The Helen Suzman Foundation Writes to the Public Protector Over Alleged Corruption Between Hitachi and the ANC’s Chancellor House

The Helen Suzman Foundation notes, with grave concern, the settlement deal reached between the United States Securities Exchange Commission and Hitachi Ltd.

29 September 2015

The Helen Suzman Foundation (HSF) notes, with grave concern, the allegations contained in a statement, released on 28 September 2015, relating to a settlement agreement reached between the United States Securities Exchange Commission (SEC) and Hitachi Ltd.

The SEC alleged that: 

1. Hitachi deliberately engaged with Chancellor House to secure lucrative deals with Eskom, financed by the public purse;

2. Chancellor House received significant payoffs in the form of preferential share options, dividends, and consulting fees; 

3. Chancellor House was deliberately chosen as a local partner for Hitachi given its significant connections to Eskom, the ANC, and the Government; and

4. Chancellor House is a front company for the ANC.

Of particular importance is the paper trail referred to by the SEC in its founding affidavit before the US District Court for the District of Columbia. 

Rather than defending themselves in court against these allegations, Hitachi have reached a no prejudice out of court settlement with the SEC. Hitachi would pay a penalty of USD 19 million for violating, amongst others, the US Securities Exchange Act of 1934. This agreement is yet to be approved by a court of law. 

Section 217 of the South African Constitution demands that public money is spent in a fair, equitable, transparent, competitive, and cost-effective manner. If the allegations are correct, they demonstrate a clear violation of the Constitution, separation of powers and rule of law. It is impermissible in a constitutional state that a company owned by members of ruling party and/or the government should negotiate business contracts with the Government.

It is for this reason that the HSF is writing to the Public Protector, Advocate Thuli Madonsela, asking her to investigate the veracity of the SEC claims and to report on any unlawful activity by Hitachi and the Government.

In addition, corrupt and uncompetitive practices hinder cost-effective and timely supply of South Africa’s infrastructural needs. Considering the crisis in power generation currently plaguing Eskom, and the adverse impact this has on the economy, this matter requires immediate attention.

Statement issued by Francis Antonie, Director, and Kameel Premhid, Legal Researcher, Helen Suzman Foundation, 29 September 2015