Phosa must say how much ANC has benefited from Hitachi's taxpayer-funded share rise
The Democratic Alliance (DA) welcomes ANC Treasurer Matthews Phosa's admission that the shares held by ANC front company Chancellor House in Hitachi Power Africa - the company awarded a multi-billion rand contact in Eskom's new Medupi power station - clearly created a situation in which the ANC was seen to be "taking advantage of the taxpayer to raise money". We also welcome Mr. Phosa's announcement that the ANC will disinvest its share in Hitachi. However, these developments - both the admission of a serious conflict of interest and the decision to disinvest - have come far too late in the process, and fail on their own to mitigate the real problem, which is that the ANC's involvement in this deal has essentially seen state funds transferred from the fiscus into the bank accounts of the ANC. Matthews Phosa must go further, and say how much the ANC has benefited from Hitachi's taxpayer-funded share rise.
Last week, ahead of the World Bank's decision, the DA lobbied various stakeholders to encourage the World Bank to make its loan conditional (the primary condition being that Chancellor House divest). In response the ANC labeled the DA unpatriotic and incorrectly suggested we opposed the loan in its entirety. But what is "unpatriotic" is for a political party to exploit state resources for its own gain! And although Matthews Phosa now seems to understand the principled problem to which the DA was alluding - that it is improper for the ruling party to benefit from government business when it controls the decision making process - that realisation has come far too late in the day to speak well of the ruling party or its values.
The fact is that even by selling their shares in Hitachi Power Africa "within the next six weeks", as Mr. Phosa has now stated that Chancellor House will do, the ANC will stand to make an enormous profit on the deal. The value of their shares in the company will no doubt have risen exponentially over this period of time, and particularly after the World Bank loan was granted. The share value of Hitachi will have already now factored in the windfall that Hitachi will receive as a result of the World Bank loan. The ANC, through Chancellor House, has now already made their killing.
Since this has been done at the expense of the taxpayer, the ANC should state publicly just how much they have benefited out of this deal, and they should give close consideration to the private member's legislative proposal that the Democratic Alliance will be submitting to Parliament this coming week, which would ban political parties from tendering and contracting with general government.
Passing legislation of that sort will be the only way for Mr. Phosa to be able to genuinely claim to the South African people that his party is serious about avoiding conflicts of interest of this sort.
It is notable that even though this debate has raged for several months now, the ANC waited until the week after the World Bank deal to make this announcement. This means that the ANC has waited until after the World Bank deal was secured, so that the value of its shares have risen. That point notwithstanding, the ANC would have probably faced no real pressure to sell their shares, had it not been for the lobbying of opposition parties and civil society - pressure that may well have resulted in a tacit agreement being made with the World Bank for the shares to be sold.
Statement issued by Sejamothopo Motau, MP, Democratic Alliance shadow minister of energy, April 11 2010
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