PP hit in the pocket; Eskom cash injection; Denel without pay; PIC lost $333m in oil

By Linda van Tilburg

  • The Constitutional Court has ruled that Public Protector Busisiwe Mkhwebane must pay 15% of the Reserve Bank’s legal costs, which is about R900,000. The Constitutional Court upheld the High Court’s finding that the Public Protector acted in bad faith and that she exceeded her mandate. The court said Mkhwebane’s “entire model of investigation was flawed” and she was not honest about her engagements during the investigation, which included meetings with the State Security Agency. It is a stinging blow to the ombudsman as she faces accusations of bias and challenges to various findings she made. President Cyril Ramaphosa announced on Sunday night that he will seek an urgent judicial review of her report that found that he violated the constitution and executive ethics code by misleading lawmakers about a campaign donation.
  • Eskom is getting additional support of R59bn over two years; R26bn for the current financial year and R33bn for next year. This comes only five months after Finance Minister Tito Mboweni announced a three year R69bn cash injection for the struggling utility. The details are in a special appropriation bill before Parliament. According to the bill the funds will come from the Revenue Fund and Finance minister, Tito Mboweni may impose conditions to be met by Eskom before any part of the amount is transferred. Mboweni will release more details tomorrow in Parliament. Yields on Eskom dollar securities due 2021 climbed eight basis points yesterday to 5.12%, the highest since June 28.
  • The ex-chief of the Public Investment Corporation, Dan Matjila has admitted that the PIC lost $333m after a “poor investment” in Erin Energy Corp. Matjila accused the US oil explorer of deliberately withholding information about its prospects ahead of a listing in Johannesburg. The PIC took part in a private placement in what was then known as Camac Energy ahead of the Houston-based company’s secondary listing in 2014, but technical problems at a rig and the falling oil price made the business unviable, he said, and Erin filed for bankruptcy last year. Erin’s founder Kase Lawal was a close friend of ex-president Jacob Zuma.
  • Meanwhile staff at state owned entity Denel face the possibility of no salaries in July. This has prompted the Solidarity union to threaten legal action against the arms manufacturer. Denel has seen financial difficulty for much of this year, but Public Enterprises Minister Pravin Gordhan has previously said he will assist the company to get back on its feet.
  • The arrival of troops on the Cape flats is starting to make a difference. Weekend murder statistics show 25 murders, still a very high rate, but it is down from 43 last weekend and 55 two weeks ago. Over the weekend the SANDF were in Hanover Park and Manenberg. Some residents say the weekend was mostly peaceful. The Western Cape Government has appealed to the Police to use the presence of the troops to catch the culprits who are driving up crime and disorder.
  • News from the markets, the JSE closed lower, losing 0.4% as expectations of a US Federal Reserve Rate cut of 50 basis points were lowered to 25 basis points. The Rand improved in late afternoon trade to R13.85 to the dollar. There was a sharp drop in food producer RCL foods down 6.5%, while Supergroup and KAP Industrial lost 4.5% of its value. Winners on the day were South32 mining group up 3%, while Kumba Iron Ore and Transaction Capital gained more than 2% .
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