POLITICS

Phosa For President? Remember Chancellor House And The Eskom Millions

The ANC's former treasurer-general wants to challenge for the presidency. But he did nothing about cronyism when he could.

01/05/2017 10:33 SAST | Updated 01/05/2017 11:20 SAST
SIPHIWE SIBEKO1 / Reuters
A general view of the construction site at the Medupi power station in Lephalele April 11, 2013. South African power utility Eskom said on Thursday it will do its utmost to have its new Medupi power plant generate electricity by the end of this year and ease pressure on the national grid, but admitted it will be a "huge challenge". Construction was suspended for several weeks earlier this year because of a violent strike and labour protests. REUTERS/Siphiwe Sibeko (SOUTH AFRICA - Tags: ENERGY BUSINESS CONSTRUCTION)

ANALYSIS

When Mathews Phosa emerged from the African National Congress' (ANC) bruising and divisive national conference at Polokwane in 2007 as the newly-minted treasurer-general, he was determined to help clean up the organisation.

Kgalema Motlanthe's organisational report painted a picture of an organisation urgently in need of renewal and the implementation of mechanisms to curb the growing problem of corruption. He impressed upon the 4 500 delegates that ANC cadres need to be above suspicion and the governing party needs to ensure that morally unbreakable cadres are deployed to public office.

Phosa understood that and his first port of call was to sort out the mess left him by his predecessor, Mendi Msimang, and the ANC's links to a massive contract to supply Medupi power plant with boilers.

Eskom contracted Hitachi Power Africa, the local subsidiary of Hitachi Power Europe, to construct the boilers and Hitachi soild a 25% stake of the business to Chancellor House, the ANC's investment arm named after the building from which the legal firm of Mandela-Tambo operated from.

The problems though were obvious: Eskom and the department of public enterprises decided on the need for new power plants, it then sourced the suppliers and awarded the contract to a company in which the ANC has a direct stake.

Phosa, in one of his first comments as treasurer-general, promised to look at Chancellor House and have it divest from the Hitachi deal.

But nothing ever came of it.

As the construction of the plant neared its planned date of completion and it became clear it will not be able to deliver electricity to the grid as planned, the focus on the problems with the boilers – which became the main point of concern in the delay – drew Chancellor House and the ANC's treasurer-general into focus.

Whereas Phosa was accessible and open in the aftermath of the Polokwane conference, he became increasingly agitated and belligerent towards any and all references to or queries about Chancellor House and Hitachi, even telling this reporter to "f--k off" when questioned about his promised efforts to have Chancellor House divest from the Hitachi/Eskom deal.

Phosa seemingly did nothing to clear up the irregularities around Chancellor House, even in the face of mounting pressure on the ANC, dogged reporting and questions in Parliament. And even though he undertook to do so.

In September 2015, three years after Phosa was dumped by President Jacob Zuma and he was banished to the political wilderness, the United States' Securities and Exchange Commission (SEC) confirmed that Hitachi paid a $19 million fine for violations of that country's Foreign Corrupt Practices Act. According to the SEC, Chancellor House received $5 million "in dividends" from the Eskom deal, as well as a $1 million "success fee" awarded to it. Zweli Mkhize, who replaced Phosa as the ANC's bagman, denied any wrongdoing on the ANC's part and said it was an "internal" matter between Chancellor House and Hitachi.

A complaint was laid by the Democratic Alliance in terms of the Prevention of Corrupt Activities' Act and the World Bank began an investigation into the deal after it granted a loan to Eskom. (It concluded no World Bank funds were "in danger".)

But that was the last we heard of Chancellor House, Hitachi and the ANC.

Now Phosa has re-entered the political stage, accepting a nomination to contest the ANC presidency in December. Even though he has (officially) been out of active politics since 2012, he has surfaced now and again, most notably writing about his "Damascus moment" in February this year when he "came to a point" where he refused to associate himself with the leadership of the party any longer.

He has been adamant for a while now that he is afraid of the country's future and that he believes Zuma is leading the republic down the wrong path. But what did he do when he was in power, able to influence the course the country is taking and able to stop the rot of corruption, cronyism and state capture that went into the highest gear post-Polokwane?

He did nothing. And Chancellor House – and the ANC – reaped the rewards.