World Bank urged to investigate alleged corruption involving Hitachi

The opposition Democratic Alliance (DA) on Wednesday urged the World Bank to investigate alleged unlawful activity in influencing the awarding of contracts by South African state-run electricity utility Eskom to Japanese Hitachi Ltd.


A complaint has been lodged with the World Bank which provided a loan to Eskom to fund the construction of Medupi and Kusile power stations in South Africa, the DA said.

World Bank
World Bank
Under a deal with Eskom, Hitachi was to provide boilers for the Medupi and Kusile power stations.

Meanwhile, the DA also laid charges against Chancellor House, a company owned by the ruling African National Congress (ANC) for mediating the deal unlawfully.

“In the light of recent developments we believe the World Bank should invoke their power to demand financial restitution, in this case from the ANC, in cases where loans where employed to fund fraudulent, corrupt, collusive, coercive or obstructive practices,” said DA leader Mmusi Maimane.

The DA said the World Bank is suspected of effectively bankrolling the ANC through their share in Hitachi via Chancellor House.

On Tuesday, the DA also lodged a complaint to Public Protector Thuli Madonsela, urging her to conduct a full investigation into the circumstances surrounding the awarding of the contract to Hitachi.

“The latest corruption scandal to hit the ruling party only serves to underscore the moral bankruptcy of the ANC which continues to profit at the expense of South African citizens,” Maimame said.

The Hitachi tender has cost South Africa dearly. The failure by Hitachi to deliver on their contractual obligations has been one of the underlying reasons for the length delay in brining Medupi online, resulting in countless job losses and cost the economy billions in lost revenue due to prolonged load shedding, according to Maimane.

Hitachi allegedly allied with Chancellor House in 2005 in order to boost their Black Economic Empowerment (BEE) profile in a deal that saw the ANC investment company purchase a 25-percent stake in the mega-company for only 1 million rand (about 70,000 US dollars). Under the arrangement, Chancellor House would share in the profits of power station contracts awarded to Hitachi.

Hitachi was subsequently awarded a 38.5-billion-rand (about 2.75-billion-US-dollar) contract by Eskom in 2007 to construct boilers at Medupi and Kusile in a move that was later found to be a conflict of interest by the Public Protector given that Valli Moosa, then Eskom chairperson, was also a member of the National Executive Committee (NEC) of the ANC.

In a de facto admission of guilt, Hitachi paid US$19 to settle the charges brought against it by the U.S. Securities and Exchange Commission (SEC) in terms of the Foreign Corrupt Practices Act (FCPA).

“There can be no doubt that Chancellor House served as vehicle to effectively launder funds for the ANC who unlawfully exerted political influence over tender processes that benefitted Hitachi, and as a result, ultimately themselves,” Maimane claimed.

According to the DA, the ANC has unduly benefitted in excess of 100 million rand (about seven million dollars) through their eight-year association with Hitachi.

After receiving 50 million rand (about 3.6 million dollars) in dividends over the course of the relationship, Chancellor House sold its 25-percent stake back to Hitachi just before the 2014 election for 50 million rand (about 3.6 million dollars).

This is in addition to the “success fees” paid to Chancellor House by Hitachi after being awarded the Eskom contracts. Enditem

Source: Xinhua

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