Zuma's Son, Guptas Own Company That Bought Glencore Mineby , , and
Competition Commission approves deal by Tegeta Exploration
Tegeta Exploration is owned by Oakbay Investments, Mabengela
South African President Jacob Zuma’s son, Duduzane, has a stake in a company that’s buying Glencore Plc’s Optimum Coal mine along with the Gupta family, according to the country’s antitrust regulator. The Guptas have been criticized because of their links to the nation’s leader.
Before Duduzane’s involvement was disclosed, the transaction attracted criticism from opposition parties and labor unions because Mines Minister Mosebenzi Zwane said he traveled to Switzerland to meet Glencore’s Chief Executive Officer Ivan Glasenberg to help advance the deal in what he said was an attempt to save jobs. Optimum is now selling coal to the Arnot power plant owned by the state power company Eskom Holdings SOC Ltd. after the utility decided not to renew a supply contract with Exxaro Resources Ltd., threatening almost 2,000 jobs.
The revelation of the ownership details comes ahead of Zuma’s delivery of the annual state-of-the-nation address in Cape Town later on Thursday. His links with the Guptas include their companies having employed his daughter and one of his wives, previous business partnerships with Duduzane Zuma and their landing of a jetliner bearing wedding guests from India at an airforce base that as a “National Key Point” is prohibited from undertaking commercial activities. Opposition Economic Freedom Fighters supporters marched with placards on Thursday attacking the relationship.
“It’s just a stupid thing to do. It reflects very badly on the government. Everything that Zuma is going to do in his state-of-the-nation address to impress his international audience that our business model is ok is eroded by something like this,” said Theo Venter, a political analyst at North-West University in Potchefstroom, South Africa. “They might present a lot of political spin but the people in the know can deduct what is going on here.”
The Competition Commission recommended the approval of the purchase by Tegeta Exploration and Resources (Pty) Ltd., a company owned by Oakbay Investments and Mabengela Investments, of Optimum, which had been placed into bankruptcy protection by Glencore Plc, the regulator said in an e-mailed statement. Tegeta will still be expected to pay a 2.3 billion rand ($145 million) fine incurred by Glencore for breaching the terms of a coal supply contract, said Khulu Phasiwe, a spokesman for Eskom, according to Johannesburg’s Business Report newspaper.
Oakbay Investments, owned by the Gupta family, controls Oakbay Resources & Energy Ltd. Mabengela, in which Duduzane Zuma has a stake, also has an interest in the Shiva Uranium operation, which the Gupta family controls through Oakbay. Duduzane Zuma and Gupta family members are directors of at least 11 of the same companies, publicly available documents show.
“The only way the government can now ensure the country that this deal was above board is to show all details of it” and of all the deals that the Gupta family have done with Eskom, James Lorimer, a lawmaker for the main opposition party, the Democratic Alliance, said in an interview. “It is highly problematic that not only has the current mining minister extensive connections with the Gupta family, but that the President’s son is also involved.”
Zwane said in a Feb. 8 interview that he met with Glencore’s Glasenberg. He denied giving Tegeta any preferential treatment. Department of Mineral Resources spokesman Martin Madlala didn’t immediately respond to messages seeking comment on Thursday. At the time of his appointment South African newspapers, including Business Day, reported that Zwane was linked to the Guptas and the Sunday Times said a delegation from the Guptas was in Switzerland at the same time.
“Even if Zwane’s involvement in the deal was in the interest of preserving jobs, it certainly creates an impression of bias at a time of crisis in the industry,” Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence, said in an e-mailed response to questions.
The Competition Commission recommended that the Competition Tribunal approve the transaction, provided that no jobs are lost as a result of the deal.
Eskom said it isn’t concerned who owns the mine. Calls and e-mails to Oakbay weren’t responded to outside of normal office hours. Oakbay’s office also takes inquiries for Duduzane Zuma.
“Eskom’s primary concern is supplying its power stations with coal,” Khulu
Phasiwe, a spokesman for the utility, said by phone. “As to who owns what, it’s
none of our business.”
Glencore declined to comment.