The Coega project has been plagued with problems from the start. Now it may encounter legal troubles
Stefaans Brmmer
The Coega Development Corporation (CDC), the government-owned company driving the establishment of an industrial development zone and now evicting residents at Coega near Port Elizabeth, is alleged to have done both without legal mandate.
And the man supposed to adjudicate that mandate happens to be a CDC director himself.
The claim that the CDC has operated illegally was made this week by the Rhodes University-based Public Service Accountability Monitor and an environmental activist group. It is disputed by the CDC.
The national and Eastern Cape governments, who jointly own all equity in the CDC, have already allocated or spent at least R250-million on the project. It has been estimated the industrial development zone (IDZ) infrastructure will cost twice that amount over five years. The IDZ will be twinned with a R4,5-billion deepwater port to be developed by parastatal Portnet.
The government has pushed the Coega project, saying it will stimulate the depressed Eastern Cape economy. The IDZ is also to play a key role housing industrial offset investments that the government has promised will flow from the country’s controversial arms procurement package.
The CDC board has been chaired since its inception in 1999 by Moss Ngoasheng, then economic adviser to President Thabo Mbeki and now a private businessman. Environmental and other civil society groups have opposed the project, saying it poses unacceptable environmental and economic risks.
Coega was first mooted by private sector interests in 1996. Minerals giant Billiton, which would have constructed a multi-billion rand zinc smelter and was considered the anchor tenant, withdrew two years later. Around that time the government formally took over the project with the establishment of the CDC’s forerunner, the Coega Implementing Authority.
Soon European companies participating in the arms deal, including Ferrostaal, were touted as anchor tenants. Ferrostaal has since reconsidered its plan to locate a R4,8-billion stainless steel plant at Coega as part of the arms deal offsets, dealing the project a credibility blow.
Cabinet formally approved the establishment of IDZs duty-free areas geared to attract export-oriented industry in March 1999. Last December Minister of Trade and Industry Alec Erwin published regulations on how IDZ operators in this case the CDC are to be licensed.
The regulations state that “a provisional IDZ operator permit shall be required in order to commence making arrangements for the development of a new industrial development zone”, to be followed by a full operator permit. The permits are adjudicated by a statutory body, the Manufacturing Development Board (MDB).
But the Public Service Accountability Monitor and the South African Environmental Project this week charged the CDC’s actions were “effectively illegal” as it had neither permit. Pursuant to the project the CDC has already secured more than half the land in the 17 000ha area, built a road and cleared land, lined up shipping giant P&O Nedloyd and infrastructure company TCI as foreign partners and, most recently, started relocating about 300 families from the area.
The Human Rights Commission last week started investigating claims the removals are “unprocedural, forceful and unlawful”.
The Mail & Guardian has confirmed that Jan de Bruyn, chairperson of the MDB, which has to adjudicate CDC’s permit applications, is also a director of the CDC a direct conflict of interest. Erwin’s regulations expressly bar any member of the board from participating in an adjudication if they have a “direct financial interest or any similar personal interest” in the applicant.
De Bruyn responded he would recuse himself from both the CDC and the MDB in case specific conflicts arose. In general, he said, Erwin agreed with him that there was no conflict since both organisations belonged to the state and pursued the same goals.
CDC communications manager Raymond Hartle this week denied the CDC was operating illegally, saying no more than “preparation” work had been done.
“Our view is that we’re not doing anything illegal; we’ve been operating as a developer pursuing a development plan which includes the [future] obtaining of a provisional IDZ operator’s licence … We’re certainly not going to apologise for a project which we believe … will lead to the economical regeneration of this region.”
Hartle denied the removals were illegal, saying they had been negotiated and were done by local authorities, with the CDC acting only in a supportive role.