It’s a sunny day in the judicial capital of South Africa, Mangaung—formerly known as Bloemfontein—but inside the country’s highest court of appeal, the temperature is rising. Media conglomerate Media24, with one of its specialist journalists, Jan de Lange, are first respondents to a case against one of the biggest mining companies in the world, BHP Billiton.
The London Stock Exchange-listed company is appealing a decision by the Gauteng High Court, which declared that they should divulge the details of their contract with Eskom. The contract might reveal that BHP Billiton is actually paying very little for electricity and that the public is subsidizing their consumption.
It is big money. In his application to the High Court, de Lange mentioned, among other things: “It appears that the contracts are responsible for at least part of Eskom’s R3.2 billion ($368 million) operating loss for the year ended March 31, 2009 and the whole of its projected loss on embedded derivates of R9.5 billion ($1.1 billion) going forward.”.
It all started in 1995 after de Lange joined Media24 as a specialist reporter in the business division, Sake24.
“It was the first story I went out to when we made the trip to Eshowe for the opening of a power station; it was here that they announced that Hillside and Gencor were to become Eskom’s biggest private client. When it came to the question and answer section of the presentation, we wanted to know how much Gencor was paying for electricity. We were not given an answer. I then started following this issue closely because you could feel that something was not right,” de Lange says.
Gencor was, at the time, one of South Africa’s biggest mining companies. Under its control it had, amongst others, Impala Platinum, Goldfields and Billiton. The company was unbundled and Billiton changed its focus to non-precious metals under the leadership of former Gencor head, Brian Gilbertson.
“At that time Gencor was one of South Africa’s major companies. We were looking for growth opportunities and we identified this aluminum opportunity arising from the country’s surplus electricity at the time,” Gilbertson says from London, where he runs a resources company.
“In order for us to invest $1 billion in South Africa and over $1.5 billion into Mozambique we needed to be confident about the power supply. As part of our risk mitigation, we wanted to know that if the price of aluminum collapsed we [wouldn’t] lose all our money invested in the project and so we did something new in South Africa, which was to link the power price from Eskom to the price of aluminum in the market.”
“This meant that if the aluminum price went down, the cost of our power would go down; if the aluminum price went up, the price would go up. In this way our project would be more viable. Even President Mandela was backing the deal because we were using it to showcase to the world that South Africa would be able to build projects of this size and nature.”
In those days Eskom had a surplus of cheap electricity but this was soon to change when economic and population growth surpassed anticipated figures. BHP Billiton was purportedly doing well as a result of the cheaper tariffs they were charged.
De Lange’s investigations revealed that while the general public was hit hard by tariff increases subsequent to blackouts, BHP Billiton might have been gaining benefit through lower electricity prices.
In 2009, he went to court to try to obtain the details of the contract between Eskom and BHP Billiton.
In August last year, de Lange finally won a ruling in the Gauteng High Court in Johannesburg, which obliged Eskom to release the contract details. Eskom was willing to abide by the ruling. BHP Billiton was not and appealed.
“We have contracts with our customers and those contracts are confidential. The reason Eskom originally contested Jan de Lange’s case was that the contracts were confidential. When we lost the case we agreed to the courts findings,” says Eskom spokesperson, Hilary Joffe.
Eskom has since gone to the National Energy Regulator of South Africa (Nersa) to seek a renegotiation of the electricity supply contract for the Hillside and Bayside smelters after the Mozal Smelter (in Mozambique) deal was successfully renegotiated along with Scorpion Zinc in Namibia.
In the Mangaung courtroom, the two opposing advocates are exploring legal issues and the technical loopholes of each other’s cases.
Advocate Frank Snyckers, on behalf of BHP Billiton, states that his client is unwilling to reveal the details of the case.
“Aluminum pricing information is crucial to keep away from competitors,” he says.
It was revealed that BHP Billiton employs around 1,600 people between the two smelters. Each smelter uses at least 500MW of electricity per year. A large city like Mangaung only uses 400MW. BHP Billiton also uses around 6% of the country’s total electricity consumption.
After four hours of legal sparring, Justice Mthiyane reserved judgment for a later date.
Managing director of EE Publishers, Chris Yelland, was one of only five people in the court’s public gallery today and he is a worried man.
“An Appeal Court is looking at obscure technical issues of a legal nature, which are being used to try and overturn a judgment of the High Court. For me, as a non-lawyer, I find this frustrating. Issues of the rights of South African public are being ignored. It is conceivable that Media24 will lose their case and if so, I hope they will take it to the Constitutional Court,” he says.
I ask de Lange if he will indeed continue fighting if he loses this round. “Of course,” he says, with a smile.

On the Threshold Of The Truth

The road to Mangaung, South Africa’s judicial capital, is an uncertain one. Beleaguered, incumbent president, Jacob Zuma (70), is up against his strangely ambivalent deputy, Kgalema Motlanthe (63). Nowadays, no one is even talking about Tokyo Sexwale, a tycoon known to have ambitions to the post but who has just never been able to muster enough support.
Although nominations only opened on October 1, that did not stop warring factions from firing the first salvos, digging up dirt and leaking (mis)information to newspapers about one another. And there is evidence that even though members can now openly talk about, and even circulate list slates and permutations of their preferred candidates, somewhere in some dark alleys and smoke-filled rooms, connivers on either side are continuing to plan the downfall of their opponents, by all and any means necessary.
Not surprisingly, the stakes are high. With an overwhelming parliamentary majority in charge in eight of the country’s nine provinces, as well as the great majority of municipalities, the ANC is mighty. The fight over resources and the dispensation of patronage is therefore a real one. And plots are abound.
In the past year both presidential hopefuls Motlanthe and Sexwale have been subjects of investigations for their alleged involvement, directly or indirectly, in a scandalous UN Oil-for-Food program that involved Saddam Hussein’s regime.
The ANC Youth League, the first group to make it clear that they didn’t want Zuma re-elected, is among those crying foul, alleging that state resources are being used to silence the president’s critics. The league points to the disciplinary expulsion of its president, Julius Malema. The youngsters contend that Malema did nothing wrong and was in fact articulating resolutions of the league when he was kicked out. Malema’s comrades don’t believe that it is sheer coincidence that following his expulsion, the Hawks, South Africa’s elite crime-busting unit, has charged Malema for money laundering; the Public Protector is now investigating him; while the South African Revenue Services believes he may have a case to answer with regard to his tax liabilities. The league’s acting president, Ronald Lamola, says it’s “a political issue” they are going to raise at the conference.
The incumbent is not having any peace either. In October, following a complaint lodged by the official opposition, the Democratic Alliance (DA), South Africa’s Constitutional Court found that Zuma had acted “irrationally” by appointing one “dishonest” Menzi Simelane as the chief of the National Prosecuting Authority.
While Zuma was pondering that, new “looting” allegations emerged detailing how, on top of his rural village, which was upgraded to become “a mini New York” amidst a sea of poverty, around R248 million ($28.2 million) was being spent on a host of other improvements to the president’s private homestead in the area. The president has denied this, insisting his family is spending its own money to do the upgrades, and that the government is only taking responsibility for security, and even then at the insistence of state security officials. The minister of public works, whose department has the responsibility of looking after the residential and security needs of ministers and senior state officials, has however steadfastly refused to divulge the details of both the actual money spent and the extent of the work done on the president’s home.
In an unprecedented move in November, the DA, with the support of eight other opposition parties, tabled a motion in Parliament in which they declared their intention to impeach Zuma. Knowing that it has the overwhelming majority that would prevent such a move, the ANC called it a “frivolous and narrow publicity-seeking gimmick” that will never see the light of day.
The people who have the best chance of deposing Zuma—if they want to—are the 4,500 voting delegates who will be gathering in Mangaung for the party’s elective conference. Drawn from the ANC’s branches, affiliate leagues and members of the national executive committee, they are the ones who will have the job of electing not only the party’s president, but also its deputy president, the secretary general, the deputy secretary general, the treasurer general, the chairperson, as well as 82 members of the powerful national executive committee.
The voting delegates’ task has not been made any easier, though. In a rather outlandish practice, certainly for a party that makes no secret of its desire to lead the continent and the world, neither of the two candidates has to go through any form of interview for the job. The candidates are not required to present to the party faithful any vision of where they intend to steer the party, the country and the continent. In fact, they should not canvass at all. To openly campaign, the unwritten rule goes, is “un-ANC” and therefore frowned upon.
So Zuma’s campaign has been left to pronouncements made by leaders of his home province KwaZulu-Natal who, with 974 delegates to the conference (see sidebar), will have the biggest representation. Following the opening of nominations, the women’s and veterans’ leagues, as well as the majority of provincial executive committees have nominated him—although it must be pointed out that the branches may vote differently to the pronouncements of provincial leaders.
The pro-Zuma group is so confident that they are resisting any compromise permutations that are being bandied about by certain brokers, under the guise of avoiding blood on the floor. The Zuma slate, by the time of going to print, had him staying on as president, Motlanthe as his deputy, chairperson Baleka Mbete and incumbent secretary-general Gwede Mantashe also staying put. Deputy Secretary General Thandi Modise and Treasurer General Mathews Phosa are no longer wanted.
Motlanthe is being accommodated only if he doesn’t challenge Zuma, something he is yet to indicate whether he will do. But he hasn’t said he’s not interested either. At last month’s launch of his political biography, where many expected him to give the clearest indication, he was as vague as he has ever been. While at the beginning of his speech he had his supporters’ hope, talking about “agents of change” and calling for an end to “the notion that so it was, and so shall it be”, he still left everyone hanging when he somewhat abruptly ended his short speech by saying when he dies, eventually, he would like his tombstone to have the words: “Others made suggestions and he implemented”.
Afterwards journalists asked each other about the meaning of what he had just said. No one had an answer. As for the race, it’s still very much on—for better or worse.

Tag: Mangaung

FORBES AFRICA SOCIAL MEDIA

On the Threshold Of The Truth

The Rocky Road To Power