In response to media queries, the Department of Mineral Resources today (Tuesday, 8 March) confirmed that it has removed the administration of the Quattro Programme from Mhlatuze Bay Coal Administrators.
In a statement issued by the Department of Mineral Resources spokesperson Bheki Khumalo said: “The Department of Mineral Resources (DMR) is the custodian of the 4 million tons of export allocation (Quattro Programme) that was made available by the Richards Bay Coal Terminal Company (RBCT) to facilitate the access of junior Black Economic Empowerment (BEE) coal producers to the coal exports market.
The Quattro Programme was introduced because it was impossible for non-RBCT shareholders to use the terminal unless they negotiated for a portion of a shareholder’s quota, and they did this by paying nominal terminal handling fees plus a fee to the shareholder for the privilege of using the terminal. This was the case as the terminal was built by shareholders for the exclusive use of shareholders.”
The practice was, however, considered unfair by emerging BEE coal producers who were trying to break into the export markets where coal prices were much higher than domestic market prices. To assist emerging BEE coal producers break into the export markets, RBCT shareholders provided over a five-year period (2002-2007) a total of 4 million tons of export allocation for use by junior BEE coal producers.
Due to logistical complications of moving coal from many junior BEE coal producers and integrating these small stockpiles into larger tonnage capable of using the RBCT facilities, Mhlatuze Bay Coal Administrators, a section 21 Company, was formed to facilitate and administer the exports logistics for junior BEE coal producers.
The Department said, “Legally, we play no oversight role in the affairs of Mhlatuze as there is no statute that defines the relationship between ourselves and Mhlatuze. However, the fact that Mhlatuze administers the Quattro Programme makes us an interested party in the affairs of MBCA. We are the custodian of the 4 million tons of export tonnage that Mhlatuze administers for BEE junior coal produces. As such, we have an obligation and responsibility to ensure that the administration of Quattro is underpinned by a high standard of professional ethics and supported by good corporate governance practices.”
“It would therefore be a gross dereliction of duty on our part if we were to fold our arms when we see that things are not going well at Mhlatuze. It is precisely for this reason that the department acted decisively when it uncovered some maladministrative practices at Mhlatuze.
While we are mindful of the legal intricacies that normally define relationships between government departments and non-government organisations, we can’t turn a blind eye to malpractices that undermine government transformation initiatives and the values that must necessarily constitute good governance.
We find it totally unacceptable and unforgivable that funds generated through the administration of Quattro have been misappropriated. This not only undermines government transformation effort but also constitutes a serious criminal behaviour. We are in possession of documentation that clearly demonstrates how a former employee of Mhlatuze defrauded the organisations of huge sums of money.
Preliminary indications suggest that a sum of R5,5 million have over time been fraudulently withdrawn from the bank accounts of Mhlatuze. The investigation is not yet complete as there are strong suspicions that the amount involved may be higher than R5,5 million. However, criminal charges have been formally instituted against the suspect and the matter is being handled by the Commercial Crimes Unit in Central Johannesburg.
In order to prevent further misappropriation of Quattro funds, the department has decided to remove the administration of Quattro from Mhlatuze to UBU Logistics. We shall leave no stone unturned in our quest to ensure that all those involved in the misappropriation of Quattro funds are brought to book.
In the meantime, there have been incessant complaints from Junior BEE coal producers and other players in the industry that the programme primarily benefits traders and some large mining companies instead of the Junior BEE coal producers. This remains a mystery to us because the Terms of Reference for Quattro unequivocally indicate that the intended beneficiaries of the programme are Junior BEE coal producers and that traders and long term commercial users of the Richards Bay Coal terminal are strictly prohibited from participation in the programme.
There have also been allegations of fronting levelled against some Quattro members. We are fully committed to eradicate fronting and other forms of business malaise that were afflicting the programme,” the department said.
We have accordingly requested, at the end of last year, all Quattro members to reapply for their export allocation. The department has completed the evaluation of the applicants and matter will be finalised before the end of the month.
Enquiries:
Bheki Khumalo
Cell: 082 773 2388
Zingaphi Jakuja
Cell: 082 766 3940
