Smuts Ngonyama, who heads the Presidency in the African National Congress, intervened with government regulators to smooth the way for Bato Star, a fishing company in which his family — and allegedly he — holds interests.
The company was struggling for permission for its newly purchased trawler, the Sandile, to fish in South African waters, and Ngonyama arranged the meeting between Bato Star and government officials that broke a deadlock over compliance with rules designed to prevent overfishing.
Less than a year later, the Sandile was arrested for illegally catching snoek. Licensed to catch hake, it had caught over 300 tonnes of snoek and just 39 of hake.
Joe Jongolo, the CEO of Bato Star Fishing and a member of the mayoral committee in the Eastern Cape’s Amatole District Municipality, said Ngonyama holds a 6,75% share in Bato Star, which he ”had not yet paid for”.
Ngonyama told the Mail & Guardian: ”I was approached to take up a small stake in Bato Star … I expressed an interest in principle. Financial terms were not discussed. Subsequently matters were left ‘in the air’. Accordingly, I have no financial interest in Bato Star.”
However, his intervention came last July as Bato Star battled for permission to bring the 64,5m vessel into local waters. Officials at the Department of Marine and Coastal Management pointed out in a letter that the vessel’s capacity far exceeded the company’s 840 tonne deep-sea hake quota.
Shortly after the meeting the licence was granted despite the MCM’s serious misgivings — apparently borne out by the vessel’s later arrest.
Ngonyama confirmed he had stepped in to arrange a meeting between MCM and Bato Star ”to discuss the licensing of Sandile”. ”I was informed difficulties had been experienced in convening the meeting. It was in these circumstances that I telephonically arranged for a meeting to be set up.”
Babalwa Ngonyama — a Bato Star director related to Smuts by marriage; Barend Hendricks, a Cape Town-based businessman who, like Smuts Ngonyama, was part of the empowerment consortium that recently bought into Telkom; and Gladman Boltina, an Eastern Cape-based businessman and former adviser to President Thabo Mbeki, met representatives of the department’s fishing effort management committee. Not long afterwards, ”in late August or September”, according to Bato Star’s Danny Bailey, the Sandile was licensed.
Jongolo said that there was nothing politically untoward about the meeting, which was simply to iron out technical questions. ”[The MCM] wanted to make sure we were not bringing in a cannon to shoot a fly,” he said.
Smuts Ngonyama denied ”intervening in the matter” or ”persuading MCM to grant the licence”.
According to a MCM official familiar with the saga, these ”technical issues” were in fact substantive and crucial. There was apparently concern over the increased risk of irregular or illegal fishing. MCM attempts to closely control the amount of ”fishing effort” in South African waters, and a large vessel like the Sandile, operating on a limited quota, has a good deal of spare capacity to put to work. ”If you have spare effort available, you are going to put it to work, it really increases the likelihood of abuse,” said one industry source.
Bailey, however, said buying a larger vessel was ”a reasonable strategy to demonstrate our ability to perform”. ”It seems they would have preferred us to use a 25m vessel, which wouldn’t be safe in these rough waters.”
The Ngonyama interest in Bato Star also includes Smuts’s sister, Nozipho Mgaga (Ngonyama). She owns 37,8% of the shares in a company called Amandl Olwandle, which in turn, holds the majority stake (45%) in Bato Star.
Mgaga confirmed she is Smuts’s sister. However, pressed on her Bato Star interest, she refused to comment.
Smuts Ngonyama distanced himself from the involvement of Mgaga and Babalwa in Bato Star saying he had ”no knowledge” of it.
Amandl Olwandle also houses Jongolo’s shares in Bato Star (17%), and those of Sam Kweleta, the Eastern Cape minister for housing, who owns 8,8%.
Asked whether there was a potential conflict of interest given the number of politicians and their relatives with shares in Bato Star, Jongolo answered: ”Why can politicians not have business interests?”
Bato Star is backed by the Lusitania group and its controlling Fernandes family, which holds substantial stakes in it through family companies and trusts.
The Sandile has been released on bond — the maritime equivalent of bail — and is fishing again. But Jongolo said he was still consulting financial institutions for a loan to repay R32-million the company owed on the Sandile and the purchase of its quota.
He said Lusitania boss Joao Fernandes had stood 100% surety for the R32-million.
Jongolo said the dispute with the Department of Environmental Affairs and Tourism over Bato Star’s fishing quota stemmed from the ”ambiguity” of the permit conditions for snoek fishing. ”We do not plan to rip off the sea,” he said. ”Have you investigated how other companies use their permits?”
Bato Star would begin paying its shareholders dividends in two years and pay its debt off in five years if ”we get the right fish and tonnage”, said Jongolo.
”I am absolutely confident that my own business interests are above reproach and that I have never used my party membership or political position to secure any financial advantage, whether for myself, my family member or any other person or entity for that matter,” said Smuts Ngonyama.
Three other companies make up the balance of the shares in Bato Star: Real Fishing (8%), Copperglow Investments (12%), and African Marine Products (10%). Bailey is listed as the sole director of Copperglow Investments, while the Fernandes stake in Bato Star is held through through African Marine Products.
African Marine Products also owns 35,6% of Amandl Olwandle.