ANC increases stake in Shell ahead of shale gas exploration

In 2012 news broke that the ruling party, the ANC, had significant shareholding in the oil company Shell and would stand to benefit financially from allowing shale gas exploration. This news caused an outcry and was met with criticism from civil society groups and opposition parties. The ANC's Batho Batho Trust had a 51% stake in Thebe Investments, which is the local empowerment partner of Shell SA. Thebe Investment Corporation had stakes in Shell SA Refining and Shell SA Marketing. Through Thebe, the Batho Batho Trust effectively had a 12% stake in Shell SA Refining, and a 14% stake in Shell SA Marketing.

At the time, Jonathan Deal, CEO of Treasure Karoo Action Group (TKAG), stated: "The ANC government has effectively placed itself in a position of being player and referee in the game. This is unacceptable." Despite calls for divestment by several groups, including opposition parties, to date no steps have been taken to rectify this predicament.

According to an article published in Business Day last week (20 January 2015), Thebe Investment Corporation has recently increased its shareholding in Shell SA to 28%, indicating that the investment company is still committed to its partnership with Shell. The article stated: "In 2002, Thebe bought a 25% stake in Shell SA Marketing. In 2011 this stake was increased to 28%. In 2008 Thebe acquired 25% of Shell SA Refining in order to broaden its exposure. With this latest transaction, Thebe will buy an additional 3% stake for cash ... This will then take its stake to 28% of the entire Shell SA operations."

The most recent increase in the stake comes after a merger of the Shell SA Marketing and Shell SA Refining businesses to form Shell Downstream SA. In essence, these comprise the operations of Shell SA.

"The net asset value of this merged entity will run into billions of rand," Shell SA chairman Bonang Mohale said to Business Day last Monday. "Their (Thebe's) stake will also amount to billions of rand." When asked about what this would imply, Mr Mohale said: "It means Thebe must be involved in everything we (Shell) do in South Africa."

Thebe Investment Corporation chairman, Mr Vusi Khanyile, said Shell was the largest single investment in the Thebe portfolio.

Jeanie le Roux, Operations Director at TKAG, said: "The recent move by the ANC investment arm to increase its stake in Shell is concerning, even more so at this time after the inappropriate conflict of interests has already been pointed out since 2012. We would have held this view regardless of the specific political party in power. The timing of past increases and especially the most recent event - mere months before shale gas exploration licenses are expected to be issued - is very suspect.

"We will be taking the necessary steps to ensure transparency and accountability on this issue, even if it means that we have to go to court," Le Roux concluded.

Julius Kleynhans, Head of Environmental Affairs at AfriForum, agrees: "This is an absolute disregard for the tenets of the Constitution and principles of good governance. The fact that increases in shareholding took place during the government investigation into fracking and before the expected issuing of licenses is very disappointing. If there is any corruption or misconduct involved, we will make sure it is exposed and that the right people are held accountable."

Statement issued by Jeanie le Roux, Head of Operations, TKAG and Julius Kleynhans, Head of Environmental Affairs, AfriForum, January 27 2015

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