What Can We Learn From the Eskom Procurement Fraud Case?
Procurement fraud is common due to insider collusion, high-value transactions, weak oversight and complex supply chains that allow for inflated contracts.
Energy organisation Eskom has faced several corruption and theft complications within its operations. These issues highlight wider financial mismanagement, governance failures and systemic criminality.
Six individuals were arrested – including a former Kusile Procurement Officer and a Procurement Manager – between 14 and 15 March, 2025, for their involvement in a fraudulent procurement scheme at Kusile Power Station.
NATJOINTS Energy Safety and Security Priority Committee and Eskom continue to work alongside each other to tackle theft and corruption across Eskom’s operations.
Dan Marokane, Chief Executive at Eskom Group, explains: “Our commitment to eliminating corruption within Eskom remains unwavering. By far the vast majority of our employees demonstrate integrity and dedication, and those who engage in wrongdoing will increasingly face investigation and action.”
Eskom’s procurement process
Eskom’s procurement and supply chain management policy governs its procurement processes.
This aligns with South Africa’s frameworks that ensure procurement activities are transparent, fair, cost-effective and competitive.
- Strategic alignment to ensure operations support Eskom’s corporate objectives
- Adhere to legislative requirements and maintain internal controls
- Set standardised procedures to achieve effective performance
- Supplier development and localisation
- Ethical practices
Eskom aims to address the country’s electricity needs by introducing diverse generation technologies, reducing the funding burden on the government and incorporating private sector participation.
The organisation must maintain effective procurement governance to maintain efficiency, transparency and integrity that will reduce risks of supply chain disruptions and fraud.
The Procurement fraud case
In 2018, investigations uncovered that a pump at Kusile Power Station was unjustly procured for R857,977.00 (even though an identical pump with the same serial number was purchased for R18,835.00 in 2015).
This transaction led to Eskom experiencing vital financial losses.
Mission Area Joint Operational Centre (MAJOC) led a coordinated intelligence-driven operation on 14 and 15, March 2025.
This operation led to the arrests of six individuals who were involved in the counterfeit procurement scheme. All six appeared in the eMalahleni Magistrates’ Court on 17 March 2025.
The former Kusile Procurement Officer was arrested on 14 March 2025 by the SAPS. on 15 March 2025, four suspects were taken into custody, including the Kusile Procurement Manager.
The authorities are still looking for two remaining suspects.
NATJOINTS Energy Safety and Security Priority Committee are continuing to investigate corruption, fraud and criminal activities within Eskom, South Africa’s wider energy infrastructure and its Eskom’s supply chain.
What impact will this case have on procurement at Eskom?
Eskom has created the Group Investigations and Security Division (by consolidating its forensic, security and investigative functions) to enhance its investigative capabilities and governance.
The Kusile procurement fraud case will disrupt Eskom’s procurement practices:
Procurement processes tightened
- Eskom is likely to introduce more stringent approval workflows for high-value purchases, greater supplier vetting and more internal audits into procurement decisions
Greater use of data analytics & technology
- Eskom can use blockchain for transparent procurement tracking and AI-driven procurement monitoring to identify anomalous transactions
Governance reforms
- Eskom may segregate duties, centralise procurement governance and introduce more robust whistleblower protection to reduce the risk of future fraud
Eskom must introduce stronger anti-corruption measures to help enhance supplier accountability, minimise financial losses and tighten procurement oversight.
Not only will this case expose failures in Eskom’s procurement system but it will also require the organisation to restore trust from stakeholders that it continues to focus on ethical and transparent procurement.
How to strengthen procurement oversight
The fraudulent procurement case at Eskom highlights an urgent need to enhance procurement oversight to maintain cost efficiency, prevent fraud and maintain transparency.
By centralising procurement governance and publishing procurement decisions, Eskom can integrate stronger governance measures while maintaining transparency in its operations.
Conducting reviews of supplier performance and contract compliance will strengthen supplier management while AI-powered tools will help Eskom to detect procurement irregularities.
Employees also must be educated on ethical procurement, fraud detection and compliance and procurement officers must be rotated to improve ethical standards and ensure standards are implemented across the organisation.
Eskom can build trust in its procurement processes by combining advanced technology, strong policies and continuous oversight.
Its recent procurement fraud case at Kusile Power Station highlights an urgent need for the procurement industry to strengthen its procurement oversight to prevent future fraud incidents.
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