Clear signal to foreign investors: Hasty go ahead for Guptas to buy Optimum

Regulatory inconsistency has wrought great damage on the South African economy. Among the perpetrators has been the Competition Commission which often adopted a politically-motivated approach, distorting the overriding brief of promoting greater competition in the economy. But just when when you hoped there would be consistent inconsistency, there’s none. Despite concerns around backroom shenanigans and Gupta strong-arming of mining multinational Glencore, this time the Competition Commission stuck to a tight brief. It has moved rapidly to flick the green light on a deal that shouts out for detailed investigation. By so doing, a clear signal is sent to foreign investors. One reinforcing perceptions that in South Africa nowadays, political influence trumps foreign investment.  – Alec Hogg

By Dane McDonald and Matthew le Cordeur

Cape Town – The Competition Tribunal on Monday approved the controversial merger between the Tegeta Exploration and Resources, whose shareholders include President Jacob Zuma’s son and the Gupta family, and Optimum Coal Mine.

Tegeta agreed to buy Optimum for R2.15bn in December 2015 after Glencore had placed the mine under administration because it said it couldn’t make a profit because of the terms of a coal supply deal with Eskom.

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According to a Bloomberg report Tegeta is 64% owned by by Mabengela Investments, which in turn is 45% owned by Duduzane Zuma. Tegeta is a joint venture between the latter and the Guptas’ Oakbay Investments.

The merger was approved with a condition that prohibited “merger specific retrenchments” and imposed a set of “monitoring conditions” on the parties.

Aside from employment concerns the Commission found that the merger was unlikely to lessen competition in the market “as they were relatively small players when compared with rivals such as Anglo American and Exxaro Coal”.

Read also: How world sees SA: Guptas pulled levers of State to grab Glencore’s Optimum

Tegeta will supply coal to three Eskom power plants: Hendrina, Komati and Majuba.

The Optimum Coal Mine sale has thrust Eskom’s coal contracts into the spotlight.

The Guptas are increasingly making headlines due to deals that are linked to Duduzane and their perceived influence over the president.

The recent headlines include its arms contract with state-owned company Denel, influence over cabinet appointees Mosebenzi Zwane (mines minister) and Des van Rooyen (finance and Cogta), its sponsorship of the SABC breakfast show and recent coal deals.

It was reported this weekend that Gordhan would not partake in the New Age Breakfast show on SABC after his budget speech this Thursday.

The New Age is a newspaper owned by the Guptas, which does not share its circulation publicly, but is circulated in government departments and state-owned entities.

Molefe’s surprise comes as Eskom has already started this process with Treasury, Eskom said.

Read also: James Lorimer: Optimum’s loss, Guptas gain. Private profiteering from SOEs.

It submitted contracts to Treasury for coal and diesel including a register of payments made to various suppliers in 2015 after a request from the department on June 25 2015, Eskom said.

It said Treasury visited Eskom’s head office on July 23 2015 to clarify certain information they needed, and to also get additional documents which could not be sent electronically because of their size.

Treasury’s last request for additional information from Eskom was on October 21 2015, which was duly submitted, said Eskom.

Eskom said it has demonstrated a serious commitment to deal with corruption and maladministration issues. – Fin24

Source: http://www.fin24.com/Companies/Mining/tegeta-optimum-merger-approved-with-condition-20160222

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