IDC beneficiaries’ list reveals network of politically connected black executives
Industrial Development Corporation has loaned R8.5bn to 128 black industrialists since April 2017
Several of the beneficiary companies that received funds from the Industrial Development Corporation (IDC) last year involve former and present executives of a range of state-owned entities.
This is an indication both of the small pool of executives in the country but also of the network that exists within the state sector.
Those involved as IDC beneficiaries include former executives of the Development Bank of Southern Africa, the Land Bank, the Public Investment Corporation (PIC), the IDC itself and state-owned entities.
The IDC has listed the beneficiaries of its funds from April 1 2017 to early April 2018 on its website, which also includes the names of prominent persons associated with the investments. It has loaned R8.5bn to 128 black industrialists since April 1 2017.
The prominent persons listed by the IDC on its list of beneficiaries include the names of prominent politicians such as former deputy finance minister Sfiso Buthelezi who is involved with Eskom chairman Jabu Mabuza in Resource Generation Africa Holdings (Resgen) subsidiary Ledjadja Coal which received a R1bn loan from the IDC in April.
Former Denel board chairman Sandile Zungu, established businessman Vusumuzi Khanyile (who was head of African National Congress finances in the early 1990s) and KwaZulu-Natal health MEC Sibongiseni Dhlomo are cited as being connected with the Project Libra Newco which is involved in base metals and mining and received R1,3bn from the IDC.
IDC divisional executive for corporate affairs Zama Luthuli said that from April 1 2017, when the IDC started publishing its funding approvals, the bulk of approved transactions did not include persons who could be regarded as politically exposed persons. The corporation has strict policies and guidelines in this regard and rigorous due diligence preceded all funding decisions.
She said that politically connected people were not automatically suspected and excluded from IDC loans but their loan applications were subjected to stringent checks.
"The intention is to ensure that the integrity of the investment decision-making process has not been compromised by the presence of politically influential persons in transactions," she explained.
The IDC’s funding programme for black industrialists is different from the black industrialists programme of the Department of Trade and Industry (DTI) which was launched in 2016 and which has approved 102 black industrialists for financial support. A further 100 black industrialists are targeted for support over the next two years.
There can, however, be an overlap of beneficiaries between the department’s grant programme and the IDC funding programme. This co-funding is underpinned by rigorous due diligence processes, DTI director-general Lionel October said Thursday.
October said the DTI’s programme was focused on manufacturing enterprises with the grant used for machinery and equipment. Tight criteria were applied and due diligence undertaken which excluded fly-by-night operators. "We want people who are currently invested and have skin in the game. We take them to the next level," October said.