IDC to live lid on loans

THE Industrial Development Corporation (IDC) has given in to pressure to publicly disclose politically connected people it gives loans to so it can secure funding from Futuregrowth Asset Management, which cut off cash to the development finance institution in August.

The IDC would publish the quantum and performance of all deals concluded with these people in its annual report and website, Futuregrowth said. It gave no further details. 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.”

Futuregrowth, a subsidiary of Old Mutual financial services group, had raised concern about the IDC’s governance and lending practices after cabinet decided to establish a coordinating council for stateowned companies overseen by President Jacob Zuma.

Futuregrowth also raised concern about contracts awarded to PEPs at parastatals and froze funding to six stateowned companies. It has now lifted the funding ban on the IDC and the Land Bank.

Futuregrowth spokeswoman Michele Usher said 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 IDC had then decided to disclose these loans and their performances. It has also bolstered its policy on conflicts of interest.

“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 IDC’s highest-profile loan to politically connected people was its R250million loan to Shiva Uranium, owned by the Gupta family, who are close to Zuma.

This loan was originally repayable by 2013 with interest, but Shiva was unable to pay by the deadline and the IDC restructured the loan.

IDC chief executive Geoffrey Qhena told parliament in May the original loan was expected to be fully repaid by March 2018, while interest of R257-million – accumulated between April 2010 to May 2014 – was converted into shares when Shiva’s parent company Oakbay Resources and Energy was listed on the JSE in 2014. The IDC received its shares at a 10% discount to the listing price of about R10 a share.

Oakbay has gained R9 since then. Qhena said interest accumulated after that date would be paid in one go in March 2018. — BDLive