Africa

SA power firm Eskom sues Deloitte for 'overcharging'

Coal-fired power station run by Eskom in Lesotho Image copyright Reuters
Image caption Most of Eskom's power plants run on coal, an abundant resource in South Africa

South Africa's embattled state power firm, Eskom, is taking legal action to reclaim $14m (£11m) from multinational consultancy Deloitte, accusing it of being awarded contracts improperly.

Eskom said Deloitte charged five times more than its competitors for work undertaken in 2016.

Deloitte said it did nothing wrong, and would fight the claim in court.

South Africa has been hit by a series of power cuts as Eskom battles to meet growing electricity demands.

It is one of the biggest power utilities in the world, but is saddled with debt and relies on government bailouts to keep running.

It has also been embroiled in a giant corruption scandal known in South Africa as "state capture".

Former President Jacob Zuma was kicked out of office in 2017 for allegedly presiding over the scandal. He denies any wrongdoing.

Mr Zuma's successor, Cyril Ramaphosa, is now trying to restore trust in Eskom and other key state institutions, says the BBC's Andrew Harding in the main city, Johannesburg.

Eskom has now taken Deloitte to court, saying it should give back $14m because it was "ill-gotten".

"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," the utility's chief executive and chairman Jabu Mabuza was quoted by Reuters news agency as saying.

Image copyright Getty Images
Image caption Deloitte is not the first multinational giant to be caught up in South Africa's "state capture" scandal

Deloitte denied any wrongdoing and said it would put forward its version in 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 in a statement.

It is not the first giant multinational company to get caught up in South Africa's "state capture" scandal, says our reporter.

McKinsey, Bain, SAP and KPMG have also been accused of working with corrupt local officials.

Some have paid money back but all say they have done nothing wrong, our reporter adds.

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