Our investigation shows that that the DTI abandoned prudent planning, assessment and feasibility protocols for what would be one of the largest industrial developments in the country\u2019s history in favour of a \u201cpet project\u201d approach, driven by opaque and unaccounted-for private and geopolitical interests.<\/p>\n\n\n\n
\nRead Comment: Digging dung in the time of Corona<\/em> here<\/a>.<\/strong><\/p>\n<\/blockquote>\n\n\n\n
As we point out separately<\/span>, Covid-19 is the harbinger of the larger crisis of climate change. This project is part of the problem, not the solution.<\/p>\n\n\n\n
Part 1: The Operator<\/h5>\n\n\n\n
On 15 September 2017 then minister of trade and industry Rob Davies signed<\/span><\/a> a \u201cspecial economic zone operator permit\u201d appointing a company called South African Energy Metallurgical Base (SAEMB) to \u201cdevelop, operate and manage\u201d the Energy and Metallurgical Special Economic Zone (SEZ) as part of the larger Musina-Makhado SEZ.<\/p>\n\n\n\n
<\/figure>\n\n\n\n
<\/p>\n\n\n\n
There are serious questions about the process and due diligence that led to that signature \u2013 and to decisions to continue this project in conjunction with SAEMB.<\/p>\n\n\n\n
The directors of the company granted the operator permit at the time of minister Davies\u2019 decision were Yat Hoi Ning (aka Yihai Ning) and Chuanhua \u201cFrank\u201d Shang.<\/p>\n\n\n\n
Ning is an obscure Hong Kong-based businessman, though he received his bachelor’s degree from the mainland South China University of Technology in 1980. His company biography says he has more than 20 years\u2019 experience in non-ferrous and precious metals trading, investment and management.<\/p>\n\n\n\n
Shang is said to be a former attach\u00e9 of the Chinese embassy in South Africa, but associates say he became the go-to guy for Chinese businessmen seeking a foothold in South Africa.<\/p>\n\n\n\n
His official biography says Shang obtained a bachelor of electronic engineering in 1987 from the University of Shandong, China. He worked for the state-owned China National Export Bases Development Corp for fourteen years as a director of new ventures in African mining and resources.<\/p>\n\n\n\n
SAEMB, the company awarded the operator permit, is supposedly a 100% subsidiary of the Chinese mainland-based Shenzhen Hoimor Resources Holding Company, but amaBhungane has not been able to find a trace of this company.<\/p>\n\n\n\n
On the date Davies signed the permit there was good reason for the minister to withhold his approval pending a proper due diligence as to the fitness of Ning and Shang.<\/p>\n\n\n\n
By this date there was public information showing that:<\/p>\n\n\n\n
\n
- Both Ning and Shang were associated with a London-listed company with small mining holdings in Southern Africa: ASA Resource Group (formerly known as Mwana Africa). Ning was the executive chair and Shang was a shareholder.<\/li>\n\n\n\n
- On 18 April 2017, five months before the minister\u2019s decision, it was reported via official company announcements that the ASA board had removed<\/span><\/a> Ning and financial director Yim Kwan over alleged financial mismanagement.<\/li>\n<\/ul>\n\n\n\n
The company put out a statement saying, \u201cThe board is extremely disappointed to report that there is strong evidence of funds amounting to several million US dollars being transferred from the accounts \u2026 to entities in China, without full value being received.\u201d<\/p>\n\n\n\n
What it meant was there was preliminary evidence of fraud.<\/p>\n\n\n\n
The names Ning and Kwan might have rung a faint bell for the minister if the statement had been drawn to his attention.<\/p>\n\n\n\n
On 15 June 2015, Kwan had written<\/span><\/a> to Davies on behalf of Mwana Africa, stating: \u201cMwana Africa Plc is interested in the planned South Africa Energy Metallurgical Industry Special Economic Zone after its designation as an SEZ\u2026<\/p>\n\n\n\n
\u201cTo this end, we are willing to share the related information and our position with your department in terms of the project preliminary work which includes the project feasibility study materials, project cooperation plans and project program, as well as the project implementation program.\u201d<\/p>\n\n\n\n
The letter from Kwan was a word-for-word copy<\/span><\/a> of a letter sent to Davies four days earlier by Ning on behalf of another company, the Hong Kong Mining Exchange Company.<\/p>\n\n\n\n
Clearly the minister or his officials were not paying attention because there was also media reporting on the ASA scandal.<\/p>\n\n\n\n
In April 2017, the Zimbabwe Sunday Mail<\/em> reported<\/span><\/a> that \u201cmore than US$15-million could have been spirited away\u201d.<\/p>\n\n\n\n
\nClick on the Evidence docket to access all the documents used to in this investigation.<\/em><\/strong><\/p>\n<\/blockquote>\n\n\n\n
On 29 July 2017 ASA shares were suspended pending \u201cfinancial clarification\u201d.<\/p>\n\n\n\n
On 1 August 2017 the high court in London appointed<\/span><\/a> administrators to take over the running of ASA and on 4 September 2017 (ten days before Davies\u2019 decision) the Mashonaland Central magistrate issued an arrest warrant<\/span><\/a> for the financial director, Kwan.<\/p>\n\n\n\n
So perhaps Davies ought to have been informed that the leading figure behind SAEMB (the SEZ operator he was appointing) was implicated in allegations of fraud that had led to his removal from the board of a London listed company, that the same company had been suspended and placed under administration and that its finance director was a fugitive from justice.<\/p>\n\n\n
\n<\/figure>\n<\/div>\n\n\n
<\/p>\n\n\n\n
At that stage, before Davies signed, some additional due diligence might have revealed that:<\/p>\n\n\n\n
\n
- Shang (Ning\u2019s co-director in SAEMB) and a South African, Briss Mathabathe, were involved in the Chinese venture to buy into Profert, the South African fertilizer producer, an initiative that ended in tears and business rescue.<\/li>\n\n\n\n
- Shang and Mathabathe were also involved in the abortive Super 5 Media initiative which involved an attempt at setting up a Telkom-linked competitor for Mnet, but which resulted in collapse and losses both for Telkom and for a Chinese investor.<\/li>\n<\/ul>\n\n\n\n
It was not to be.<\/p>\n\n\n\n
Davies told us he was unaware of any untoward associations around Ning prior to signing off on the operator license: \u201cNothing was drawn to my attention.\u201d<\/p>\n\n\n\n
He said he acted on the advice of the SEZ advisory board, his officials and the Limpopo Economic Development Agency, which was the project \u201csponsor\u201d.<\/p>\n\n\n\n
But even following the formal announcement in September 2017, there were opportunities for the minister and the department to take stock and reassess the appropriateness of SAEMB and Ning.<\/p>\n\n\n\n
On 27 December 2017 the state-controlled Herald<\/i> newspaper reported<\/span><\/a> that Zimbabwean authorities had issued arrest warrants for both Kwan and Ning.<\/p>\n\n\n\n
On 10 May 2018 the Financial Mail<\/em> carried a detailed expos\u00e9<\/span><\/a> on some of the preliminary allegations directed at Ning and his associates.<\/p>\n\n\n\n
The article quoted DTI spokesperson Sidwell Medupi as saying they would investigate and, “If any evidence of wrongdoing emerges, the department will deal with such matters expeditiously.”<\/p>\n\n\n\n
It also quoted a statement from Ning saying he “strenuously” denied ASA\u2019s allegations against him and that he, Kwan and another director were removed from the board unjustly.<\/p>\n\n\n\n
“Our removal as directors of ASA was unlawful and I am currently bringing a claim in the high court of justice [in London] concerning my unlawful removal as a director and other matters,” he said.<\/p>\n\n\n\n
Davies was aware of at least some of these developments. He told amaBhungane: \u201cAt a subsequent stage the department informed me the individual [Ning] appeared on something called an Interpol Red Notice\u2026 We wrote to the individual and said if this is the case, the DTI \u2026 was not able to go ahead with supporting this project until these outstanding issues were sorted out.\u201d<\/p>\n\n\n\n
Davies said Ning claimed the red notice was scam and that he would clear his name.<\/p>\n\n\n\n
Ning\u2019s name does not appear on Interpol\u2019s current list and Zimbabwean sources said he had since 2017 reingratiated himself with the Harare regime.<\/p>\n\n\n\n
However, the court actions brought by Ning were struck out.<\/p>\n\n\n\n
On 29 November 2018 the London high court issued an order effectively dismissing Ning\u2019s application.<\/p>\n\n\n\n
The judgement<\/span><\/a> noted, \u201cThe petition [by Ning] is defended on substantial grounds which involve a number of very serious allegations being made against Mr Ning arising from his tenure as the chairman of the company\u2026<\/p>\n\n\n\n
\u201cThose allegations are of misconduct, including fraudulent transfers of funds… Specifically they included stealing money, a corrupt relationship between Mr Ning and the Chinese suppliers and \u2026 conspiracy between the Chinese directors. The pleadings are extensive.\u201d<\/p>\n\n\n\n
In order to go to trial, Ning was required to make disclosure of documents and correspondence in his possession, akin to what happens in our courts under what is known as Rule 53.<\/p>\n\n\n\n
Like this story? Be an amaB Supporter<\/a> <\/span>to help us do more. Sign up for our newsletter<\/a><\/span> to get more.<\/em><\/p>\n\n\n\n
Ning\u2019s application was dismissed because of his lack of candour.<\/p>\n\n\n\n
The judge ruled: \u201cThe shortcomings are sufficient for me to come to the conclusion that in reality, the actions of Mr Ning are not consistent with a bona fide attempt to comply with the terms of the \u2026 order.\u201d<\/p>\n\n\n\n
Davies was at least willing to answer questions on the matter.<\/p>\n\n\n\n
His successor trade and industry minister, Ebrahim Patel, did not bother to respond to written queries, even though his officials had weeks to do so.<\/p>\n\n\n\n
In fact, not a single government agency responded to the detailed inquiries we reproduce here<\/span><\/a>.<\/p>\n\n\n\n
Neither Ning nor Shang replied to email or WhatsApp messages containing the same questions.<\/p>\n\n\n\n
The only body to respond was the private consultancy, Delta BEC, appointed by the Limpopo Economic Development Agency to carry out the environmental scoping and impact studies.<\/p>\n\n\n\n
We deal with their response in part 4.<\/p>\n\n\n\n
Read all the stories in this series:<\/span><\/strong><\/p>\n\n\n\n
\nComment: Digging dung in the time of Corona<\/a>
#EarthCrimes \u2014 Limpopo\u2019s dirty white elephant part 2: the dodgy designation<\/a>
#EarthCrimes \u2013 The dirty white elephant part 3: Limpopo \u2013 the weakest link<\/a>
#EarthCrimes \u2014 The dirty white elephant part 4: Caution, environmental hazard!<\/a><\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"Government\u2019s plan to develop a R40-billion Chinese-controlled energy and metallurgical industrial complex at the Musina-Makhado Special Economic Zone is founded on quicksand.<\/p>\n","protected":false},"author":3,"featured_media":21527,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[3,334,335,336,185,337,338],"class_list":["post-11317","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-amabhungane","tag-dit","tag-earthcrimes","tag-investigation","tag-limpopo","tag-sez","tag-yat-hoi-ning"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11317","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=11317"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11317\/revisions"}],"predecessor-version":[{"id":30230,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11317\/revisions\/30230"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/21527"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=11317"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=11317"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=11317"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}