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South Africa's Eskom takes Deloitte to court alleging improper contracts

FILE PHOTO: Men walk past electricity pylons as they return from work in Orlando

JOHANNESBURG (Reuters) - South Africa's Eskom is taking legal action to recover 207 million rand ($14 million) linked to contracts it alleges were improperly awarded to Deloitte Consulting in 2016, the cash-strapped state power firm said late on Monday.

Eskom, struggling with debt of over 450 billion rand and reliant on government bailouts to keep the lights on, is at the center of a judicial inquiry into corruption at state entities, in addition to several other probes into mismanagement at the company.

The power firm's chairman and acting chief executive Jabu Mabuza said in a statement that it had filed court papers against Deloitte to recover the money linked to contracts it was awarded by former Eskom executives, accusing the consulting firm of unfair practices.

"Information before us shows that Deloitte engaged in activities that were unfair, inequitable, non-transparent and uncompetitive using off-the-record briefings with Eskom officials to submit proposals, and were granted contracts even though their pricing was way above their competitors," he said.

Mabuza said Eskom was asking the court to declare the activities relating to a batch of tenders "unlawful and unconstitutional, to set aside the awards, and for Deloitte to pay back the amounts paid to them".

Deloitte Consulting disputed the allegations made by Eskom in an emailed statement on Tuesday, saying that it welcomed the opportunity to put its version and facts before a court.

"Deloitte Consulting has been engaging in good faith with Eskom on this matter for some time now in order to assist Eskom to understand the processes followed and the value that Deloitte Consulting has delivered to Eskom," it said.

The investigations and inquiries were triggered by the 2016 leaking of a trove of documents detailing relations between the wealthy Gupta family, former President Jacob Zuma, and deals struck with state firms like Eskom, as well as a number of big companies including multinationals like McKinsey and Germany's SAP.

The Gupta family and Zuma have denied the allegations.

Earlier in October the United States sanctioned the three Gupta brothers over the corruption allegations.

The probes have led to resignations and the firing of numerous executives in state firms, a broad presidential inquiry into graft, as well as the eventual axing of Zuma by his party in 2018 just months before the end of his second term.

At Eskom, which supplies 90% of the country's electricity, the clean-out has seen the chief executive and chief financial officers pushed out in quick succession.


(Reporting by Mfuneko Toyana; Editing by Sonya Hepinstall and Emelia Sithole-Matarise)