The Congress of South African Trade Unions is seriously concerned at the report in Business Times (16 November 2008) that Wendy Luhabe, Chairperson of the Development Corporation (IDC), "has scored big from multimillion-rand deals involving the state-owned development financier".
The report alleges that two of her companies, Women Investment Portfolio Holdings (Wiphold) and the Women's Private Equity Fund (WPEF) benefited from two IDC loans and a multimillion-rand black economic empowerment deal.
According to the IDC's latest annual report, it approved an "interest-free" loan of R100 million, in two tranches of R50-million each, between 2005 and 2007 to Luhabe's WPEF, in which she is a 33% shareholder in the fund's management company.
Luhabe's other company, Wiphold, benefited last year when an IDC subsidiary, Hans Merensky Holdings - in which the IDC holds a 42% stake - sold 26% of its wood business, valued at R260-million, to black empowerment partners, one of which was Whiphold.
This raises once again the danger of conflicts of interests for people like Luhabe who sit on Development Finance Institutions (DFIs), when they also own companies who benefit from DFIs. According to the Sunday Times report, Luhabe admitted that she had been involved in board meetings that dealt with Hans Merensky's applications for funding, but said this had happened before Wiphold's involvement.
It is simply not good enough for her to say that she had recused herself from board meetings that made decisions involving her companies.
It should be illegal for anyone who has a position in a DFI - or any company in which they have a interest - to receive any contracts, tenders or any other form of financial benefit from that body. No-one must be allowed to be on a board that allocates money to their own companies.
This is an example of the ‘javelin syndrome', whereby people throw the javelin from their position in the public sector and then catch it in their private capacity.
The Alliance Summit on 17-18 October 2008 resolved that DFIs should play a more developmental role. They should not simply be funders of private BEE companies.
Luhabe is one of the key bankrollers for the COPE splinter group led by her husband, former Gauteng premier Mbhazima Shilowa, and former defence minister Mosiuoa "Terror" Lekota. The question that arises is "Is the new party being funded indirectly by the state, from money given to Luhabe's companies by the IDC?"
COSATU remains convinced that the COPE's decision to break from the ANC has nothing to do with the ANC departing from the Freedom Charter, but stems from a feeling that they have been displaced from their positions as parasitic, comprador capitalists, using the state to finance their highly profitable private ventures.
Statement issued by COSATU national spokesperson Patrick Craven November 17 2008
