Stefanutti denies impropriety in social investment


Stefanutti denies impropriety in social investment

Published Date: 2019-12-02 | Source: Stephen Gunnion | Author: Stephen Gunnion

Stefanutti denies impropriety in social investment

The construction group says it was an unwitting contributor to what may have been a slush fund for the benefit of certain Eskom executives.

Stefanutti Stocks has defended payments to a company that has been accused of operating a slush fund for Eskom executives, saying they were made as part of its Corporate Social Investment initiative.

A report by Daily Maverick's Scorpio investigating unit named Stefanutti as one of a number of companies that contributed to the fund meant to benefit officials at the parastatal, including at its Kusile power station where they had contracts. The report was released in the same week that the ailing construction group reported a large interim loss due to provisions it made against troublesome contracts and project losses.

Scorpio alleged the money was paid into the bank account of Babinatlou Business Services, which then channeled cash to Kusile contracts manager France Hlakudi and two of his former Eskom colleagues. Maphoko Hudson Kgomoeswana is the sole director of Polokwane-based Babinatlou.

Stefanutti said payments totalling R2 million were made at Kgomoeswana's request in order to fund the completion of a four-classroom block at Mokhine High School at Sekhukhune in the Limpopo province. Before making payment, it took a number of measures to ensure the money was being used for its intended purpose, including checks with the SA Revenue Service, a breakdown of outstanding works needed to complete the project and engagement with the school's principal. It said it was unaware that Babinatlou may have been used to front for certain Eskom executives and their link to Kgomoeswana.

The company said it had disclosed the payments to the Special Investigating Unit.

Due to adverse market conditions, including the impact of a power project where it's battling to get payment from its client, contract revenue from operations declined by 14% to R4.4 billion in the six months to end-August. Provisions, impairments and specific project losses totalling R1.12 billion left it with an operating loss of R973 million for the period, down from an operating profit of R125 million last year. It reported a loss of 622.35c per share, from earnings of 61.76c, and a headline loss of 607.72c per share, from headline earnings of 60.3c previously.

Its shares closed unchanged at 12c on Friday. They have declined 97% this year.

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