Publication: Mail and Guardian Issued: Date: 2005-11-11 Reporter: Editorial

Against Cronyism

 

Publication 

Mail and Guardian
Date

2005-11-11

Reporter

Editorial

Web Link

www.mg.co.za

 

The three big black economic empowerment deals announced this week suggest South Africa’s empowerment process is in a transitional phase. Some interesting new models are being tested. But this does not change the fact that deeply disturbing trends are being entrenched.

The upside is clearest in the case of De Beers, which announced what looks like the most thorough staff empowerment scheme yet, along with a method for channelling some benefits directly to mining communities before debt flowing from the transaction is paid off. If smart women like Wendy Lucas-Bull and Cheryl Carolus can use the proceeds for some genuinely entrepreneurial investment, creating new wealth and jobs rather than just lavishing it on big houses and luxury German sedans, we’ll cheer as loudly as anyone.

But tiresome as it is to repeat: the overwhelming impression is of a well-intentioned economic reorganisation drifting toward crony capitalism.

Big business deals probably need to involve individual leaders, and they probably need to feel they are getting substantial benefits -- we are not suggesting that spreading miniscule dividends among rural women’s cooperatives is the only way to redistribute wealth. But white-owned companies are still extraordinarily cynical about whom they choose as partners.

De Beers and Sun International both work in heavily regulated industries and depend on good relationships with the government for their wellbeing. Each is notable for including serving or former state officials in its empowerment consortium. Aerosud relies for its existence on offsets and other industrial participation agreements arising from parastatal and government aircraft imports -- so its interests are also deeply enmeshed with the government’s decisions.

Ruling party stalwarts and ex-officials are there in numbers, some with the imprint of the revolving door still fresh on the backs of their heads -- Manne Dipico, Popo Molefe, Valli Moosa, Carolus, Max Sisulu and Moss Mashishi, for starters.

Apparently it is no longer enough to exit swiftly from government to emerge on the business stage. Hints of a cooling-off period for officials moving into the private sector seem to be spurring some people into hurried pre-emptive action. Perhaps Ronnie Mamoepa, spokesperson for the Foreign Affairs Department, and Murpy Morobe, who runs communications in the Presidency, are tired of catching flak. Morobe now has a stake in Sun International, while Mamoepa gets a slice of Aerosud.

Nor does the fact that Mamoepa and presidential adviser Titus Mafolo bought their shares from the parastatal Industrial Development Corporation seem to have raised eyebrows *1. The Sun International deal was facilitated by the Public Investment Corporation, another semi-state body, just 18 months after Valli Moosa quit as a Cabinet minister. Maybe everyone concerned is too boggled to say anything, but this is shameless stuff.

There are some remarkable black entrepreneurs who, without strong connections, are beginning to benefit from the kind of thorough empowerment envisaged by the government’s recently released codes of good practice. When they are recognised in these big equity deals, and when the kind of structure that De Beers has developed is the norm, rather than the exception, then we’ll know that a sustainable empowerment model has arrived.

With acknowledgement to the Mail and Guardian.


*1  The Industrial Development Corporation needs an independent investigation, it is indeed shameless stuff.