Erwin aims to profit from inside info
Former public enterprises minister Alec Erwin teamed up with his then director general, Portia Molefe, after both had left office to form a company that will help the government make money out of state-owned enterprises.
Erwin held the public enterprises Cabinet portfolio when Thabo Mbeki was president, but resigned after Mbeki was effectively fired by the ANC.
This business initiative on Erwin’s part could raise eyebrows: he is in a position to use inside knowledge of the government, and especially public enterprises, to make money outside government.
The ANC has not yet decided on formal cooling-off periods for government leaders after they leave office—a measure under discussion to avoid precisely the manoeuvre Erwin has executed.
He established Ubu Investments in October 2009 to achieve what Mbeki’s administration did not: drive investment in manufacturing and develop sufficient levels of productivity to export goods.
As minister, one of his pet projects was the pebble-bed modular reactor (PBMR), but it had to all but shut down this year, despite having swallowed R6billion in public funds.
Before Molefe moved to public enterprises she was chief operating officer at the Trade and Industry Department, Erwin’s previous ministry.
Ubu Investments has its offices in Bryanston, Johannesburg. The company’s prospectus says Erwin and Molefe, together with former chief executive of Denel Saab Aerostructures Lana Kinley and former De Beers executive Lloyd McPatie, will find investors in energy and transport infrastructure initiatives.
These are mostly projects the government undertakes. Ubu promises that investors will partner the government in getting large-scale enterprises off the ground.
The company will identify investment opportunities in mining and agriculture, among others, and will link projects to national infrastructure programmes. Energy and transport will be a special focus.
In its prospectus Ubu boasts that:
- Its shareholders occupied senior positions in government departments during major economic reforms in South Africa;
- These people played active roles in government policymaking;
- They have contacts in leading centres of expertise in key sectors around the world; and
- They have direct experience of critical infrastructure problems in South Africa.
Ubu Investments says it will help companies to “bring in” black economic empowerment enterprises and help big companies with their BEE compliance. The company will advise governments on creating regulatory environments that will instil confidence in the country’s business environment. “We are not dependent on government for business but will obviously work with government where it is required by the project or our customers,” McPatie said.
Erwin and Molefe could not be reached for comment.