The controversy surrounding the Swazi Government’s award of a US$90 million contract to build an oil storage facility without going through the legally-required tender process has rekindled memories of the time King Mswati III fell for a US$5 billion con-trick.
It involved a contract that was similarly awarded without a public tender process and it raised doubts over the Swazi King’s ability to do business in the international arena.
In 2009, King Mswati, who rules Swaziland as sub-Saharan Africa’s last absolute monarch, announced he had secured US$5 billion through ‘donor aid’ to pay for two coal-powered electricity generating stations to be built in the kingdom.
The King deliberately bypassed the Swazi Government (which he personally hand-picked) and the King’s Office negotiated the deal with a firm calling itself Franken Mining.
Prince Mangaliso-Logcogco, chair of Liqoqo, the group that advises the King, said at the time, ‘We wanted to avoid the delays, bickering and disagreements that characterise many government projects.’
The Times of Swaziland quoted the Prince saying the rights to coal reserves in Swaziland had been allocated to Franken Mining.
The Times of Swaziland quoted Prince Mangaliso-Logcogco saying that to avoid delays in seeing the project actually taking off, government had not been involved. He said government would only be brought on board once all important aspects had been covered.
Prince Mangaliso-Logcogco said, ‘Land and minerals are under the control of the King.’ He said, ‘That is the level at which this matter is being handled.’
The NGO, the Swaziland Coalition of Concerned Civic Organisations (SCCCO), was quick to raise concerns about the project. In a statement it said the project, ‘has the potential to destabilise the country, ruin the environment, destroy communities and set back the cause of poverty reduction by many years if not forever.’
Prince Mangaliso-Logcogco, in an interview with the Times Sunday newspaper, called the SCCCO ‘Judas’ and launched a bitter personal attack on SCCCO chair Bishop Mabuza and the whole Anglican Church.
The sums involved in the power station deal were vast: US$5 billion was roughly the equivalent of Swaziland’s entire gross domestic product at the time. The total amount of imports into Swaziland in 2008 was worth roughly US$2 billion.
Within hours of the King’s announcement which received wide coverage in Swaziland itself, journalists outside the kingdom smelt a rat when they could find no trace of a company called Franken Mining.
Swazi Media Commentary reported at the time, ‘The deal is shrouded in secrecy. [Swazi Media Commentary] and others have separately been trying to find out more details and have come up against a brick wall. Top of our list of concerns is that none of us can even find a company with the name Franken Mining. Nor is it clear which international donor agencies have contributed the funding or what process was gone through before awarding the contract to Franken.’
‘We are right to be suspicious since Swaziland has a long track record of corruption and financial incompetence. It is estimated by the Swazi Government itself that E40 million (US4 million) is lost to corruption in Swaziland each and every month.’
It took more than 18 months before Prince Mangaliso-Logcogco admitted the King and Liqoqo had been conned by criminals who wanted to use Swaziland to launder money.
In an interview in the Times Sunday in December 2010, he said the main intention for the unnamed donors to finance the projects in Swaziland was to gain tax relief for their respective companies and associations.
They were to apply to the US and some governments affiliated to the European Union (EU) for their companies to be granted tax relief because of their involvement in humanitarian activities in developing countries across the globe.
‘We discovered that they were a syndicate hell-bent on money laundering tactics when we checked their genuineness. I can confirm that the projects we announced last year will not take off. We can’t deal with those people who wanted to help us because their financial activities are not so clean,’ Prince Mangaliso-Logcogco told the newspaper.
He did not explain why the King ever thought Franken was legitimate, since there was no trace of their company anywhere and the amount of money it claimed to have to invest was so huge – about five times the size of Swaziland’s annual budget.
In December 2014, in controversial circumstances, the Swazi House of Assembly passed an Act of Parliament to pay a legitimate South African company called Kantey and Templer Consulting Engineers nearly US$90 million to build oil storage facilities at Phuzumoya, in the Lubombo region.
The contract had not been put out to open tender and a number of Swazi parliamentarians questioned the manner in which the deal was done.
One Senator, Chief Kekela, said Swaziland had experienced a number of projects that have failed as a result of companies whose profiles and credibility was not considered. ‘We have seen companies that have come and made heavenly promises that have however not come to effect and failed and I must say I do not want to work on risks here as a risk is dangerous, we should not therefore risk with the Swazi people,’ the Senator said.
$5bn SWAZI POWER PLANT WAS A CON
GOVT UNDER FIRE IN US$90m OIL DEAL