The African National Congress’s (ANC) Chancellor House group has targeted investments in sectors of the economy where government institutions dish out opportunities such as business rights or contracts. When companies in which Chancellor holds a share compete for such opportunities, the ruling party becomes both player and referee. Chancellor’s biggest known deal is as part of a manganese consortium. Here are others.
COMPANY Hitachi Power Africa, local subsidiary of Babcock-Hitachi Europe
CHANCELLOR’S SHARE Reportedly 25%
PARASTATAL OPPORTUNITY Hitachi Power Africa was formed last year in response to Eskom’s drive to increase electricity generation capacity. It has tendered for a R26-billion contract to construct a coal-fired power station near Lephalale.
REMARKS Robin Duff, Hitachi Power Africa MD, declined to comment on the links between Chancellor House and the ANC.
SECTOR Information technology
COMPANY Tsohle Technology Holdings and two subsidiaries, Tsohle Business Solutions and Tatis Africa.
CHANCELLOR’S SHARE 50,75% in the holding company until mid-August, then divested completely, according to Tsohle.
GOVERNMENT OPPORTUNITY ONE Tatis Africa is a joint venture between Tsohle Technology Holdings and Swiss company Tatis, which supplies software solutions for customs and other law enforcement authorities. Tatis Africa is part of a consortium that has tendered for the South African Revenue Service (Sars) tax and customs modernisation project, worth about R500-million, according to a source close to the company.
GOVERNMENT OPPORTUNITY TWO The Tsohle Business Solutions website states that ”one of Tsohle’s main focus areas is the public sector”. Another web posting boasts government contracts ranging from the presidency to the police, the State Information Technology Agency, Sars and the departments of minerals and energy, trade and industry and justice.
REMARKS Charles Upchurch, CE of Tatis in Switzerland, said: ”In our due diligence to choose Tsohle as our joint venture partner, we were aware that a principal investor in Tsohle is Chancellor House. We are not aware of any political connections of Tsohle or of Chancellor House, nor does Tatis Africa need these political connections.”
Charles Morgan, speaking for Tsohle Technology Holdings, said that during the time Chancellor was a shareholder the company obtained no government contracts, although it was appointed subcontractor by successful tenderers. He did not address the fact that subsidiary Tatis Africa was part of a consortium that had tendered for the Sars contract.
COMPANY Wits Gold, listed in April, valued at R1,8-billion by August
CHANCELLOR’S SHARE Wits Gold CFO Derek Urquhart said he ”understood” that Chancellor House had a share in the Continental Africa Gold Resources Consortium. Continental held about 23% of Wits Gold at the time it listed. Chancellor House chair Taole Mokoena is Wits Gold’s deputy chair.
GOVERNMENT OPPORTUNITY By the time it listed in April, Wits Gold had been granted new-order gold prospecting rights by the Department of Minerals and Energy for six of the nine areas it had applied for, covering almost 80Ã‚Â 000ha in the Witwatersrand Basin.
REMARKS Wits Gold appears designed in part to provide an ”outsourced BEE” solution to established mining companies that may struggle to meet the empowerment criteria of the Mineral and Petroleum Resources Development Act and its associated empowerment charter. Wits Gold acquired its mineral assets from established companies. As a 40% empowered company itself, it then obtained new-order mineral rights. The established companies have the option of taking back a 40% share.
COMPANY Grindrod J&J Logistics, set up in 2003 by shipping group Grindrod as an empowered subsidiary.
CHANCELLOR’S SHARE 5%, according to Grindrod CEO Ivan Clark.
GOVERNMENT OPPORTUNITY Grindrod J&J Logistics provides services including warehousing, bonded warehousing, container facilities and transport. Bonded warehouses are government-licensed customs warehousing facilities.
REMARKS Clark said ”we were not told” that Chancellor House was owned by an ANC funding trust, but that ”we did not inquire heavily Ã¢â‚¬Â¦ At the end of the day, as a South African company, we were just hoping this would provide a better South Africa, whether political or broad-based.”
COMPANY Afgem, best known for its former ownership of a tanzanite mine in Tanzania. Bought three local diamond mines last year and entered a BEE deal.
CHANCELLOR’S SHARE Afgem company secretary Robert Summers confirmed Chancellor was originally to have taken a direct empowerment stake in Afgem. However, he subsequently heard it would hold its stake through the Simeka Mining Consortium, which he said held 11,8% of Afgem. He was not sure whether this had happened.
GOVERNMENT OPPORTUNITY Like other mining companies, Afgem is dependent on rights issued by the department of minerals and energy.
REMARKS The Simeka Mining Consortium is led by former public service director general Robinson Ramaite, who is also involved, alongside Chancellor, in the Kalahari manganese deal.
COMPANY Bateman Africa, established as an empowerment subsidiary of project management company Bateman in 2004. Expected turnover at the time: R1-billion.
CHANCELLOR’S SHARE 10%, according to Bateman at the time.
PARASTATAL OPPORTUNITY Bateman CEO Sivi Gounden said: ”Our clientele are Ã¢â‚¬Â¦ the mining companies Ã¢â‚¬Â¦ and not government departments or state entities.” However, the Bateman (parent company) website talks of it operating ”primarily in the South African power and energy sector”, while Bateman Africa was said in a company publication last year to focus on ”the provision of innovative solutions to the natural resources, power generation, infrastructure and industrial sectors”.
Another Bateman subsidiary, Bateman Howden, won a R34-million contract last year to supply equipment to an Eskom power station.
Power generation in South Africa is government regulated and heavily dependent on parastatal contracts.
REMARKS Gounden said: ”I was unaware, and remain so, of any link to the funding of the ruling party.”
This article formed part of a larger report on the ANC’s funding front, Chancellor House. Click here to read more.