Meltdown in South Africa: How corruption pushed a nation to the brink of collapse

André de Ruyter knew something was not right when he started to feel dizzy and nauseous after drinking a coffee.

At the time he was chief executive of Eskom, South Africa’s collapsing electricity utility, and to his surprise, he found himself forgetting simple words, even the term “power station”.

Only later, after he had been rushed to hospital, did he discover the coffee had been laced with a poisonous cocktail of cyanide and sodium arsenite.

According to his toxicologist, “this was indeed an attempted murder, not just a warning”, says De Ruyter, who rejects speculation that whoever spiked his coffee was only out to scare him.

“Cyanide is not like I take out a gun and I shoot you in the foot,” he says in an FT interview. Had it not been for his doctor, who as a precaution pumped him full of vitamin B, a compound that binds to cyanide, he would probably have died.

The apparent attempt to kill the man tasked with keeping South Africa’s lights on is a dramatic example of how criminality has seeped into South Africa’s state. Though Cyril Ramaphosa, president since 2018, has sought to roll back the systemic corruption that mushroomed under the previous administration of Jacob Zuma, significant parts of the state are still deeply compromised.

De Ruyter was sacked last week in dramatic fashion — barely two months after the poisoning — for attacking the ruling African National Congress and for alleging that four mafia-like crime syndicates were operating inside Eskom.

The 54-year-old executive’s experience at Eskom, which he ran since 2019, has become a devastating indictment of governance under the ANC nearly three decades after the end of apartheid. The company has been forced to impose rolling power cuts of up to 10 hours a day to keep the electricity grid from crashing. De Ruyter blames the power shortages on the failure of the ANC over many years to maintain coal-fired power stations that have an average age of 42 years.

He also blames sabotage. Criminal syndicates, he says, steal coal and infrastructure, including copper and aluminium cables, pylons and even bolts, to be melted down and resold. They also make more money by tendering for contracts to repair the damage they have done, he says.

Former Eskom CEO Andre de Ruyter: “There might be pure criminals and pure politicians. And then there’s an area in the middle where the interests of the two intersect.” Photo / AP

Though much of the activity is purely economic, he also hints at darker motives and links with politicians, including members of the ANC, who might be seeking to undermine the Ramaphosa government.

“It’s a little bit like a Venn diagram,” he says. “There might be pure criminals and pure politicians. And then there’s an area in the middle where the interests of the two intersect.”

A report by the Global Initiative Against Transnational Organised Crime, a Geneva-based body, last year highlighted the scale of the problem. “South Africa’s infrastructure is suffering from sustained and organised theft, mainly of copper, on an industrial scale affecting the transport, energy, water, communication and fuel sectors,” it said. “This has eroded state capacity to provide critical services.”

Organised crime, the report concluded, posed “an existential threat to South Africa’s democratic institutions, economy and people”.

Last week, South Africa became only the second G20 country after Turkey to be put on a global anti-money laundering watchlist of countries not doing enough to fight organised crime. The “grey-listing” by the Financial Action Task Force will damage investment and banking flows, analysts warn.

Many residents call South Africa a “mafia state”, says Julian Rademeyer, east and southern Africa director for the Global Initiative Against Organised Crime. He believes the term is still probably more suited to oil-dependent kleptocracies such as Venezuela, but he says it illustrates the growing despair among ordinary South Africans about the state of their democracy. “There is an overwhelming sense of desperation.”

The spectre of state capture

Ties between criminals and South Africa’s state first started to become evident during Zuma’s presidency from 2009 to 2018.

A four-year inquiry into the Zuma years, known as the Zondo commission and which ended last year, uncovered links between the state and alleged criminals, including most notoriously the trio of Indian-born Gupta brothers who wheedled their way into Zuma’s inner circle.

The Guptas, who fled to the UAE in 2018, have denied wrongdoing. So has Zuma, who is currently on trial for corruption.

Although the Zuma era may be over, De Ruyter says, the links between state bodies such as Eskom and organised crime persist.

A lawyer by training, de Ruyter had worked in the private sector for many years, notably at petrochemicals group Sasol, where among other executive roles he marketed coal for export.

Former South African president Jacob Zuma. A four-year inquiry into the Zuma years, which ended last year, uncovered links between the state and alleged criminals.

Immediately after De Ruyter was recruited to turn around the ailing utility, he publicly made his intention clear to root out the criminal syndicates that maintained deep tendrils inside the company and which, he says, were looting Eskom to the tune of R1billion (NZ$88.4 million) a month.

As well as going after criminals, he aimed to shift South Africa’s energy mix towards renewable energy. That also posed a threat to the coal and trucking syndicates that operate in Mpumalanga province, where Eskom has the bulk of its power stations and where criminality is rife. Today at least 80 per cent of South Africa’s energy is produced from coal.

De Ruyter’s championing of renewables made him powerful enemies within the ANC. One of those was Gwede Mantashe, the energy minister and a former coal miner, who calls himself a “coal fundamentalist”. Last year, Mantashe berated De Ruyter for not getting power stations working properly and accused him of treason for failing to stop the power cuts that are crippling South Africa’s economy.

De Ruyter announced his resignation last December in response to Mantashe’s accusations and what he regarded as the deafening silence from the ANC, which did not come to his defence. He was working out his notice when he was abruptly sacked last week.

The trigger for his dismissal was an interview he gave to local news channel eNCA in which he accused the ANC of being stuck in a Marxist time-warp. He also raised concerns over the suspected involvement in corruption of a “high-level politician”. Those concerns, he said, were brushed aside by a minister, since revealed to be Pravin Gordhan, minister for state enterprises and De Ruyter’s boss.

The ANC did not take De Ruyter’s broadside lying down. It accused him of “reactionary political thinking” and of making “irresponsible and baseless claims of alleged political meddling and corruption”.

Gordhan, who had previously defended De Ruyter, also turned his guns on the former Eskom chief. “He must stop throwing around intelligence and accusations. The obligation is on him to do what is legally required of him,” he tells the FT, adding that de Ruyter should file an affidavit about his accusations.

Of his performance at Eskom more generally, Gordhan says that De Ruyter blamed anyone but himself. “If you’re the CEO, part of the brief is to attend to these issues. Get the plant to work,” he says. “There are problems, but attend to them.”

No one has yet been charged for the attempt on De Ruyter’s life. But suspicion among private investigators he appointed is that criminal gangs ordered the hit. The assault seemed well-planned. The coffee machine on Eskom’s executive floor was broken on the morning of the poisoning. De Ruyter thinks someone may have used that as an excuse to enter the building and spike his personal mug. The investigators are going “through CCTV footage frame by frame”.

De Ruyter was less than impressed with the official police investigation. “It was quite bizarre, actually,” he says of his encounter with two sergeants assigned to the case. “I said that the blood tests have indicated that my cyanide levels were elevated. And the sergeant looks at me and says, ‘Oh, so you had problems with your sinuses?’ And I said, ‘Do you know what cyanide is? ‘No,’ she says, ‘I don’t know.’”

Looting Eskom

If the investigation into the poisoning has not gone well, neither has enough been done to get to the bottom of much broader criminality within Eskom, says De Ruyter.

De Ruyter and his private investigators have laid out in detail how criminals allegedly target the company, and frighten people into silence through intimidation. The Daily Maverick, a South African newspaper, quoting an intelligence report, named the crime cartels allegedly operating within Eskom as the Presidential Cartel, the Mesh-Kings Cartel, the Legendaries Cartel and the Chief Cartel.

One of the most lucrative criminal strategies, says De Ruyter, is to steal coal being trucked to Eskom power stations and sell it abroad. Trucks that are hijacked are driven to old dumps, called blending sites, where good coal is swapped for discard, essentially rubble, and the weight made up with water and metal scrap.

President Cyril Ramaphosa overrode the objections of his energy minister last July to liberalise the generation sector. Photo / AP

“The police have now identified and shut down three illegal coal blending sites,” De Ruyter says, adding that a further 30 are under surveillance.

De Ruyter says his attempts to monitor coal deliveries more effectively were sabotaged from within. New systems were not implemented and power stations where he had identified the biggest potential fraud found themselves on the bottom of action lists.

When rubble and scrap is fed into power stations, he says, it wrecks the grinding mills and causes shutdowns.

In one incident last November, an Eskom guard apprehended a truck driver delivering substandard coal to Camden power station in the eastern province of Mpumalanga.

“First the truck driver tried to bribe the security guard with R50,000,” he says. When the driver confessed to stealing the better-quality coal, he was taken to the nearby town of Ermelo, where the police arrested him. A “local prosecutor declined to have anything to do with the case”, he says, and eventually, the driver was released on bail and absconded.

Another recent act of vandalism took place in Bronkhorstspruit, outside Johannesburg. De Ruyter says thieves took advantage of power outages to topple a pylon and strip cable. Eskom security personnel followed the gang to an informal settlement where they found a scrap-metal dealer melting the copper ready for export. Local people started attacking Eskom employees.

The police, who had initially refused to come out, attended the scene once violence broke out. “They recovered something like 30 tonnes of stolen metal,” he says. “This is just one example. You start multiplying this by 100, 200, 300, then you have a [serious] problem. And to compound the issue the police say, ‘Terribly sorry, but we can’t be bothered to come out to the crime scene today.’”

De Ruyter says he raised the problems with Shamila Batohi, the national director of public prosecutions, a Ramaphosa appointee brought in from 2019 to clear up the Zuma rot at the prosecuting authority. She took his complaints seriously and “significantly stepped up her involvement in Eskom-related cases”.

Last year, in words that seemed to corroborate de Ruyter’s claims of collusion, Batohi said: “Let’s face it, the root cause of corruption in the spheres of government is because of a lack of good governance and ethical leadership.”

Karen Pillay, head of security at Eskom, says that until recently, police “saw theft of copper cable or aluminium cable as minor crimes”. The police were often frightened to confront gangs. “A patrol vehicle with two officers in it is not going to respond to an incident like this because these individuals are heavily armed. And they will not hesitate to use violence.”

Worse, she alleges, police are sometimes in cahoots with criminals. “We have confirmed incidents where we’ve seen police vehicles escorting stolen coal in Mpumalanga province while they’re on duty. We’ve also received intelligence where we’ve learnt police officials have established informal scrap yards.”

Pillay says criminals also work inside Eskom as employees. Some have been arrested and more arrests are expected. “It’s really heartbreaking when you see people turn a blind eye to these acts of criminality,” she says.

‘Crime is our number one issue’

Eskom is not the only target. Pillay says the same gangs that are robbing Eskom are also often targeting other companies. “So the coal industry, for example, you take out a rail line and create opportunities for more trucks to be on the road. When there’s more trucks on the road, what happens? There’s greater opportunity for you to swap out and steal coal. And it’s not just limited to coal, it’s also diesel and fuel.”

Roger Baxter, the outgoing chief executive of the Minerals Council South Africa, says criminal gangs have infiltrated many industries, including his own. “When we talk to government, crime is our number one issue,” he says.

Protection rackets that started in the construction industry have migrated to mining, he says. “Criminal mafia masquerade as legitimate business forums. They come to your gate and basically threaten to shut down your mining operation if you don’t give them 30 per cent of your contracts.”

Gangs armed with AK-47s and high-calibre rifles sometimes attack facilities where precious metals, including gold and platinum, are smelted, Baxter says. Illegal mining is also taking place on a huge scale, including at legitimate mining operations. “Basically, you’ve got a shadow staff living underground for six months and mining almost in parallel to you.”

Worse even than the direct attacks on mines is the near collapse of the freight rail system, operated by Transnet, which also runs ports, some of the most inefficient in the world. In 2022, deliveries by rail to Richards Bay coal terminal collapsed to a three-decade low of 50m as armed gangs sabotaged the lines, according to the Minerals Council, and Transnet struggled to keep trains moving. Miners had hoped to ship 80m tonnes.

Like Eskom, Transnet, which is majority-owed by the government, was a target of state capture during the Zuma years. The Zondo inquiry said it accounted for almost three-quarters of all suspicious contracts.

Bottlenecks have come at a time of high commodity prices when South Africa could be reaping the benefit. Instead, minerals are transported on roads that are not designed to withstand heavy loads and that cannot cope with additional volumes. The Minerals Council, whose members include Anglo American and De Beers, calculates that mining companies lost between R50b and R150b in potential revenue last year.

Mining companies have had to warehouse the minerals they are unable to shift, a disincentive to expand existing mines let alone explore for new deposits. In 2003, South Africa accounted for 5 per cent of global exploration, Baxter says, a figure that has dropped to 1 per cent.

Before he was sacked, De Ruyter said that there were signs that Ramaphosa was finally getting to grips with problems at Eskom. In December, the government put a temporary ban on the export of scrap metal to disincentivise looting. It also allowed the army to guard power stations against sabotage. In January, Eskom was given permission to set aside R16b worth of maintenance contracts signed with 15 power stations during the state capture era.

Ramaphosa’s government declared a national state of disaster last month that allowed Eskom to insulate critical infrastructure, such as hospitals and water-treatment plants, from power cuts.

“It’s taken a long time of shouting it from the rooftops. I didn’t exactly make a secret of my view that load shedding is, to a large extent, attributable to crime and corruption,” says De Ruyter.

Ramaphosa took what many consider the most important measure of all last July when he overrode the objections of his energy minister to liberalise the generation sector. The President promised to “massively increase” private generation — mostly the solar and wind power with which South Africa is blessed — by lifting limits on the amount of electricity they can produce.

De Ruyter estimates that an additional 9GW could come on stream in the next 18 months. New capacity will come “predominantly” from renewables, he says, “not because I’m a foaming-at-the-mouth environmentalist, but because both wind and solar are now by far the cheapest electricity and also the quickest to deploy”.

Yet Ramaphosa might still face opposition from within the ANC, which remains beholden to the coal lobby and suspicious of the private sector, De Ruyter says. Many government officials are opposed to a planned break-up of Eskom into three divisions — generation, transmission and distribution — which will inevitably weaken the generation unit as privately generated renewable energy gradually replaces coal.

If renewables do come to South Africa’s rescue, it will not happen on De Ruyter’s watch. Power cuts are likely to get worse before they get better, he says.

As a former chief executive, he will now lose his Eskom bodyguard. Given the furore around his dismissal and the attempt to poison him, he will “lay low” for a while, he says.

Asked if he intends to flee South Africa, De Ruyter replies: “I may go abroad for a while, but I have no intention of leaving the country. I’ll just watch out for who invites me to coffee.”

- Additional reporting by Joseph Cotterill

Written by: David Pilling

© Financial Times