NJM Heat Treatment & NDE Services, an engineering firm, faces significant challenges due to allegations of fraud in tender submissions to Eskom and Sasol.

Founded in 2009, the engineering firm specialises in quality assurance, including heat treatment services and non-destructive testing. The company told Energize that the legal process currently underway and accompanying publicity have severely impacted its operations, leading to the retrenchment of over 500 employees.

The allegations

According to the Directorate for Priority Crime Investigation of the South African Police Service, known as the Hawks, an investigation has found violations of the Broad-Based Black Economic Empowerment (B-BBEE) Act in tender applications submitted to Eskom and Sasol. The alleged loss to both entities potentially exceeds R400 million.

In August 2017, Eskom issued a tender for non-destructive testing services required during planned outages and maintenance at 15 coal-fired power stations. According to Eskom, NJM submitted an affidavit stating that it was a QSE Level 2 with 51% black women ownership but was disqualified as it could not prove black ownership. The company reapplied for a similar tender in 2020 but was disqualified again during the evaluation process, Eskom said in a statement.

NJM’s response

The directors of NJM, Mark Smith, Alexander Roditis and Vanessa Chungu, spoke to Energize to present their side of the story. They firmly deny the allegations of fronting. The company attributes the B-BBEE-related accusations to a dispute with a former shareholder, which deteriorated in 2019. According to the company, a draft shareholders’ agreement was prepared at the time of its Eskom tender submission but this was never finalised.

The directors claim the former shareholder signed the agreement but later clarified via email that the signature was solely for the purpose of supporting the tender application. NJM asserts that the shareholders’ agreement was not a requirement for the tender and was never submitted as part of the documentation. “As it stands, we do not have a binding shareholders’ agreement,” the directors said.

About the company’s relation to Sasol, NJM says it provided heat treatment maintenance, shutdown services and refractory dry-outs for many years. However, in December 2023, Sasol terminated its dealings with the company following a second investigation into B-BBEE fronting allegations, confirmed Sasol.

“We fully support the principles and objectives of Broad-Based Black Economic Empowerment (B-BBEE) and expect our business partners and service providers to adhere to both the spirit and the letter of the law in this regard,” a spokesperson from Sasol said.