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Friday, 5 August 2011

LOAN ‘COMES FROM A SUGAR DADDY’

Mail and Guardian, South Africa

5 August 2011

SOURCE

‘It is not a bailout but a handout from a sugar daddy’

President Jacob Zuma and the ANC appear to be conflicted over personal and business ties in relation to the controversial R2.4-billion bailout offered to Swaziland's King Mswati III, which was announced this week.

It is well known that the ANC's investment vehicle, Chancellor House Holdings (CHH), holds a 75% stake in the Maloma Colliery, an anthracite mine in the poverty-stricken country.

A Chancellor House-led consortium paid a reported R25-million for the stake, which was purchased from Xstrata in May 2010.

Now the Mail & Guardian has established that:

The other 25% is held not by the Swazi government but by Tibiyo Taka Ngwane, the billion-rand trust that is effectively controlled personally by Mswati.

Sibusisiwe Mngomezulu, described in correspondence about the Maloma deal as the "finance and business development executive" of Chancellor House, is the brother of one of Mswati's wives, Sibonelo Mngomezulu. Sibusisiwe previously also served as a director of Tibiyo Insurance Brokers, a subsidiary of the trust.

Company registration records show that Sibusisiwe is a director of two other South African companies with Bongani Mahlalela, the ANC's chief financial officer.

Internal documents on the purchase of the Maloma mine, which also involved Nehawu Investment Company, show that Chancellor House was the entity with influence in the kingdom. A draft agreement records that Chancellor House will ensure Tibiyo Taka Ngwane is "agreeable to the propositions put to them". Key to the success of the mine is the expansion of mining rights to adjacent areas, which will extend its life.

According to the document, Chancellor House is also committed "to identify other assets in Swaziland, in particular, to use best efforts in ensuring that once the St Phillips asset is acquired it shall be contributed into the Consortium in order to offset CHH's part of the debt". St Phillips is understood to be another mining property.

The mining royalty, set at 3%, flows to Tibiyo Taka Ngwane.


The Maloma transaction had a number of odd features. The mine, which supplies anthracite to Xstrata's ferrochrome operations and Richards Bay Minerals, appeared to be making losses. The seller, Xstrata, disclosed Maloma had an assessed tax loss of R198-million and a "non-interest-bearing loan account liability" to Xstrata of R192-million.

Despite this, it appears the buyers were talking of raising loans that wildly overvalued the purchase. One document states: "The parties … have to raise the amount of R500-million or such other amount as represents the fair enterprise value of the target company."

ANC treasurer general Mathews Phosa has also served as a special adviser to the Swazi government on the country's Millennium Project. This is highly controversial, given that its centrepiece was the construction of the Sikhupe International Airport, which critics say Swaziland does not need and cannot afford.

As for Zuma's Swazi connections, in 2002 he was officially engaged to Sebentile Dlamini, one of Mswati's nieces. He paid a part of the lobola, the negotiations for which were handled by KwaZulu-Natal Premier Zweli Mkhize, who was the provincial health minister at the time. Zuma was reportedly introduced to Sebentile by his former financial adviser, Schabir Shaik.

Sebentile is a daughter of the late Swazi prince Phiwokwakhe Dlamini, who served as both health and labour minister and sat on Mswati's panel of advisers. He died in January 2004 in Durban.

To read the full Mail and Guardian report, click here.

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