(InsideOutNews) – National Treasury has cautioned Eskom against temporarily restricting suppliers before investigations have been concluded, warning that such actions could expose the power utility to litigation while causing significant financial and reputational harm to affected businesses.
The warning is contained in a letter addressed to Eskom Holdings Chief Executive Officer Dan Marokane in response to the utility’s December 2024 request for a departure from certain provisions of the Public Finance Management Act (PFMA) Supply Chain Management Instruction Note 3 of 2021/2022.
In the letter, Treasury says supplier restriction processes must be legally sound and procedurally fair. It further states that any deviation from the prescribed process could weaken accountability mechanisms and undermine transparency in public procurement.
Treasury specifically warned that blocking suppliers “without conclusive investigation or due process could lead to reputational and financial harm to affected suppliers, unfair treatment, and risk of litigation.”
As a result, the department said it does not support Eskom’s proposal to temporarily restrict suppliers while supplier disciplinary processes are still underway. Instead, Treasury recommends that Eskom strengthen its service-level agreements to include contractual remedies for poor performance and clearly define circumstances such as fraud, corruption, material non-performance or other irregularities as grounds for suspension or contract termination.
Treasury over Social Media for Allegations
The Treasury letter has circulated widely on social media, where it has been linked to allegations of an alleged “Indian cabal” operating within Eskom’s procurement structures.
Posts on various platforms claim that Black-owned businesses are being excluded from lucrative Eskom contracts through supplier restrictions imposed before investigations are completed. Some users allege that Black-owned security companies and other businesses are disproportionately affected, while individuals linked to an alleged procurement network remain protected.
However, the Treasury letter itself makes no reference to an “Indian cabal” or any findings of discrimination against Black-owned businesses. The allegations remain unverified, and no official investigation has publicly confirmed the existence of such a network.
Treasury Warn Eskom Over Procurement Scrutiny
The allegations come amid broader concerns over procurement governance and transformation within Eskom.
The power utility has previously reported increased procurement spending with Black-owned and Black youth-owned enterprises as part of its transformation commitments. Nevertheless, critics continue to question whether some procurement decisions align with government policies aimed at promoting equitable participation in state contracts.
At the time of publication, neither Eskom nor National Treasury had publicly responded to the circulation of the letter alongside the social media allegations.
Procurement specialists have long argued that while state-owned entities must act decisively against fraud, corruption and non-performance, any action against suppliers must comply with due-process requirements to ensure fairness and withstand legal scrutiny.
The Treasury’s position reinforces the principle that supplier management within state-owned entities should remain transparent, legally defensible and consistent with the requirements of public procurement law.