amaBhungane’s EarthCrimes series:
Government’s plan to develop a R40-billion Chinese-controlled energy and metallurgical industrial complex at the Musina-Makhado Special Economic Zone is dicey, however you look at it
The department of trade and industry (DTI) outsourced the development and management of a coal-burning, water-guzzling, capital-soaking heavy industrial zone in Limpopo to an obscure Hong Kong-based businessman, Yat Hoi Ning, who was removed as chief executive of his previous company amid allegations of misconduct and fraud.
This despite there being publicly available information on the allegations against Ning and his associates, despite no feasibility study being done on the project, and despite the environmental pre-feasibility study identifying critical environmental issues such as the project’s high water requirements in a water-scarce area.
Despite all that, the Ramaphosa administration – including Environ-ment, Forestry and Fisheries Minister Barbara Creecy and the Limpopo government – are persisting with this scheme which entails handing over control of a large patch of South African soil for 90 years – and control of a project that will have a major impact on all aspects of our economy.
The DTI abandoned prudent planning, assessment and feasibility protocols; instead they have taken a “pet project” approach, driven by opaque and unaccounted-for private and geopolitical interests.
This Chinese project is part of the problem, not the solution.
Part 1: THE OPERATOR
On 15 September 2017 then minister of trade and industry Rob Davies signed a “special economic zone operator permit” appointing a company called South African Energy Metallurgical Base (SAEMB) to “develop, operate and manage” the Energy and Metallurgical Special Economic Zone (SEZ) as part of the larger Musina-Makhado SEZ.
There are serious questions about the process and due diligence that led to that signature and the project’s continuance.
The directors of the company that was granted the permit were Yat Hoi Ning (aka Yihai Ning) and Chuanhua “Frank” Shang.
Ning received his bachelor’s degree from the mainland South China University of Technology in 1980. His company biography says he has more than 20 years’ experience in non-ferrous and precious metals trading, investment and management.
Shang is said to be a former attaché of the Chinese embassy in South Africa, but associates say he became the go-to guy for Chinese businessmen seeking a foothold in South Africa. His official biography says he obtained a bachelor of electronic engineering in 1987 from the University of Shandong, China. He worked for the state-owned China National Export Bases Development Corp for 14 years as a director of new ventures in African mining and resources.
SAEMB, the company awarded the operator permit, is said to be a 100% subsidiary of the Chinese mainland-based Shenzhen Hoimor Resources Holding Company, but amaBhungane has not been able to find a trace of this company.
On the date Davies signed the permit there was good reason for the minister to withhold his approval pending a proper due diligence as to the fitness of Ning and Shang.
Both men were associated with a London-listed company with small mining holdings in Southern Africa called ASA Resource Group (formerly known as Mwana Africa). Ning was the executive chair and Shang was a shareholder.
On 18 April 2017, five months before the minister’s decision, it was reported via official company announcements that the ASA board had removed Ning and financial director Yim Kwan over alleged financial mismanagement.
The company put out a statement explaining “there is strong evidence of funds amounting to several million US dollars being transferred from the accounts… to entities in China, without full value being received.”
The same Kwan had on 15 June 2015 written to Davies on behalf of Mwana Africa, stating: “Mwana Africa Plc is interested in the planned South Africa Energy Metallurgical Industry Special Economic Zone after its designation as an SEZ…
“To this end, we are willing to share the related information and our position with your department in terms of the project preliminary work which includes the project feasibility study materials, project cooperation plans and project programme, as well as the project implementation programme.”
That letter was a word-for-word copy of a letter sent to Davies four days earlier by Ning on behalf of another company, the Hong Kong Mining Exchange Company.
Clearly the minister or his officials were not paying attention because there was also media reporting on the ASA scandal.
In April 2017, Zimbabwe’s The Sunday Mail reported that “more than US$15 million could have been spirited away”.
On 29 July 2017 ASA shares were suspended pending “financial clarification”. Two days later the high court in London appointed administrators to take over the running of ASA and on 4 September 2017 (ten days before Davies’s decision) the Mashonaland Central magistrate issued an arrest warrant for the financial director, Kwan.
Davies ought to have been informed that the leading figure behind SAEMB (the SEZ operator he was appointing) was implicated in allegations of fraud that had led to his removal from the board of a London-listed company, that the same company had been suspended and placed under administration and that its finance director was a fugitive from justice.
Some additional due diligence for a project as large as this might have revealed that:
Shang (Ning’s co-director in SAEMB) and a South African, Briss Mathabathe, were involved in the Chinese venture to buy into Profert, the South African fertilizer producer, an initiative that ended in tears and business rescue.
Shang and Mathabathe were also involved in the abortive Super 5 Media initiative which involved an attempt at setting up a Telkom-linked competitor for Mnet, but which resulted in collapse and losses both for Telkom and a Chinese investor.
Davies told us he was unaware of any untoward associations around Ning prior to signing off on the operator licence: “Nothing was drawn to my attention.” He said he acted on the advice of the SEZ advisory board, his officials and the Limpopo Economic Development Agency, which was the project “sponsor”.
Subsequent to the formal announcement in September 2017, there were more opportunities for the minister and the department to reassess the appropriateness of SAEMB and Ning.
On 27 December 2017 the Zimbabwe’s Herald newspaper reported that Zimbabwean authorities had issued arrest warrants for both Kwan and Ning.
On 10 May 2018 the Financial Mail carried a detailed exposé on some of the preliminary allegations directed at Ning and his associates.
It quoted DTI spokesperson Sidwell Medupi as saying they would investigate and, “If any evidence of wrongdoing emerges, the department will deal with such matters expeditiously”.
It also quoted Ning saying he “strenuously” denied ASA’s allegations. “Our removal as directors of ASA was unlawful and I am currently bringing a claim in the high court of justice [in London] concerning my unlawful removal as a director and other matters,” he said.
Davies was aware of at least some of these developments. He told amaBhungane: “At a subsequent stage the department informed me the individual [Ning] appeared on something called an Interpol Red Notice… We wrote to the individual and said if this is the case, the DTI… was not able to go ahead with supporting this project until these outstanding issues were sorted out.”
Davies said Ning claimed the Red Notice was a scam and that he would clear his name.
Ning’s name does not appear on Interpol’s current list and Zimbabwean sources said that since 2017 he had re-ingratiated himself with the Harare regime.
However, in the UK, a court application brought by Ning to have the case against him set aside failed. In a judgment issued on 29 November 2018 the London high court noted that the case against him was based on substantial grounds that included “stealing money, a corrupt relationship between Mr Ning and the Chinese suppliers and… conspiracy between the Chinese directors”.
Ning had been required to make disclosure of documents in his possession. Shortcomings in his disclosures led the court to conclude that they were “not consistent with a bona fide attempt to comply with the terms of the… order.”
Davies’s successor, trade and industry minister Ebrahim Patel, did not bother to respond to written questions from amaBhungane, even though his officials had weeks to do so.
Neither Ning nor Shang replied to email or WhatsApp messages.
– Sam Sole and the amaBhungane team
♦ This is the first of a four-part series. You will find them, with source references, online at:
‘Only a drunk man could have signed’
Tanzania President John Magufuli has cancelled a Chinese loan worth $10 billion signed by his predecessor Jakaya Kikwete to construct a port in his country.
The project, which broke ground four years ago and was set to be run by China Merchants Holding International, would have been the largest port in East Africa.
Magufuli said that the terms of the Chinese loan agreement could “…only be accepted by a drunken man”.
His predecessor, President Kikwete signed the deal with Chinese investors to build the port on condition that they would get a 30-years guarantee on the loan and a 99-year uninterrupted lease, according to local media reports.
Another shocking demand made by the Chinese and accepted by Kikwete administration was that the Tanzanian government will have absolutely no power to raise concerns on whoever invests in the port during that period.
Dubbed as the “killer Chinese loan”, several organisations and African citizens had demanded the then President should cancel the agreement.
They had warned that the deal will have dire consequences but their concerns were overlooked and the deal was signed. – as reported on April 24, 2020 by PortandTeminal.com
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