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Friday, 6 February 2015

MYSTERY OF SWAZI KING’S $10m ‘LOAN’

There is a mystery as to why King Mswati III of Swaziland needed a US$10 million loan from the company running the Ngwenya Iron Ore Mine.  

The company had a cash-flow crisis after the King’s representative Sihle Dlamini halted all sales of iron ore in August 2014. When the King was asked to repay part or all of the loan to save the company he refused. The company then went out of business owing creditors about US$4 million and more than 700 people lost their jobs.

The King asked for and was granted the loan in April 2012, shortly after he gave a mining licence to a company called Salgaocar Swaziland to operate at Ngwenya.

Salgaocar Swaziland was the original name of SG Iron Ore Mining (PTY) Ltd (SG Iron). SG Iron was 50 percent owned by Southern Africa Resources Ltd (SARL), 25 per cent by the Swaziland Government and 25 percent by King Mswati in trust for the Swazi nation.

SARL has lodged an arbitration case claiming US$141 million against the Kingdom of Swaziland stating that the company failed in 2014 after only being in business for two years because the King’s representative Sihle Dlamini halted all sales of iron ore. It said a major reason it did this was because the King, who rules Swaziland as sub-Saharan Africa’s last absolute monarch, did not want to repay the loan.

It also stated that the closure and subsequent court order winding up the company was an attempt by Swaziland to illegally seize the assets of the company. The Swazi High Court wound up the company in December 2014 and it was liquidated on 30 January 2015.

It is not clear why King Mswati needed the US$10 million loan, since he sits on a personal fortune amassed at the expense of his subjects.

In August 2014 the Sunday Times newspaper in South Africa reported King Mswati personally received millions of dollars from international companies such as phone giant MTN; sugar conglomerates Illovo and Remgro; Sun International hotels and beverages firm SAB Millerto.

In its report the Sunday Times said the companies, which are based in South Africa, ‘have all brokered cosy relationships with the monarchy’.

It added, ‘These companies have either given large chunks of the shares in their Swazi businesses to Mswati directly or to Swaziland’s investment institution, Tibiyo Taka Ngwane over which Mswati has absolute control.’

It reported that MTN, which has a monopoly of the cell phone business in Swaziland, paid dividends directly to the King. He holds 10 percent of the shares in MTN in Swaziland and is referred to by the company as an ‘esteemed shareholder’. It said MTN had paid R114 million (US$11.4 million) to the King over the past five years.

The newspaper also reported that the King was receiving income from Tibiyo Taka Ngwane, which paid dividends in 2013 of R218.1 million. The newspaper reported ‘several sources’ who said it was ‘an open secret’ that although money generated by Tibiyo was meant to be used for the benefit of the nation, Tibiyo in fact channelled money directly to the Royal Family.

The newspaper quoted a report from Freedom House which stated, ‘Foreign companies wishing to enter Swaziland must bribe Mswati with shares or cash in varying amounts depending on the potential for profitability of the proposed venture and the new business’s possible impact on Mswati’s own business interests.’

The Sunday Times reported that MTN had a monopoly in Swaziland and was used by 57 percent of the population. It said MTN was able to keep prices high, citing the cost of 300 megabytes of data in Swaziland as R149, while in South Africa the same amount of data cost R79.

King Mswati holds substantial stakes in numerous companies. The Sunday Times said sugar giant Illovo owned 60 percent of Ubombo Sugar and Tibiyo owned the other 40 percent. Tibiyo also owned 40 percent of Royal Swazi Spa hotel of which Sun International held an ‘indirect’ 50.6 percent stake.

Remgro’s sugar subsidiary TSB owned a 26.4 percent stake in the Royal Swaziland Sugar Corporation and Tibiyo held 50 percent. SAB Miller, which owned 60 percent of Swaziland Beverages was in business with Tibiyo, which owned the remaining 40 percent.

In 2009, Forbes magazine estimated that the King himself had a personal net fortune worth US$200 million. Forbes also said King Mswati was the beneficiary of two funds created by his father Sobhuza II in trust for the Swazi nation. During his reign, he has absolute discretion over use of the income. The trust has been estimated to be worth US$10 billion.  

All this is happening while seven in ten of Swaziland’s tiny 1.4 million population live in abject poverty with incomes less than US$2 a day; three in ten are so hungry they are medically diagnosed as malnourished and the kingdom has the highest rate of HIV infection in the world.

At the last national budget in Swaziland in 2014 the King’s annual household budget increased by more than 10 percent to US$61m, this was on top of the 13 percent increase he had in 2013.

The AFP news agency reported in May 2014 that the figure also included provisions for construction work on palaces that would cost the tax payer about $12.6m.

The King has taken huge increases in his slice of the Swaziland budget in recent years.

In the Swazi national budget introduced in February 2012 King Mswati and his royal family received E210 million (US$21 million) a year from the Swazi taxpayer for their own use. This was the same amount they got in the financial year 2011/12, but was an increase of 23 percent over 2010/11 and a 63 percent compared with what the King took from his subjects in 2009/10.

Observers note that the King has had many chances in the past to cut back on his spending and reduce the amount of money he takes from his subjects, but so far he has increased his budget, rather than reduced it. In 2011, as Swaziland hurtled towards financial meltdown, Majozi Sithole, the then Finance Minister, in his budget demanded 10 percent budget cuts (later increased further) from government departments, but in the same budget the amount of money given to the King increased by 23 percent.
Despite the poverty of the kingdom, King Mswati continues to live a lavish lifestyle. He has 13 palaces, fleets of top-of-the-range Mercedes and BMW cars and at least one Rolls Royce.

In 2012 he acquired a private jet. He refused to say who had paid for it, leading to speculation that the money came from public funds.

The King travels abroad in style. In May 2012  he went to London to visit Queen Elizabeth II for lunch on a trip estimated to cost US$794,500.  

The previous year he was in London with a party of 50 people for the wedding of Prince William and Kate Middlelton, staying at a US$1,000 per night hotel on a trip that was also estimated to cost US$700 000 for the hire of a private jet to take the King and his party from Swaziland to the UK.  

In 2012 Queen LaMotsa, the second of the King’s wives, stayed at a Johannesburg hotel on a personal trip at a cost of US$60,000 a month. 

In July 2012, some of the King’s 13 wives went on a shopping trip to Las Vegas, where 66 people reportedly stayed in 10 separate villas – each costing US$2,400 per night. The party were reported by South African newspapers to have travelled by private jet which might have cost US$4.1 million.

See also

KING AT CENTRE OF IRON MINE FAILURE
 
ONLY KING GAINS FROM MINE FAILURE
HYPOCRISY OF KING MSWATI III
http://swazimedia.blogspot.com/2012/02/hypocrisy-of-king-mswati-iii.html

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