Tue, 03 Aug 2021

Asea Brown Boveri (ABB) is being investigated for suspect payments related to work carried out by the Swiss industrial giant for embattled power utility Eskom.

The maker of robotics and power grids "self reported" the incidents to US and South African authorities and expects it may be sanctioned, ABB said alongside third-quarter earnings on Wednesday.

The Zurich-based company also took a writedown against the R2.2bn contract, awarded in 2015 and involving the Kusile power-plant project.

Former acting Eskom CEO Matshela Koko was accused of promising ABB R6.5bn in future contracts if it subcontracted work on Kusile to Impulse International, a company partially owned by his stepdaughter, Koketso Choma, Fin24 previously reported.

ABB was allegedly awarded a R2.2bn control and instrumentation contract for Kusile, and subsequently awarded Impulse R800m in work - despite the fact that Impulse failed ABB's tests for subcontractor appointments twice and did not qualify to do the work, according to a report in the Sunday Times.

Koko denied wrongdoing.

ABB joins a string of international companies to be caught up in graft allegations related to Eskom, which is reliant on state bailouts and seen as the greatest risk to the South African economy.

Meanwhile, German software giant SAP SE is being probed in the US for how it won contracts with South African state companies, while McKinsey & Co. said last year it would repay money unlawfully received while working for Eskom.

Both SAP and McKinsey became involved with third-parties linked to the Gupta family, the trio of brothers who were friends with former President Jacob Zuma and are accused of corruption during his scandal-hit tenure. They and Zuma also deny wrongdoing.

ABB "believes that there may be an unfavorable outcome in one or more of these compliance-related matters," the company said. "It is not possible for the company to make an informed judgment about the possible financial impact."

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