Hitachi gets new penalty

Probe into power station loan finalised IN THE latest development involving a giant Japanese company with close links to ANC investment arm Chancellor House, Hitachi has been penalised by the African Development Bank following a corruption investigation. This follows allegations over its contract to build Eskom’s Medupi power station in Limpopo. The Ivory Coast-based bank – which loaned Hitachi billion (about R28-billion at current rates) in 2009 – announced the sanction yesterday after a three-year investigation by its anticorruption department. That follows Hitachi having been fined $19-million (R273-million) in the US by the Securities and Exchange Commission (SEC) in September after a similar investigation. The loan went to Hitachi’s South African subsidiary, Hitachi Power Africa, in which Chancellor House secured a 25% stake in 2005 for next to nothing. The bank did not elaborate on its exact findings, but said it had found that Hitachi had engaged “in sanctionable practices”.

Hitachi would be debarred for 12 months from getting loans from the bank. The restriction would be terminated once the company “enhances its integrity compliance programme”. In the case of the SEC fine, two specific findings were made. The first was that Hitachi had sold a stake to a company serving as a front for the ANC and had paid it handsome dividends for its relatively small investment. The second was that “through a separate, undisclosed arrangement, Hitachi paid Chancellor House an additional $1-million (R14.39-million) in ‘success fees’ that were inaccurately booked as consulting fees”. The development bank said that the relative leniency of the penalty on Hitachi was because of the excellent cooperation it had received from the company and its affiliates. In addition, Hitachi had voluntarily agreed to make a substantial financial contribution to the African Development Bank to be used to fund worthy anticorruption causes on the African continent.