/ 16 April 2010

ANC rejects criticism over Hitachi stake

The African National Congress (ANC) was defiant this week about its involvement with Hitachi Power Africa, which secured a multibillion-rand contract with Eskom, despite the Congress of South African Trade Unions (Cosatu) adding its voice to the chorus of concern.

Opposition parties and trade unions have urged the ANC to sell its stake in the party’s investment arm, Chancellor House, which has a 25% shareholding in Hitachi. Finance Minister Pravin Gordhan has also spoken out, saying the ANC should do the right thing.

During its meeting with the ANC this week, Cosatu unsuccessfully tried to persuade the ruling party to withdraw from the Hitachi contract, saying the involvement constituted a conflict of interest.

“It will become increasingly difficult for the ANC to deal with concerns that it may have accepted the National Energy Regulator’s [Nersa] determination because it stood to benefit,” Cosatu said in its document at the meeting.

Hitachi Power Africa was awarded a contract to supply steam generators (boilers) for the Medupi power station in 2007. Chancellor House was reported to have had a R3-billion stake in the contract. Valli Moosa, at the time an ANC national executive committee (NEC) member, was also chairperson of Eskom and a trustee of Chancellor House Trust, the owner of Chancellor House Holdings.

“In fact, the deputy president of the ANC [Kgalema Motlanthe] is on record [as] cautioning against Chancellor House Holdings getting government tenders to avoid conflict of interest,” said Cosatu. “The treasurer general [Mathews Phosa] has also advised Chancellor House to divest from Hitachi Africa for the same reason.”

But the ANC took a swipe at Cosatu in response. “The manner in which our ally, Cosatu, partook in this malicious debate was shocking given that it did not even take the trouble of consulting with the ANC beforehand,” secretary general Gwede Mantashe said in his bilateral meeting.

“It instead adopted a populist stance wherein it publicly pronounced that it would seek clarity with the ANC. It is not an exaggeration to describe the seeking of clarity as an afterthought that is a mere formality, given that Cosatu has taken a formal position on the matter.”

Lobbying against World Bank loan
Mantashe said it would be interesting to get Cosatu’s views on the Democratic Alliance’s (DA) position regarding Eskom’s loan from the World Bank. The DA and the Independent Democrats are among parties that lobbied World Bank shareholders and the World Bank to refuse to give Eskom a $3,75-billion (R28-billion) loan if the ANC would benefit.

The veiled suggestion that companies with investments in the ANC or alliance partners must not bid for such work suggested that conservative companies should monopolise these opportunities, Mantashe said.

“This flies in the face of the 1995 resolution of the NEC of the ANC that the democratic movement should invest in the various sectors of the economy to sustain themselves in the face of the donor funding that was fast drying up,” argued Mantashe.

Yet, “whether a company with a remote relation to the ANC should ever be involved in the public sector” is a question that “should be clarified”, Mantashe said.

“In the same vein, we should ask: Shouldn’t the debate be extended to sustainable public funding of political parties?”

Mantashe said that in discussing an appropriate course of action to correct public perception, the ANC should also debate whether, for instance, union investment companies must pull out of public investments in health or education. That debate should extend to all companies that had any party investments or interests.

“This would appear to be an appropriate solution to what amounts to a holier-than-thou attitude to issues of principle,” said Mantashe.