DA complaint on Hitachi to land on ex-Scorpions boss McCarthy’s desk

2015-10-01 21:45
Leonard McCarthy

Leonard McCarthy

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The former head of the Scorpions, Advocate Leonard McCarthy, would be responsible for taking up the Democratic Alliance’s complaint to the World Bank, it was confirmed today.

McCarthy is now the World Bank’s vice-president for integrity in Washington, and investigates allegations of fraud and corruption in projects funded by the bank.

Although the bank did not confirm receiving the DA’s complaint that the ANC had benefited from contracts to build the Medupi and Kusile power stations, it said that the vice-president for integrity would be the office to deal with it.

The bank granted a loan to Eskom in 2010 for the construction of the two power stations.

The DA yesterday laid the complaint, calling on the bank to investigate allegations that the ANC, through its investment company Chancellor House, allegedly benefited from a tender for the construction of the two stations. It is alleged that the Japanese company Hitachi Power Europe, to whom a tender to provide boilers for the power stations was awarded, made payments to Chancellor House in exchange for political influence in the awarding of government contracts.

McCarthy was among those who were accused of a “political conspiracy” against President Jacob Zuma due to the timing of corruption charges against the president.

His name is mentioned in the so-called spy tapes, which intercepted conversations between McCarthy and Advocate Bulelani Ngcuka, former head of the National Prosecuting Authority.

Spokesperson for the World Bank in South Africa, Zandile Ratshitanga said today: “If the World Bank office in South Africa were to receive a complaint by the DA to investigate Hitachi activities at Medupi Power Station, this would be forwarded to the bank’s vice-presidency for integrity, who investigates allegations of fraud, corruption, coercion, collusion, and obstructive practices related [to] World Bank Group-financed projects.”

Ratshitanga added: “The unit would take up the issue and liaise directly with the complaining party. To ensure the independence of the [unit’s] activities, the vice-president for integrity reports directly to the president of the World Bank Group.”

Ratshitanga emphasised that the World Bank “did not finance the Hitachi contract because financing was already available from other lenders”. 

The bank, however, in a statement of 2010 punted the loan to Eskom as “the bank’s first major lending engagement with South Africa since the fall of apartheid 16 years ago and aims to benefit the poor directly, through jobs created as the economy bounces back from the global financial crisis and through additional power capacity to expand access to electricity”. 

In the complaint, DA leader Mmusi Maimane also asked the bank to insist on financial restitution from the ANC, which he alleges “benefited” from the transaction.

Weeks before the World Bank granted the loan, former DA leader Helen Zille also warned of this “benefit” to the ANC.

The ANC this week distanced itself from the Hitachi allegations.

Professor Pierre de Vos, a constitutional expert at the University of Cape Town, said that questions could arise about a possible conflict of interest for McCarthy.

“There can be a perception of a conflict of interest when a person who was close to the political party [ANC], now has to investigate a complaint implicating that party. Questions will be raised over how fair such an investigation can be.”

Eskom awarded a tender for the construction of boilers at the two power stations to Hitachi Power Europe, with the ANC’s Chancellor House investment arm as black empowerment partner.
Maimane now claims the World Bank through the loan was “effectively bankrolling the ANC through their share in Hitachi via Chancellor House”.

“In light of recent developments we believe the World Bank should invoke its power to demand financial restitution, in this case from the ANC, in cases where loans were employed to fund fraudulent, corrupt, collusive, coercive or obstructive practices,” he said in a statement.

McCarthy was appointed at the World Bank in 2008.

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