Evidence wa ka Ngobeni The Industrial Development Corporation (IDC), the state-backed financing company, has been injecting millions of rands into private companies of which the IDC’s chief executive is a shareholder. Kanya Ngqula, who reportedly earns at least a R1-million annual salary from the IDC, is also a director of Worldwide Africa Investment, a black-owned and managed investment holding company. Ngqula was among the founders of Worldwide in 1994 and is believed to have a 30% share in the company. Since Ngqula joined the IDC in 1997 it has invested more than R200-million in Worldwide. In 1998 the IDC gave Worldwide an advance loan of R130-million to top up its stake in Plessey, a telecommunications company. Worldwide, which is valued at about R2,7-billion, now holds the majority shares in Plessey. In 1998 the IDC gave another company linked to Worldwide, Fasic Investment Corporation, a R180-million five-year loan for it to buy the Lion Match Company. A year before this deal was struck, Worldwide had acquired an 8% stake of Fasic for about R3-million. Ngqula this week confirmed that the IDC has invested in Worldwide but said there was nothing wrong as he did not play any part in the deals. “I declared my interest and I was not part of the decisions. I only see the deals when they have been completed,” he said, adding: “I don’t see any problems with the IDC funding Worldwide. I believe that you can’t disqualify a company applying for loan at the IDC on the basis that the CEO is a director of that company.” Ngqula, who has also worked for Norwich Unit Trusts and whose directorates include African Media Entertainment, Lotus 2000 and Sapekoe Estates, said that if he was asked to choose between Worldwide and the IDC he would choose Worldwide as it was like his “family business”. But Ngqula said that he did not help Worldwide with its loan application, saying the management of Worldwide had made those decisions itself. Worldwide CEO Phuthuma Nhleko echoed Ngqula’s sentiments: “We have never gone to Kanya to get funding. Like any other company that goes to the IDC for assistance we approached relevant officials there at the IDC.” Ngqula sits on Worldwide’s board of directors. Other companies in the Worldwide stable include Zenex and Afric Oil and the company has stakes in companies such as NBC, Alexander Forbes and Commerce One. Worldwide became the first black-controlled company to have a significant interest in a major South African oil company after it acquired a 20% stake in Engen, the country’s largest oil company. The IDC helped Engen acquire franchises across the country. Ngqula confirmed that Engen has been in contact with the IDC, but declined to elaborate further. “Yes, Engen was there and so was Amplats, Shell and others. This is an empowerment for black retailers. Everybody is looking for advice and their first stop is the IDC.” According to board members who did not want to be named, the IDC’s support of Worldwide in the Plessey transaction created some tensions in senior management. The sources said IDC management under Ngqula had pushed through bridging finance for Worldwide to top up its stake at Plessey to 51% despite the fact the board had not approved the IDC’s funding parameters to include telecommunications.
One board member said some members were surprised about consistency within the IDC as questions were raised about whether board members were now going to start funding companies that do not fall within the scope of the IDC after the Plessey deal.
Nqgula confirmed that he was one of the people who motivated for the change of the IDC’s mandate to include telecommunications but insisted he did not motivate for Plessey in particular. “I believe that the IDC’s mandate is a dynamic thing and flexible. Now we are even looking at including rural development,” Nqgula said. The IDC was established 59 years ago by the apartheid state to foster heavy industrial activity as a counter to the mining houses. When the new government came into power after the 1994 general election the IDC was tasked with empowering historically disadvantaged entrepreneurs and with promoting black economic empowerment. Edwin Smith, a representative of the Ministry of Trade and Industry, which presides over the IDC, said Minister of Trade and Industry Alec Erwin was satisfied with and fully aware of Nqgula’s conduct and that “its board is very deliberately composed of senior business leaders who are linked to many companies”.