Probe into Chappies deal

Published Feb 10, 2009

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Hard questions about the black economic empowerment (BEE) component of the consortium that won the bid to build and manage Chapman's Peak Drive will be asked by the provincial task team that is probing the entire deal.

The private-public partnership set up in 2002 to build and manage the upgraded toll road was supposed to promote BEE, but the major BEE partner pulled out before the project had even started and appears not to have been replaced yet.

Since then, BEE involvement has been limited to a small group of prominent and well-established local businessmen and former academics, and with a very small percentage going to a community trust.

And there is a particular question mark about a possible conflict of interest around one of those involved: Dr Lionel Louw, who was head of the office of Premier Ebrahim Rasool during his four-year term from 2004 to 2008.

Koketso Sachane, spokesperson for Transport and Public Works MEC Koleka Mqulwana, said in response to questions by the Cape Argus that the task team appointed by Premier Lynne Brown - its membership has not yet been confirmed - would investigate all matters relating to Chapman's Peak Drive "in its totality".

"Among other areas, (the team) will be looking into the structure and design of the consortium.

"As announced by the premier last week, the matter of good governance with regards to the long-term future of Chapman's Peak Drive and the public-private partnership between the government and Entilini Concession (Pty) Ltd is of utmost importance to the provincial government."

When Entilini was awarded the R350-million contract in May 2003 - the company was called Capstone 252 at the time - the shareholding was supposed to have comprised a 55 percent share for construction company Concor, 15 percent for civil engineering and construction company Haw & Inglis, 10 percent for local investment company Marib Holdings and 20 percent for the major ANC-initiated BEE company Thebe Investment Corporation, through its subsidiary, Thebe Tourism Group.

However, Thebe never took up the investment and had withdrawn before the signing of the concession.

This was confirmed to the Cape Argus this week by Thebe spokesperson Nokuthula Thomas.

"This decision (to withdraw) was as a result of a re-evaluation of the investment and projected returns, which no longer suited the investment profile and criteria of Thebe Tourism Group," she said.

It is not been made public whether or how this declined 20 percent shareholding was subsequently taken up. It was supposed to have been done within 18 months, but no other BEE interests are reflected in Entilini's board.

In terms of the concession agreement, a Community Trust was formed with trustees from Imizamo Yethu, Hangberg, Masiphumelele, Westlake and Red Hill.

It was allocated 3 percent of the concession company, and BEE spending during the operations phase of the project had to be at least 15 percent, excluding salaries.

In 2005/6, the shareholders of the concession company provided R50 000 to the trust from their own social responsibility budgets.

Of the eight current active directors of Entilini Concession, only two technically meet BEE criteria.

They are prominent Cape Town businessman Patrick Parring and former academic and businessman Professor Brian Figaji, a former vice-chancellor of the Peninsula Technikon.

The other six directors are all from Haw & Inglis and Murray & Roberts, which in 2006 acquired senior Entilini partner, Concor.

The actual operation of the toll road, which has been closed since last June, is managed by a subsidiary company called Entilini Operations, which has just four active directors.

Again, only two meet BEE criteria - Parring and Professor Lionel Louw, who is a former head of the social welfare department at UCT and a board member of the Institute for Justice and Reconciliation, among other interests.

But Louw was also chief of staff in Rasool's office, raising a question mark about a possible conflict of interest between his joint positions as one of the province's most senior civil servants and a director of a company that was in a close business relationship with the province.

Louw became a director of Entilini Operations in June 2003, before joining Rasool, and is still listed as an active member.

Marib Holdings was set up in 1997, and in February 1999, Parring, Figaji, Louw and another prominent Cape Town businessman, Blum Khan, were appointed directors.

Also appointed director on that date was veteran struggle activist and former Western Cape MP Hilda Ndude.

However, she subsequently resigned.

Murray & Roberts, which is overall manager of the Chapman's Peak Drive toll road, local project manager Mark Jacobs and Parring all told the Cape Argus that the partners in the project had agreed that only the Western Cape government would comment on the issue.

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