Swiss Engineering Firm ABB to Pay $103 Million to Eskom to Settle South Africa Corruption Probe

Swiss engineering firm ABB would pay 1.56 billion rand ($104 million) to South African state power utility Eskom to settle an investigation relating to improper payments and other compliance issues, the two companies announced on Friday.

ABB would pay 1.56 billion rand ($104 million) to South African state power utility Eskom after an investigation revealed evidence of corruption and improper payments that the automation tech giant made during its work for the Kusile project, the two companies announced on Friday.

The Special Investigating Unit (SIU) in South Africa revealed in October that the Switzerland-based engineering firm made over-payments for the work it had carried out for Eskom’s Kusile power station project.

The new coal-fired power station is the largest power plant in South Africa. Together with its sister project Medupi, it was meant to help in ending the rolling power outages in the most industrialized economy of Africa.

However, coal-burning boilers at some power stations have been failing due to the poor quality of coal, which resulted in long-running periods of stage four load shedding across the country in 2019.

The erratic electricity output of the power stations helped plunge Eskom in debts that amounted to more than 480 billion rand.

“In order to avoid lengthy and protracted litigation, Eskom and the SIU agreed that the settlement amount is a fair and reasonable reflection of the damages that Eskom, and by implication the people of South Africa, suffered as a result of this unlawful contract,” said Eskom CEO Andre de Ruyter.

According to ABB, most of the payment has already been recognized in the financial results that it has disclosed in the last 15 months.

There would be an additional impact of $30 million on operational earnings before interest, taxes and amortization, and a hit on cash flow of around $110 million in relation to the settlement.

The Swiss engineering firm said that it would continue to cooperate with authorities in South Africa to fulfill its contractual obligations for the finalization of the Kusile project.

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