Chancellor House: This is the Hitachi scandal all over again

Evidence presented in this morning's Sunday Times indicates that the ANC, via its front company Chancellor House, is benefiting from the national energy crisis, through its recent purchase of a major Swazi coal mine, which is in turn apparently set to supply coal to several power plants, including the new Medupi plant.

In other words, as was the case in the Hitachi scandal, the ANC stands to profit from higher electricity tariffs, and from the state's World Bank loan deal. We believe that this amounts to a gross conflict of interest. It blurs the lines between party and state, and we once again call for the ANC to shut down Chancellor House.

Chancellor House is a front company that is doing nothing except enriching the ANC. And it is doing that through very questionable means.

Just as it was entirely inappropriate for the ANC to be helping itself to the tenders to supply boilers to the two new power plants, so it is deeply dubious that Chancellor House would be benefiting from the supply of coal to these plants. The timing of the deal, just two days prior to the signing of the World Bank loan, and the fact that the reported purchase price of just R25-million was a fraction of the mine's R500-million estimated value, raises particularly serious questions. We cannot have a situation where the ANC is able to benefit from an energy crisis of its own making, and its insider knowledge of the state's dealings, in order to bankroll its own party financing and election campaigns.

Just under three years ago, ANC Treasurer-General Matthews Phosa stated that Chancellor House would have nothing to do with the tender for power plant boilers, because "governance is an issue and there is public focus on this." He also said: "There will be no deals in the corner. It will be very transparent." Mr. Phosa then stated in April this year: "We [the ANC] have advised Chancellor House of our desire to exit from Hitachi as quickly as possible, and they are in the process of doing so." Former cabinet minister Barbara Hogan, and Finance Minister Pravin Gordhan, have also called on their party to "do the right thing", and withdraw from deals in which a conflict of interest exist.

Now, after seemingly admitting that holding a stake in our new power plants amounts to a conflict of interest, the ANC has not only kept its investment in the Hitachi deal, but it has actually ramped up its dealings in these power plants - by getting involved in the supply of coal as well.

And far gone is the cry of transparency. ANC spokesperson Brian Sokutu told the Sunday Times today: "We have taken a position as the ANC that we will not comment on any business dealings that have to do with Chancellor House."

The ANC needs to shut down Chancellor House, and it needs to release the findings of the Ernst and Young forensic audit that was carried out into the dealings of Chancellor House. If the ANC has nothing to hide in this audit, then it has nothing to lose, and everything to gain, by releasing it publicly. If it does not do so, that will speak volumes.

Statement issued by Sejamothopo Motau, MP, Democratic Alliance Shadow Minister of Energy, November 14 2010

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