South Africa: Karpowership failed interdict unearths ‘State Capture on steroids’ agreement

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  • The court battle between Turkish powership company Karadeniz and its estranged BEE partners unearthed a draft agreement suggesting that influential businesswoman Anna Mokgokong was asked to help Karpowership secure permits from government.
  • In terms of the agreement, Karadeniz would help Mokgokong and her company take over 49% of the R218-billion Karpowership deal, replacing the original BEE shareholders.
  • The secret agreement also promised Karadeniz a slice of a new R13.6-billion gas terminal in the Port of Ngqura – an arrangement described as “State Capture on steroids”.

In November 2022, with its R218-billion deal hanging by a thread, Turkish powership company Karadeniz decided to ditch its black empowerment partners Powergroup SA – an incredibly risky move that put the entire deal in jeopardy.

Why? Seemingly, because Karadeniz believed powerful businesswoman Anna Mokgokong could help Karpowership secure the approvals it desperately needed from government.

Karpowership SA – a joint venture between Karadeniz and Powergroup SA – won the majority of the Risk Mitigation Independent Power Producer Procurement Programme (RMI4P) tender to supply dispatchable (on demand) power to Eskom.

The 20-year contract is conservatively estimated to be worth R218-billion.

But recently the partnership has soured.

Karadeniz and its BEE partner clashed in the Johannesburg high court last month. Powergroup wanted the court to reinstate its 49% stake in the scandal-plagued deal after Karadeniz exercised a call option and kicked its empowerment partners out of the company.

Powergroup lost the urgent application – after Judge Shanaaz Mia ruled that the horse had bolted – but succeeded in exposing a secret agreement between Karadeniz and Mokgokong’s BHI Energy, which Powergroup’s advocate, Tembeka Ngcukaitobi, described as “State Capture on steroids”.

Although counsel for Karadeniz told the judge this allegation was “reckless” and “without merit”, a closer look at the scheme of the agreement suggests Ngcukaitobi was not simply being dramatic.

The confidential memorandum of understanding (MOU), drafted in November last year, detailed how Karadeniz would help BHI Energy to acquire the 49% stake of the Karpowership deal held, at the time, by the unsuspecting Powergroup.

For her part, Mokgokong was asked to deliver three things: funding, a stake in a new liquified natural gas (LNG) terminal planned for the Port of Ngqura, and help securing the outstanding permits Karpowership desperately needed from government.

Mokgokong is the chair of Seriti Resources, which took over Anglo American’s portfolio of coal mines that supply Eskom. Her own company, Community Investment Holdings, has a substantial portfolio of mining, energy and healthcare assets.

Mokgokong blasted Ngcukaitobi’s description of the deal as “State Capture on steroids”, calling it “false, defamatory and … calculated to cause embarrassment to BHI, myself and the companies that I represent”.

“I categorically deny any inference of wrongdoing on the part of BHI, myself or any company that I represent,” she told us in a written response this week.

“I reject the false narrative that has been created by Powergroup and its advisors. The narrative created by them has clearly been designed to detract from the real issue between them and Karadeniz and is a calculated attempt by Powergroup to mislead the court, the press and the general public.”

As we asked more questions, she got annoyed: “I still have to deal with exhausting e mails from you like I’ve nothing to do all day,” she wrote on Tuesday.

But the devil – as is so often the case – is in the detail.

And what it suggests is that Mokgokong has been the beneficiary of a series of questionable decisions that will help realise energy minister Gwede Mantashe’s dream of making the Eastern Cape the “gas capital of the country”.

Outstanding permits

When the Sunday Times broke the story on 13 August of Mokgokong’s attempt to move in on the Karpowership deal, the paper reported she delivered a barefaced denial that she was interested in acquiring Powergroup’s 49% stake……

Author: Susan Comrie

This is an extract from a main article with more information Susan Comrie for the amaBhungane Centre for Investigative Journalism. 

Read more on this exclusive story from the amaBhungane Centre for Investigative Journalism HERE



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