Johannesburg - An uproar has erupted over revelations that bribes were paid by Hitachi Ltd to Chancellor House – an ANC investment company – for a R38.5 billion tender to provide Eskom with boilers for the Medupi and Kusile power stations in 2007.
Last night the US Securities and Exchange Commission (SEC) issued a press release saying it had found that improper payments had been made to Chancellor House to the value of $6 million leading up to the tender being awarded. It says Hitachi agreed to pay $19m to settle charges brought against it by the SEC.
The SEC claims that Hitachi “sold a 25 percent stake in a South African subsidiary to a company serving as a front for the ANC”.
“This gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured,” it said.
Hitachi was awarded two contracts to build power stations in South Africa and paid the ANC’s front company about $5m in “dividends based on profits derived from the contracts”.
Hitachi also paid the front company $1m in “success fees” that were booked as consulting fees without appropriate documentation.
“Hitachi’s lax internal control environment enabled its subsidiary to pay millions of dollars to a politically connected front company for the ANC to win contracts with the South African government. Hitachi then unlawfully mischaracterised those payments in its books… as consulting fees and other legitimate payments,” said Andrew J Ceresney, director of the SEC’s Enforcement Division.
According to the SEC’s complaint filed in the US District Court for the District of Columbia, Hitachi was aware that Chancellor House Holdings was a funding vehicle for the ANC, but continued to partner with Chancellor and encouraged the company to use its political influence to help obtain government contracts from Eskom. Hitachi paid “success fees” to Chancellor for its exertion of influence during the Eskom tender process. Hitachi’s misconduct violated the books and records and internal accounting controls provisions of the federal securities laws.
Without admitting or denying the allegations, Hitachi agreed to a settlement that would require the company to pay a $19m penalty, and it would be permanently enjoined from future violations. The settlement is subject to court approval.
While the ANC remained mum on the issue early today, with spokesman Zweli Mkhize saying “we’ll talk to you a bit later”, social media platforms were abuzz with people slamming the ANC for corrupt activities. The DA said it intended laying criminal charges against the ANC.
DA leader Mmusi Maimane’s acting spokesman, Graham Charters, said this was clearly an admission of de facto corruption that implicates the ANC – “a party that has infected government at every level with corruption”.
“Yet another ANC corruption scandal has negatively affected millions of South Africans as our load-shedding crisis has been hampered by delay after delay at Medupi and Kusile – costing our economy millions of rand.”
The DA will be laying criminal charges against Chancellor House for this unlawful activity and will write to Public Protector Thuli Madonsela, asking her office to investigate this matter, Charters said.
Patrick Craven, spokesman for the Unite Against Corruption Coalition, said the news made tomorrow’s march against corruption even more relevant.
“It shows corruption is seeping in at all levels, not just the public sector. This puts business under the spotlight as well and will be placed on our agenda,” he said.
The coalition was expecting big numbers to march as there had been tremendous support for the campaign, he said.
The Mail & Guardian reported on February 8, 2008, that then-Eskom board chair Valli Moosa presided over the parastatal giving contracts worth billions to the ANC’s funding company Chancellor House, while also serving on the ANC’s fundraising committee. Eskom refused to disclose at the time whether Moosa had declared a conflict of interest or recused himself when his board decided on the contracts. Mkhize had not responded to The Star by the time of publication.
Eskom spokesman Khulu Phasiwe said the tender process at the time had been fair and open.
“Anyone who participated can attest to this. This is a matter between the ANC and Hitachi to comment on,” he said.
Subsequent to this article going to bed, the ANC issued the following statement: "The African National Congress has been inundated with enquiries on a matter involving Chancellor House and Hitachi. We would like to advise that such enquiries be directed to parties cited in the transaction. The ANC has not participated in the said transaction and therefore find it difficult to respond to these enquiries."