Move follows Business Day probe into R22m arms group loan to IDC chairman

IN A move designed to restore the confidence of the public in the Industrial Development Corporation (IDC), Trade and Industry Minister Alec Erwin is expected to publish a list this week of loans to, and business dealings with, the state-owned industrial holdings group and the members of its own board of directors.

The decision, part of a bid to tighten corporate governance in the parastatal, was triggered by Business Day inquiries into a R22m loan granted in March to IDC chairman Diliza Mji and comes in the wake of revelations in this newspaper of a series of improper "gifts" worth about R40000 made to IDC CEO Khaya Ngqula by an associate company of the IDC last year.

Business Day understands that, following concerns about corporate governance, the IDC is tightening up its internal regulations and will soon require that any loan made by the group to a director needs board approval.

At present only loans of R25m or more require board approval. Lesser amounts can be ratified by the group's executive committee.

The loan to Mji and a business partner, Moeletsi Mbeki, the younger brother of President Thabo Mbeki and entrepreneur in his own right, was to enable them to buy an equity stake in Vickers OMC, local arms manufacturer and subsidiary of UK armoured vehicles producer Vickers.

Although the loan has been approved by the IDC board, Mji and Mbeki are understood to still be negotiating their entry.

Vickers OMC failed to win a contract in the state's controversial R43bn arms procurement package, but is building a substantial export business from SA.

Mji applied for the loan before being appointed chairman.

Erwin's decision to publish the details of loans made to board members is part of an effort to bring some transparency to the affairs of the IDC and to restore public trust in it following the Ngqula affair. Unease among some board members about the loan to Mji is believed to be one reason behind the decision.

A senior government official told Business Day that, while the loan to Mji did not involve investment in a new business or project, it was granted to enhance black empowerment.

Last month Vickers OMC MD Johan Steyn said negotiations with a black empowerment group for the purchase of an equity stake in the company were at an advanced stage. Mji confirmed discussions with Vickers were at an advanced stage.

"The raising of the funding has not been a problem and most of the ducks are in a row. However, the final decision has to come from Vickers UK parent company, Rolls Royce, " he said.

When quizzed on the loan, Mji declined to talk about it.

The corporation states in its annual report that its strategic objective is to create as many black entrepreneurs as possible.

Nevertheless, white members of the board have also been able to access capital from the IDC. One recent appointee, Pieter Karsten, a farmer, is said to have been given a far larger loan than Mji. It is not known what the loan was used for.

The corporation's initiatives include assisting black entrepreneurs interested in acquiring or taking over existing businesses. In this instance a 10% contribution from the entrepreneur would be required.

The IDC's chief financial officer Gert Gouws declined to be drawn on the Mji loan, saying that it was an internal matter.

With acknowledgement to Patrick Wadula and Business Day.