Hitachi Power Africa (HPA), which has won a R38.5 billion Eskom boiler contract, on Tuesday pleaded ignorance about questionable business links with the ruling ANC.
HPA chief executive officer Johannes Musel told reporters the company had no idea that the African National Congress owned Chancellor House when it signed a black empowerment deal with the ruling party's investment arm. Also, Musel said HPA had not been informed of any plans that the ANC might disinvest its 25 percent stake in the company. “We can confirm that we have had no direct approach from our shareholders... "It is in the first instance a shareholder issue, so if something is going to happen they should be talking to our holding company,” said Musel.
The ANC owns 25 percent in HPA through its investment arm Chancellor House. ANC treasurer general Mathews Phosa had said the ANC would disinvest, while Chancellor House officials had denied this. “It's a business transaction and it takes all partners involved to agree... "There is a disagreement if the share should be sold or not... We have not been made an offer,” said Musel. He said HPA had needed a black economic empowerment (BEE) partner to get a R38.5 billion Eskom contract to build boilers at its new Medupi and Kusile power stations in Limpopo and Mpumalanga. Chancellor House paid “more than R1 million” for the 25 percent stake in HPA, said the company's chief financial officer Robin Duff. “At the time we did the deal with them, we did not know they were an ANC front company,” Duff said.
Duff and Musel were briefing media in Johannesburg to set “the record right” on reports linking the company to the ruling party. “We really want to put the record right – we have done what we can to ensure that there is no funding going to political parties,” said Duff. “There is no corruption in our business or in our dealings with Chancellor House... We are not funding political parties,” he added.
The contract between HPA, Chancellor House and a five-percent broad-based black empowerment partner, Makotulo, was signed in November 2005. “The first we knew about it [the ANC link] was when the ANC secretary general in 2007 came out in the press and said he had just become aware that it is an ANC company,” said Duff. At that stage, “numerous meetings” followed with Chancellor House directors, trustees and politicians and HPA was subsequently informed the ANC would not disinvest. Now that the issue was making news headlines again, Musel said HPA would “carry on to fulfil our contracts”. “We have done what needed to be done. There is no legal issue... if there are any problems coming up, we will deal with it,” said Musel. “We would like to proceed with our business.”
The pair went to great lengths to explain that Chancellor House Trust presented itself to HPA as a trust with beneficiaries who were “natural black people who support the struggle of previously disadvantages South Africans... there was no reference to any political party”. As soon as Hitachi became aware of the situation, it made sure that the beneficiaries of the trust were “natural persons” and not a political party. “All we can do, is we can make sure that the conditions are legal... correct in terms of what the deed of the trust says; the responsibility lies with the trust,” said Musel. “If you want to know who the beneficiaries are, speak to Chancellor House Trust,” he added.
Chancellor House was expected to receive an estimated R50 million over eight years in profit from the Eskom Medupi and Kusile power stations deal, said Musel. “Chancellor House will only share in the profits of the local scope and it will not be billions... We are looking at about R50 million over a period of eight years. That's the magnitude,” he said. That money would not go to any political party, said Musel, because the beneficiaries of the Chancellor House Trust were “natural black persons”. “It will go back to natural black persons such as women, the youth, the disabled, the aged.” He told journalists: “I see some of you are smiling. It's for you to speculate, it's for me to tell you the truth.” But when asked if HPA could guarantee that the money would not end up in ANC pockets, Musel replied: “What control would we have over what you do with [your] money... it's a good question but ask it to the right people.”
