Matshela Koko in court bid to can prosecution immunity for state capture firm

Former Eskom CEO Matshela Koko’s case to set aside the investigating directorate’s (ID) agreement with global company Asea Brown Boveri (ABB) not to prosecute it after it paid R2.5bn in punitive reparations in a state capture case has been set down for a two-day hearing in the Gauteng high court.

In December 2022, the National Prosecuting Authority (NPA) announced the ID (now the investigating directorate against corruption) reached a settlement with the Swedish-Swiss engineering company not to prosecute. In exchange ABB agreed to pay R2.5bn to the state in reparations and assist law enforcement with evidence of tender corruption at Eskom.

The company had R2.2bn worth of contracts with Eskom for Kusile Power Station in 2015.

Koko is among former executives probed on tenders allegedly awarded through bribes, but his case was struck off the roll in 2023 due to delays.

Koko now wants the high court in Johannesburg to issue an order declaring the immunity deal with ABB South Africa to be unlawful, unconstitutional, and setting it aside.

ABB legal representative Deidre Simaan, however, warns if the agreement were to be set aside, the state might have to pay back the R2.5bn.

Koko further pleads for a declarator that the ID, operating under the NPA, usurped the function of the courts when it entered into the “nonprosecution agreement”.

“The settlement … provides guaranteed indemnity for ABB South Africa from criminal prosecution. [It] infringes the rule of law and various constitutional rights in all material aspects,” Koko argues in court papers.

The company has paid more than R2.5bn in punitive reparations, but the NPA contends the deal does not mean individuals involved in criminal conduct, such as directors, staff and contractors of ABB, cannot be criminally charged.

The state contends it was within its powers to conclude an agreement with the company.

At the time ABB faced penalties at the US department of justice (DOJ) and in other countries for criminal transgression and breach of the Foreign Corrupt Practices Act in relation to South African contracts.

Koko argues the agreement is a breach of the NPA’s constitutional mandate to prosecute without fear or favour when there is evidence of wrongdoing.

“We do not have any provision or precedent for the type of agreement the NPA had with ABB, and we don’t have a precedent for this type of agreement as a legally effective agreement.

“The NPA must prosecute where there is a strong case and adequate evidence for criminal prosecutions — the reason ABB South Africa was not an accused is because it enjoyed the status of guaranteed immunity from criminal prosecution under the alternative dispute resolution [ADR] and co-operation agreement with the NPA.”

Koko contends the deal creates a space for companies with money to pay their way out of prosecution.

Simaan, in opposing the application, flags the possibility that should Koko succeed in the litigation, the state might have to pay back the R2.5bn.

“The payment of the punitive reparation was part of the co-ordinated global resolution.

“While ABB South Africa does not intend to request repayment of the punitive reparation if the ADR agreement is set aside, the ID may be legally obliged to return the payment, in which case the funds will have to be paid by ABB to the US DOJ.”

She argues Koko does not have the right to bring the application before the court and the case should be set aside.

The NPA entering the agreement exercised its prosecutorial discretion, she contends. “The ADR agreement is valid and enforceable, and there is no basis in law and in fact to set it aside.

“More particularly, it constitutes a valid exercise of prosecutorial discretion. ABB South Africa is entitled to rely on a decision not to prosecute it, and it would be prejudiced if the ADR agreement were to be set aside.”

Part of the agreement was that ABB employees would give law enforcement information about alleged tender fraud.

Simaan says the penalties paid to Eskom do not amount to “buying” a way out of prosecution.

“The US DOJ agreed that 50% of the total criminal penalty amount should be paid to the South African authorities as the victim country. There was, accordingly, no monetary incentive to ABB to ‘buy’ its way out of trouble as Koko mendaciously suggests.”

Simaan argues the Criminal Procedure Act states a corporation cannot be imprisoned but rather be fined when found guilty of wrongdoing, adding that the settlement to pay reparations was a legally sound decision and cut litigation costs for the state.

“Even if the ADR agreement is set aside, ABB South Africa will not be successfully prosecuted in South Africa as it would in terms of section 35(3)(m) of the constitution.

“ABB, on behalf of ABB South Africa, made payment of punitive reparations in the sum of R2,562,555,000 in recognition of the social and economic harm done.

“ABB implemented several remedial measures, including financial remediation to Eskom amounting to R1.56bn, completing the Kusile works at zero profit.”

The case will be heard on April 20 and 21, facing pushback from ABB and the NPA.