GRN suspends China loans

GOVERNMENT has confirmed suspending US$100 million in credit lines with the Export-Import (Exim) Bank of China.

Exim is the main financer of the controversial multi-million dollar scanner deal between Nuctech and Namibia. Permanent Secretary in the Ministry of Finance, Calle Schlettwein told The Namibian yesterday that the scanner deal will not be affected by the decision taken late last year.The facility that was suspended, Schlettwein said, has ‘unfavourable terms and conditions’. Namibia will therefore no longer make use of the US$100 million in preferential export buyers credit Exim has been offering.Elaborating on Government’s stance on Exim, Schlettwein told The Namibian the credit facility comes with high interest rates, a tough repayment schedule and costly insurance obligations. Also, Exim only finances Chinese goods and services. This, coupled with the high cost of borrowing, means Exim deals are simply too expensive compared to local credit packages, Schlettwein said.Pending further negotiations, Government decided to sever the Exim link late last year, he said.Schlettwein said the decision to suspend the use of the facility and the probe into the scanner deal was not related. In a letter dated July 15 2009, National Planning Commission (NPC) Permanent Secretary, Mocks Shivute informed the Namibia Chamber of Commerceand Industry (NCCI) that the Namibian Government had decided not to make use of the ‘Chinese US$100 million export buyer’s credit’.’The Ministry of Finance informed NPC that the Government of the Republic of Namibia in the meantime cannot make use of this credit facility because the terms and conditions were found to be unfavourable,’ Shivute told NCCI.China Exim Bank defines ‘Export Buyers’ Credit’ among others on its website, as ‘mainly extended to finance the export of Chinese capital goods such as mechanic and electronic products and complete sets of equipment. It is also available for financing the export of Chinese-built ships, high- and new-tech products and services, and overseas construction projects contracted by Chinese companies’.SCANNER DEALAlthough the controversial scanner deal will not be affected by the suspension of the credit line, by definition the scanners fit Exim Bank’s description of the type of goods it finances, namely ‘high- and new-tech products’. The financing of the scanners through a Chinese firm, Nuctech, became the subject of media reports a week ago after the arrest of three suspects, as part of an wide ranging investigation by the Anti-Corruption Commission (ACC) into alleged fraud, bribery and corruption.The three, Teckla Lameck, a Public Service Commissioner, and Kongo Mokaxwa, and a Chinese national Yang Fan are currently behind bars.Meanwhile, the ACC is awaiting confirmation on when a Nuctech team will arrive in Namibia to brief its investigators.ACC Director Paulus Noa would also like to question Hu Haifeng, former president of the state-owned Nuctech and son of Chinese President Hu Jintao.The contract between Nuctech and Government was signed on May 14 last year, according to an affidavit by the ACC’s Chief of Investigations, Nelius Becker.In the contract, the Ministry of Finance agreed that Government would be buying security X-ray scanners for ports and airports worth US$55,348 million. Government would pay US$12,828 million, while Exim would finance the balance of US$42,52 million.Government’s share, meant to enable Nuctech to start producing the scanners, was transferred to the company in Beijing. Nuctech then paid more than N$42 million in local currency, into the account of Teko Trading CC, their project agent locally. Lameck and Mokaxwa are partners in Teko Trading, while Yang apparently also has business ties with the company.Teko Trading’s bank account was virtually cleared out within two months in a manner which ‘is not consistent with the way in which a legitimate consulting company would operate’, Becker said in his affidavit. He alleged that the money was used for the personal benefit of Lameck, Mokaxwa and Yang in ‘what can properly be described as an enormous ‘spending spree”.ACC’s Noa told The Namibian yesterday that he is keen to talk to Hu, who has since been promoted as the Party Secretary of Tsinghua Holdings, the group controlling Nuctech.Hu is not a suspect at this stage, Noa said, but would be interviewed as a potential witness.He also told the paper that Nuctech has indicated their willingness to send officials to Namibia to brief the ACC on the company’s ‘operations and policy’.Nuctech, and especially Hu’s involvement in a corruption probe, has made world news since the weekend. PROBE MAKES HEADLINESReports of the ACC investigation appeared in various papers in Asia and India, in Australia, as well as the United Kingdom (UK).The ACC’s probe coincides with a European Union (EU) investigation into Nuctech’s business dealings.The Telegraph yesterday wrote that the EU was also investigating Nuctech after Smiths Group, one of the UK’s largest engineering companies, accused it of ‘illegal dumping’.Smiths claimed Nuctech was using the enormous resources of the Chinese government to lower prices allegedly ‘to a degree that precludes free and open competition.’According to The Telegraph, ‘it is unclear whether Hu has been formally questioned by the (European) Commission, but he has recently resigned his directorship of Nuctech although he is the Communist Party Secretary of a holding company that oversees Nuctech, alongside a number of other companies’.The paper further reported that Nuctech was also recently probed in the Philippines after winning an airport security contract before it had been put to public tender. jo-mare@namibian.com.na