South African Micro-Electric Systems

In 2004, MAN Ferrostaal invested about € 9-million in South African Micro-Electronic Systems (Sames), a subsidiary of venture capital company Labat Africa, which makes semi-conductors .

Sames was chaired by former minister of defence Joe Modise before his death in 2001. Barbara Masekela, former ambassador to France and the US, was also at one stage a director.

In June this year the JSE threatened to suspend Labat, now headed by former SA rugby boss Brian van Rooyen, if it did not submit results for the year to February by the end of that month.

The group was temporarily suspended in July ahead of an announcement in which it issued a detailed response to concerns outlined in an audit review. Labat's former auditors raised the alarm about the viability of Sames and a tax liability of R36-million, among other things.

Mdm/Ferroman Und Tan

TAN Mining & Exploration (TAN) is a tantalum mining company owned by MAN Ferrostaal and based in northern Mozambique. Its BEE component is Enable Mining. Chippy Shaik is a director of Enable Mining and a director of TAN, both of which are registered at the same Rosebank address.

MDM/Ferroman, an engineering and consulting company, and sister company Ferroman were used to set up BEE partners as part of offset obligations. Both went into liquidation.

Julekha Mahomed, a former attorney of Jacob Zuma, was also registered as a director of Ferroman.

Atlantis Education and Training Institute

In 2003, Ferrostaal lent R25-million to the Atlantis Economic Development Trust, a nonprofit organisation in the Western Cape, as an offset. The loan was to be repaid in annual instalments, with interest.

Two years later, the trust celebrated the opening of the Atlantis Education and Training Institute in the poverty-stricken area an hour outside Cape Town. Here, disadvantaged students would be provided with knowledge and skills training.

By 2006, no money had been repaid and MAN Ferrostaal was in the Cape High Court in a bid to have the trust provisionally wound up because of alleged fraud to the tune of R2-million.

The money was gone, teachers were not paid, students lost their fees and the institute closed. It was taken over by the Western Cape Education Department.

Trimica Call Centre

Trimica was set up as an offset in Randburg in 2004, but apparently shut within a year, leaving more than 80 employees without jobs.


Magwa Tea Estate

In 2004, the Eastern Cape Development Corporation brokered a deal with MAN Ferrostaal and Indian tea giant Gokal to invest € 3-million in the embattled Magwa Tea Estate *1 in Lusikisiki, Eastern Cape.

The estate, established in 1965, had long been seen as a political white elephant, mired in corruption and debt.

MAN Ferrostaal's money was disbursed through the Eastern Cape Development Corporation in annual payments, and Gokal was contracted to rehabilitate the estate.

Gokal left Magwa in 2006 and MAN Ferrostaal's last grant was paid last year. According to estate manager Ian Crawford, the Eastern Cape Development Corporation is still the custodian of Magwa, and the estate is once again looking for an investor.

Condom Factory

A much talked about condom factory, to be built by MAN Ferrostaal in the Eastern Cape creating 520 jobs, never got off the ground.

Abalone Farm

The farm, at St Helena Bay on the Cape West Coast, was included on MAN Ferrostaal's list of offsets.

Bernie Pols, a director of Benguela Holdings, which owns the farm, initially told the Sunday Times his company did not have any foreign investment.

Later, when sent an e-mail asking if Ferrostaal had invested any money in his company, Pols replied: "That is correct. The funding is in the form of a loan. The start-up fund for the farm and hatchery came from ourselves. Their funding just allowed us to expand further."

Welfit Oddy

John Oddy, managing director of Welfit Oddy, which manufactures stainless steel containers in Port Elizabeth, said MAN Ferrostaal's participation was handled directly between it and his company's Netherlands holding company.

He said he was unable to provide any answers to Sunday Times questions. A further request for details of the holding company was ignored.

Hosaf Recycling

MAN Ferrostaal lent money to Hosaf, which recycles plastic bottles.

Hosaf financial director Grant Litkie said MAN Ferrostaal's investment in 2004 had been in the form of a soft loan.

"The Ferrostaal participation helped the (PET recycling) plant to remain viable during its start-up and initial few years of trade, creating direct employment of 69 staff and possibly hundreds of informal employment opportunities in the waste collection industry," said Litkie.

Oil and Gas Fabrication

Late last year, MAN Ferrostaal launched South Africa's first shipyard to construct oil and gas production platforms, at Saldanha Bay on the West Coast.

The offset agreement was R1.7-billion. The Department of Trade and Industry referred to the project as "an excellent example" of offsets at their best.

Ferrostaal built a platform fabrication yard, which it said would meet the increasing demand for production platforms triggered by the growing West African oil and gas industry. Structural engineering company Grinaker-LTA would operate the new plant.

In a 2006 report titled "Restoring South Africa's lost industry", MAN Ferrostaal said that since existing shipyards elsewhere were booked up, it was expected that orders would be received "immediately".

This did not happen.

But Grinaker's engineering manager, Steve Hrabar, said that although there was a perception that the fabrication yard was a "white elephant", this was not entirely true.

"The reason for there being no activity at the facility is because we are yet to secure our first contract. Based on our experience in the international oil and gas modular fabrication market, the average lead time from first identifying an opportunity to securing an order is approximately three years.

"We have been marketing this facility for 18 months and have a number of opportunities in the pipeline *2. "

With acknowledgements to Megan Power, Jocelyn Maker and Sunday Times.