Hitachi to pay R250m fine for 'improper dealings' with ANC

US SEC says Hitachi made improper payments to the ANC's private investment arm, Chancellor House.

FILE: US SEC says Hitachi made improper payments to the ANC's private investment arm, Chancellor House. Picture: WikiCommons

JOHANNESBURG - On the eve of a nationwide anti-corruption march in South Africa, Japanese conglomerate Hitachi has agreed to pay over R250 million in a settlement over its business dealings with African National Congress (ANC) front company Chancellor House.

A statement from the US-based Securities and Exchange Commission (SEC) says Hitachi violated the Foreign Corrupt Practices Act in connection with contracts to build two multi-billion rand power plants.

The Mail & Guardian newspaper first exposed these payments five years ago, but its reports were widely denied at the time.

The statement released by the commission says Hitachi made improper payments to the ANC by selling a portion of its local subsidiary to the politically-connected Chancellor House.

This, it says, allowed the front company and the ANC to share in the profits from the construction of two of Eskom's power plants.

The commission says payments were disguised as dividends and a success fee amounting to around R85 million.

Hitachi is slammed for what is described as a 'lax internal control environment' that allowed millions of dollars to flow to Chancellor House that helped secure government business.

Hitachi has agreed to pay a settlement but this must still needs to be approved by a US court.


There are calls this morning for criminal and civil investigations to unpack the latest findings.

Reacting to the news, the Democratic Alliance (DA) says it will lay criminal charges against Chancellor House.

Spokesman Graham Charters said, "The DA will be writing to the Public Protector requesting an immediate investigation into this matter. The DA will also be laying charges in this regard to ensure that anyone that is implicated at Chancellor House are investigated, prosecuted, found guilty and jailed."

There are also calls for a local civil investigation and a review of how political parties raise funds.

Political analyst Judith February said, "This is an issue about money and the political process. The political parties need money to survive but the question is how they raise that money."

The Mail & Guardian's Sam Sole says the findings are damning and an investigation should be launched.

"There really should be a civil and criminal investigation, whether that will happen or not I think it depends on how much public pressure is."

The ANC and Chancellor House are yet to comment on this development.

For a full statement from the US SEC, click _ here._