult and reached agreement, all in terms of the
contractual agreement in place.

I have kept the response to the issues at hand as Esor still has unresolved claims with
Eskom that is in the process of being determined by the Engineer.

Kind Regards,

Wessel van Zyl | CEO

Esor Construction

Facsimile: +2786 504-4082 (fax to email)

Mobile: +2782 498-3518
Phone: +2710 824-7877
Physical: 30 Activia Road, Activia Park, Germiston, 1401
Postal: P.O. Box 6478 Dunswart 1508
Skype: wesselvz@esor.co.za
Skype: wesselvz@esor.co.za
Website: https://www.esor.co.za

This e-mail is subject to an e-mail disclaimer.

From: Pieter-Louis Myburgh

<plm@dailymaverick.co.za<mailto:plm@dailymaverick.co.za>>
Sent: 19 November 2019 2:47 PM
To: Wessel van Zyl
<wesselvz@esor.co.za<mailto:wesselvz@esor.co.za>>
Subject: Esor Construction media queries RE Eskom Kusile project

Dear Mr Van Zyl

I would like to give Esor Construction an opportunity to respond to queries

and provide its comment on certain issues regarding its involvement at
the Eskom Kusile power plant project. These issues will be unpacked in a
Daily Maverick article in the near future.

Kindly provide me with Esor’s responses by or before close of business

[5pm] on Thursday 21 November 2019.

BACKGROUND: The Directorate for Priority Crime Investigation (DPCI,

also known as the Hawks) and the Special Investigating Unit (SIU) are
currently investigating several complaints and issues regarding Eskom’s
Kusile and Medupi power plant projects. My queries regarding Esor’s
involvement at the Kusile project stems from documents submitted to the
Hawks and the SIU.

The documents reveal that, between May 2016 and October 2017, Esor
made several payments to an entity called Babinatlou Business Services,
totalling just over R20-million. It has been established that Babinatlou’s
account was used as a ‘slush fund’ to illicitly enrich top Eskom officials at
Kusile, namely France Hlakudi, Mildred Nyoka and Dianah Motlou.

In light of the above, could Esor please address the following queries:

1. Why did Esor make payments totalling more than R20m to Babinatlou?
What was the basis of these payments, ie were there contracts in place
for “consultancy services” or similar agreements? Who at Esor approved
the payments to and/or agreements between Esor and Babinatlou?

2. Did Esor and/or the Esor employees who approved the Babinatlou
payments and/or agreements at any point know that Babinatlou and/or its
principal director, Mr Maphoko Hudson Kgomoeswana, was in fact
effectively fronting for Eskom’s France Hlakudi, Mildred Nyoka and
Dianah Motlou, and that the payments Esor would make to Babinatlou
was in fact to be illicitly and covertly utilised by the aforementioned Eskom
officials? Did Esor know that Babinatlou and/or Mr Kgomoeswana were
closely related to or linked to Mr Hlakudi and/or his Eskom colleagues?

3. How did Babinatlou and Esor, and the two entities’ respective
principals/directors, become acquainted with one another in the first
place?

4. Hlakudi, Nyoka and Motlou, the three Eskom officials who benefited
 4. Hlakudi, Nyoka and Motlou, the three Eskom officials who benefited
most from the monies companies like Esor flushed into the Babinatlou
account, were all involved in negations between Eskom and Eskom
contractors such as Esor over payments and claims relating to work at the
Kusile power station project. This creates the impression that Esor, and
the other entities that made payments into the Babinatlou account, made
such payments in order to bribe or illicitly gratify Hlakudi and his
colleagues in order to secure favourable outcomes in negations over
outstanding claims for work at Kusile. Was this the case? Did Esor,
through its payments to Babinatlou, effectively bribe Hlakudi and his
Eskom colleagues in order to win their favour in
negations over unpaid claims?

5. Have any Esor employees been internally investigated and/or

disciplined over their dealings with Babinatlou? If so, please elaborate.

6. Has Esor been approached by the Hawks and/or the SIU over the
Babinatlou payments? If so, is Esor providing its cooperation to either or
both of these law-enforcement entities?

Thanks for your consideration. Please feel free to add any comment or
information you deem to be pertinent to this issue.

Regards

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Labour loss Sub-Clause 3 5

claim 3…ent.pdf Agree…14.pdf