The award of the tender to buy the state-owned Komatiland forests has left parties who backed the original ill-fated Zama forestry deal with a number of awkward loose ends. The R575-million bid by Bonheur consortium was approved this month.
Some of the former Zama shareholders regrouped to form part of the Miri consortium that took part in the latest round of bidding. If they were successful, it was hoped that they could recoup some of their losses and satisfactorily wind up Zama. However, the nod went to the Bonheur consortium.
Now the prospects for Zama’s creditors are slim and rest on a legal battle over the R2-million put up on behalf of Zama by the Eskom Pension Fund as a deposit when Zama was awarded preferred-bidder status.
According to the bid agreement the deposit should have been refunded to the bidder in full (without interest) in the event that the preferred bidder and the government failed to sign the transaction documents.
The Zama deal was cancelled after it was revealed that Zama, or its then MD Mcebisi Mlonzi, had paid monies for the benefit of the chair of the then bid evaluation committee. The transaction documents were never signed.
The Eskom money is still sitting in the trust account of the government attorneys, Ledwaba Mazwai, more than a year after the original deal was stopped, and a dispute has arisen about who should be repaid.
Eskom maintained the money was paid ”on the understanding” that it would be refunded directly to the fund, but the legal position is less clear.
”I believe the money belongs to the pension fund, not to Zama,” said Gary Pritchard, the attorney representing Eskom, but he admits that position is being contested.
Already, the state-owned SA Forestry Company, Safcol, has obtained a court order for nearly R500 000 in claims against Zama, which has been paid out from the R2-million.
Pritchard said this was paid out unlawfully, but admitted that the whole matter was ”a huge debacle” and the pension fund would be lucky even to get back the R1,5-million left.
Pension fund trustee Brian James denied the fund had made a risky investment. ”The Komatiland deal was a very good investment. How could anybody have foreseen that the MD would have behaved in such an extraordinary way?”
It is understood that negotiations between Eskom and the government have been going on for a year, without result. ”I don’t know what game their attorneys are playing,” said James.
Attorney Lungile Mazwai declined to comment.
Meanwhile, the award of the latest bid to Bonheur has thrown up some questions about the status of one of the government’s arms deal industrial participation projects.
The government has claimed more than R100-billion in new investments and exports will flow from the arms deal, but questions have been raised in the past about how such claims are calculated — including in the case of the major shareholder in the Bonheur consortium.
Bonheur is 70% owned by Global Forest Products (GFP), originally a joint venture between Anglo American subsidiary Mondi and a United States investor, the Global Environmental Fund.
In December 2000, when Anglo announced the formation of GFP, a capital investment of $60-million was planned to upgrade the company’s Mpumulanga forestry and sawmill operations. No mention was made of offsets. By November 2001 the $60-million was being claimed as part of the arms deal industrial participation programme.
According to figures presented by the Department of Trade and Industry, one of the arms deal contractors, BAE Systems-Saab, would be granted industrial participation credits of $90-million of investment and $81-million for the export of timber products.
A spokesperson for BAE, Linden Birns, said BAE had paid $6-million for 50% of one of the holding companies that has shares in GFP.
The Global Environmental Fund has the other 50% of this holding company, which, in turn, is one of three Environmental Fund holding companies that own 51% of GFP. The state-owned Industrial Development Corporation holds 30% and Mondi 19%.
According to a July 2002 trade report quoting Global Environmental Fund chairperson John Earhart, the capital investment has now been reduced to $30-million, all of which has been sourced locally from the Industrial Development Corporation.
The money has been used to buy second-hand equipment from Europe and North America to upgrade the outdated machinery being used in Mpumulanga.
It is not clear what the current industrial participation value attached to the BAE investment in GFP is, or whether the Komatiland deal will be given industrial participation status.
Attempts to get clarity on this from the Department of Trade and Industry were unsuccessful at the time of going to press.
GFP deputy CEO Terry Moore said that, as far as he was aware, there was no industrial participation content to the Komatiland deal.