The decision of the Industrial Development Corporation (IDC) to publish the identities of its new clients, including those officially identified as politically exposed people (PEPs), should be applauded. Such disclosure affects all the State-owned development finance institution’s funding recipients since April 1.
Naturally, many would have preferred to have access to the full client list for the period when so-called State capture was arguably at its zenith, particularly given the IDC’s controversial 2010 loan to the Gupta-family-linked Oakbay company for the purchase of the Shiva uranium mine. However, the fact that the identities of all new clients are now being published on the financier’s website is still a progressive development.
A key supporter of the intervention is Economic Development Minister Ebrahim Patel, the IDC’s shareholder Minister, who announced the step in his Budget Vote address earlier this year. Patel says the decision to disclose the names of IDC clients has been taken in the interests of transparency and to safeguard the institution’s integrity.
Indeed, it marks a material departure from the past, where the IDC treated the identities of its clients as confidential and even had to request permission when seeking to showcase some of the positive investments made by its clients. Such client confidentiality is also the norm across the financial sector and Patel says the decision to depart from such a well-established practice was, thus, the source of intense debate. “We recognise that confidentiality is an ordinary part of a banking relationship, but, given the times we are living in and the fact that this is public money, we need to change and say: ‘As important as confidentiality is, it is more important that we are able to demonstrate integrity and transparency in the way in which the IDC handles public money’.”
Therefore, from April onwards, all clients, including PEPs, have had to accept that the IDC will be disclosing their details. “Will some of the information sometimes prove uncomfortable? Unavoidably, that’s the nature of complex societies. But the IDC has to ensure that it’s never uncomfortable because of questions of integrity; that’s a line that mustn’t be crossed.”
In addition, IDC chairperson Busisiwe Mabuza has announced that nonexecutive directors will, in future, be precluded from conducting any business with the IDC. Previously, the board insisted only on full disclosure of interests, as well as a director’s recusal from deliberations on the transaction in question.
Both moves come amid heightened concern in South Africa over the state of governance at a number of public institutions, as well as several ‘uncomfortable’ questions over the Oakbay loan.
CEO Geoffrey Qhena indicates that the company is taking proactive steps to protect its interests. The IDC is still owed R37.5-million on the capital portion of the R250-million loan, while the outstanding interest of R257-million has been converted into equity. However, that conversion took place ahead of Oakbay’s delisting from the JSE, which has fundamentally changed the character of the holding.
The sooner the IDC can extricate itself from the relationship the better. South Africans will then have more trust in both the integrity of the institution and the two progressive governance initiatives outlined above.