Pieter du Toit: Chancellor House and Eskom? 'F-off!' said the ANC's treasurer | Fin24
 
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Pieter du Toit: Chancellor House and Eskom? 'F-off!' said the ANC's treasurer

Feb 15 2019 06:00

In early 2008, the winds of change were blowing through the corridors of Luthuli House.

The Jacob Zuma Project scaled the ramparts and deposed Thabo Mbeki, who by then had become persona non grata in the ANC, with the new leadership promising to dismantle his economic policies and to drive the idea of a developmental state.

The Zumaites promised an era of glasnost and perestroika, of transparency and dialogue, a sure break from the latter stages of the Mbeki government that became cumbersome, paranoid and ineffective. The message: The needs of the people would be placed at the centre of a responsible, reactive and caring government and the ANC's tasks.

And when Mathews Phosa, the party's new treasurer general, declared the party's investment vehicle Chancellor House would look to divest from its deal with Hitachi, who won a healthy tender to work on Eskom's Medupi and Kusile power stations, it looked like they might actually walk the talk.

On 21 February 2008 he said Chancellor House – named after the building housing the law firm of Mandela-Tambo – would exit the Hitachi deal "because governance is an issue and there is public focus on this".

The criticism was clear: how could the governing party's investment vehicle be the empowerment partner to an international company hoping to win tenders from a state-owned enterprise? The conflict was clear, surely? And Phosa, it seemed, got it.

He wanted the Zuma leadership to be beyond reproach. There must be a clean break from the previous leadership, he explained to this reporter, giving him a lift to Cape Town International Airport in April 2008.

"We must ensure we get re-elected in 2012…because in the ANC, you're always in election mode."

But the ANC did nothing on Chancellor House. Hitachi Power Africa, the consortuim between Hitachi Europe and Chancellor House, brought in to repair faulty welds on the massive boilers, was banking massive fees – hundreds of millions of rands.

Phosa's declaration to divest came to nought. Gwede Mantashe, the new secretary general, dismissed queries, arguing the decision to sell the stake in Hitachi was one for the board of Chancellor House, not the ANC, who is the shareholder.

It became farcical. It was as clear as daylight there wasn't only conflict of interest, but that corruption was in play.

One Sunday morning I called Phosa, who used to be accessible and available to political hacks attempting to navigate the brave new world offered by the Zuma leadership. He answered the call, as he usually did, exchanging some thoughts about the morning's Sunday papers and the main banner headlines.

But the mood quickly changed when I breached the issue of Chancellor House.

"Just following up on your comments earlier that the ANC is going to disinvest from the Hitachi consortium…governance issues and ethics and all that," would have been the pitch.

Phosa's mood turned dark. He didn't want to engage about the ANC and Chancellor House, nor did he want to address the associated problems or the repercussions for the party if it was seen as manipulating the state in order to obtain monetary gain.

"Fokof man," Phosa said in Afrikaans and ended the call.

The ANC has never come clean on Chancellor House, its investments, how its proximity to the party and state has benefited it or how many contracts it scored from the state. 

In 2015, however, Hitachi settled a dispute with the United States' Securites and Exchange Commission, its financial services watchdog. It was found the company had "inaccurately recorded an improper payment" to Chancellor House. Without admitting any form of guilt, Hitachi paid a fine of $19m.

According to the settlement document, Hitachi received $5.6bn from the contract, and that Chancellor House's investment in the consortuim delivered a yield of 5 000%. Hitachi was clear about its choice of empowerment partner. It agreed to pay Chancellor House a "success fee" if it helped Hitachi win the contracts, and an internal memorandum stated that the Eskom board was dominated by members aligned to the ANC.

According to Bloomberg, "Chancellor House paid $190 819 for its stake in 2005. By July 2008, Hitachi's African unit started making payments of success fees, which it reported as 'consulting fees', and dividends totalled about $6m. In February 2012, it also paid Chancellor House $4.5m to buy its 25% stake, giving the ANC front company a 5 000% return on its investment".

The ANC made a pretty penny, merely by leveraging its position as governing party with control over the commanding heights of the public purse and parastatals.

It was brazen, sure, and very easy. It allegedly filled the ANC's coffers before the 2009 election, and it opened the door to many, many more lucrative enterprises. The era of capture had started.

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