The Industrial Development Corporation (IDC) has agreed to disclose publicly, those politically connected people who have received loans from the company so it can secure funding from Futuregrowth Asset Management, which cut off cash to the development finance institution in August.
The IDC has been under much pressure to release the names of politicians it had business deals with so it could secure funding from Futuregrowth Asset Management.
This comes after the release of the explosive state capture report which had notable political individuals being implicated, including the president, Jacob Zuma.
The IDC said it would publish the quantum and performance of all deals concluded with these people in its annual report and website.
Though the company gave no further details on its decision, the IDC spokesman Mandla Mpangase said it was the first time the institution would be reporting on lending to politically exposed persons (PEPs).
“We are in the process of structuring a report as requested by the board,” he said.
“However, in terms of transaction approval, a robust process is followed in line with the IDC PEP policy,” he added.
Futuregrowth has laid bare its concern about IDC’s governance and lending practices after Cabinet decided to establish a co-coordinating council for state-owned companies overseen by President Jacob Zuma.
The financial institution, which is also a subsidiary of Old Mutual financial services group also raised its concern over the contracts awarded to PEPs at parastatals and froze funding to six state-owned companies. It has now lifted the funding ban on the IDC and the Land Bank.
The asset manager found the IDC had a mandate to make loans to PEPs and had good policies for the loans, but there were worries that such lending could give rise to particular risks, the Futuregrowth spokeswoman Michele Usher.
The Industrial Development Corporation on the other hand, made the decision to disclose in details, the loans and their performances; it added that had strengthened its policy on conflicts of interest.
It’s highest-profile loan to politically connected people was its R250m loan to Shiva Uranium, owned by the Gupta family, who are Zuma’s close allies.
“The IDC regulations published in terms of the IDC Act permit the IDC directors to access funding through the IDC,” said Mpangase.
“These transactions have been reported in our integrated report and are few and far [between].”
The loan was originally repayable by 2013 with interest, but Shiva was unable to pay by the deadline and the IDC restructured the loan.
Industrial Development Corporation CEO Geoffrey Qhena told Parliament in May that the original loan was expected to be fully repaid by March 2018, while interest of R257m — accumulated between April 2010 to May 2014 – was converted into shares when Shiva’s parent company Oakbay Resources & Energy was listed on the JSE in 2014.