ABB to repay Eskom R1.56bn after probe

ABB Ltd will repay R1.56 billion ($103 million) to South Africa’s power utility, the latest international company to return money after being ensnared in corruption probes in the country.

The reimbursement was agreed with the nation’s Special Investigating Unit, state-owned Eskom said in a statement Friday. ABB has already accounted for the bulk of the payment in its financials, the Zurich-based company said in a separate statement.

By returning the funds, ABB joins McKinsey & Co. and KPMG LLP among firms that have given back money they’ve earned in South Africa from contracts tainted by graft. McKinsey this week said it would repay R650 million to the state logistics company and national airline after handing back R1 billion to Eskom two years ago. The US consultancy’s chief risk officer testified at a state judicial inquiry on Thursday.

The recovery is the biggest ever by the SIU and sends “a clear message about the commitment of government to assist the SIU and other law-enforcement agencies to do their jobs,” Justice Minister Ronald Lamola said at a briefing.

Rampant Corruption

President Cyril Ramaphosa came to power three years ago with a pledge to clamp down on state corruption that became rampant under former President Jacob Zuma’s nine-year rule. The government estimates that more than R500 billion was looted from the state, much of it from government firms while Zuma was in power.

Investigators this year widened a probe into contracts that Eskom signed with five international companies including ABB, WSP Global Inc., Black & Veatch Corp., Alstom SA and Tenova SpA. The deals were all repeatedly modified, with the value increasing to a multiple of their initial approved cost.

They were connected to the construction of coal-fired electricity plants, including the Kusile Power Station, that have run tens-of-billions of rand over budget and are yet to be completed. That has contributed to recurrent power shortages in the country and Eskom’s unsustainable R484 billion debt.

In July, Eskom said it estimated it had overpaid ABB by R1 billion and the engineering firms collectively by R4 billion. It plans to pursue a further R3 billion of irregular spending at Kusile.