ANC's Chancellor House fingered in secret R170m deal

2014-04-26 11:08

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Pietermaritzburg - The ANC’s investment company has scooped control of a major Eskom supplier in Pietermaritzburg in a secret R170m deal.

The deal was hammered by critics on Friday, who called it “illegal” and evidence that the ANC was profiting from South Africa’s power crisis.

Weekend Witness can exclusively reveal that Chancellor House is a key player in a black empowerment consortium that has purchased Pfisterer South Africa from its Swiss parent company.

Pfisterer - Pietermaritzburg’s third largest private employer with 500 staff - is a power grid accessories maker whose R550m contract with Eskom formally expires this year - ahead of major new infrastructure contracts to be awarded early next year.

The deal comes a month after another Eskom supplier, Hitachi Power Africa, shed its ANC-linked shareholding due to a "conflict of interests".

It comes only two weeks after ANC treasurer general Zweli Mkhize stated that Chancellor House should make no investments in companies that do business with the state.

More than 50% of Pfisterer’s contracts come from Eskom, which is its sole major client in South Africa.

The European power firm hailed the deal as one that provided security for the 500 staff, and complied with Eskom’s transformation agenda of 51% black and 30% black female ownership.

But on Friday watchdog agencies expressed outrage at the revelations  while unions and industry competitors said the deal could place hundreds of skilled jobs at risk in Pietermaritzburg.

Paul Hoffman, head of the Institute for Accountability in Southern Africa, alleged the investment was "illegal" in terms of the Constitution.

He warned that “this means money received from a state-owned entity will go straight into the coffers of the ANC”.

“This seems to be a brazen repeat of the Hitachi formula, which was unconstitutional, and which undermines the fairness of elections,” said Hoffman. “No other party has the temerity to enter into deals like this, where they are both [player and referee].”

Lance Greyling, the DA’s spokesperson on energy, said the deal represented “further profiteering by the ANC on the electricity crisis in this country”.

“There is going to be a huge expansion in transmission infrastructure in South Africa in future, and the ANC is blatantly positioning itself to cash in on contracts it can influence,” said Greyling.

ANC spokesperson Jackson Mthembu declined to comment.

Orene Mnguni - head of the company’s black empowerment entity, Speedcraft - was a key player in the deal, which was brokered by investment advisers Clifftop Colony in Cape Town.

On Friday, Mnguni denied the ANC’s controlling link in the takeover, “Chancellor House is not a stakeholder in this company. It has been a good process and it really could be a model for empowerment, and it means a lot to me.”

Meanwhile, Mamatho Netsianda, managing director of Chancellor, said, “I don’t know that company — you should ask somebody else.”

But Pfisterer’s financial director, Geoffrey Myburgh, confirmed what one rival bidder and other sources told Weekend Witness: “Chancellor House is one of the investors,” he said.

Myburgh said he could not reveal the precise details of the sale, and said clauses had yet to be finalised. But he said agreements had been signed, and added, “We’re very hopeful that good things will come from this change.”

Marc Hindle was a member of a team that bid for Pfisterer last year on behalf of Royal Bafokeng Holdings.

He said he understood that Chancellor House had contributed R34m in a deal that sees an immediate 49% purchase of the company, and the remainder bought over the next 18 months.

“It’s a horrible deal for us in the industry, because of the new owner’s ties to the ANC,” said Hindle, MD of McWade Productions, which also tenders for transmission accessory contracts.

“Our fear is that all products Eskom wants will be sourced from Pfisterer from now on, which could amount to uncompetitive practice,” he said.

Mbuso Ngubane, the KZN regional secretary for the National Union of Metalworkers of South Africa, said shop stewards at the factory told him yesterday that “they knew the ANC company is one of the buyers”.

“As long as they are secure in their jobs, they are fine with the ownership,” said Ngubane.
There was some concern over export plans that the union feared could lead to job losses.

“So we have requested a meeting with management next week to determine the sustainability of the company going forward.”

Based in Willowton, Pietermaritzburg, the company has grown from a small structure in 1982 into a sprawling set of buildings spread over four factory blocks, and has employees spread over generations.

The firm is renowned for making its own tools and moulds for the insulators that attach Eskom cables to poles and pylons.

On Friday, a statement by the Swiss parent company stated that “the sale consideration and negotiations are still subject to confidentiality”.

However, Pfisterer chairperson Michael Keinert said: “The sale process has been a lengthily consultative process in which all potential buyers were vetted by Eskom.”






























Read more on:    anc  |  eskom  |  pietermaritzburg  |  energy
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