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[2019] ZAGPPHC 185
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Eskom Holdings SOC Limited v McKinsey and Company Africa (Pty) Ltd and Others (22877/2018) [2019] ZAGPPHC 185 (18 June 2019)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED.
CASE NO: 22877/2018
18/6/2019
In
the matter between:
ESKOM
HOLDINGS SOC LIMITED
Applicant
And
MCKINSEY
AND COMPANY AFRICA (PTY) LTD
1
st
Respondent
TRILLIAN
MANAGEMENT CONSULTING (PTY) LTD
2
nd
Respondent
TRILLIAN
CAPITAL PARTNERS (PTY) LTD
3
rd
Respondent
NATIONAL
DIRECTOR OF PUBLIC PROSECUTIONS
4
th
Respondent
MMS
NXUMALO N.O.
5
th
Respondent
JUDGMENT
THE
COURT
Tsoka
J, Baqwa J & Fourie J
INTRODUCTION
[1]
The
new dawn that engulfed the country in 2018, did not miss Eskom
Holdings SOC Limited (Eskom). It brought life to Eskom in that
in
January 2018, Eskom's old and inactive leadership was replaced by new
leadership with new life to undo years of maladministration
and
corruption within the organization.
[2]
In
March 2018, Eskom launched the present application for the review and
setting aside of its unlawful decisions that resulted in
payments
which were in excess of R1,7 billion to McKinsey and Company Africa
(Pty) Ltd, (McKinsey) the first respondent, Trillian
Management
Consulting (Pty) Ltd (TMC), the second respondent and Trillian
Capital Partners (Pty) Ltd (TCP), the third respondent
hereinafter
referred to as "Trillian".
[3]
The
impugned decisions relate to two contracts concluded with McKinsey in
2015 and 2016 respectively, From the two contracts, the
first one
endured for a period of three months (2015) while the other known as
the Master Services Agreement (MSA) (2016) was between
Eskom and
McKinsey and was terminated by agreement. Eskom then made payments to
both McKinsey and Trillian in excess of R1,7 billion.
[4]
In
this application Eskom seeks to review and set aside the two
agreements as well as the resultant payments in terms of s1(c) of
the
Constitution. That this is not a review in terms of the Promotion of
Administration of Justice Act 3 of 2000 (PAJA) is clear.
The
application need not therefore be instituted within a period of 180
days from the date the decision was made. The application
is founded
on the principle of legality in terms of s1 of the Constitution. It
need only be instituted within a reasonable time.
Although McKinsey
and Trillian did not challenge the application on this basis,
something needs to be said on this score.
DELAY
AND CONDONATION
[5]
In
Tasima
[1]
,
the Constitutional Court reasoned
thus -
'... That state functionaries are
entitled to challenge exercises of public power, including their own,
was recognized by the Supreme
Court of Appeal in
Pepcor,
and
endorsed by this Court in
Khumalo.
There it was noted that
"state functionaries are enjoined to uphold and protect [the
Constitution]," and that a court
should be slow to ·allow
procedural obstacles to prevent it from lodging a challenge into the
lawfulness of an exercise
of public power.'
[6]
The
question may be asked whether are there procedural challenges
preventing this court from looking into the lawfulness of the
decisions made by Eskom and the resultant payments flowing therefrom?
In our view, the answer is a resounding no. We say so for
the
following reasons. The new board of Eskom took office in January
2018. It immediately investigated the unlawful conduct of
the
previous board and its decisions and all payments made by it. After
securing the necessary evidence, on 29 March 2018, the
present
application was launched. The launching of the application was made
in spite of the deliberate efforts and obstructions
made by senior
personnel of Eskom in preventing the launching of the present
application.
[7]
The
launching of the application was made notwithstanding the former
Eskom officials who actively sought to prevent Eskom's dealings
with
McKinsey and Trillian being unmasked. Relevant information was hidden
from the new board by senior personnel of Eskom. In
addition, some
senior personnel of Eskom with the necessary and vital information
were either suspended or resigned. Vital and
necessary documents were
either spirited away or destroyed. Despite these senior personnel
receiving legal advice to take swift
legal action to protect Eskom's
assets, these personnel obstructed any attempts to take legal action.
In 2017, once the shenanigans
and the unlawful activities of these
personnel were uncovered, a letter of demand was issued, which,
inexplicably, was withdrawn.
Persons who were concerned about the
unlawful goings-on at Eskom were either punished or suspended.
Notwithstanding the Public
Protector's findings of malfeasance in
Eskom published in October 2016, no action was taken against anybody
to safeguard the interests
of Eskom.
[8]
In
these circumstances it is apt to refer to what this Court (Francis J)
said in
Swifamba
[2]
.
The learned Judge, in condoning a
delay of two and a half years for the review of a decision in terms
of s1 of the Constitution,
said the following -
'In my view state institutions
should not be discouraged from ferreting out and prosecuting
corruption because of delay, particularly
not where there has been
obfuscation and interference by individuals within the institution.'
[9]
Francis J concluded that-
'In my view to hold state
institutions too strictly to the prescribed period, and thereby to
shield the perpetrators, encourages
the commission and concealment of
egregious conduct of the nature found in this matter and would
discourage prosecution by state
institutions. It would also
negatively impact on the administration of justice. There is no
prejudice to the respondent if the
application is heard. The
consequences of refusing to hear the application and, as a result,
allowing the invalid decision to stand
will be borne by the public at
large for many future generations. In my view, the hearing of the
application will advance the principle
of legality and the interests
of justice. This is an appropriate case where the time period to have
brought the application is
extended and should be condoned.'
[10] We
share the same sentiments as Francis J. In our view, though there
appears to be no delay in launching
this application but if regard is
had to the obfuscation and interference by individuals within Eskom;
the egregious conduct of
the senior officials within Eskom; lack of
good faith and fidelity towards the interests of this national asset;
the interests
of justice and the protection of the foundational basis
of the rule of law and constitutionalism demand nothing less than
condoning
the perceived delay in launching the application. To hold
otherwise, in our view, would not only be against the interest of
justice
but would be to perpetrate the mantra that crime and
malfeasance indeed do pay.
[11]
In
the result, the conclusion reached is that the application was
brought within a reasonable time. But any perceived unreasonable
delay which is not prejudicial to the respondents, is accordingly
condoned.
FACTUAL
BACKGROUND
[12]
The
facts in this matter are, in the main, not disputed. They are the
following. In 2015 while Eskom was negotiating the MSA with
McKinsey,
the parties concluded a fixed-fee and fixed term contract. The
purpose of the contract was to govern the relationship
between the
parties pending the conclusion of the MSA.
[13]
Although
the 2015 McKinsey contract was envisaged to be from the effective
date on 1 October 2015, for a period of six months, it
endured only
for a period of three months until January 2016. In spite of its
short-duration McKinsey were remunerated by Eskom
as if the contract
was for the entire period of six months. The conclusion of this
contract was entered into without any tender
process. In terms of
this particular contract, McKinsey had to have a Supply Development &
Localization (SD&L) partner.
But no partner was named in the
contract. Neither were the terms specified in the said contract. What
is clear from the contract,
however, is that Trillian was not a party
to the contract. In the three months until January 2016 inexplicably
McKinsey was paid
over R70 million while Trillian was paid R30,6
million. The latter was paid notwithstanding its CEO's evidence that
at that time
Trillian had only two employees who had done no billable
work for Eskom at all let alone work worth this amount of money.
[14]
During
the negotiations for the MSA, Trillian did not feature at all as
McKinsey's SD&L partner was, during this period, Regiments
Capital. This is common cause. It appears that during this period Mr
Eric Wood, the director of Regiments Capital and his co-director,
Mr
Salim Essa, a close associate of the infamous Gupta family, intended
to abandon Regiments and to form Trillian. It was only
later in 2015
that Trillian was formed. Then Mr Essa became the sole director of
Trillian Holdings which owned 60% of the issued
shares in Trillian
Capital Partners which was the 100% shareholders in Trillian
Management Consulting.
[15]
It was only in March 2016 that Mr Wood
resigned from Regiments Capital and became the Chief Executive
Officer of Trillian Capital
Partners. When Mr Wood left Regiments
Capital, he left with some of the latter's employees who became
Trillian Management Consulting's
employees. The formation of Trillian
Management Consulting in 2015 coincided with Mr Brian Molefe and Mr
Anoj Singh, who at that
time were at Transnet, also leaving the
latter by assuming new senior positions at Eskom with executive
roles.
[16]
Once Mr Molefe and Mr Anoj Singh arrived
at Eskom, senior officials at Eskom who were expected to act in good
faith and in the best
interests of Eskom, started to interact with Mr
Essa, meeting him at his offices at Melrose Arch, Johannesburg and
feeding him
with confidential information belonging to Eskom. Some of
these officials, in particular, Mr Matshela Koko and Mr Anoj Singh
enjoyed
trips to Dubai either paid for or facilitated by Mr Essa
through the Gupta linked businesses. That these events occurred with
the
sole intention of favouring or benefiting Trillian, if not
fraudulent, is quite obvious.
[17]
In
the meantime, McKinsey undertook a risk assessment against Trillian.
On 15 March 2016, once the risk assessment was concluded,
McKinsey
came to the conclusion that it is risky for its global image to do
business with Trillian and in particular for the latter
to be its
SD&L partner in executing its mandate to Eskom. McKinsey
addressed a letter to Mr Wood on behalf of Trillian stating
that -
'Our global risk committee has
reviewed and discussed the proposal to work with Trillian, as our
BBBEE partner on our engagement
with Eskom. As a result of this
discussion we have decided not to proceed with this proposal.'
[18] On 30
March 2016 McKinsey advised Eskom that it will not be commencing any
business relationship with
Trillian. In the letter Eskom was further
advised that any relationship McKinsey had with Trillian had been
terminated and that
the termination has since been communicated to
the latter. Thus, to all the parties, that is to say Eskom, McKinsey
and Trillian,
as from 30 March 2016 everyone knew that McKinsey had
no BBBEE partner in its interaction with Eskom. Notwithstanding this
knowledge,
in April 2016 Trillian was paid the amount of R30,6
million for having done no work for Eskom.
[19]
To buttress the point that Trillian was
favoured by Eskom for no apparent reason, once the latter was alerted
that the former was
no longer a BBBEE partner of McKinsey,
inexplicably and for no justifiable reason at all, the MSA was
terminated. Surprisingly,
Trillian was paid about R600 million by
Eskom, ostensibly on the basis that Trillian was McKinsey's BBBEE
partner and that the
payment was allegedly for damages suffered by
both McKinsey and its BBBEE partner, which by the way is not named,
because of the
early termination of the MSA. As a result of the
settlement agreement reached with Eskom, McKinsey benefited to the
tune of over
R1 billion.
THE
PROCUREMENT LAW FRAMEWORK
[20]
The starting point is the Constitution
and in particular s217(1) which requires that when an organ of state,
such as Eskom, when
contracting for goods or services, must do so "in
accordance with a system that is fair, equitable, transparent,
competitive
and cost effective." As it is clear from the
language of s217(1), its purpose is to eliminate fraud and corruption
in a public
tender process and to secure goods and services, for the
public good, at the best competitive price in the market.
[21]
The provisions of the Public Finance
Management Act (PFMA) promulgated pursuant to s217(1) of the
Constitution, echo the objects
of the Constitution. In terms of PFMA,
Eskom which is listed in Schedule 2 as a public entity, and in
particular s51(1)(a)(ii)
of the PFMA, Eskom's board, as an accounting
authority, must maintain an appropriate procurement and provisioning
system which
is fair, equitable, transparent, competitive and cost
effective. As a result, Eskom developed policies and procedures
collectively
known as "Approved Procurement Framework." In
addition Eskom is bound by the Treasury Regulations and instructions
issued
by the National Treasury under s76 of the PFMA. These
regulations and instructions are in terms of the PFMA form part and
parcel
of the Act.
[22]
In
Allpay1
[3]
,
these layers of the procurement
framework were described as the necessary requirements that must be
complied with. The Constitutional
Court reasoned thus -
'Compliance with the requirements
for a valid tender process, issued in accordance with the
constitutional and legislative procurement
framework, is thus legally
required. These requirements are not merely internal prescripts that
SASSA may disregard at whim. To
hold otherwise would undermine the
demands of equal treatment, transparency and efficiency under the
Constitution... '
[23]
Realizing
that this substantial payment by Eskom was unjustifiable and
indefensible, McKinsey repaid the moneys to Eskom. The repayment
was
later followed by a further payment representing interest earned on
the moneys earlier received from Eskom. McKinsey is no
longer
participating in this matter other than to inform the court that at
no stage did it conclude any contract with Trillian.
Similarly, the
National Director of Public Prosecutions is no longer a party to the
present action. It withdrew its forfeiture
application in terms of
the Prevention of Organized Crime Act (POCA) since the preservation
order has lapsed. From the uncontested
evidence of both Eskom and
McKinsey it is clear that Trillian was not entitled to the payment
received from Eskom.
[24]
In its written submissions and in court
it however persisted in retaining the payments received. Although it
does not challenge
either the 2015 Agreement or the MSA, as its
stance is that it has no knowledge of the internal workings and
requirements at Eskom,
it merely resists to refund the moneys
received insisting that it was entitled to the payments as it had an
agreement with McKinsey.
The only challenge mounted with vigor is
that Eskom's case is based on hearsay and that, on this basis the
matter should be referred
to evidence not only to disprove the
hearsay evidence but to resolve the dispute of fact arising as a
result of McKinsey' denial
that it had an agreement with it which
agreement obliged Eskom to have made the payment to it. What follows
we deal with the issues
of hearsay and the alleged dispute of fact
that must be referred to evidence.
THE
HEARSAY ARGUMENT
[25]
It was contended on behalf of Trillian
that Mr Hadebe, the deponent on behalf of Eskom, had no direct
knowledge of any of the facts
contained in the founding affidavit,
because his appointment was virtually a year after the events
narrated in the founding affidavit.
It has also been pointed out that
Eskom was relying on confirmatory affidavits, various reports,
testimony at a Parliamentary Inquiry
and information gathered from
the
"Guptaleaks".
The
argument is therefore that Eskom has failed to meet the requirements
in
s3
of the
Law of Evidence Amendment Act, 1988
which governs the
admission of hearsay evidence. It was pertinently argued that Eskom
has failed to demonstrate that Trillian would
not be prejudiced by
the admission of such hearsay evidence.
[26]
As a general rule hearsay evidence is
not permitted in affidavits. However, in terms of
s3(1)
of the
Law of
Evidence Amendment Act, No 45 of 1988
a Court has a discretion to
admit hearsay evidence under certain circumstances. It provides as
follows:
'Subject to the provisions of
any other law, hearsay evidence shall not be admitted as evidence at
criminal or civil proceedings,
unless
-
(a)
each party against whom
the evidence is to be adduced agrees to the admission thereof as
evidence at such proceedings;
(b)
the person upon whose
credibility the probative value of such evidence depends, himself
testifies at such proceedings; or
(c)
the Court, having regard
to
-
(i)
the nature of the
proceedings;
(ii)
the nature of the
evidence;
(iii)
the purpose for which the
evidence is tendered;
(iv)
the probative value of the
evidence;
(v)
the reason why the
evidence is not given by the person upon whose credibility the
probative value of such evidence depends;
(vi)
any prejudice to
a
party which the admission of such
evidence might entail;
(vii)
any other factor which
should in the opinion of the Court be taken into account,
is of the opinion that such
evidence should be admitted in the interests of justice.
'
[27]
When
considering the objection raised by Trillian as well as the
provisions of s3(1) of the Act, it is important to bear in mind
what
the main issues between the parties are. Counsel for Eskom submitted
that this case turns on two questions. First, whether
the contracts
concluded between Eskom and McKinsey, and all payments flowing from
those contracts, are unlawful and invalid and
stand to be set aside.
Second, whether it is just and equitable to order Trillian to return
the money it unlawfully received from
Eskom.
[28]
Counsel
for Eskom has also pointed out that the first question is effectively
unopposed. McKinsey no longer seeks to defend the
Master Services
Agreement, the 2015 McKinsey contract and the settlement agreement
reached between Eskom and McKinsey. As a matter
of fact, in argument
Trillian did not seriously dispute the allegation that the said
contracts are unlawful.
[29]
In
argument counsel for Trillian also referred to certain main issues
between the parties. It was put as follows:
'On the assumption that one or
more of the grounds of the rule is good and would result in the
setting aside of the two McKinsey
contracts, the question is what
principles govern the claim for repayment from McKinsey and Trillian.
The Constitutions gives the
Courts
a
discretion to
order remedial relief that is just and equitable.
'
[30]
Counsel for Eskom pointed out that,
while Trillian continues to oppose the application, it does not
meaningfully dispute the three
primary grounds to review and set
aside all the impugned decisions. These grounds are:
(a)
the
Master Services Agreement and the 2015 McKinsey contract were
concluded without any open and competitive tender process in breach
of s217(1) of the Constitution, the
Public Finance Management Act 1
of 1999
and Eskom's procurement policies;
(b)
both
contracts were concluded in violation of National Treasury
Instruction No 1 of 2013/2014 which imposes strict requirements
for
the procurement of management consulting services; and
(c)
the
conclusion of the Master Services Agreement without notice to or
approval from the Minister of Public Enterprises was in breach
of
Eskom's Significance and Materiality Framework.
[31]
The deponent on behalf of Trillian made
it clear, from the outset, that Trillian has no knowledge of Eskom's
internal processes.
The explanation given reads as follows:
'At the outset, it is incumbent
upon me to make it clear that the second and third respondents Jack
direct knowledge of what precisely
transpired in the corridors of
Eskom regarding its decision-making processes, save for what was
intermittently communicated to
them by the first respondent.
Accordingly, in the nature of things, I
am
unable to deal
comprehensively with
a
large number of
the allegations in the founding affidavit.'
[32]
The evidence with regard to payments
made to Trillian can be summarised as follows:
(a)
On
15 March 2016 McKinsey wrote a letter to Trillian titled
"Termination
of Interactions between McKinsey and the Trillian Group in respect of
the Top Consultants Program at Eskom"
in
terms whereof Trillian was informed that McKinsey was no longer
prepared to work with Trillian. This letter is part of the record
before us;
(b)
On
30 March 2016 McKinsey sent a letter to Eskom informing it that it
would not be concluding any agreement with Trillian. In terms
of this
letter it was clearly stated that McKinsey would not be in a position
"to commence
a
relationship with Trillian"
and
"interactions with Trillian have
now been terminated with confirmation having been sent to Trillian".
This letter is also part of the
proceedings before us;
(c)
It
is then alleged that, despite the absence of a contract, Trillian
representatives continued to attend meetings of the steering
committee established under the Master Services Agreement. In order
to substantiate this allegation reference is made to the steering
committee meeting minutes indicating attendance by Trillian
representatives on various dates. These minutes have also been
included
in the papers before us;
(d)
It
is also alleged that certain improper and corrupt dealings took place
between Trillian representatives and Eskom officials. To
substantiate
this allegation reference is made to private meetings which took
place between Mr Koko (representing Eskom) and Mr
Essa (representing
Trillian) regarding Trillian's work at Eskom. As proof of this
relationship extracts of Mr Koko's testimony
in Parliament regarding
his visits to Mr Essa, are included in the papers before us;
(e)
It
is then explained by the deponent on behalf of Eskom which payments
were made to McKinsey and Trillian following certain written
submissions to the board tender committee. These submissions are also
included in the papers before us;
(f)
Reference
is also made to a resolution of the board tender committee approving
a total settlement of R1,8 billion,
"inclusive
of payment to the BBBEE partner"
and
a further approved cash payment of R800 million
"to
cover the utilisation of the consultant's resources to date".
This resolution is also included in
the papers before us.
[33]
The
deponent on behalf of Eskom also explained the problems he had to
face in putting together the jigsaw puzzle. They are,
inter
alia,
the following:
(a)
it
appears that deliberate attempts were made by senior Eskom officials
to disguise the true nature of certain decisions and to
hide relevant
information;
(b)
many
of the key role-players within Eskom have in the meantime departed;
(c)
various
Eskom executives who had been implicated in maladministration,
irregular payments and allegations of corruption have tendered
their
resignation or had their employment terminated.
[34]
Taking
into account the nature of these proceedings, the nature of the
evidence referred to above and the purpose for which the
evidence is
tendered, i.e. to obtain an order as prayed for, it appears to us
that the evidence referred to above is reliable.
First, Trillian has
no knowledge of Eskom's internal processes and appears to be unable
to seriously dispute, not only the allegation
that the said contracts
are unlawful, but also the evidence referred to above. Second, taking
into account the nature of the evidence,
it appears that the facts
are mainly derived from contemporaneous documents such as emails, an
attendance register and minutes
of meetings. We have no reason to
doubt the veracity of these documents and no evidence was presented
to indicate that these documents
have been falsified.
[35]
Also
taking into account the nature of the evidence, the probative value
or reliability thereof must be considered. This evidence
is not only
relevant, but it appears to be also the best evidence available.
Furthermore, we also have to take into account the
problems faced by
Eskom in presenting the relevant evidence. Many of the key
role-players within Eskom have in the meantime departed.
Those
executives who had been implicated in maladministration and irregular
payments have tendered their resignation or had their
employment
terminated. It would not only be unrealistic but also unreasonable to
expect Eskom to make use of their support in presenting
its evidence.
[36]
It
was argued that Eskom has failed to demonstrate that Trillian would
not be prejudiced by the admission of all this evidence.
Trillian has
already indicated that it has no knowledge of Eskom's internal
processes. The allegation that the Master Services
Agreement and the
2015 McKinsey contract were concluded without any open and
competitive tender process can easily be verified
by a respondent
such as Trillian. An open and competitive tender process does not
take place in secret. It is open for the public
to consider. There
can certainly be no prejudice for Trillian taking into account these
considerations. Furthermore, the documents
relied upon by Eskom and
annexed to the papers before us have provided Trillian with ample
opportunity to investigate the reliability
of such evidence and to
demonstrate why these documents should not be accepted as reliable.
In this regard we also take into account
that the issues between
Eskom and Trillian is of significant public interest.
[37]
Taking
into account all the facts and circumstances referred to above, we
are satisfied that the evidence objected to by Trillian
should be
admitted in the interests of justice and therefore the objection
raised by Trillian should be dismissed.
[38]
In
Swifambo
[4]
,
Francis J in admitting hearsay
evidence in similar circumstances as in the present matter reasoned
that-
'...Hearsay will generally be more
readily admitted in application proceedings than n trial proceedings.
This general proposition
applies more so in review proceedings where
the litigant has no procedural election and must bring the review by
way of application.
It is common cause in tender review proceedings
that the members of the public authority who feature in the record of
the proceedings
may not be before court and may not depose to
confirmatory affidavits. It cannot be suggested that all the
information in the record
relating to the decision falls to be
disregarded because it is hearsay... '
[39]
Like
the Supreme Court of Appeal
[5]
,
we also agree with Francis J's reasoning in
Swifambo.
It will indeed be foolhardy to
expect the very persons who either acted unlawfully or fraudulently
to depose to confirmatory affidavits.
In addition, the interests of
justice would not only be frustrated by the non-admission of the
evidence on the basis that such
evidence is hearsay, but this
rejection of such evidence would benefit the wrong-doers. To do so
would not only cover malfeasance
perpetrated by persons who displayed
lack of fidelity to an organ of the state such as Eskom but would be
to pervert the rule of
law the very basis of our constitutional
state.
REFERRAL
TO ORAL EVIDENCE
[40]
Trillian
seeks to make out a case for this application to be referred to oral
evidence in order to afford them an opportunity to
cross-examine
witnesses in a trial. Its contention is based on issues on which it
submits are disputes of facts. Before making
reference to those
issues it is necessary to give a brief exposition of the legal
principles applicable in this regard.
[41]
The
approach of our courts to the determination of whether a dispute of
fact exists or not is summarised in The Civil Practice of
the High
Courts of South Africa (Herbstein and Winsen) 5
th
Edition at p294 where the following is stated:
'The
determination of the question of whether
a
real and genuine dispute of fact
exists is
a
question
of fact for the court to decide. The respondent's allegation of the
existence of such
a
dispute
is not conclusive. 'In every case the court must.
.
..
see
whether in truth there is
a
real issue of
fact which cannot be satisfactorily determined without the aid of
oral evidence.' If this were not done, the respondent
might be able
to raise fictitious issues of fact and thus delay the hearing of the
matter to the prejudice of the applicant
[6]
At
p296 the learned authors continue:
'Once the absence of
a
bona fide dispute
on material facts is apparent, the applicant is entitled as of right
to have the claim enforced by the more expeditious
and less expensive
method of motion proceedings, and the court has no discretion to
refuse to entertain such proceedings notwithstanding
the loss to
a
respondent of
some tactical advantage that he might have enjoyed in the event of
the institution of
a
trial action.'
[7]
[42]
It
is trite that a dispute of fact arises when a respondent denies
material allegations made by deponents on applicant's behalf
and
produces positive evidence to the contrary.
However, in
Soffiantini
[8]
Price JP said:
'If by
a
mere denial in
general terms
a
respondent can
defeat or delay an applicant who comes to Court on motion, then
motion proceedings are worthless, for
a
respondent can
always defeat or defy
a
petitioner by
such
a
device.
It is necessary to make
a
robust,
common-cause approach to
a
dispute on motion
as otherwise the effective functioning of the Court can be hamstrung
and circumvented by the most simple and blatant
stratagem. The Court
must not hesitate to decide an issue of fact on affidavit merely
because it may be difficult to do so. Justice
can be defeated or
seriously impeded and delayed by an over-fastidious approach to a
dispute raised in affidavits.'
[43]
ln
Plascon-Evans Ltd
[9]
the Appellate Division pronounced on
the issue of disputes of fact in motion proceedings as follows:
'[W]here in proceedings on
notice of motion disputes of fact have arisen on the affidavits, a
final order, where it be an interdict
or some other form of relief,
may be granted if those facts averred in the applicant's affidavit
which have been admitted by the
respondent together with the facts
alleged by the respondent, justify such an order. The power of the
court to give such final
relief on the papers before it is, however,
not confined to such a situation. In certain instances the denial by
respondent of
a fact alleged by the applicant may not be such as to
raise a real, genuine or bona fide dispute of fact.
.
. .
If in such a
case the respondent has not availed himself of his right to apply for
the deponents concerned to be called for cross-examination
under Rule
6(5) (g) of the Uniform Rules of Court.
.
. .
and the Court
is satisfied as to the inherent credibility of the applicant's
factual averment, it may proceed on the basis of thecorrectness
thereof and include this fact among those upon which it determines
whether the applicant is entitled to the final relief he seeks.
.
..'
[44]
This
is an application for review and the setting aside of the two
contracts and the subsequent payments made as a result thereof.
it is
trite that a litigant in such proceedings has no procedural election
and must bring the review by way of application. To
suggest,
therefore, as Trillian does, that Eskom ought to have foreseen or
ought to have reasonably foreseen the disputes of facts
and proceeded
differently misses that procedural point.
[45]
In seeking referral to oral evidence
Trillian makes refererce to a number of what it refers to as material
disputes of fact which
we must now examine.
[46]
The subcontract
46.1
In the founding affidavit Eskom
states
'when the Master Services
Agreement was purportedly concluded in January 2016, it did not
include any 'SD and L Annexure' setting
out the terms of Mckinsey's
relationships with Trillian. Trillian was also not mentioned in any
other portion of the agreement.
This omission
of
the SD and L
Annexure appears to be
a
result of the
fact that McKinsey and Trillian could not reach agreement'.
It continues:
'McKinsey was unable to
conclude any agreement with Trillian until Trillian passed McKinsey's
internal due diligence checks (known
as
a
'global risk
review.' Trillian failed these checks.'
Finally Eskom concludes:
'Following McKinsey's letter,
and to the best of my knowledge, no contract or subcontract was ever
concluded between McKinsey and
Trillian. There is no evidence that
Eskom concluded any contract with Trillian directly.
Ms Mothepu confirms that
Trillian was well aware of the fact that there were no contracts in
place between Trillian and McKinsey
or Trillian and Eskom'.
Notably
Ms Mothepu is Trillian's former Chief Financial Officer (CFO).
46.2
What is notable also is that Trillian
does not dispute the non-existence of a sub-contract when it states:
'Although it was contemplated
that a written sub-contract would be signed, this did not eventuate,
despite an exchange of drafts.
This process began with an email sent
by Benedict Phiri to Eric Wood on 30 November 2015 ('EW 11(1)? and
culminated with the marked-up
version sent by Clive Angel to Vikas
Sagar on 22 February 2016 ('EW 11(2)J. However, the parties did not
intend to make that agreement
dependant on this formality, as is
evidenced by the fact that TMC rendered the required services to
McKinsey for the benefit
of
Eskom and also
paid its share, without McKinsey ever objecting'.
46.3
Also pertinent regarding the
sub-contract is McKinsey's response in its answering affidavit when
it said:
'In the result, after only
a
few weeks of work
on
the
three-year long Turnaround Programme and as
a
consequence of
Trillian's failure to supply the repeatedly requested information,
McKinsey concluded that Trillian did not satisfy
McKinsey's due
diligence requirements and McKinsey decided not enter into
a
supplier
development partnership with Trillian. Eskom's allegations in its
founding affidavit to this effect, is correct'.
46.4
Evidently from the quoted paragraphs it
is quite apparent that Eskom and the two respondents, namely Trillian
and McKinsey, are
in agreement that no sub-contract came into
existence between them. It can hardly therefore be argued that in
these circumstances
a dispute of fact arises let alone a genuine one
between the parties.
[47]
The existence of a corrupt
relationship between Eskom and Trillian
47.1
Trillian also submits that there is a
dispute of fact regarding the corrupt relationship which Eskom
alleges existed between Trillian
and Eskom officials.
In this regard Eskom states
(inter
alia) in its founding affidavit:
'There is further evidence that
Mr Koko and Mr Singh enjoyed trips to Dubai, paid for or otherwise
facilitated by Mr Essa and his
associates.
The emails sourced from Eskom's
server show that in December 2015 Mr Essa or his associates assisted
Mr Koko in obtaining visas
for his trip to Dubai in January 2016.
Those emails were previously attached to annexure PH1.
Information in the public
domain further records that Mr Koko's hotel accommodation and other
expenses in Dubai were paid for by
Sahara Computers,
a
company owned by
the Gupta family. Investigative reports on this trip are attached as
Annexure PH17 and PH18. Mr Koko offered to
provide proof to
Parliament that this was not the case but to date all that he has
produced is an 'invoice' from The Oberoi Hotel
in Dubai indicating
that the invoice was paid. The source of the payment has never been
explained. A copy of this invoice is attached
as Annexure PH20.
The disciplinary charges put to
Mr Koko in January 2018 included his failure to declare these
conflicts of interest and these business
gratuities in terms of
Eskom's Conflict of Interest Policy. These charges are attached as
Annexure PH21. On 16 February 2018, Mr
Koko resigned with immediate
effect half an hour into his disciplinary hearing'.
47.2
Eskom expands on the corruption link
between Trillian, Essa and the Gupta family when it says
'As I have mentioned, Mr Essa
was the majority shareholder and a director of Trillian Capital
Partners. I attach Mr Essa's biography
as
well as relevant
extracts from a CIPC Director Search, as Annexure PH14 and PH15. Mr
Essa
is
widely
known to be a close associate of the Gupta family. Annexure PH15
reflects Mr Essa's role
as
a director of VR
Laser, another company with close links to the Gupta family.
Mr Koko has also admitted that
he attended private meetings with Mr Essa regarding Trillian's work
at Eskom. In this regard, I attach
relevant extracts of Mr Koko's
testimony in Parliament as Annexure PH16.
.
.'
47.3
Trillian's
response regarding Eskom's corruption allegations is as follows:
'I
wish to make it perfectly clear that, to my knowledge, the Eskom
decisions were not brought about by any corrupt dealings on
the part
of TMC or any of its representatives. The founding affidavit, I
am
advised, makes out no case to the
contrary and is replete with hearsay and irrelevant statements,
generalised accusations and aspersions
and indeed pure conjuncture.
The record, if anything shows a process internal to Eskom that may or
may not bear scrutiny from perspective
of the principle of legality,
but which is inconsistent with corruption or bias'.
47.4
Eskom does make a concession which might
seem to an extent to support the above averment by Trillian when it
says:
'Eskom accepts that it has no
evidence that Trillian improperly participated in any corruption or
bribery relating to the awarding
of either of the contacts to
McKinsey or to Trillian's appointment as sub-contractor. This may be
seen from its acceptance of Trillian's
allegation that there is no
evidence that Trillian introduced McKinsey to Eskom. Rather, Eskom
says that this is 'beside the point.
'
Its case is that, once the
contracts with McKinsey were in place, Eskom officials used those
contracts systematically as a convenient
vehicle to benefit Trillian.
That, however is a different
matter entirely in the context of allegations of corruption.
As far
as
the case goes, is
that there was 'preferential treatment' accorded to Trillian in
relation to the contracts themselves, there is
similarly, no direct,
not even indirect, evidence of corruption. Once again, it must follow
that if any treatment was 'preferential'
to Trillian, it must
perforce also have been 'preferential' to McKinsey'.
What is apparent from the above is
that the corrupt relationship that existed between Essa and senior
Eskom officials is not disputed
by Trillian. Its lack of knowledge
thereof does not create a dispute of fact. It is common cause that it
is the same officials
who fast-tracked and facilitated payments to
Trillian when there was neither factual nor legal basis to do so. It
is also common
cause that Mr Essa was a 60% shareholder of Trillian
Capital Partners, the third respondent. We therefore conclude that no
dispute
of fact arises on this issue.
[48]
Work
Performance and Invoices submitted
48.1
To illustrate the nebulous nature of
Trillian's claims regarding the nature of the work performed, Eskom
references 'work' performed
at Majuba Power Station as follows:
'Mr Steyn recalls one Indian
national who could have been from E Gateway, he recalls that his name
was Mr Saha. He does not recall
Mr Singh.
Mr Steyn recalls that Mr Saha
was on site at Majuba Power Station for less than
a
month in
approximately January or February 2016. Mr Saha was not an English
first language speaker. He was an Indian national. Mr
Steyn reports
that this created
a
language barrier
and he struggled to communicate with the staff on site, including Mr
Steyn. As
a
result of the
language barrier, and the fact that Eskom had sufficiently qualified
and experienced engineers and technical personnel
on site, Mr Saha
was not considered by Mr Steyn to be of value or assistance and
within
a
month
of his arrival, Mr Steyn asked that Mr Saha be removed from the
Project.
Wood makes several improbable
statements in the Trillian Answering Affidavit regarding the
'technical experience' that the individual/s
from E Gateway
apparently provided at Majuba Power Station 'providing most of the
engineering clarifications on how sections of
the Thermal Power Plant
operated' (Trillian AA, para 166, pp1224). Mr Steyn confirms that one
of the appointees under the Master
Services Agreement were technical
experts, that Eskom has no need of clarification of how
a
Thermal Power
Plant works, and that Eskom was not provided with such services by Mr
Saha,
McKinsey
or any other party'.
Eskom continues:
'Ms Goodson confirms that as
the CEO of TMC she knew only of the involvement at Majuba Power
Station of the following TMC employees:
Mr Jasher Bharath (“Mr
Bharath”) was
a
Trillian employee
on the Majuba Power Station Generation work stream who started on 1
March 2016 and Mr Ben Barnard ("Mr Barnard'),
later the CEO of
TMC
,
would
also attend weekly meetings at Majuba Power Station.
.
.
Mr Bharath's role at Majuba
Power Station appears to be the high point of TMC's claims of work
performed under the Master Services
Agreement. All that is alleged is
that Mr Bharath had some success in arranging meetings for the Eskom
Majuba team (Annexure EW
30(1), pp 1906). This limited work could
hardly justify the more than R100 million fee'.
48.2
Trillian alleges that there are disputes
arising out of the detail and nature of the work performed in that
there are several possibilities
contained in Eskom's submissions
namely, there was no work done or there was some initial work or
that, according to Trillian at
least, there was work from which Eskom
derived
value,
hence
the invoices which were submitted by Trillian and which Eskom
considers either fraudulent, inflated or unlawful. Eskom further
submits that the invoices were not properly substantiated and refers
(inter alia)
to
the following example:
"On 10 August 2016,
Trillian sent an invoice for R122, 208, 000.00 (including VAT),
addressed to Ms Maya Bhana (General Manager
of Mr Anoj Singh's
office) ('the MC02 August invoice?. This invoice was signed on 11
August 2016 by Mr Govender and Mr Mabelane.
It appears as Item 137 of
the Record Bundle. This invoice provided scant details of the basis
for this claim. It merely stated:
"Professional fees:
Financial Advisory for the following Eskom Initiatives:
-
Project Surge
-
Private Sector
Participation
-
Online Vending
Services
-
Hitachi
-
Duvha
-
Short term
funding facility
-
Long term funding
facility'
48.3
Over
and
above the content of the Invoices Eskom alleges that "a
significant number of irregularities in the manner in which payments
were “approved for those Trillian invoices” in that they
were made without any contractual basis resulting in Eskom
officials
having to create fictitious contracts in order to facilitate
payments. This was the trend with regard to all the invoices
submitted by Trillian to Eskom. As will appear
(infra)
Trillian admitted that the time
sheets in support of invoices MC02 and MC03 were fabricated. This was
also confirmed by Ms Mothepu.
Corporate
Plan Project
[49]
Trillian
submits that there is a dispute regarding the Corporate Plan Project
but Eskom's version is that the conclusion of the
project was not
legitimate in that it was procured on a sole source basis without any
tender process being followed and that it
was therefore not in
compliance with Eskom's internal prescripts. This matter is dealt
with in detail as part of the grounds of
review. It does not give
rise to any dispute of fact.
Trillian's
BBBEE Status
[50]
Trillian also claims that there is sufficient dispute around the
issue of Trillian's BBBEE status to
justify a referral to oral
evidence. This is despite the following evidence in Eskom's founding
affidavit:
'As confirmed by Ms Goodson, at
the time that Trillian purportedly submitted its invoice on 31
January 2016, it had only two employees.
These employees did not
perform any work for Eskom during this period, and Trillian could not
have delivered the work for which
it submitted its invoices.
The payment was apparently
claimed on the basis that Trillian was
a
BBBEE Partner/
Supporter Development Partner to McKinsey under the 2015 contract.
However, at the time payment was claimed and made
Trillian had no
black ownership, and
was
registered
as
such on
Eskom's
Supplier Database
based on its confirmation of shareholding provided on 1 April 2016. I
refer to Annexure PH33 (also Item 110 of
the Record Bundle),
previously described above.
Trillian made these
representations knowing them to be false and with the intention to
defraud Eskom."
Ms Goodson is a former Chief
Executive Officer of TMC and she derives information from the time
she occupied that position with
TMC but Trillian does not accept her
evidence.
Eskom responds as follows:
'Wood asserts (at para 37 of
the Trillian Answering Affidavit) that TMC had a 60% BEE ownership at
all material times. This is apparently
based on a shareholding held
by Mr Essa. Wood, however, fails to provide any evidence of actual
shareholding by Mr Essa nor does
he identify precisely when Mr Essa
became
a
shareholder of
TMC and
he
provides no evidence of B-BBEE certification'.
(our emphasis)
[51]
Notably, and besides, any
apparent conflict between Ms Goodson and Wood in their respective
affidavits the version of Ms Goodson
has remained unchanged. It is
therefore not clear how this issue can serve or be asserted as a
basis for referral to oral evidence.
[52]
The main issue for determination
by this court is whether the contracts concluded between Eskom and
McKinsey and the payments flowing
therefrom are unlawful and invalid
and stand to be set aside. This issue has been settled between Eskom
and McKinsey with the latter
accepting such unlawfulness and
invalidity and repaying all the monies including the interest earned
flowing from the impugned
contracts.
[53] It is
also common cause that Trillian makes no submission to refute Eskom's
grounds of review. Just
to recap, Eskom's application is the review
and setting aside of the two contracts as well as all the subsequent
payments flowing
therefrom. The grounds for the application have been
comprehensively dealt with elsewhere in this judgment but they are:
53.1
No open and competitive tendering
processes
Eskom was by law (s 217(1) of the
Constitution) required to ensure fair competitive and cost effective
procurement
53.2
Breaches of the National Treasury
Institution 1 of 2013/ 2014
This Treasury instruction was to
ensure fiscal prudence in regard to resources generally but more
particularly the public spend
on external consultants.
53.3
Breaches of the Significance and
Materiality Framework (SMF)
The SMF was meant to give the
Minister of Public Enterprises an enhanced capacity to exercise
oversight over the affairs of an entity
especially regarding
contracts above the one-and-a-half billion Rand threshold. A breach
of the SMF would result in the invalidation
of a tender. See
PRASA
v Swifambo Rail Agency
(Pty) Ltd
2017 (6) SA 223
GJ at para 70
[54]
Trillian adopts a stance where the issues it identifies as giving
rise to disputes of fact ought to
be treated in isolation as matters
not relevant to or affected by the above grounds of review, the
so-called "Trillian Bubble."
It seeks to achieve this goal
despite the fact that its purported relationship with McKinsey was
brought in writing to a decisive
end in March 2016. It further seeks
to achieve this goal despite its explicit admission that there was no
contract between itself
and McKinsey on the one hand and Eskom on the
other. It also seeks to achieve this goal with the full knowledge
that the 2015 McKinsey
contract, the MSA agreement and the settlement
agreement were unlawful.
'No
referral' reasons
[55]
There
are a number of reasons which emerge from the evidence on the basis
of which this matter need not be referred to oral evidence.
We
discuss these
seriatim.
55.1
There
was no basis in law for payments to be made to Trillian absent a
contractual relationship between Eskom and Trillian.
55.2
Payments
were made as a result of corrupt dealings between Eskom officials and
Trillian representatives. Objective evidence demonstrates
how Eskom
officials had to create fictitious contracts in order to "legitimise"
the payments through the Eskom payroll
system.
55.3
The
Trillian invoices were either false or with inflated claims of work
allegedly performed for Eskom. The invoices presented were
fraudulent
and unlawful.
55.4
The
'Trillian Bubble' which is encapsulated in the following Trillian
statement:
'Eskom's
case
for the
illegality of the McKinsey contracts does not extend to Trillian's
contracts with McKinsey. It is not, therefore, necessary
for Trillian
to engage directly with the grounds of review with the notable
exception of the case for corruption on its part'.
The attempt to insulate Eskom's
payments cannot stand scrutiny due to the undisputed fact that the
payments were all made on the
assumption that these were valid
contracts with McKinsey. The whole basis of referral to oral evidence
is thus swept away; whether
it refers to a subcontract, work
performed, invoices, corruption or whatever head Trillian may conjure
up to try and refer the
matter to trial, the referral submission is
not sustainable.
This is evident, for example when
one makes reference to Trillian's claims to entitlement to 30% "gain
share" which was
supposedly flowing from the MSA and Settlement
agreements which required McKinsey to have an SD and L Partner and
permitted risk-based
termination. This is also evident upon a reading
of the final settlement agreement which reflected the payments to
McKinsey and
Trillian as
"in lieu of all claims by McKinsey
and its BBBEE Partner for services rendered in terms of the [Master
Services Agreement]."
55.5
It is established law that where an
administrative act is declared invalid and set aside, any
consequential acts relying on the
prior act are rendered invalid. In
Kirland Investments (Pty) Ltd
[10]
the Constitutional Court was
explicit in stating that
'[A]cts performed on the basis
of the validity of
a
prior act are
themselves invalid if and when the first decision is set aside'.
It therefore goes without saying
that all payments to Trillian were similarly rendered unlawful and
invalid. Referral to evidence
in these circumstances would be an
exercise in futility.
55.6
Any subcontracting relationship which
may have existed between Trillian and McKinsey could not have
survived the undisputed termination
of the contract by McKinsey in
March 2016.
55.7
In its quest to prove or demonstrate the
"Trillian Bubble", Trillian seeks to suggest through the
so-called dispute of
facts (supra) that beyond all the terminated
contracts, there existed a tacit agreement arising out of attendance
of meetings and
alleged work with McKinsey.
This issue was addressed in
Metgovis
[11]
when the
Constitutional Court discussed the test for a tacit contract and
said:
'The test to be applied is
whether the party alleging the existence of the tacit contract "has
shown on
a
balance of
probabilities unequivocal conduct" on the part of the other
party that proves that it intended to enter into
a
contract with
it.'
The uncontested evidence of the
due diligence test of Trillian by McKinsey and the subsequent
unequivocal termination of any relationship
with Trillian shows
McKinsey's intention to distance itself from Trillian. To suggest
otherwise as Trillian tries to do is simply
disingenuous.
55.8
The payments to Trillian by Eskom had
neither a contractual nor legal basis. The 9 February 2016 letter
from McKinsey was written
with reference to the 2015 McKinsey
contract. It had a specific condition, namely that Eskom could only
make direct payments to
Trillian upon approval by McKinsey. That
condition was never satisfied before payments started flowing from
Eskom to Trillian.
None of the invoices submitted by Trillian was
approved by McKinsey.
[56]
Corruption is the only issue that Trillian seems, even though feebly,
to put in issue. Upon examination
of the undisputed facts it seems
that even on this aspect Trillian fails to make out a case. One of
the events that stand out in
the corrupt collaboration between
Trillian and Eskom officials was the all expenses paid trips enjoyed
by Eskom's senior officials,
Koko and Anoj Singh, to Dubai which were
arranged by Mr Essa and Sahara, a Gupta-owned company.
It is not disputed by Trillian
that Mr Essa had a direct interest in Trillian's affairs. At best,
all that Trillian's Wood could
do was to disclaim any knowledge of
these affairs which amounts to a bare denial. No affidavit was filed
by Mr Essa who was alleged
by Wood to have fled to Dubai.
[57] Trillian claims
that
'Even assuming the correctness
of these a/legations, they do not assist Eskom.
.
.
in essence the allegations
concerning Messrs Koko and Singh do not demonstrate
a
causal
nexus between their alleged receipt of 'gratification' and the
conclusion of any agreement with McKinsey or the appointment
of
McKinsey (or indeed Trillian as subcontractor)'.
What
Trillian states in this excerpt, is far removed from the truth as the
following facts demonstrate:
57.1
As
Chief Financial Officer, Singh was a signatory to the Board Tender
Committee submissions on 8 August 2016 which motivated the
R1,8
billion settlement "inclusive of payment to BBBEE partner"
which partner is not identified.
57.2
Trillian
sent invoices directly to Singh as what appeared to be Trillian's
contact person at Eskom.
57.3
The
Board Tender Committee's December 2016 resolution appointed Singh,
Koko and Mabelane to negotiate the final settlement which
included
payments to the "BBBEE partner''
57.4
On
6 July 2015 Koko was tasked to conduct negotiations as Group
Executive: Technology and Commercial to conduct negotiations of
the
MSA.
57.5
Koko
and Singh sought approval of the 2015 McKinsey contract from the
Eskom Board.
Evidently there is a consistent
pattern in the behaviour of these senior officials which at the end
of the day benefitted Trillian.
Another theme in the conduct of these
officials was that whenever invoices landed at Eskom's desk they were
settled with alacrity
and with a total and unseemly disregard for
Eskom's internal prescripts regarding payment approvals.
The objective evidence presented
by Eskom demonstrates more than just a nexus between Eskom and
Trillian's beneficiation but speaks
to a theme of consistently
corrupt behaviour.
57.6
Invoices
Trillian admits that the "time
and materials" invoices (MC02 and MC03) submitted to Eskom were
"reconstructed."
This confirmed Ms Mothepu's version that
these invoices were fabricated. These are the invoices on the basis
of which Trillian
submitted were proof of work performed and costs
specifically incurred.
57.7
Ms
Mothepu alleged that all financial advisory work was conducted "at
risk" by Trillian, a fact which was admitted by
Wood in an
affidavit in his dispute with his Regiments partners. Unequivocally
Wood states in his supplementary affidavit as follows:
'384 My statement in the
litigation against Regiments in relation to the events pertaining to
the work done by Trillian at McKinsey's
instance for Eskom prior to
February 2016 at which stage the contract was entirely risk-based
relationship [sic]. There is no contradiction
there'.
[58]
Demonstrably, the invoices on the undisputed facts were fabricated,
fraudulent and unlawful. In the
circumstances, not only was Trillian
not entitled to payment on the basis thereof and, with equal force,
this evidence cannot serve
as a basis for a referral to evidence.
[59]
The
Oliver Wyman Marsh Report (OWM)
This report served as the only
report which provided independent analysis of the events surrounding
Eskom, McKinsey and Trillian
regarding the Master Services Agreement.
The report was highly critical regarding the 'gain share' calculation
of the work performed
by Trillian at Majuba Power Station.
The report was critical also of
the negotiation processes which led to the payments subsequently made
in that they were not only
poorly documented but also that they
lacked transparency.
The OWM Final Report advised
against any payments to McKinsey and Trillian pending a review of the
value add. Most significantly,
the OWM findings were never disputed
by Trillian. The OWM findings therefore remain uncontested.
[60]
In
conclusion, an overall assessment of objective evidence presented by
both Eskom and Trillian draws one to the inescapable result
that the
issues raised by Trillian of disputes of fact are in essence
fictitious issues of fact which are aimed at delaying the
hearing of
the matter and cause prejudice to Eskom. The issues have been dealt
with in detail in order to demonstrate the absence
of a genuine and
bona fide
dispute
on the material facts. In
Soffiantini
(supra) it was stated that
"the
Court must not hesitate to decide an issue of fact on affidavit
merely because it may be difficult to do
so."
In casu,
almost
without exception it has not been difficult to decide whether or not
there were disputes of fact. The decision on the matters
raised has
been at times made easier by the admissions by Trillian which have
bolstered the view that there are no disputes of
fact.
Most significant of these are the
statement made by Wood in a supplementary affidavit to this effect:
'63 Accordingly, on or about 15
December 2015 and, in circumstances I set out in detail below,
McKinsey and TMC concluded
a
partly oral,
partly tacit and partly written agreement, the material terms of
which were
63.1 .. .
63.2 .. .
63.3 .. .
The contract would be
coterminous with the contract between Eskom and McKinsey'.
Evidently, the contents of
paragraph 63.8 when considered with the fact that Trillian does not
contest the three grounds of
review by Eskom dispel whatever doubt
there may be that a referral to evidence is absolutely not required
in the present case
and that it would only serve to delay the
inevitable and a waste of time.
From Trillian' own version it is
patently clear that whatever subcontract there may have been, it is
not sequested from the
main contract. If the main contract is set
aside, the subcontract must also fall.
What emerges from the evidence
is that the subcontract is not the subject of a genuine dispute of
fact. The issue of a genuine
dispute of fact was discussed in
SARFU
[12]
when the
Constitutional Court said the following:
'[235] It is trite that an
application will be referred for oral evidence only if there is a
genuine dispute of fact, the resolution
of which is material to the
determination of the case
.
. . .'
[61]
In
the circumstances we find that Trillian has failed to make out a case
for referral to evidence.
THE
JUST AND EQUITABLE REMEDY
[62]
The
starting point is the remedial powers courts have in terms of s172(1)
of the Constitution. In terms of this section, once a
court has made
a pronouncement that Eskom's conduct, in the present case, was
unlawful, unconstitutional and invalid, it remains
for the court to
decide on a "just and equitable relief' to be made.
[63]
In
Steenkamp
[13]
,
Moseneke, Deputy Chief Justice,
reasoned that-
'...The purpose of a public-law
remedy is to pre-empt or correct or reverse an improper
administrative function. In some instances
the remedy takes the form
of an order to make or not to make a particular decision or an order
declaring rights or an injunction
to furnish reasons for an adverse
decision. Ultimately the purpose of a public remedy is to afford the
prejudiced party administrative
justice, to advance efficient and
effective public administration compelled by constitutional precepts
and at a broader level,
to entrench the rule of law.'
[64]
In
AIlPay2
[14]
,
wherein the above-stated
public-remedy was approved, the Constitutional Court reasoned that -
'Logic, general legal principle,
the Constitution and the binding authority of this court all point to
a default position that requires
the consequences of invalidity to be
corrected or reversed where they can no longer be prevented. It is an
approach that accords
with the rule of law and principle of
legality.'
[65]
The
Constitutional Court further stated that "... in the context of
public procurement matters generally, priority should
be given
to the public good. This means that the public interest must be
assessed not only in relation to the immediate consequences
of
invalidity - in this case the setting aside of the contract between
SASSA and Cash Payments - but also in relation to the effect
of the
order on further procurement. .. "
[66]
That
a party such as Trillian should not benefit from unlawful conduct is
more than clear. In the present matter, where there was
neither
factual nor legal basis for Trillian to be paid such substantial
amount of public moneys. It is indeed just and equitable
that such
moneys be returned to Eskom. To prove that indeed crime, no matter
what euphemism is used in describing such unlawful
conduct, does not
pay. That indeed the cancer of corruption can be eradicated and those
who benefit from ill-gotten gains, will
be deprived of such gains. In
the ultimate end, this would encourage good and ethical behavior in
public procurement matters and
thus entrench the rule of law.
[67]
In
the present matter, where the probabilities are apparent that senior
officials of Eskom could leave no stone unturned to benefit
Trillian;
where confidential information belonging to Eskom was leaked to
Trillian; where senior personnel of Eskom, who were expected
to
display the conduct of the utmost good faith and to act in the best
interests of Eskom; where there appears to be a corrupt
relationship
between Eskom's senior personnel and the directors of Trillian,
justice and equity demand nothing less than that the
moneys paid to
Trillian, unjustifiably, be returned to Eskom.
[68]
It
is apt to refer to what Francis J said in
Swifambo
[15]
,
a decision approved by the Supreme
Court of Appeal, when dealing with corruption in the public
procurement sphere. The learned Judge
said the following -
'Corruption is a cancer that is
slowly eating at the fabric of our society. If it is left unchecked
it will devour our entire society.
Chemotherapy is needed to curb it.
The chemotherapy in this instance is an effective remedy that will
nip the cancer in its bud...
'
[69]
We
agree. The only and effective remedy, that is just and equitable, in
the circumstances of this matter, is that the substantial
resources
paid to Trillian, in the absence of either factual or legal basis,
must be returned to Eskom for the utilization of such
resources to
all the inhabitants of this Country. This will not only be just and
equitable, but will be to strengthen the rule
of law, the very
foundation of any constitutional state such as ours.
[70]
Having
regard to the aforesaid, the following decisions ("the impugned
decisions") are declared to be unlawful and invalid
and are set
aside:
70.1
The decisions to negotiate and conclude
the "Master Services Agreement" between the Applicant
("Eskom") and
the first respondent ("Mckinsey"),
consisting of:
i)
The
Eskom Board Tender Committee's decisions on 6 July 2015 and 21
October 2015 to authorize the negotiation and conclusion of the
Master Services Agreement between Eskom and McKinsey; and
ii)
The
decision taken by Mr Edwin Mabelane, Eskom's Chief Procurement
Officer, to conclude the agreement with McKinsey between 7 and
11
January 2016.
70.2
The Eskom Board Tender Committee's
decisions on 21 June 2016 and 8 August 2016 to authorize the
cancellation of the Master Services
Agreement and initial cash
payments of R800 million in "settlement" to McKinsey and
its unnamed "BBBEE partner",
the second respondent
("Trillian")·.
70.3
The Eskom Board Tender Committee's
decision on 13 December 2016 to authorize the further payment of R134
million to the unnamed
"BBBEE partner'', Trillian.
70.4
The decisions to effect "full and
final settlement" with McKinsey and its "BBBEE partner",
Trillian, consisting
of:
i)
The
Eskom Board Tender Committee's decision on 13 December 2016 to
authorize the negotiation and conclusion of a final settlement
and
its further decision on 8 February 2017 to “
note
and support”
the payment of
R460 million in settlement.
ii)
The
further decisions by Mr Mabelane, alternatively Mr Mabelane and
senior Eskom officials, to conclude the 2017 Settlement Agreement
with McKinsey on 16 and 17 February 2017 and to effect payments to
McKinsey and Trillian pursuant to that settlement.
70.5
The decisions to negotiate and conclude
the "NEC3
Professional Services
Contract (PSC3)"
between Eskom
and McKinsey ("2015 McKinsey Contract") consisting of:
i)
The Eskom Board Tender Committee
decision of 10 September 2015 approving the negotiation and
conclusion of the 2015 McKinsey Contract;
ii)
The decision of senior Eskom officials
to conclude the contract with McKinsey on 29 September 2015.
70.6
The payments made by Eskom to Trillian
arising from the impugned decisions above are declared unlawful and
invalid.
70.7
Trillian is ordered to repay to Eskom
the sum of R595 228 913.29, together with interest thereon at the
prescribed rate, calculated
from the date of judgment to date of
payment.
70.8
Trillian is ordered to pay the costs of
this application including the costs of three counsel.
TSOKA
J
JUDGE
OF THE HIGH COURT
BAQWA
J
JUDGE OF THE HIGH COURT
FOURIE J
JUDGE OF THE HIGH COURT
Date of hearing:
18
-19 March
2019
Date of judgment:
18 June 2019
Appearances:
For the Applicant:
Adv T Ngcukaitobi & Adv C McConnachie
Instructed by:
Bowman Gilfillan Inc
For the first Respondent:
Adv W Trengove SC, Adv A Cockrell SC &
Adv M Stubbs
Instructed by:
Norton Rose Fulbright South Africa Inc
For
the second & third Respondents: Adv M Hellens SC, Adv J
Blou SC, Adv J
Meiring & Adv T Makgalemele
Instructed by:
Fairbridges Wertheim Becker Attorneys
[1]
Department of Transport and Others v Tasima (Pty) Ltd
2017 (2) SA
622
(CC) para 139
[2]
Passenger Rail Agency of South Africa v Swifambo Rail Agency (Pty)
Ltd
2017 (6) SA 223
(GJ) para 74 - 79
[3]
Allpay Consolidated Investment Holdings (Pty) Ltd v Chief Executive
Officer of the South African Security Agency and Others
2014 (1) SA
604
(CC) para 40
[4]
See footnote 2 para 25.3
[5]
Swifambo Rail Leasing v PRASA (1030/2017)
[2018] ZASCA 167
(30
November 2018)
[6]
Peterson v Cuthbert and Co Ltd
1945 A.O. 420 at 428
[7]
Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T) at 1165, 1166;
Tamarillo
(Pty) Ltd v B N (Pty) Ltd
1982 (1) SA 398
(A) at 431A
[8]
Soffiantini v Mould 1956 (4) SA150 (E) at 154 G-H
[9]
Plascon-Evans Ltd v Van
Riebeeck {Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
at
634H-635B
[10]
MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd
2014
(3) SA 481
CC at fn 74
[11]
Buffalo City Metropolitan Municipality v Metgovis (Pty) Limited
CCT78/18
[2019] ZACC 9
(28 February 2019)
[12]
President of the Republic of South Africa and others v South African
Rugby Football Union and others
2000 (1) SA 1
(CC) para 235
[13]
Steenkamp N.O. v Provincial Tender Board, Eastern Cape
2007 (3) SA
121
(CC) para 29
[14]
AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
(No2)
2014 (4) SA 179
(CC) para 30 - 32
[15]
See footnote 2 para 125