Karpowership accused of “state capture on steroids”
Local empowerment partner Powergroup SA has accused Karpowership parent company Karadeniz Holdings Ltd (KHL) of actions reminiscent of state capture, reports the Sunday Times.
These accusations were made in a court battle where Powergroup SA is attempting to stop KHL from taking back the latter’s shares in Karpowership SA.
Karpowership SA is the company government awarded a controversial 20-year contract to provide over 1,200MW of electricity through five power ships.
According to Powergroup SA, KHL is deliberately misrepresenting it as a non-contributing shareholder to transfer Powergroup SA’s stake in the company to KHL’s newly nominated BEE partner, Anna Mokgokong.
Mokgokong is co-founder and executive chair of Community Investment Holdings (CIH), which owns a minority stake in Community Investment Ventures Holdings (CIVH), which owns Vumatel and Dark Fibre Africa.
She was also the first female director of Shoprite and sits on numerous companies’ boards — including as chair of Eskom’s second-largest coal supplier, Seriti Coal.
KHL reportedly initiated discussions with Mokgokong because it was frustrated that Powergroup SA had not come up with the R190 million required for the project’s working capital — over and above KHL’s contribution.
However, Powergroup SA’s counsel, Tembeka Ngcukaitobi, said that Mokgokong and her business partner had already agreed with KHL to take over Powergroup SA’s stake as far back as November 2022 — yet KHL only requested that Powergroup SA provide funding months for the first time in February 2023.
It is through these funding requests in February and March 2023 that Powergroup SA is being labelled a non-contributing shareholder — and Ngcukaitobi claims this is proof that the claim against Powergroup SA is in bad faith.
Anna Mokgokong
State capture allegations
He further alleges that the BEE agreement between KHL and Mokgokong involves giving KHL owner Orhan Karadeniz control of a state asset.
“It is an astonishing agreement. It is state capture on steroids,” said Ngcukaitobi.
“What is happening is that Dr Mokgokong, Mr Madungandaba [Mokgokong’s business partner], and Mr Moletsane [a Powergroup partner who fell out with the other directors] have agreed to give access to a state asset, which is the gas storage facility in Coega, to Karadeniz.”
“In exchange, Karadeniz has given them 49% of the consortium that belongs to my client. This is despite the fact that neither Mr Madungandaba nor Dr Mokgokong were bidders in the first place.”
In response, KHL’s counsel Adrian Botha labelled Ngcukaitobi’s allegations as “reckless.”
He said the agreement with Mokgokong’s company was not “underhanded”, as Powergroup SA had acknowledged in its own papers that it was asked to negotiate a price with Mokgokong.
Botha also criticised Ncgukaitobi’s state capture allegations.
“It is reckless to make such statements in an argument when we’ve even got people from the press in the court today,” said Botha.
“It’s appalling that that is suggested when we have not been given an opportunity to address it properly, but there is absolutely no merit to it.”
Screenshot from a segment of Annika Larsen’s interview with Karpowership’s Zeynep Harezi, aired on Wednesday, 9 August 2023. Credit: YouTube/eTV
Karpowership controversy
This is not the only big move Karpowership has made in recent weeks.
Earlier this month, Karpowership bought and donated a game farm to Ezemvelo KZN Wildlife — which manages protected areas in KwaZulu-Natal — in exchange for the body not objecting to its powership in Richards Bay harbour.
“The Port of Richards Bay presents a unique circumstance where the active industrial port, used largely for coal exports, operates within an estuarine bay,” Karpowership said in a statement.
“Biodiversity offsetting is a form of impact mitigation.”
Karpowership CCO Zeynep Harezi also said last month that it is willing to reduce the period on its contract to provide emergency power to South Africa from 20 years to five.
“Whatever is the best proposal we can put forward for five years, we will,” said Harezi.
“And if that is saving South Africa billions of rand [in diesel] costs, I think it is an offer to be considered.”
“A 5-year project is better than 20 years of nothing, if that is the decision we will be subjected to,” Harezi said.
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