Ann Eveleth
The highest bidder for resort parastatal Aventura instructed attorneys this week to force Minister of Public Enterprises Stella Sigcau to back down from her decision to choose the buyer before a parliamentary debate on the sale.
Parliament’s public enterprises portfolio committee this week also accused Sigcau of “pre-empting the activities of Parliament” and misreading the 1993 Act governing the state asset, which requires a “resolution of Parliament” to sanction the decision.
Shomang Investment Holdings, which topped the bids with an offer of R196,8-million for 85% of the resort chain, instructed attorney Muzi Msimang to interdict Sigcau to set aside the selection of Kopano ke Matla, a consortium led by the Congress of South African Trade Unions’s investment arm, as the preferred bidder.
Sigcau announced on May 29 that Kopano had been selected as the preferred bidder. It made an offer of R93- million, R30-million of which would be paid to the government.
Shomang, which offered the government R100-million, claimed the process had not been transparent because Parliament and its portfolio committee had not been consulted. While Shomang said this failure alone rendered the selection of Kopano “null and void”, the consortium also complained about the constitution of the evaluation committee.
Shomang chair Vincent Phaahla could not be reached for comment. But sources inside the consortium said they were unhappy about the role of Sigcau’s privatisation advisers, HSBC Investment Bank, in the evaluation process.
Shomang’s attorneys notified Sigcau of its planned court action on Wednesday. The company demanded reasons for Kopano’s selection, access to all relevant tender documents and minutes of meetings on the sale, as well as proof that the decision had gained the support of the portfolio committee and a resolution of Parliament.
Sigcau said this week the matter would be sent to Parliament after Kopano completed negotiations with land claimants affecting the resorts. But portfolio committee chair Mandla Msomi said this was insufficient: “We will not simply rubber-stamp what the executive has done. The Act requires a resolution of Parliament. In other words, Parliament must apply its mind. It must evaluate the pre-bid criteria, the bidding criteria and the whole process, and come to its own, independent conclusion. Speaker after speaker will have to proclaim on whether the process was transparent.”
Msomi said the portfolio committee decided on Monday that the Act “was not read properly by the executive”. The committee had sought information from Sigcau’s office and the matter would be on the agenda of another meeting next Monday.
Other bidders also raised concerns about the selection process this week.
Moses Molefe, chair of Boiketlong Investment Consortium, which offered the second-highest bid with R160- million, including R45-million for the government, said: “The process has not been transparent. We had a perfect vehicle for black empowerment. We brought on board six communities, five of which are land claimants on Aventura land. Why are we going out to empower some union group in Denmark instead?”
He was referring to the Dansk Folkeferie, a Danish labour-union holiday company which forms part of Kopano’s bid, together with the consortium’s primary financier, Malaysian tycoon Dato Samsudin’s Samrand.
The South African National Civic Organisation’s New Adventure Investments backed down on its initial R250-million offer due to financing problems. But its adjusted bid of R118- million, with R85-million for the government, was the third highest.
New Adventure representative Kalie de Lange said procedural mistakes were “apparent” and the consortium was consulting with other participants to determine future action. “The question should be asked if the rush to get everything finalised is worth the loss of R55-million [the difference between New Adventure and Kopano’s offers to the government] in external revenue to the state,” he said.
The Phalafala Leisure Consortium, whose links to Deputy President Thabo Mbeki’s wife, Zanele, raised alarm bells two months ago, emerged as a strong contender in the process, but put forward the lowest bid at R77- million.
Phalafala representative Andre van Heerden said the process had been “handled shoddily … we’re not quite satisfied, but we accept that this is the new South Africa”.
Kopano’s bid was the second lowest. But Sigcau stressed this week that price was not the sole selection criterion. Other criteria included the ability to run Aventura effectively; human resource development; proven ability to pay; undertaking to arrive at a workable land claims solution; meaningful economic empowerment of historically disadvantaged communities; and financial standing and market position.
Sources inside Shomang, however, claimed their bid was augmented by the 57% shareholding it proposed for previously disadvantaged groups, including the Umkhonto weSizwe Veteran’s Association, the Nelson Mandela Children’s Fund, the Association for the Physically Disabled, the Katekani women’s group and Settapart Property Limited, the investment arm of the National Education, Health and Allied Workers’ Union.
“Our Native American partners, who were financing 100% of the bid with foreign exchange, are also previously disadvantaged people who have learned how to run successful businesses. And we planned to turn one of the loss- making resorts into a skills and social rehabilitation centre,” the sources said.