SA’s elite cashing in
IOL / 21 JUNE 2018 - 06:34 / LOYISO SIDIMBA
Johannesburg - ANC bigwigs - including a former governing party president’s grandson - top businesspeople and a former spy boss are among several wealthy and prominent black industrialists who got a share in more than R9.1billion in state funding.
The identities of the more than 100 beneficiaries of the government’s black industrialists programme have been finally revealed by the state-owned development financier, the Industrial Development Corporation (IDC).
KwaZulu-Natal Health MEC Dr Sibongiseni Dhlomo is listed among the prominent influential persons in the Project Libra NewCo, whose shareholders include the IDC, Seriti Resources and CoalZar.
Picture: Gcina Ndwalane/African News Agency (ANA)
A list of beneficiaries obtained by The Star shows that KwaZulu-Natal Health MEC Dr Sibongiseni Dhlomo, former spy boss Gibson Njenje, Massmart chairman Kuseni Dlamini, retired deputy chief justice Dikgang Moseneke’s brother Tiego Moseneke, Black Business Council founding member Sandile Zungu, Lily Mine’s new owner Fred Arendse and fashion designer Laduma Ngxokolo scored multimillion-rand deals from the IDC, which administers the programme.
In the period between April last year and May 25, 2018, the IDC funded over 128 companies in deals worth more than R9.1bn.
Zama Luthuli, the IDC’s corporate affairs divisional executive, said the Black Industrialists Programme created or saved 10512 jobs last year.
The majority of beneficiary companies (49) are in Gauteng, while KwaZulu-Natal and the Eastern Cape had 15 and 13 respectively in the 2017/18 financial year.
But SA Federation of Trade Unions general-secretary Zwelinzima Vavi dismissed the programme as another hijacking of the broad-based black economic empowerment concept and offering an escape for the black elite.
Vavi, a former IDC board member, said the country was de-industrialising and experiencing a jobs bloodbath in the manufacturing sector, despite these efforts and the pumping of billions of rand into what he described as a black elite empowerment scheme.
“We are not supporters of that programme,” he said.
According to the documents, the IDC’s release of the list of beneficiaries is in line with its decision to disclose all its business partners and beneficiaries of funding from April last year.
Dhlomo is listed among the prominent influential persons in the Project Libra NewCo, whose shareholders include the IDC, Seriti Resources and CoalZar, to which South Africa’s pre-eminent development finance institution granted a R1.259bn loan in November, according to the list.
On Wednesday, Dhlomo denied any knowledge of Project Libra NewCo, Seriti Resources and CoalZar, saying anyone could have included his name in the deal.
Other prominent influential persons involved in the deal include top businessman Zungu, SA Airways chairperson JB Magwaza, former ANC head of finance Vusi Khanyile, and businesswoman Dr Anna Mokgokong and her husband Pius Mokgokong.
Smile Telecoms Holdings, which operates wireless internet in Nigeria, Tanzania and Uganda and was founded by former SABC interim chairperson Irene Charnley, got more than R516million through the programme a year ago.
In March, Zungu also received R35m for Elgin Engineering, for which he paid R50m to save it in 2016, after it was placed under business rescue a year earlier.
Dlamini is identified as the black industrialist involved in Dimako Transformers, which received R248m, while Arendse took over Lily Mine with the help of a R200m loan from the programme.
Ex-National Union of Metalworkers of SA president Cedric Gina, who is now general-secretary of the breakaway Cosatu affiliate, the Liberated Metalworkers Union of SA, is identified as one of the politically exposed persons in Rainwood Trading, along with former Minerals Council South Africa chief executive Bheki Sibiya.
Rainwood Trading received nearly R145m from the IDC in March.
Gina and Zungu did not respond to requests for comment yesterday.
Ngxokolo’s Shugaz Fashion and Textile received R3.1m and Best Cut Meat, in which Just Nyensi, a company whose majority shareholder is late former ANC president Albert Luthuli’s grandson Nkululeko Luthuli, got R1m.
The IDC’s Luthuli said the financier did not largely fund politically exposed persons, or PEPs, and had a PEP policy to ensure that its processes and decisions were not politically influenced.
“We conduct an enhanced customer due diligence on all clients to identify PEPs and thereafter we compile a PEP report in terms of the Financial Intelligence Centre (FIC) Act or financial action task force recommendations,” she explained.
Luthuli said it should be borne in mind that there was no law or rule that prohibited any entity from doing business with a PEP, but proper due diligence processes must be followed as required by the FIC Act.
According to Luthuli, all team members participating in a transaction or a deal sign declarations stating that they have not been duly influenced in the decision-making process.
She said the IDC assessed applications for funding on their ability to be financially sustainable, their products’ potential market and the business’s technical capacity.
Luthuli said the assessment of businesses run by black industrialists followed similar basic guidelines, including demonstrating the business’s ability to make acceptable profits in a reasonable period and be economically viable and compliant with all the relevant laws and regulations by companies and shareholders.
Projects demonstrating high developmental impact were given consideration, and applications for IDC financing must fall within its mandate, she added.
Former IDC chief economist Lumkile Mondi said the IDC applied rigorous processes.
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