Until now, Eskom’s bombastic CEO Brian Molefe has managed to keep a relatively low profile as speculation over the public protector’s state capture report swirled. Instead, all eyes have been on President Jacob Zuma and two of his cabinet ministers, Des van Rooyen and Mosebenzi Zwane.

But as the 355-page report was released on Wednesday, it emerged that the shady machinations at Eskom are, in fact, central to claims that the influential Gupta family were able to “capture” state apparatus for their personal benefit.

In the final analysis, Zuma will rightly bear the brunt of the fallout from the report written by Thuli Madonsela (before she left office), as she calls for a judicial inquiry to get to the bottom of these claims.

But when it comes to Eskom, the findings are unequivocal: Eskom bent over backwards to lavish sweetheart coal deals on the Guptas, favouring their mining company Tegeta over any other rivals. Worse, Eskom paid more than R1.1bn to the Guptas, providing them with much-needed funds to buy Optimum Coal from the JSE-listed Glencore this year.

In the report, Madonsela says: “it appears that the conduct of the Eskom board was solely to the benefit of Tegeta in awarding contracts to them and, in doing so, (Eskom) funded the purchase of Optimum Coal Holdings”.

Read the full State of Capture report here.

This would be a “severe violation of the Public Finance Management Act,” she said.

However, it is Molefe himself — a former treasury official — who comes in for a real roasting from Madonsela as her report paints a picture of an insidious relationship between him and the family.

During his interviews with Madonsela on October 4th, Ajay Gupta described Molefe as a “very good friend”, who often visits the family’s house in Saxonwold.

Phone records show that in a six month period, between August 2015 and March 2016, Molefe called Ajay Gupta 44 times, and Gupta called him 14 times. Within four months, her report adds, Molefe also visited Saxonwold 19 times.

Yet, even though Molefe was CEO of a company that approved lucrative contracts with the Guptas, Madonsela said he “did not declare his relationship with the Gupta family”.

Speaking to the Financial Mail this week before the report emerged, Molefe seemed to think Eskom didn’t have too much to worry about from Madonsela. Molefe confirmed that Madonsela had indeed asked Eskom plenty of questions about its payments to the Guptas — particularly a R600m “prepayment” for coal — as well as the overall state of the power utility’s governance.

“We gave her all the documents she asked for. We explained this (prepayment) wasn’t unusual, that we’d done it before, and there was nothing wrong with it,” he said.

Days before leaving office two weeks ago, Madonsela then sent Eskom a preliminary report in which she said she was likely to make certain findings — but Molefe said it contained nothing adverse about the Tegeta prepayment.

However, the final report shows that Madonsela clearly didn’t buy Eskom’s explanations.

The dirty deal

At the heart of this issue lies the odious deal which saw the Guptas buy Optimum Coal from Ivan Glasenberg’s Glencore for R2.1bn last December.

Suspicions were raised from the start, when the Financial Mail reported in January that mining minister Mosebenzi Zwane had surprisingly tagged along with the Guptas to Switzerland for the negotiations with Glasenberg.

But even before that, insiders claim, Eskom had apparently torpedoed the efforts of other prospective buyers — including a company called Pembani — to buy Optimum. As Optimum’s largest creditor, owed R2bn (because of a penalty it imposed on Optimum for providing poor quality coal), Eskom had major influence in who the buyers were.

In her report, Madonsela took a dim view of Zwane’s trip to Switzerland, saying it was “not in line with section two of the executive members ethics act”.

Given that Duduzane Zuma, the president’s son, was a 28.5% shareholder of Tegeta, Madonsela said “it is potentially unlawful for (Zwane) to use his official position of authority to unfairly and unduly influence a contract for a friend or, in this instance, his boss’s son at the expense of the state”.

But it gets worse

Soon after the Guptas arrived on the scene as possible buyers of Optimum, Eskom’s previous hard-line attitude towards buyers softened overnight. Suddenly, Eskom was willing to entertain all sorts of concessions for Tegeta that it wasn’t willing to afford Glencore — a red flag for those close to the deal.

After acting in a way that “severely prejudiced” Glencore, Eskom then bent over backwards to help the Guptas, said Madonsela.

Still, the trick for the Guptas was finding the R2.1bn to make the deal happen. The first R1.5bn came through the bank of Baroda (funding which, until now, no-one had been able to trace). But getting that final R600m proved to be a nightmare.

The alarming behind-the-scenes machinations to get that R600m are detailed in a complaint to the Hawks in July, under section 34 of the Corruption Act, by Optimum’s business rescue practitioner Piers Marsen.

This police report, first mentioned by investigative journalists AmaBhungane and also scrutinised by Madonsela, spell out the bizarre turn of events on Monday April 11th.

Here’s the chronology: at 10am, Nazeem Howa (who was CEO of the Gupta-owned Oakbay) met Marsen, telling him “Tegeta was R600m short”. He asked Marsen to approach the banks — FirstRand, Investec and Nedbank — for a R600m “bridging loan”.

As time was tight, Marsden raced off to meet the banks in Sandton at 1.30pm. Only, the banks refused, so at 3pm, Marsen phoned Howa to tell him this.

No matter. Barely six hours later, the Guptas had made another plan, convincing Eskom’s board to do something particularly unusual — pay Tegeta, a company without any assets, for coal it hadn’t already got.

Marsen says “the pre-payment was approved by a committee of Eskom representatives at a meeting held at 9pm on 11th April”.

Curiously, Marsden says “the pre-payment was not made to Optimum Coal Mine” but rather to Tegeta — so he never saw Eskom’s R587m.

So here’s the problem with that: when Eskom pre-paid the R587m, Tegeta didn’t own Optimum and it had no coal. At the time, Tegeta was pretty much just a cash shell with little more than the right to buy a coal mine.

In fact, it was only ten days later, that an agreement was put in place for Optimum to supply coal to Tegeta, which then supplied it to Eskom.

In her report, Madonsela puts the total value of Eskom’s prepayments to Tegeta at R659,5m – part of an overall R1.1bn paid to the Gupta-owned company between January and April.

She says these prepayments “may not be in line with the Public Finance Management Act”, as the money wasn’t used to fund the purchase of coal. Tegeta’s conduct around this payment “could amount to fraud”, she said.

Eskom’s board, she said, appears not to have “sufficiently managed its conflicts”.

Talking to the Financial Mail this week, Molefe remains adamant that “we didn’t make the payment so that the Guptas could pay Glencore. It was about the supply of coal”.

Asked about the late-night approval of the payment, Molefe says: “well, if the coal had not been delivered, it would have been a different story. But it was delivered, and it addressed a real coal supply problem we had”.

He says Eskom had also made numerous prepayments to other companies in the past. Madonsela’s report records that during the 2016 financial year, Eskom made R6,4bn in prepayments to a number of companies besides just Tegeta. Molefe, said Eskom, also “has no role during the pre-payment”, although he was briefed on the rationale for it.

And the other R1.5bn …

But Madonsela’s report also sheds light on another mystery that has remained unanswered until now: how the Guptas found the initial R1.5bn that was transferred through the Bank of Baroda, India’s second-largest bank, to finance the deal.

Her report now reveals how immense sums of money washed into the Bank of Baroda from various sources -including the Guptas themselves, Trillian Capital Partners and an obscure United Arab Emirates-registered company called Centaur Mining — which was then used to pay the R1.5bn.

In all, between December 2015 and April 2016, 32 deposits amounting to R2.47bn were deposited into the Bank of Baroda accounts “for the benefit of Tegeta”.

“It is safe to say that the frequency and amounts deposited should have attracted attention, and an investigation by other financial institutions anti-money laundering departments,” she said.

Madonsela called the bank’s actions involving the Guptas “highly suspicious”.

This would appear to at least partly vindicate SA’s big banks, which closed the Guptas accounts based on what are understood to be concerns over moneylaundering.

It is also clear that besides its R659m prepayment, other Eskom funds were also used to help the Guptas pay for Optimum. Tracing all the payments from Eskom, Madonsela reveals that Eskom paid no less than R1.1bn to Tegeta for coal between January 2016 and April 13th, when the family had to make the final payment.

“Of the R1.1bn paid by Eskom, R910m was diverted by Tegeta to fund 42% of the R2.1bn purchase price to acquire Optimum,” she says.

The implications of this are damning: payments from the state-owned power company helped Tegeta buy Optimum Coal, after a series of behind-the-scenes manoeuvres ensured the Guptas were the only bidder remaining.

Madonsela concludes: “it appears that the sole purpose of awarding contracts to Tegeta to supply (the) Arnot power station was made solely for the purposes of funding Tegeta, and enabling Tegeta to purchase all shares of Optimum Coal Mine”.

Eskom is due to release its half-year results this week, and it remains to be seen how Molefe will deal with the fallout from this report.

But there are a number of other parties that come out looking pretty poor from this report.

In particular, what Madonsela’s report doesn’t say is why the criminal authorities didn’t follow up on the corruption complaint lodged by Optimum’s business rescue practitioner, Piers Marsden.

The Hawks, in particular, have seemed more preoccupied with scouring the SA Revenue Service (Sars) offices for people to kidnap of late than doing their day job.

Speaking to the Financial Mail this week, Marsden said “I only got an email saying they’d got the complaint (from the Hawks). Otherwise we haven’t really heard from them”.

Asked if he’s glad to be finished with the saga, Marsden says: “you can say that again. It was a difficult job with lots of surprises”.

Madonsela’s report into state capture attests to just how difficult that job really was, laying bare how politicians interfered every step of the way to help the Guptas, while the state-owned power utility bent over backwards to do the same.

* This is an adapted version of the Editor's Note which ran in this week's Financial Mail, it has been updated after the report was released on Wednesday November 2.