The three-year battle between Imperial Crown Trading and Kumba Iron Ore for a multibillion-rand stake in Sishen is getting dirtier and dirtier.
An alleged assassination attempt has driven a witness to go public with allegations of collusion between ICT and the department of mineral resources.
A legal consultant who claims that he survived an assassination attempt on a lonely stretch of the N7 highway between Cape Town and Springbok last month has come to the Mail & Guardian with an incredible story. Gawie Hendriksz says he knows how politically connected mining company Imperial Crown Trading 289 (ICT) acquired a multibillion-rand stake in the Sishen mine in the Northern Cape during the long weekend of May 2009.
ICT provisionally acquired a 21.4% stake in Sishen when it beat Anglo American’s subsidiary Kumba Iron Ore to the rights for what both companies believed was a vacant stake in one of the world’s largest opencast iron ore mines.
ICT and Kumba have spent millions in court sparring over the allocation of the 21.4% stake, and have laid criminal charges against one another. Hendriksz, who since July 2011 has been under contract to a risk consultancy acting for Kumba, makes the following key allegations:
ICT co-founder and chief executive Phemelo Sehunelo paid a bribe of R250 000 to Charles Lerumo, the department of mineral resources’s Northern Cape assistant director of mineral laws to facilitate the acceptance of ICT’s application;
Lerumo kept R150 000 and passed R100 000 on to Thozama Basi, the department’s Northern Cape assistant director of social and labour plans;
Basi, who took possession of Kumba’s application on April 30 2009, made copies of documents such as title deeds from this application during the subsequent long weekend. She then handed these copies to Sehunelo; and
ICT’s application was incomplete and unsigned at the time it was purportedly captured on the department’s computer systems on May 4 2009. Lerumo saw to the capturing of ICT’s application on May 4, even though the ICT application was in fact only signed on May 5 that year. This is significant, as Kumba’s application was also registered on May 4 and legislation promotes a “first past the post” approach to competing applications. Basi chose not to respond to detailed allegations put to her by the M&G. Lerumo would not even entertain the questions.
Responding on behalf of Sehunelo and ICT, attorney Ronnie Mendelow described Hendriksz as “nothing but a scurrilous liar seeking to peddle ‘information’ (in actual fact disinformation) to the highest bidder”. Mendelow said that during a taped interview with ICT’s lawyers on November 2 2010, Hendriksz had offered a different version, in which Kumba had in fact bribed the department of mineral resources officials. Mendelow said: “Suffice it to say that these allegations were all without any foundation whatsoever, and that the allegations regarding paying off of advocate Charlie Lerumo by our client, advocate Sehunelo are completely false and without any foundation whatsoever.”
Mendelow said that on his own version, Hendriksz had attempted to “peddle his information” to Kumba and ArcelorMittal. “Mr Gawie Hendriksz’s alleged desire — to make the facts known before somebody succeeds in killing him, is a conjured up story,” Mendelow said. Arcelor potentially lost the 21.4% stake in Sishen it previously held by failing to convert its rights in terms of new legislation by the end of April 2009.Before the M&G contacted Mendelow, Hendriksz had disclosed his interaction with ICT to the newspaper, claiming that he had “played along” with the latter as part of his own investigation.
Hendriksz had also disclosed his interactions with both Kumba and Arcelor to the M&G. The DMR also dismissed Hendriksz as “an information peddler”, claiming he had previously approached the department to offer his assistance in the matter. The department rejected his approach. While Hendriksz’s allegations have not been tested in court, he has made a detailed affidavit to the Hawks investigator probing ICT’s conduct.
No assessment of his credibility is complete without considering his role in the successful investigation of another case involving the Kimberley department of mineral resources office—the so-called Saltworks case. In this matter, Hendriksz was hired by Jalie du Toit, owner of Saamwerk Soutwerke, which had been on the brink of acquiring a mining right from the department to extract salt from a pan near Upington in 2006 when a rival mining company, Suid-Afrikaanse Soutwerke (SA Soutwerke), produced what it claimed was a valid permit to mine the same saltpan.
Du Toit’s suspicions were raised because two well-connected Northern Cape politicians—ANC regional chairperson John Block and Upington mayor Gift van Staden—had become directors of SA Soutwerke four months earlier. Du Toit hired Hendriksz to investigate. Hendriksz made it his business to find out how mineral rights were awarded, and by whom, in the office of the department of mineral resources in Kimberley. “In the course of my Soutwerke investigation, I was in the department office in Kimberley every second or third day until they got used to me,” he told the M&G. By May 2009, when the 21.4% stake in Sishen became vacant, sparking the scramble between Kumba and ICT, Hendriksz said his investigations into SA Soutwerke’s permit had “intensified”. “I was regularly attending at the Kimberley office of the department and was meeting several officials on a regular basis ... [deputy director] Hennie Jansen van Rensburg and [assistant director of mineral laws] Charles Lerumo in particular. “I sought not only to obtain information from them, but also, unknown to them, to cross-check information provided by one of them with the other. I avoided consulting them jointly,” Hendriksz said. In May 2009, Jansen Van Rensburg was temporarily heading the regional office in Kimberley because his superior, Pieter Swart, had taken leave. On May 18, Hendriksz said Jansen Van Rensburg called him into his office and said: “Here is a file on my table. I’ve got exactly the same case and problem with Kumba and ICT like in your matter with SA Soutwerke. The same what happened on your side. The permit is fraudulent, with high-up cover-up.”
At another meeting a few days later, on May 21, Jansen van Rensburg told Hendriksz what he meant by “high up”. “He said to me: ‘There is also involvement on the political level. There’s someone called Jagdish Parekh who also has a lot of influence [in ICT]. You’ll see, sooner or later—like John Block [with SA Soutwerke]—he’ll be brought in as a partner for ICT.”
ICT lawyer Mendelow, responding on behalf of Parekh, said Parekh “had nothing whatsoever to do with ICT in May 2009 and thereafter when our client’s application for the prospecting right was granted. He first became involved in ICT well after the prospecting right had been granted.”
Hendriksz said that at another meeting on June 10, Jansen Van Rensburg told him that his superior, “Swart, had instructed him, during the course of April 2009, that he [Jansen Van Rensburg] was to take over as acting regional manager of the Northern Cape regional office for the month of May 2009.
“Jansen Van Rensburg was to prepare for the lodging of a prospecting right application by ICT during this period, and was to ensure that this application was accepted, regardless of any irregularities with it,” he added. The instruction had apparently come from one of Swart’s superiors in Pretoria. Swart denied this, saying: “I’ve never given Mr Van Rensburg the instruction as set out in your letter. My holiday arrangements [in which Jansen Van Rensburg would act] were made a considerable time before the end of April 2009 [when the Sishen applications were lodged].” As Jansen van Rensburg has since died, Hendriksz’s recollection of their encounters cannot be confirmed.
In the interim, the salt mine dispute Hendriksz had been investigating reached its conclusion, providing an independent test of the credibility of both Hendriksz and Swart. The case, heard in September 2009 in the Northern Cape High Court, turned on allegations that the mining permit on which SA Soutwerke relied—produced by the ANC’s Block at a meeting with the DMR—was a forgery. Before the hearing department of mineral resources officials—including Swart—gave sworn statements supporting Block’s SA Soutwerke and suggesting the fake permit was legitimate. By the time Hendriksz came to testify, Swart’s statement had been mysteriously withdrawn and Hendriksz’s evidence of manipulation and double-dealing by the department was hardly challenged in cross-examination.
In his ruling Judge Hennie Lacock found that SA Soutwerke’s permit was a fake. The judge made no mention of Hendriksz, but Jasper Tredoux, Saamwerk Soutwerke’s advocate, said: “Gawie was a truthful witness — But his greatest importance was behind the scenes. “He helped unravel everything that happened in the department of minerals, who did what with regard to the mining licence applications.”
His employer in this matter, Du Toit (owner of Saamwerk Soutwerke) said: “In the court case there was a lot of bullshit on the department’s side. I stood alone; nobody in the department would help me understand where the other permit came from. But Gawie helped me. “Without Gawie’s investigation I could not have taken this case to court.”
The relationships Hendriksz built with department of mineral resources officials during the Saltworks case, particularly with Lerumo, were crucial to the alleged disclosures they made to him about ICT. Said Hendriksz: “Lerumo was the department’s legal advocate, so I was working a lot with him [on the Soutwerke matter]. I slowly built up trust with him —”
In mid-2010, the department charged Lerumo with misconduct and regional manager Swart summoned him to a departmental disciplinary inquiry. On June 10, Hendriksz said that Lerumo had approached him for advice. He had suggested to Lerumo that he remind Swart of his own alleged conduct in the ICT matter. According to Hendriksz, the charges were then withdrawn. In February 2011, when the department revived misconduct charges against Lerumo, he and Hendriksz met again—and on this occasion Hendriksz decided to record the conversation. He asked ex-policeman Andreas Steenkamp to sit in a car outside the Protea Hotel in Kimberley, where the two men met, tap their exchange using a remote listening device and transcribe it in a notebook.
The alleged conversation took place on February 21 in the hotel reception area. Steenkamp refused to discuss the encounter with the M&G, but confirmed that he had given a sworn affidavit to the police, the content of which is unknown. The M&G has seen a copy of Steenkamp’s purported shorthand notes from this encounter. At face value, they support Hendriksz’s claim that Lerumo admitted receiving money from ICT’s Sehunelo and that he also implicated department of mineral resources official Basi.
The M&G understands that Swart eventually proceeded with disciplinary action against Lerumo, who was found guilty. The charges included an allegation that Lerumo accepted R5 000 from a mining consultant to speed up the processing of their applications, though it is not know if this particular charge was proved. Lerumo is still employed at the department in Kimberley. Hendriksz said his attempts to persuade Lerumo to approach the police and seek indemnity from prosecution had not borne fruit.
In addition to developing ties with Jansen van Rensburg and Lerumo, the third—and possibly most controversial—aspect of Hendriksz’s investigation was his decision to approach all five parties in the dispute, the police, the department of mineral resources, Kumba, ArcelorMittal and ICT, to offer information. According to Hendriksz, he first approached Colonel Tobias Marais of the South African Police Service, who had investigated SA Soutwerke, to tell the Hawks that if they wanted to know “exactly what happened about ICT” they should get in touch with him. The Hawks did not respond.
Hendriksz then approached Kumba’s attorney, Robert Botha, who told him that “Kumba does not buy information”. Hendriksz said he responded that he did not want to sell anything, but that Kumba could take him on as a consultant. Botha’s reluctance gave Hendriksz “a feeling that they had already burnt their fingers somehow”. Hendriksz said that because “ArcelorMittal and Kumba were the only two companies that had nothing to do with ICT’s fraud and bribery of DMR personnel”, he approached Arcelor next. Hendriksz claims he made contact with a senior Arcelor executive, who told him that they were not worried about ICT. Only later did he learn that Arcelor had been negotiating to buy ICT.
Finally, Hendriksz said he was contacted by Lerumo, who wanted him to meet ICT chief executive Sehunelo. Lerumo set up the appointment, and the two met at ICT’s Kimberley offices on October 25 2010. “During this meeting, Sehunelo said that he understood that I was someone who knew a lot about what had transpired regarding ICT’s application over the 30 April to 4 May 2009 weekend. I replied that I did. “He then said that I could perhaps assist ICT by deposing an affidavit that would support ICT’s case. “Sehunelo explained that I would have to depose an affidavit in which I would falsely state that I was aware of collaboration between Kumba and officials in the department which resulted in department officials tampering with the ICT application by inserting documents from the Kumba application. This was to make it appear that the ICT application had been submitted using copied documents.”
Hendriksz undertook to work with ICT, saying: “I wanted to play along with them, to understand who the key role players are behind the curtains there. I wanted to establish what political roleplayers with influence were ... in ICT.” Saamwerk Soutwerke’s lawyer Tredoux supported his explanation, saying: “Sometimes you have to go under cover and disguise your intentions in order to uncover the truth.”
The following week ICT flew Hendriksz from Cape Town to Johannesburg, where he met ICT attorney Mendelow and advocate Edmund Wessels in the latter’s Sandton chambers. The M&G has seen a record of the 1Time return flight booking made by Sehunelo’s personal assistant Sharifa Ferris. At the Johannesburg meeting Hendriksz said he had “said what Sehunelo asked me to say”. Mendelow confirmed the meeting, and gave the M&G access to a transcript in which Hendriksz indeed repeated the claim that Kumba paid a former official from the department to meddle with ICT’s application. In a transcript of the recording which the M&G has seen, Hendriksz promised ICT further information about who took bribes in the department from Kumba in return for employment as a consultant. He also offered to testify for ICT in court. Wessels expressed interest in Hendriksz’s information, but the interview did not end with a definitive undertaking by either party.
In their response, Mendelow and Hendriksz agreed that both parties had lost interest in each other soon after this meeting. Mendelow said that he believed Hendriksz was an information-peddler, while Hendriksz said: “I would not have consented to being so engaged, given my knowledge of the fraud perpetrated by ICT.” In July 2011, a consultancy called Risk Analysis, retained by Kumba’s legal team to identify evidence or witnesses which could assist the company’s litigation strategy in the ICT matter, made contact with Hendriksz.
Risk Analysis’s Mungo Soggot said: “We approached Mr Hendriksz ... after learning that, on account of his work in the Saamwerk matter, he was uniquely placed to provide an insight into what took place at the DMR Kimberley office in April 2009. “His brief was to help us identify other potential witnesses to the impropriety he described. In particular, his brief was to explore whether Charles Lerumo—with whom he had a close relationship—could become a witness. It was never intended at this stage that he would be a witness himself,” said Soggott, a former M&G journalist who left the newspaper in 2002.
Hendriksz entered into a contract with Risk Analysis. Ultimately, Kumba and its legal advisers introduced him to the Hawks. Hendriksz said his ultimate goal was to stamp out corruption in the department, which is “damaging the mining industry”.
Under 2004 mining legislation, companies were required to convert mining rights under old law by applying for “new order” rights by May 1 2009.
By the deadline, iron-ore miner Kumba, had applied to convert its 78.6% stake in the Sishen iron mine. But steel manufacturer ArcelorMittal, with the remaining 21.4%, had not. Kumba and an obscure shelf company, Imperial Crown Trading 289 (ICT), raced to acquire the rights to ArcelorMittal’s 21.4% stake, estimated to be worth R800-billion over the mine’s remaining life.
But May 1—a Friday—was a public holiday.
On Monday May 4, Kumba and Imperial’s applications for the vacant Sishen stake were recorded on the department’s system in Kimberley. ICT applied for a prospecting right, Kumba for a mining right. Controversy now surrounds both applications.
ICT claims Kumba acted deceitfully by handing in its application early and asking department officials to lodge it on May 4.
Kumba claims that ICT’s application was not ready on May 4, but that officials recorded ICT’s application as lodged on that day—even though ICT’s application trickled in over succeeding days.
Both companies also accuse one another of bribing officials to tamper with their rival’s application.
In November 2009, the department handed ICT a prospecting right on the basis that both applications had arrived on May 4, but that ICT had superior BEE credentials.
One of ICT’s founding directors was Prudence “Gugu” Mtshali, reportedly Deputy President Kgalema Motlanthe’s romantic partner. Motlanthe was South Africa’s caretaker president in May 2009 when ICT applied for the stake.
In March 2010 ICT handed over a 50% stake to JIC Mining, represented on its board by Jagdish Parekh. JIC is controlled by the Gupta brothers, benefactors of the Zuma family.
In August 2010 Arcelor offered to buy out Imperial and incorporate its directors into a new consortium that included President Jacob Zuma’s son Duduzane and Parekh, making them instant billionaires.
But the buy-out was never consummated. Instead, Kumba and Arcelor won a High Court judgment in December 2011 that mineral rights over a single area are indivisible and that Arcelor’s old order 21.4% stake is fully Kumba’s.
ICT are now out in the cold, although it finalised its appeal against Zondo’s ruling last week.
In July 2011, the Hawks raided ICT’s office and the department in Kimberley for evidence of fraud when the applications were made.
ICT has challenged the legality of the raids, and the seized materials are currently out of the Hawks’ reach.
Source: Mail & Guardian
Showing posts with label Duduzane Zuma. Show all posts
Showing posts with label Duduzane Zuma. Show all posts
Friday, February 10, 2012
Monday, September 27, 2010
Billionaire businessman arrested over threats to cops
BILLIONAIRE businessman and publisher of the newly launched newspaper, The New Age, Atul Kumar Gupta, will appear in the Randburg magistrate's court this morning on an obstruction of justice charge.
Gupta was travelling in his black X5 BMW from his offices in Midrand at about 9pm on Saturday when the police stopped him on the R55 highway. His driver and bodyguard was frisked. Police found a licenced firearm on him. Sources said when the police officers wanted to search Gupta and his car he refused. He then got on the phone and said he was calling General Bheki Cele, but not before telling them that he knew all the top police commissioners and would get them all fired. "All hell broke loose when Gupta refused to be searched. He also boasted that he was well-connected to Cele, threatening the arresting officers that they would pay for their actions," one source said. "This did not go down well with Constables Aubrey Mlotshwa and a Constable Mangema. "The police officers pulled Gupta out of his car, before taking him to the Sandton police station, where a charge was laid against him."
At the police station he was taken to an office, where he was interviewed and released just after midnight. Several managers from Sahara, including Duduzane Zuma, arrived at the police station.
Gauteng provincial police spokesperson Colonel Noxolo Kweza confirmed the arrest and said the law would take its course. Kweza said there was nothing wrong with releasing the businessman. The courts would determine whether he was guilty or not. She said the police were conducting their normal patrols on the R55 when they flagged down Gupta's car.
Gupta family spokesperson Gary Naidoo confirmed to CAJ News that his boss was arrested and charged but declined to shed more light on what transpired. He said Gupta was in Durban yesterday.
Cele's spokesperson, Nonkululeko Mbatha, said the general would not comment on the matter. "He (Cele) wouldn't have interfered, whether the person who was being arrested was a family member or a friend. Police arrest whoever. "They have to do their job. If the case is genuine it should go to court," she said.
Gupta has been a close friend of President Jacob Zuma since 1993. Apart from Sahara, the Gupta family trust has interests in mining through Afripalm and owns coal mining company Tigeta Mining & Resources, and JIC, a mining services company. They also publish The Thinker, a political journal. Gupta's brother, Rajesh, and Zuma's son, Duduzane, are business partners who recently clinched the controversial R9 billion ArcelorMittal business deals.
Source: The Sowetan
Gupta was travelling in his black X5 BMW from his offices in Midrand at about 9pm on Saturday when the police stopped him on the R55 highway. His driver and bodyguard was frisked. Police found a licenced firearm on him. Sources said when the police officers wanted to search Gupta and his car he refused. He then got on the phone and said he was calling General Bheki Cele, but not before telling them that he knew all the top police commissioners and would get them all fired. "All hell broke loose when Gupta refused to be searched. He also boasted that he was well-connected to Cele, threatening the arresting officers that they would pay for their actions," one source said. "This did not go down well with Constables Aubrey Mlotshwa and a Constable Mangema. "The police officers pulled Gupta out of his car, before taking him to the Sandton police station, where a charge was laid against him."
At the police station he was taken to an office, where he was interviewed and released just after midnight. Several managers from Sahara, including Duduzane Zuma, arrived at the police station.
Gauteng provincial police spokesperson Colonel Noxolo Kweza confirmed the arrest and said the law would take its course. Kweza said there was nothing wrong with releasing the businessman. The courts would determine whether he was guilty or not. She said the police were conducting their normal patrols on the R55 when they flagged down Gupta's car.
Gupta family spokesperson Gary Naidoo confirmed to CAJ News that his boss was arrested and charged but declined to shed more light on what transpired. He said Gupta was in Durban yesterday.
Cele's spokesperson, Nonkululeko Mbatha, said the general would not comment on the matter. "He (Cele) wouldn't have interfered, whether the person who was being arrested was a family member or a friend. Police arrest whoever. "They have to do their job. If the case is genuine it should go to court," she said.
Gupta has been a close friend of President Jacob Zuma since 1993. Apart from Sahara, the Gupta family trust has interests in mining through Afripalm and owns coal mining company Tigeta Mining & Resources, and JIC, a mining services company. They also publish The Thinker, a political journal. Gupta's brother, Rajesh, and Zuma's son, Duduzane, are business partners who recently clinched the controversial R9 billion ArcelorMittal business deals.
Source: The Sowetan
Wednesday, September 15, 2010
BEE proceeds 'cripple ANC'
The SA Communist party has blamed the factional battles rocking the ANC on the narrowness of "broad-based" black economic empowerment. On its online periodical Umsebenzi, the SACP said BEE had returned to bite the ruling party, with factions fighting for total dominance. It said the ANC's "Leadership Renewal" document, to be discussed at the ANC's national general council meeting in KwaZulu-Natal next week, fails to make a connection between factional battles in the ANC and BEE.
The SACP said BEE proceeds were being used to fund factional battles and buy votes in the ruling party. "We are now living with the consequences. Some R500-billion from pension funds, from state coffers, and from the private sector has been diverted into floating private BEE equity deals. "Worse still, this is the money that is now returning back into our organisations in order to buy votes, to fund factional activities, to print T-shirts with the faces of junior leaders."
The communists said that, though they supported the empowerment of the black majority, narrow BEE funding should be discussed at the ANC's general council meeting. "... we need now to ask the obvious question - is narrow BEE, particularly BEE codes that require percentage targets for capitalist ownership, not at the heart of exposing our movement to the material conditions that are having such a negative impact on our movement?"
ANC president Jacob Zuma came under pressure recently to explain the involvement of his family and close associates in BEE deals. Last week, his son, Duduzane, took the extraordinary step of explaining his involvement in an ArcelorMittal SA deal worth more than R9-billion after Cosatu questioned the transaction.
The SACP and Cosatu have also been vocal in condemning the attempts of tenderpreneurs to take over the ANC. The use of money in ANC's elections is expected to come under discussion at the meeting of the national general council because party leaders want to discourage what they term "alien tendencies".
In its "leadership renewal" document, the ANC said that the use of money in lobbying for positions in the party was destroying it. It said that, since the last ANC's national conference in Polokwane in 2007, "alien tendencies" had become "embedded and in fact worsened, especially as part of the lobbying process".
The SACP said that, though the emergence of the black middle class - which is the main benefactor of BEE - was an inevitable outcome of democratisation and deracialisation, it had never been "a strategic objective of the national democratic revolution" - it was "smuggled" onto the ANC agenda in 1996.
Source: Times Live
The SACP said BEE proceeds were being used to fund factional battles and buy votes in the ruling party. "We are now living with the consequences. Some R500-billion from pension funds, from state coffers, and from the private sector has been diverted into floating private BEE equity deals. "Worse still, this is the money that is now returning back into our organisations in order to buy votes, to fund factional activities, to print T-shirts with the faces of junior leaders."
The communists said that, though they supported the empowerment of the black majority, narrow BEE funding should be discussed at the ANC's general council meeting. "... we need now to ask the obvious question - is narrow BEE, particularly BEE codes that require percentage targets for capitalist ownership, not at the heart of exposing our movement to the material conditions that are having such a negative impact on our movement?"
ANC president Jacob Zuma came under pressure recently to explain the involvement of his family and close associates in BEE deals. Last week, his son, Duduzane, took the extraordinary step of explaining his involvement in an ArcelorMittal SA deal worth more than R9-billion after Cosatu questioned the transaction.
The SACP and Cosatu have also been vocal in condemning the attempts of tenderpreneurs to take over the ANC. The use of money in ANC's elections is expected to come under discussion at the meeting of the national general council because party leaders want to discourage what they term "alien tendencies".
In its "leadership renewal" document, the ANC said that the use of money in lobbying for positions in the party was destroying it. It said that, since the last ANC's national conference in Polokwane in 2007, "alien tendencies" had become "embedded and in fact worsened, especially as part of the lobbying process".
The SACP said that, though the emergence of the black middle class - which is the main benefactor of BEE - was an inevitable outcome of democratisation and deracialisation, it had never been "a strategic objective of the national democratic revolution" - it was "smuggled" onto the ANC agenda in 1996.
Source: Times Live
Monday, September 13, 2010
Zuma's son says he will give away shares
BUSINESSMAN and son of President Jacob Zuma, Duduzane, has defended his role in black economic empowerment deals and promised to give away 70 percent of his stake in ArcelorMittal SA deal. "I am very pleased to announce that I have decided to forgo 70 percent of my proposed allocation and spread it among other South Africans who are needy and disadvantaged like I once was," Zuma said. He said his close business allies, the Gupta family, had also agreed to give 70 percent of their own allocation in the Amsa deal.
Zuma said he would set up a broad-based share scheme for disadvantaged South Africans to distribute shares in the controversial Amsa deal. He said his Mabengela Empowerment Trust was worth more than R1 billion. A share would go to widows and widowers, orphans and dependants of police who died in the line of duty since April 27 1994. Another would go to a bursary fund for under-privileged students studying at universities. "The inaugural award will go to the University of Johannesburg. We will particularly target universities in historically disadvantaged areas or universities with a large proportion of students from historically disadvantaged communities," Zuma said. A portion would go towards support of women in rural communities and pay for the education of orphans in all provinces.
Zuma has been chastised by Cosatu after he was announced as one of the beneficiaries in Amsa's black economic empowerment deal worth more than R9billion. Cosatu general secretary Zwelinzima Vavi said: "The open way in which prominent 'business figures', linked to top political leaders, deepen perceptions that there is blatantly abuse of power to concoct illegitimate business deals worth billions of rands."
Zuma defended his involvement in the deal, saying that it had nothing to do with the fact that his father was president of the country. "I would like to point out that I was in business long before my father was president," he said. "I am a businessman in my own right." He said he had "never done business with government" and that hard work and dedication had helped him establish himself in business.
Source: The Sowetan
Zuma said he would set up a broad-based share scheme for disadvantaged South Africans to distribute shares in the controversial Amsa deal. He said his Mabengela Empowerment Trust was worth more than R1 billion. A share would go to widows and widowers, orphans and dependants of police who died in the line of duty since April 27 1994. Another would go to a bursary fund for under-privileged students studying at universities. "The inaugural award will go to the University of Johannesburg. We will particularly target universities in historically disadvantaged areas or universities with a large proportion of students from historically disadvantaged communities," Zuma said. A portion would go towards support of women in rural communities and pay for the education of orphans in all provinces.
Zuma has been chastised by Cosatu after he was announced as one of the beneficiaries in Amsa's black economic empowerment deal worth more than R9billion. Cosatu general secretary Zwelinzima Vavi said: "The open way in which prominent 'business figures', linked to top political leaders, deepen perceptions that there is blatantly abuse of power to concoct illegitimate business deals worth billions of rands."
Zuma defended his involvement in the deal, saying that it had nothing to do with the fact that his father was president of the country. "I would like to point out that I was in business long before my father was president," he said. "I am a businessman in my own right." He said he had "never done business with government" and that hard work and dedication had helped him establish himself in business.
Source: The Sowetan
Sunday, September 5, 2010
Guest Columnist BEE has evolved into a family affair: ZEE
There was cautious optimism among many leftists in the ANC that the ousting of Thabo Mbeki in Polokwane might mark a shift towards a much more egalitarian economic policy, including Black Economic Empowerment (BEE). Instead, BEE is increasingly becoming too narrow, amounting to ZEE – that is, Zuma Economic Empowerment.
The recent multibillion-rand Arcelor-Mittal BEE deal involving Duduzane, President Jacob Zuma’s son, is another example of how BEE has become too narrow. To crown it all, the president’s nephew, Khulubuse Zuma, seems to have suddenly become an African imperialist, amassing oil resources in the Democratic Republic of Congo.
ZEE is not only an assault on the Young Communist League and South African Communist Party (SACP) resolutions – which called for the nationalisation of monopoly industries – it amounts to a burial of the Freedom Charter. Only a few can be misled to believe that there is no link between Zuma’s rise to the presidency and his family’s rise to riches. One’s leadership position in a political party, particularly the ANC, allows one to gain and/or retain access to the institutional power that makes one the preferred candidate for white business to select to be part of its established enterprises. These politicians rely heavily on the control of organisational power to generate wealth. Access to the state provides politicians with leverage to select those who can acquire shares in white-owned firms.
South Africa’s political system is based on a multiparty electoral democracy. Access to state institutional power is achieved through elections. Consequently, many politicians are interested in party politics. Since they rely on organisational power for wealth accumulation, potential and actual entrepreneurs find it rational to contest directly or indirectly for political organisational leadership positions as an entry point to the state and its economic resources. However, not every political party matters.
Because the ANC is backed by the SACP and the Congress of South African Trade Unions – not to mention its history in the national liberation struggle – it is highly supported by the electorate and, therefore, matters. Individuals acting within and through the state have the power to decide who gets state-owned resources. However, the fact that individuals in the state have this institutional power does not mean we will know beforehand which black politicians will secure access to these resources. This is mediated by a dominant political party in government.
The BEE model is structured favourably for politically connected politicians and their proxies to enter into business through the state. The state owns key economic resources required by business that can only be accessed with state permission. The state acts as a purchaser of services from the private sector. Through its financial institutions, the state acts as a money lender. It is also a grantor of licences for, among other things, mining rights. Through privatisation, it acts as a seller of its assets.
Business can gain access to state-owned resources through a BEE criterion that requires black people to be owners and managers of enterprises. White businesses can use black people who are politically connected to gain access to these resources – and more recently, as a means to deflect ANC Youth League calls for nationalisation. This explains why certain black millionaires associated with the liberation movement have been cherry-picked by white businesses.
The BEE model has promoted competition among politicians for access to institutional power and co-option by white business. This competition finds expression in political conflicts within the ANC and the state. We are indeed on the wrong economic redistribution path. BEE has become a family affair. Children whose parents are not politicians will have to lift themselves out of poverty by their own bootstraps.
The youth’s cynical acquiescence of ZEE may find concrete expression in non-participation in political activism, including voting. After all, why vote if voting means empowering politicians to empower their children.
Source: City Press
The recent multibillion-rand Arcelor-Mittal BEE deal involving Duduzane, President Jacob Zuma’s son, is another example of how BEE has become too narrow. To crown it all, the president’s nephew, Khulubuse Zuma, seems to have suddenly become an African imperialist, amassing oil resources in the Democratic Republic of Congo.
ZEE is not only an assault on the Young Communist League and South African Communist Party (SACP) resolutions – which called for the nationalisation of monopoly industries – it amounts to a burial of the Freedom Charter. Only a few can be misled to believe that there is no link between Zuma’s rise to the presidency and his family’s rise to riches. One’s leadership position in a political party, particularly the ANC, allows one to gain and/or retain access to the institutional power that makes one the preferred candidate for white business to select to be part of its established enterprises. These politicians rely heavily on the control of organisational power to generate wealth. Access to the state provides politicians with leverage to select those who can acquire shares in white-owned firms.
South Africa’s political system is based on a multiparty electoral democracy. Access to state institutional power is achieved through elections. Consequently, many politicians are interested in party politics. Since they rely on organisational power for wealth accumulation, potential and actual entrepreneurs find it rational to contest directly or indirectly for political organisational leadership positions as an entry point to the state and its economic resources. However, not every political party matters.
Because the ANC is backed by the SACP and the Congress of South African Trade Unions – not to mention its history in the national liberation struggle – it is highly supported by the electorate and, therefore, matters. Individuals acting within and through the state have the power to decide who gets state-owned resources. However, the fact that individuals in the state have this institutional power does not mean we will know beforehand which black politicians will secure access to these resources. This is mediated by a dominant political party in government.
The BEE model is structured favourably for politically connected politicians and their proxies to enter into business through the state. The state owns key economic resources required by business that can only be accessed with state permission. The state acts as a purchaser of services from the private sector. Through its financial institutions, the state acts as a money lender. It is also a grantor of licences for, among other things, mining rights. Through privatisation, it acts as a seller of its assets.
Business can gain access to state-owned resources through a BEE criterion that requires black people to be owners and managers of enterprises. White businesses can use black people who are politically connected to gain access to these resources – and more recently, as a means to deflect ANC Youth League calls for nationalisation. This explains why certain black millionaires associated with the liberation movement have been cherry-picked by white businesses.
The BEE model has promoted competition among politicians for access to institutional power and co-option by white business. This competition finds expression in political conflicts within the ANC and the state. We are indeed on the wrong economic redistribution path. BEE has become a family affair. Children whose parents are not politicians will have to lift themselves out of poverty by their own bootstraps.
The youth’s cynical acquiescence of ZEE may find concrete expression in non-participation in political activism, including voting. After all, why vote if voting means empowering politicians to empower their children.
Source: City Press
Friday, August 27, 2010
Cosatu threatens to break link with its old ally, ANC
COSATU yesterday threatened to sever its long-standing alliance with the ANC and widen the State workers’ strike next week to key industries.
Thousands of striking State workers held marches in major cities nationwide calling on the government to meet their wage demands. About 1.3 million unionised employees have walked out in the standoff, shutting schools and cutting off medical treatment at hospitals. “The alliance is again dysfunctional,” Cosatu secretary-general Zwelinzima Vavi said. “The centre cannot hold.” The comments were some of the strongest signals to date that organised labour, which helped President Jacob Zuma ascend to the Presidency, may be ready to cut, or change, a relationship with the ANC that was forged in their struggle to end apartheid.
The State workers’ strike has had no major impact on rand and bond trading but market players said worries would mount if it extended into September and other labour groups joined in. Jasson Urbach, an economist with the Free Market Foundation, estimated the work stoppage was costing the economy R1084 billion a day.
Police fired rubber bullets when protests turned violent in Kimberley, while rallies slowed traffic to a crawl in major cities. Cosatu said it had filed seven-day strike notices yester day so that all its two million members could join the State workers in a strike they said would also target the mining and manufacturing sectors, a step which could grind the country to a halt.
On top of the wage dispute, the leader of the ANC’s Youth League, Julius Malema, fired what amounted to a warning shot at Zuma on Wednesday, questioning his leadership and implying the ruling party’s youth wing would not support Zuma for a re- election bid.
Cosatu also wants the government to reverse a R9 billion deal involving mining giant ArcelorMittal that transfers 26% of its local shares to employees and black investors including a consortium led by Zuma’s son, Duduzane. “We are heading rapidly in the direction of a full blown predator State, in which a powerful, corrupt and demagogic elite of political hyenas increasingly controls the State,” Vavi said .
Source: Daily Dispatch Online
Thousands of striking State workers held marches in major cities nationwide calling on the government to meet their wage demands. About 1.3 million unionised employees have walked out in the standoff, shutting schools and cutting off medical treatment at hospitals. “The alliance is again dysfunctional,” Cosatu secretary-general Zwelinzima Vavi said. “The centre cannot hold.” The comments were some of the strongest signals to date that organised labour, which helped President Jacob Zuma ascend to the Presidency, may be ready to cut, or change, a relationship with the ANC that was forged in their struggle to end apartheid.
The State workers’ strike has had no major impact on rand and bond trading but market players said worries would mount if it extended into September and other labour groups joined in. Jasson Urbach, an economist with the Free Market Foundation, estimated the work stoppage was costing the economy R1084 billion a day.
Police fired rubber bullets when protests turned violent in Kimberley, while rallies slowed traffic to a crawl in major cities. Cosatu said it had filed seven-day strike notices yester day so that all its two million members could join the State workers in a strike they said would also target the mining and manufacturing sectors, a step which could grind the country to a halt.
On top of the wage dispute, the leader of the ANC’s Youth League, Julius Malema, fired what amounted to a warning shot at Zuma on Wednesday, questioning his leadership and implying the ruling party’s youth wing would not support Zuma for a re- election bid.
Cosatu also wants the government to reverse a R9 billion deal involving mining giant ArcelorMittal that transfers 26% of its local shares to employees and black investors including a consortium led by Zuma’s son, Duduzane. “We are heading rapidly in the direction of a full blown predator State, in which a powerful, corrupt and demagogic elite of political hyenas increasingly controls the State,” Vavi said .
Source: Daily Dispatch Online
Thursday, August 26, 2010
Feeding Frenzy: its a BEE feast for Zuma cronies
The controversies surrounding the Sishen and Lonrho mineral rights have raised old questions about black economic empowerment (BEE), including the undeserved enrichment of elite individuals. But now, under the Jacob Zuma regime, there is growing concern about cronyism, patronage, and the role of government officials.
This time the appearance of patronage can be traced to the top. Some individuals, including the president’s son, Duduzane Zuma, could be greatly enriched by gaining ownership of mineral rights in a questionable process. Unease about the process has become more widespread.
The National Union of Metal Workers (Numsa) has commented scathingly on what it calls “the ArcelorMittal and Imperial Crown Trading looting scheme”. Minerals & resources minister Susan Shabangu’s decision last week to place a moratorium on new awards of mineral rights demonstrates that even government has concerns.
These events raise important questions: how are BEE policies working, what are the achievements and weaknesses — and are the effects in line with government’s intentions?
In more than 16 years, BEE has achieved many successes and some failures. It started in the early 1990s with companies such as Thebe Investments, launched by senior ANC officials, and Nthato Motlana’s Corporate Africa, which gained control of New Africa Investments (Nail). Thebe remains a successful enterprise, and there are other enduring black-controlled businesses. Some have grown through strong share price gains, buoyant markets and productive investment.
Among these are Patrice Motsepe’s African Rainbow Minerals, with a R34bn market cap, and MTN (R225bn market cap) which is run by CE Phuthuma Nhleko. One of the most successful is the unlisted Royal Bafokeng Holdings, a community-based investment company . It started with royalties from Impala platinum mining . Under chairman Kgosi Leruo Molotlegi and CE Niall Carroll, a former investment banker, it has diversified into mining, financial and industrial investments. At its financial year-end last December, it had a R30bn investment portfolio and minimal debt.
Nail started as a 20% shareholder in Sanlam’s Metlife, then attempted to become a conglomerate but collapsed . Mvela Group gathered stakes in companies such as Absa and Life Healthcare, but is now being dismantled . Having made his fortune, founder Tokyo Sexwale has returned to politics as human settlements minister.
Throughout these years, there has been debate about how BEE can best be achieved, and it has worked — but also created risks and unease on many fronts. In an institutional or legal sense, rules of the game were set through the Broad- based Empowerment Act of 2003 and the publication of industry codes and charters over the next few years. These changed the way companies and other stakeholders think about the process.
In the 1990s it was mainly about deals and ownership. The codes and charters have formalised a broader approach. They use a balanced scorecard, giving only a 20% weighting to ownership. Companies also gain credit in other areas including preferential procurement, employment equity, skills development and enterprise development (see table). Management control, where influence over a business is large, gets only 10%.
However, ownership of equity in companies and access to other assets such as mineral rights still play a big role in the process. This is where some old themes and questions are constantly at play. Since the charters and new regulations came into effect , most big companies have done deals over the past few years.
In each case, there are familiar questions: how can the deal be funded when the BEE investors have limited or no capital? Should key individuals benefit from the deal, or should the shareholders be entirely broad-based? If lead individual investors are involved, what value will they add to the business? Will they assist in running the business , adding new perspectives on the board — or provide influence among cronies in high places?
The Sishen/ArcelorMittal case has attracted special attention, partly because valuable mineral rights are involved and there are individuals who have direct links to senior politicians. (See next story). In other large BEE deals announced recently, companies have opted for broad-based empowerment shareholders. That includes the Sasol, SABMiller and MTN deals.
Government and other stakeholders have backed the broad-based empowerment principle, which usually seems intuitively more beneficial. But there is still leeway for companies when designing BEE deals and choosing their partners.
The benefits of broad-based empowerment deals are not always achieved as hoped. Funding arrangements linked to the share price can unravel when product prices or financial markets weaken, as occurred two years ago. Sasol’s R30bn Inzalo deal — which gave 10% of the group’s share capital to the black public, broad-based BEE groups, trade unions, employees and the Sasol Inzalo Foundation — was announced in May 2008, when the share price rose to R490. It’s now R284. Other companies, such as Barloworld, have restructured BEE deals for similar reasons.
Jenny Cargill, founder of BEE consulting company BusinessMap, gives several examples of communities that have been disadvantaged by BEE ventures or decisions made by government officials . The Richtersveld community in the Northern Cape is one. Cargill describes the potentially negative effects on communities as BEE’s “powder keg”.
In planning BEE deals, dilemmas on issues such as funding and the shareholding structure can arise. As the Sishen/ArcelorMittal case has shown, the actual or perceived ability to influence decisions on access to those rights through special relationships can be a valuable card for black investors . For some investors, the special relationships may be their only currency .
When they do play that card, and stand to be greatly enriched , investors and other stakeholders are quick to link the decisions — by government and companies — to a culture of corruption and cronyism, though weak laws, poor transparency and inept officials may be part of the problem. That’s a risk that government cannot afford .
WHAT IT MEANS
The empowerment field is not level
ArcelorMittal deal is just plain rotten
Source: Financial Mail
This time the appearance of patronage can be traced to the top. Some individuals, including the president’s son, Duduzane Zuma, could be greatly enriched by gaining ownership of mineral rights in a questionable process. Unease about the process has become more widespread.
The National Union of Metal Workers (Numsa) has commented scathingly on what it calls “the ArcelorMittal and Imperial Crown Trading looting scheme”. Minerals & resources minister Susan Shabangu’s decision last week to place a moratorium on new awards of mineral rights demonstrates that even government has concerns.
These events raise important questions: how are BEE policies working, what are the achievements and weaknesses — and are the effects in line with government’s intentions?
In more than 16 years, BEE has achieved many successes and some failures. It started in the early 1990s with companies such as Thebe Investments, launched by senior ANC officials, and Nthato Motlana’s Corporate Africa, which gained control of New Africa Investments (Nail). Thebe remains a successful enterprise, and there are other enduring black-controlled businesses. Some have grown through strong share price gains, buoyant markets and productive investment.
Among these are Patrice Motsepe’s African Rainbow Minerals, with a R34bn market cap, and MTN (R225bn market cap) which is run by CE Phuthuma Nhleko. One of the most successful is the unlisted Royal Bafokeng Holdings, a community-based investment company . It started with royalties from Impala platinum mining . Under chairman Kgosi Leruo Molotlegi and CE Niall Carroll, a former investment banker, it has diversified into mining, financial and industrial investments. At its financial year-end last December, it had a R30bn investment portfolio and minimal debt.
Nail started as a 20% shareholder in Sanlam’s Metlife, then attempted to become a conglomerate but collapsed . Mvela Group gathered stakes in companies such as Absa and Life Healthcare, but is now being dismantled . Having made his fortune, founder Tokyo Sexwale has returned to politics as human settlements minister.
Throughout these years, there has been debate about how BEE can best be achieved, and it has worked — but also created risks and unease on many fronts. In an institutional or legal sense, rules of the game were set through the Broad- based Empowerment Act of 2003 and the publication of industry codes and charters over the next few years. These changed the way companies and other stakeholders think about the process.
In the 1990s it was mainly about deals and ownership. The codes and charters have formalised a broader approach. They use a balanced scorecard, giving only a 20% weighting to ownership. Companies also gain credit in other areas including preferential procurement, employment equity, skills development and enterprise development (see table). Management control, where influence over a business is large, gets only 10%.
However, ownership of equity in companies and access to other assets such as mineral rights still play a big role in the process. This is where some old themes and questions are constantly at play. Since the charters and new regulations came into effect , most big companies have done deals over the past few years.
In each case, there are familiar questions: how can the deal be funded when the BEE investors have limited or no capital? Should key individuals benefit from the deal, or should the shareholders be entirely broad-based? If lead individual investors are involved, what value will they add to the business? Will they assist in running the business , adding new perspectives on the board — or provide influence among cronies in high places?
The Sishen/ArcelorMittal case has attracted special attention, partly because valuable mineral rights are involved and there are individuals who have direct links to senior politicians. (See next story). In other large BEE deals announced recently, companies have opted for broad-based empowerment shareholders. That includes the Sasol, SABMiller and MTN deals.
Government and other stakeholders have backed the broad-based empowerment principle, which usually seems intuitively more beneficial. But there is still leeway for companies when designing BEE deals and choosing their partners.
The benefits of broad-based empowerment deals are not always achieved as hoped. Funding arrangements linked to the share price can unravel when product prices or financial markets weaken, as occurred two years ago. Sasol’s R30bn Inzalo deal — which gave 10% of the group’s share capital to the black public, broad-based BEE groups, trade unions, employees and the Sasol Inzalo Foundation — was announced in May 2008, when the share price rose to R490. It’s now R284. Other companies, such as Barloworld, have restructured BEE deals for similar reasons.
Jenny Cargill, founder of BEE consulting company BusinessMap, gives several examples of communities that have been disadvantaged by BEE ventures or decisions made by government officials . The Richtersveld community in the Northern Cape is one. Cargill describes the potentially negative effects on communities as BEE’s “powder keg”.
In planning BEE deals, dilemmas on issues such as funding and the shareholding structure can arise. As the Sishen/ArcelorMittal case has shown, the actual or perceived ability to influence decisions on access to those rights through special relationships can be a valuable card for black investors . For some investors, the special relationships may be their only currency .
When they do play that card, and stand to be greatly enriched , investors and other stakeholders are quick to link the decisions — by government and companies — to a culture of corruption and cronyism, though weak laws, poor transparency and inept officials may be part of the problem. That’s a risk that government cannot afford .
WHAT IT MEANS
The empowerment field is not level
ArcelorMittal deal is just plain rotten
Source: Financial Mail
Tuesday, August 17, 2010
'Stop the politicians' feeding frenzy'
Cosatu leader Zwelinzima Vavi has warned that South Africa was slipping into becoming a "predatory state" where a new tier of leaders believed it was their turn to "feed". "There is an order in a predatory state - and I'm not saying that is what is happening - but in an ordinary predatory state there is an order in the feeding trough. The first family must feed first, and then the cabinet must come, and its family, and then the provincial leadership and the council. In the process we have battles of short-term interest," he said.
The Cosatu general secretary was speaking at a political school organised by the National Union of Metalworkers' of SA (Numsa) in Joburg last night. Fellow panellist, ANC secretary-general Gwede Mantashe, told the gathering the success of the ANC's struggles was not to be measured "on how many billionaires we have produced", but rather how the poverty experienced by the majority of people was addressed. The alliance leaders' comments come after multibillion-rand deals involving people directly linked to President Jacob Zuma, including his son, Duduzane, and his nephew, Khulubuse Zuma.
Mantashe asked whether having 20 black people among the top richest people in the country was really all that the "national democratic revolution" was about. The ANC's renewal campaign was about returning the party to its members. "It can't be dominated by a small inner circle that controls resources and gives access to wealth," he said.
Steel giant ArcelorMittal has come under fire after announcing a R9 billion deal to sell a 26 percent stake in its business, a transaction in which Duduzane Zuma as well as the Gupta family and other close associates of Zuma have scored millions of rands. Vavi said when it became a matter of politicians awaiting their turn to "feed", this was a "vulgarisation" of the alliance's struggle to liberate black African people. Economic empowerment and job creation were inextricably linked, he said. He criticised the government's "dilly-dallying" and "confusion" over developing a plan to curb the "job-loss bloodbath", that saw more than one million people lose their jobs in the past year. "Since April we are being told there is an economic growth path (policy document) and that it is coming. Up to now we have nothing in our hands, and we are going to discuss it for the first time in the (ANC's national general council, its mid-term policy review conference). Even that shows that there is a state of confusion up there," Vavi said. There was a growth path envisaged by cabinet and a separate one envisioned by the ANC, Vavi said. "As a result... you might be going in two different directions. It is a crisis."
Also present was SACP general secretary Blade Nzimande, who called for a review of the country's black economic empowerment policies. "Who has it worked for? And is it being corrupted in a big way?" he asked. Nzimande repeated his warnings against "tenderpreneurs" - people who manipulate state contracts to enrich themselves - and businesses that chased state tenders rather than creating opportunities in the private sector. "BEE is in a big crisis, so its roots (are) in picking on the state. When that goes on, we will turn South Africa into one big tender which will be sold to the highest bidder," he said. "You will bring in counter-revolution, because anything that stands in the way, will be dealt with quite severely."
Source: IOL
The Cosatu general secretary was speaking at a political school organised by the National Union of Metalworkers' of SA (Numsa) in Joburg last night. Fellow panellist, ANC secretary-general Gwede Mantashe, told the gathering the success of the ANC's struggles was not to be measured "on how many billionaires we have produced", but rather how the poverty experienced by the majority of people was addressed. The alliance leaders' comments come after multibillion-rand deals involving people directly linked to President Jacob Zuma, including his son, Duduzane, and his nephew, Khulubuse Zuma.
Mantashe asked whether having 20 black people among the top richest people in the country was really all that the "national democratic revolution" was about. The ANC's renewal campaign was about returning the party to its members. "It can't be dominated by a small inner circle that controls resources and gives access to wealth," he said.
Steel giant ArcelorMittal has come under fire after announcing a R9 billion deal to sell a 26 percent stake in its business, a transaction in which Duduzane Zuma as well as the Gupta family and other close associates of Zuma have scored millions of rands. Vavi said when it became a matter of politicians awaiting their turn to "feed", this was a "vulgarisation" of the alliance's struggle to liberate black African people. Economic empowerment and job creation were inextricably linked, he said. He criticised the government's "dilly-dallying" and "confusion" over developing a plan to curb the "job-loss bloodbath", that saw more than one million people lose their jobs in the past year. "Since April we are being told there is an economic growth path (policy document) and that it is coming. Up to now we have nothing in our hands, and we are going to discuss it for the first time in the (ANC's national general council, its mid-term policy review conference). Even that shows that there is a state of confusion up there," Vavi said. There was a growth path envisaged by cabinet and a separate one envisioned by the ANC, Vavi said. "As a result... you might be going in two different directions. It is a crisis."
Also present was SACP general secretary Blade Nzimande, who called for a review of the country's black economic empowerment policies. "Who has it worked for? And is it being corrupted in a big way?" he asked. Nzimande repeated his warnings against "tenderpreneurs" - people who manipulate state contracts to enrich themselves - and businesses that chased state tenders rather than creating opportunities in the private sector. "BEE is in a big crisis, so its roots (are) in picking on the state. When that goes on, we will turn South Africa into one big tender which will be sold to the highest bidder," he said. "You will bring in counter-revolution, because anything that stands in the way, will be dealt with quite severely."
Source: IOL
Friday, August 13, 2010
Mining shaky ground:"Shades of Zimbabwe"
South Africa might well have said goodbye to significant new foreign investment in its mining industry. Foreigners can be unforgiving when they see what they believe are attempts to grab their assets. Which is precisely what they believe is happening with the recent, though quickly rescinded, ban by the Department of Mineral Resources of normal by-product metals sales by London-registered platinum miner Lonmin.
Understandably, politically connected opportunists were seen as being actively helped by the department in their attempts to acquire mining assets cheaply and beyond the legal requirement that 25% ownership of mines be transferred to BEE interests by 2014.
"Shades of Zimbabwe," fund managers muttered. An earlier, similar stratagem directed at an Anglo American subsidiary, Kumba's Sishen Iron Ore, was initially largely overlooked as being an aberration. Now, the word "greenmail" is commonly heard in London. Kumba felt it had adhered strictly to the rules. When global steelmaker ArcelorMittal missed the April 2009 deadline to convert its prospecting rights - a preliminary to granting mining rights - over 21.4% of Sishen's Northern Cape mine, Kumba itself applied to the department for the rights.
Strangely, before it had considered Kumba's legitimate application, the department awarded the Sishen prospecting rights to the hitherto little-known Imperial Crown Trading - which is closely linked to the presidency and ANC top brass. That effectively sterilises part of Sishen, where mining goes back decades. Imperial has no mining skills, credentials or even visible cash - just political connections. Reportedly, it somehow got its hands on Kumba's application documentation and put in a later bid. The Department of Mineral Resources's first-come-first-served rule was ignored. When challenged earlier this year, mines minister Susan Shabangu blustered that she saw nothing sinister in granting rights to people with affiliations to the ruling party. That was just after she and Anglo CEO Cynthia Carroll had been cosying up to each other at a Cape Town mining conference at which all was sweetness and light. Shabangu was touting SA's mining investment merits and Carroll was making emollient statements about Anglo's commitment to South Africa.
Kumba is mounting a legal challenge to the Imperial award. But, in a new twist this past week, Imperial struck an R800-million deal to be taken over by ArcelorMittal, sweetened by a share in a R9-billion 26% stake in the steelmaker's South African mills - all provided that Imperial can deliver the Sishen rights to the steel company. Some favoured individuals are hoping to make quick fortunes, and they are not the ordinary South Africans BEE is supposed to benefit. Wheels within political wheels. If this deal goes through, a good part of the steel mill's stake will be owned by the Gupta Group, controlled by the Indian Gupta family, which finances the ANC and the party's new daily newspaper - set to hit the streets next month. Gupta has Jacob Zuma's son, Duduzane, on one of its boards. Neighbours say that Duduzane occupies a house provided by the Guptas in Saxonwold. How much closer can one get?
The Lonmin imbroglio was strikingly similar. The platinum miner's application to convert old-order to new-order mining rights has been grinding its way through the Department of Mineral Resources's sluggish approval process for months. But Lonmin had temporarily excluded from its application a tiny piece of ground over which rights were subject to negotiation. Prospecting rights on that area were rapidly granted by the department to the mysterious HolGoun group, controlled by Sivi Gounden. Gounden is reputedly a BEE-enriched individual believed to contribute anonymously to ANC coffers. He is, crucially, also a former director of Lonmin and a former director-general of public enterprises under the ANC government. In October, Gounden abruptly resigned his Lonmin directorship, citing pressure of other business. In Lonmin's last annual report he was dutifully praised by chairman Roger Phillimore for his insights. That sort of encomium is often par for the course, irrespective of the real reasons for a departure.
Lonmin is challenging the HolGoun claim. Lonmin might have preferred to keep the matter private while negotiating, but the department's ban would have had a potentially material effect on the company and it had to be disclosed in terms of stock exchange rules and corporate legislation. After one abortive start, Lonmin is now fully BEE-compliant, moored to Cyril Ramaphosa's unlisted Shanduka investment company, which holds indirect stakes in Lonmin's two mines and its smelter.
Why, fund managers ask, should there have been a total ban on established, normal by-product sales, particularly as HolGoun's prospecting claims cover only a tiny part of Lonmin's property? Was it "greenmail", or a crude attempt to induce Lonmin to transfer more to other BEE wannabes? Certainly, there is a lacuna in South Africa's current mining legislation. But Londoners, with Kumba in mind, believe the Lonmin ban represented another example of official processes being abused to enrich ruling-party stalwarts, or, at least, of incompetence in the Department of Mineral Resources. That might be insulting to the independence of our government departments but, unfortunately for us, the belief is a reality to fund managers, who are increasingly questioning this country's investment merits.
It is, perhaps, telling that the latest international investment climate rankings by Canada's authoritative Fraser Institute downgraded South Africa to a level below the Democratic Republic of the Congo. Miners must go where minerals - particularly the platinum mined by Lonmin and Anglo's Anglo Platinum - are found. Auto plants can be moved elsewhere, mines can't. Nonetheless, there are many new mining opportunities around the globe. It's all a deterrent to new investment crucial to the development of an emerging economy such as South Africa's. As one mining executive put it: "The ANC needs to wake up to reality."
Source: Times Live
Understandably, politically connected opportunists were seen as being actively helped by the department in their attempts to acquire mining assets cheaply and beyond the legal requirement that 25% ownership of mines be transferred to BEE interests by 2014.
"Shades of Zimbabwe," fund managers muttered. An earlier, similar stratagem directed at an Anglo American subsidiary, Kumba's Sishen Iron Ore, was initially largely overlooked as being an aberration. Now, the word "greenmail" is commonly heard in London. Kumba felt it had adhered strictly to the rules. When global steelmaker ArcelorMittal missed the April 2009 deadline to convert its prospecting rights - a preliminary to granting mining rights - over 21.4% of Sishen's Northern Cape mine, Kumba itself applied to the department for the rights.
Strangely, before it had considered Kumba's legitimate application, the department awarded the Sishen prospecting rights to the hitherto little-known Imperial Crown Trading - which is closely linked to the presidency and ANC top brass. That effectively sterilises part of Sishen, where mining goes back decades. Imperial has no mining skills, credentials or even visible cash - just political connections. Reportedly, it somehow got its hands on Kumba's application documentation and put in a later bid. The Department of Mineral Resources's first-come-first-served rule was ignored. When challenged earlier this year, mines minister Susan Shabangu blustered that she saw nothing sinister in granting rights to people with affiliations to the ruling party. That was just after she and Anglo CEO Cynthia Carroll had been cosying up to each other at a Cape Town mining conference at which all was sweetness and light. Shabangu was touting SA's mining investment merits and Carroll was making emollient statements about Anglo's commitment to South Africa.
Kumba is mounting a legal challenge to the Imperial award. But, in a new twist this past week, Imperial struck an R800-million deal to be taken over by ArcelorMittal, sweetened by a share in a R9-billion 26% stake in the steelmaker's South African mills - all provided that Imperial can deliver the Sishen rights to the steel company. Some favoured individuals are hoping to make quick fortunes, and they are not the ordinary South Africans BEE is supposed to benefit. Wheels within political wheels. If this deal goes through, a good part of the steel mill's stake will be owned by the Gupta Group, controlled by the Indian Gupta family, which finances the ANC and the party's new daily newspaper - set to hit the streets next month. Gupta has Jacob Zuma's son, Duduzane, on one of its boards. Neighbours say that Duduzane occupies a house provided by the Guptas in Saxonwold. How much closer can one get?
The Lonmin imbroglio was strikingly similar. The platinum miner's application to convert old-order to new-order mining rights has been grinding its way through the Department of Mineral Resources's sluggish approval process for months. But Lonmin had temporarily excluded from its application a tiny piece of ground over which rights were subject to negotiation. Prospecting rights on that area were rapidly granted by the department to the mysterious HolGoun group, controlled by Sivi Gounden. Gounden is reputedly a BEE-enriched individual believed to contribute anonymously to ANC coffers. He is, crucially, also a former director of Lonmin and a former director-general of public enterprises under the ANC government. In October, Gounden abruptly resigned his Lonmin directorship, citing pressure of other business. In Lonmin's last annual report he was dutifully praised by chairman Roger Phillimore for his insights. That sort of encomium is often par for the course, irrespective of the real reasons for a departure.
Lonmin is challenging the HolGoun claim. Lonmin might have preferred to keep the matter private while negotiating, but the department's ban would have had a potentially material effect on the company and it had to be disclosed in terms of stock exchange rules and corporate legislation. After one abortive start, Lonmin is now fully BEE-compliant, moored to Cyril Ramaphosa's unlisted Shanduka investment company, which holds indirect stakes in Lonmin's two mines and its smelter.
Why, fund managers ask, should there have been a total ban on established, normal by-product sales, particularly as HolGoun's prospecting claims cover only a tiny part of Lonmin's property? Was it "greenmail", or a crude attempt to induce Lonmin to transfer more to other BEE wannabes? Certainly, there is a lacuna in South Africa's current mining legislation. But Londoners, with Kumba in mind, believe the Lonmin ban represented another example of official processes being abused to enrich ruling-party stalwarts, or, at least, of incompetence in the Department of Mineral Resources. That might be insulting to the independence of our government departments but, unfortunately for us, the belief is a reality to fund managers, who are increasingly questioning this country's investment merits.
It is, perhaps, telling that the latest international investment climate rankings by Canada's authoritative Fraser Institute downgraded South Africa to a level below the Democratic Republic of the Congo. Miners must go where minerals - particularly the platinum mined by Lonmin and Anglo's Anglo Platinum - are found. Auto plants can be moved elsewhere, mines can't. Nonetheless, there are many new mining opportunities around the globe. It's all a deterrent to new investment crucial to the development of an emerging economy such as South Africa's. As one mining executive put it: "The ANC needs to wake up to reality."
Source: Times Live
How Amsa outwitted DTI
Steel giant ArcelorMittal South Africa (Amsa) appears to have found a political solution to its commercial problems by announcing two deals involving controversial Imperial Crown Trading (ICT). ArcelorMittal will buy ICT for R800-million if it is able to convert its prospecting rights at Sishen to full mining rights in its contested battle with iron ore giant, Kumba. It has also announced a BEE deal in which ICT's politically connected shareholders feature prominently.
ArcelorMittal has fought a low-intensity war with the government, which has been keen to see it pass on the benefits of the special developmental pricing it enjoys in securing cheap iron ore, such as from the giant Sishen mine. Its special pricing deal with Kumba's Sishen Iron Ore Company, intended to help supply the country with cheap steel, has been worth as much as R5-billion a year to the steel giant, according to one analyst. But ArcelorMittal has responded with aggressive pricing, which has seen it in an ongoing conflict with the authorities and has to date not moved to bring in empowerment shareholders.
Frustration with Arcelor-Mittal led the government earlier this year to threaten forced divestiture of its assets as a means to bring it to book. An analyst, who asked not to be named because of the political sensitivity of the matter, said that, by dealing with ICT, Amsa had legitimised an underhand process.
The deals with ICT have drawn fire because ArcelorMittal is seen to be siding with a party that secured these rights under irregular and possibly illegal circumstances. ICT won the right to prospect on an existing mine, one of the world's largest.
President Jacob Zuma's son, Duduzane, is a primary beneficiary of the ArcelorMittal deals with ICT, as are the Gupta family, who are known to have close links to the president. The Guptas are already very wealthy and, as natives of India, are not previously disadvantaged. While the deal will leave Amsa empowered, the inclusion of ICT, Zuma and the Guptas in the empowerment transaction has undermined real transformation in the sector, critics complain.
The Mail & Guardian has confirmed that ANC national chairperson Baleka Mbete pulled out of the deal. "I was approached with an offer to participate; I declined. The deal's structure was outside the investment philosophy and criteria of our women's group," Mbete said. She did not specify which women's group she was referring to. But it is understood that Mbete was talking to ArcelorMittal before the ICT controversy broke, and that she and her group withdrew only last week.
Earlier this year it was announced that ICT had been awarded the prospecting right to a 21% residual portion of mining rights in Sishen, which had reverted to the state in 2009. ArcelorMittal, the former owner of the rights, failed to convert them to new order rights, as required under the Mineral and Petroleum Resources Development Act.
The share was critical to a supply contract between Amsa and Kumba, whereby Amsa was entitled to more than six-million tonnes from Sishen at cost plus 3%. When the rights reverted to the state, Kumba demanded that Amsa buy iron ore at market prices. While this dispute is now subject to arbitration, it led to Amsa instituting a R600/tonne surcharge on its products.
The Department of Trade and Industry (DTI) was so incensed by the Sishen surcharge that it took the matter to the Competition Commission, which is investigating it. The surcharge, which ran between May and August this year, was halted when Kumba and Amsa came to an interim pricing agreement pending arbitration.
Rob Davies, the trade and industry minister, refused to comment on the particulars of the deal, but said the ministry intended to ensure a competitive steel price and a local manufacturing industry. The ministry also wanted to ensure that some of the iron ore from Sishen would be made available at concessionary prices for local steel manufacturing. Analysts view the Amsa deal as commercially savvy, if unpalatable.
Source: Mail & Guardian
ArcelorMittal has fought a low-intensity war with the government, which has been keen to see it pass on the benefits of the special developmental pricing it enjoys in securing cheap iron ore, such as from the giant Sishen mine. Its special pricing deal with Kumba's Sishen Iron Ore Company, intended to help supply the country with cheap steel, has been worth as much as R5-billion a year to the steel giant, according to one analyst. But ArcelorMittal has responded with aggressive pricing, which has seen it in an ongoing conflict with the authorities and has to date not moved to bring in empowerment shareholders.
Frustration with Arcelor-Mittal led the government earlier this year to threaten forced divestiture of its assets as a means to bring it to book. An analyst, who asked not to be named because of the political sensitivity of the matter, said that, by dealing with ICT, Amsa had legitimised an underhand process.
The deals with ICT have drawn fire because ArcelorMittal is seen to be siding with a party that secured these rights under irregular and possibly illegal circumstances. ICT won the right to prospect on an existing mine, one of the world's largest.
President Jacob Zuma's son, Duduzane, is a primary beneficiary of the ArcelorMittal deals with ICT, as are the Gupta family, who are known to have close links to the president. The Guptas are already very wealthy and, as natives of India, are not previously disadvantaged. While the deal will leave Amsa empowered, the inclusion of ICT, Zuma and the Guptas in the empowerment transaction has undermined real transformation in the sector, critics complain.
The Mail & Guardian has confirmed that ANC national chairperson Baleka Mbete pulled out of the deal. "I was approached with an offer to participate; I declined. The deal's structure was outside the investment philosophy and criteria of our women's group," Mbete said. She did not specify which women's group she was referring to. But it is understood that Mbete was talking to ArcelorMittal before the ICT controversy broke, and that she and her group withdrew only last week.
Earlier this year it was announced that ICT had been awarded the prospecting right to a 21% residual portion of mining rights in Sishen, which had reverted to the state in 2009. ArcelorMittal, the former owner of the rights, failed to convert them to new order rights, as required under the Mineral and Petroleum Resources Development Act.
The share was critical to a supply contract between Amsa and Kumba, whereby Amsa was entitled to more than six-million tonnes from Sishen at cost plus 3%. When the rights reverted to the state, Kumba demanded that Amsa buy iron ore at market prices. While this dispute is now subject to arbitration, it led to Amsa instituting a R600/tonne surcharge on its products.
The Department of Trade and Industry (DTI) was so incensed by the Sishen surcharge that it took the matter to the Competition Commission, which is investigating it. The surcharge, which ran between May and August this year, was halted when Kumba and Amsa came to an interim pricing agreement pending arbitration.
Rob Davies, the trade and industry minister, refused to comment on the particulars of the deal, but said the ministry intended to ensure a competitive steel price and a local manufacturing industry. The ministry also wanted to ensure that some of the iron ore from Sishen would be made available at concessionary prices for local steel manufacturing. Analysts view the Amsa deal as commercially savvy, if unpalatable.
Source: Mail & Guardian
Zuma Jnr heading for first billion
Justifying the top-heavy composition of her company's new BEE structure, ArcelorMittal (Amsa) chief executive Nku Nyembezi-Heita this week said that "strategic" as opposed to broad-based investors are included "where a company needs assistance in a particular area". For "strategic", read politically connected; for "assistance", read lobbying with government. So what are the lobbying fees, and to whom do they go?
An investment vehicle led by Duduzane Zuma, President Jacob Zuma's 28-year-old son, will gain shares with a face value approaching R1-billion, and Gugu Mtshali, reportedly Deputy President Kgalema Motlanthe's romantic partner, will get face-value shares plus cash totalling over a third of a billion rand.
The investment company of Sandile Zungu -- a member of President Zuma's broad-based empowerment advisory counsel once tipped to be director general in the Presidency -- will get shares with a face value approaching half-a-billion rand. Ditto the Gupta family, friends and benefactors to President Zuma.
The largest single benefit -- face-value shares and cash totalling R2,2-billion -- will go to Jagdish Parekh, chief executive of the Guptas' investment vehicle. He is half-owner of Imperial Crown Trading, the upstart company that was in a prime bargaining position after controversially winning a stake in the Sishen iron mine that previously belonged to Amsa.
Amsa, however, will not be out of pocket. Even though the Ayigobi Consortium will get shares based on ArcelorMittal's market capitalisation with a total face value of R7,33-billion, their economic value appears to be circumscribed by a floor of R728-million and a cap of R1,67-billion, depending on ArcelorMittal's share-price performance. This means the benefit breaks down as follows:
* Duduzane Zuma-led Mabengela Investments (12,5% of Ayigobi Consortium): shares with a face value of R916-million, but economic value of between R91-million and R209-million. Zuma is believed to own up to 50% of Mabengela, which would give him personal economic value of R46-million to R104-million.
* Gugu Mtshali (about 4,2% of Ayigobi): face value about R300-million, economic value of between R30-million and R70-million. As one of the owners of Imperial Crown Trading, she also stands to get R67-million in the related R800-million cash buy-out of Imperial Crown's shareholders.
* Zungu-led Zico special purpose vehicle (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Gupta family-owned Oakbay Investments (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Jagdish Parekh (25% of Ayigobi): face value R1,83-billion, economic value R182-million to R418-million. As 50% owner of Imperial Crown, he also qualifies for a cash pay-out of R400-million.
Parekh, Mtshali and other Imperial Crown shareholders had a gun to Amsa's head because of their disputed Sishen mine stake. But how did the Guptas get their stake, and how did Duduzane Zuma's company get a stake twice as large as theirs -- or, for that matter, twice that of Ayigobi "leader" Zungu?
Nyembezi-Heita told Moneyweb radio this week that the Guptas had been cut in as "major facilitators" of the deal. An Ayigobi spokesperson, who asked not to be identified, echoed this, saying the Guptas had provided "advisory and facilitation services".
Asked why the president's son's company should get a stake as large as the Guptas' and Zungu's combined, the spokesperson was stumped, saying: "I can see what you're saying: Was there a greater contribution from Mabengela [Investments] to warrant it? Or was it purely based on the fact that he's the president's son that he qualifies for that additional percentage? That I don't know. I cannot answer you for sure."
Source: Mail & Guardian
An investment vehicle led by Duduzane Zuma, President Jacob Zuma's 28-year-old son, will gain shares with a face value approaching R1-billion, and Gugu Mtshali, reportedly Deputy President Kgalema Motlanthe's romantic partner, will get face-value shares plus cash totalling over a third of a billion rand.
The investment company of Sandile Zungu -- a member of President Zuma's broad-based empowerment advisory counsel once tipped to be director general in the Presidency -- will get shares with a face value approaching half-a-billion rand. Ditto the Gupta family, friends and benefactors to President Zuma.
The largest single benefit -- face-value shares and cash totalling R2,2-billion -- will go to Jagdish Parekh, chief executive of the Guptas' investment vehicle. He is half-owner of Imperial Crown Trading, the upstart company that was in a prime bargaining position after controversially winning a stake in the Sishen iron mine that previously belonged to Amsa.
Amsa, however, will not be out of pocket. Even though the Ayigobi Consortium will get shares based on ArcelorMittal's market capitalisation with a total face value of R7,33-billion, their economic value appears to be circumscribed by a floor of R728-million and a cap of R1,67-billion, depending on ArcelorMittal's share-price performance. This means the benefit breaks down as follows:
* Duduzane Zuma-led Mabengela Investments (12,5% of Ayigobi Consortium): shares with a face value of R916-million, but economic value of between R91-million and R209-million. Zuma is believed to own up to 50% of Mabengela, which would give him personal economic value of R46-million to R104-million.
* Gugu Mtshali (about 4,2% of Ayigobi): face value about R300-million, economic value of between R30-million and R70-million. As one of the owners of Imperial Crown Trading, she also stands to get R67-million in the related R800-million cash buy-out of Imperial Crown's shareholders.
* Zungu-led Zico special purpose vehicle (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Gupta family-owned Oakbay Investments (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Jagdish Parekh (25% of Ayigobi): face value R1,83-billion, economic value R182-million to R418-million. As 50% owner of Imperial Crown, he also qualifies for a cash pay-out of R400-million.
Parekh, Mtshali and other Imperial Crown shareholders had a gun to Amsa's head because of their disputed Sishen mine stake. But how did the Guptas get their stake, and how did Duduzane Zuma's company get a stake twice as large as theirs -- or, for that matter, twice that of Ayigobi "leader" Zungu?
Nyembezi-Heita told Moneyweb radio this week that the Guptas had been cut in as "major facilitators" of the deal. An Ayigobi spokesperson, who asked not to be identified, echoed this, saying the Guptas had provided "advisory and facilitation services".
Asked why the president's son's company should get a stake as large as the Guptas' and Zungu's combined, the spokesperson was stumped, saying: "I can see what you're saying: Was there a greater contribution from Mabengela [Investments] to warrant it? Or was it purely based on the fact that he's the president's son that he qualifies for that additional percentage? That I don't know. I cannot answer you for sure."
Source: Mail & Guardian
Tuesday, August 10, 2010
Zuma's son involved in R9bn BEE deal
ArcelorMittal South Africa (AMSA, ACL), the South African arm of the world's largest steel producer, on Tuesday unveiled a 9.1 billion rand black economic empowerment deal that will see it transfer 26% of its shares to black investors and staff.
The BEE transaction has been structured so that all the assets of AMSA will be transferred into a new company where the issued share capital of that company will be 21% held by a special purpose vehicle controlled by the Ayigobi Consortium led by Sandile Zungu and 5% will be held by an employee share ownership scheme that will benefit about 8,500 AMSA staff members.
Shareholding of the Ayigobi Consortium is in turn held 75% by strategic partners including several of Imperial Crown Trading's (ICT) shareholders, as well as Mabengela Investments, which is led by President Jacob Zuma's son Duduzane Zuma. AMSA in a separate announcement on Tuesday said it planned to acquire ICT for 800 million rand in cash. ICT's only asset is a 21.4% prospecting right in Kumba Iron Ore's (KIO) Sishen mine.
Speaking during a conference called to explain the transaction, AMSA CEO Nonkululeko Nyembezi-Heita said the transaction fulfilled one of the key BEE objectives of AMSA, makes AMSA compliant with legislated empowerment equity ownership requirements and positions the company for various future opportunities.
The transaction, which is being funded through a notional funding formula, requires no equity contribution or third party funding and has an upfront loan available at facilitated rate to allow BEE partners early monetisation for a portion of the gain. The consortium has been tied into the deal for up to 14 years.
AMSA shareholders are expected to vote on the transaction late September and Nyembezi-Heita sees February 2011 as the date for the BEE transaction's conclusion
Source: The Sowetan
The BEE transaction has been structured so that all the assets of AMSA will be transferred into a new company where the issued share capital of that company will be 21% held by a special purpose vehicle controlled by the Ayigobi Consortium led by Sandile Zungu and 5% will be held by an employee share ownership scheme that will benefit about 8,500 AMSA staff members.
Shareholding of the Ayigobi Consortium is in turn held 75% by strategic partners including several of Imperial Crown Trading's (ICT) shareholders, as well as Mabengela Investments, which is led by President Jacob Zuma's son Duduzane Zuma. AMSA in a separate announcement on Tuesday said it planned to acquire ICT for 800 million rand in cash. ICT's only asset is a 21.4% prospecting right in Kumba Iron Ore's (KIO) Sishen mine.
Speaking during a conference called to explain the transaction, AMSA CEO Nonkululeko Nyembezi-Heita said the transaction fulfilled one of the key BEE objectives of AMSA, makes AMSA compliant with legislated empowerment equity ownership requirements and positions the company for various future opportunities.
The transaction, which is being funded through a notional funding formula, requires no equity contribution or third party funding and has an upfront loan available at facilitated rate to allow BEE partners early monetisation for a portion of the gain. The consortium has been tied into the deal for up to 14 years.
AMSA shareholders are expected to vote on the transaction late September and Nyembezi-Heita sees February 2011 as the date for the BEE transaction's conclusion
Source: The Sowetan
Friday, July 23, 2010
Unease over Zuma's Gupta ties
Concern is growing in political and business circles about the relationship between President Jacob Zuma and the Gupta family. Zuma has known the family, headed by three brothers -- Atul, Ajay and Tony -- since he was deputy president in 2002, but their relationship has blossomed since he became president.
Government ministers and business leaders became suspicious of the relationship during Zuma's state visit to India, where he was seen spending a disproportionate amount of time on meetings with the Guptas. "It was clear that they had organised things beforehand and took charge of at least some parts of his diary," one member of the business delegation that accompanied Zuma told the Mail & Guardian.
It is understood that some of the government officials who joined Zuma on the visit were questioned by their Indian counterparts about the Guptas' relationship with the president. "They were asked why the president is hanging around with these guys; they don't have a great reputation in India," a government source said. Business leaders told the M&G that the state visit underlined the special relationship between Zuma and the Guptas, which gave the family favoured access.
More than 200 business people joined Zuma on the trip as part of a delegation organised by the department of trade and industry. Some complained that they only had one opportunity to meet Zuma and that this was during a photo opportunity before a function. "Several of us were pissed off that we were not included. During the two-day programme, Zuma was kept separate and the only people allowed to be with him were the Guptas and [Kumba Iron Ore president] Lazarus Zim," said one of the business delegates. Another source who accompanied Zuma claimed that the president had attended meetings with prominent Indian business people that had been organised by the Guptas. Only selected South African business people, some of whom are said to be Zuma's known funders, attended these engagements, while other business people were sidelined, the source said. "It was clear that the family wanted to use Zuma to establish connections for themselves. We expected to meet potential investors, but it soon became clear all the deals were done already; we could just pick up the crumbs that fell from the main table," one businessman said.
The M&G sent questions to the presidency and the department of trade and industry, but the responses shed no light on who was responsible for Zuma's schedule and whether some meetings were arranged by the Guptas. On the state visit Ajay Gupta represented the family company, Sahara Computers, while Tony Gupta represented mining company Mvengela, of which he is director. Zuma's son, Duduzane Zuma, also represented Mvengela on the trip.
Gupta family spokesperson Gary Naidoo said that all meetings were arranged by the relevant government departments. Another source familiar with the family said that the Guptas were not particularly prominent in India and had built most of their wealth in South Africa. They now wanted to leverage their South African status to gain business in India. "They entirely grew in South Africa; they did not have much to speak of in India," said the source. This trip could have helped them gain access to people in India which they could not have seen otherwise," the source said. The Guptas' influence in cricket "helps to build links in India", he said. The family was known to have helped bring the Indian Premier League (IPL) to South Africa after security fears prevented it from taking place in India.
A civil society source in Mumbai confirmed that there was confusion when the Guptas started Sahara Computers, as a company of the same name operates in India. "They couldn't push their brand in India because the other Sahara is just so much bigger," the source said.
The presidency said the trade department prepares the business delegation lists and works on that delegation's programme during state visits. "The business delegation normally has its own programme, which runs parallel to that of the government delegation," the department said. "The [department] normally runs workshops with the business delegation and there is normally a business forum which is addressed by the heads of state of the two countries. The Indian state visit had more government-business interactions organised by the [department] to boost trade relations."
The visit also saw the relaunch of the India-South Africa CEOs' Forum, chaired by Africa Rainbow Minerals chief executive Patrice Motsepe. In addition to meeting the leader of the Congress Party, Sonia Ghandi, Zuma also met the leader of India's official opposition party, the Bharatiya Janata Party. The Congress Party is historically aligned with the ANC and there are strong links between the two parties.
The presidency said Zuma had requested a special meeting with the entire South African business delegation to hear their views on how the visit went, as well as promising them a meeting in South Africa at a later stage. "This has not transpired yet," said Zizi Kodwa, Zuma's communications adviser.
Source: Mail & Guardian
Government ministers and business leaders became suspicious of the relationship during Zuma's state visit to India, where he was seen spending a disproportionate amount of time on meetings with the Guptas. "It was clear that they had organised things beforehand and took charge of at least some parts of his diary," one member of the business delegation that accompanied Zuma told the Mail & Guardian.
It is understood that some of the government officials who joined Zuma on the visit were questioned by their Indian counterparts about the Guptas' relationship with the president. "They were asked why the president is hanging around with these guys; they don't have a great reputation in India," a government source said. Business leaders told the M&G that the state visit underlined the special relationship between Zuma and the Guptas, which gave the family favoured access.
More than 200 business people joined Zuma on the trip as part of a delegation organised by the department of trade and industry. Some complained that they only had one opportunity to meet Zuma and that this was during a photo opportunity before a function. "Several of us were pissed off that we were not included. During the two-day programme, Zuma was kept separate and the only people allowed to be with him were the Guptas and [Kumba Iron Ore president] Lazarus Zim," said one of the business delegates. Another source who accompanied Zuma claimed that the president had attended meetings with prominent Indian business people that had been organised by the Guptas. Only selected South African business people, some of whom are said to be Zuma's known funders, attended these engagements, while other business people were sidelined, the source said. "It was clear that the family wanted to use Zuma to establish connections for themselves. We expected to meet potential investors, but it soon became clear all the deals were done already; we could just pick up the crumbs that fell from the main table," one businessman said.
The M&G sent questions to the presidency and the department of trade and industry, but the responses shed no light on who was responsible for Zuma's schedule and whether some meetings were arranged by the Guptas. On the state visit Ajay Gupta represented the family company, Sahara Computers, while Tony Gupta represented mining company Mvengela, of which he is director. Zuma's son, Duduzane Zuma, also represented Mvengela on the trip.
Gupta family spokesperson Gary Naidoo said that all meetings were arranged by the relevant government departments. Another source familiar with the family said that the Guptas were not particularly prominent in India and had built most of their wealth in South Africa. They now wanted to leverage their South African status to gain business in India. "They entirely grew in South Africa; they did not have much to speak of in India," said the source. This trip could have helped them gain access to people in India which they could not have seen otherwise," the source said. The Guptas' influence in cricket "helps to build links in India", he said. The family was known to have helped bring the Indian Premier League (IPL) to South Africa after security fears prevented it from taking place in India.
A civil society source in Mumbai confirmed that there was confusion when the Guptas started Sahara Computers, as a company of the same name operates in India. "They couldn't push their brand in India because the other Sahara is just so much bigger," the source said.
The presidency said the trade department prepares the business delegation lists and works on that delegation's programme during state visits. "The business delegation normally has its own programme, which runs parallel to that of the government delegation," the department said. "The [department] normally runs workshops with the business delegation and there is normally a business forum which is addressed by the heads of state of the two countries. The Indian state visit had more government-business interactions organised by the [department] to boost trade relations."
The visit also saw the relaunch of the India-South Africa CEOs' Forum, chaired by Africa Rainbow Minerals chief executive Patrice Motsepe. In addition to meeting the leader of the Congress Party, Sonia Ghandi, Zuma also met the leader of India's official opposition party, the Bharatiya Janata Party. The Congress Party is historically aligned with the ANC and there are strong links between the two parties.
The presidency said Zuma had requested a special meeting with the entire South African business delegation to hear their views on how the visit went, as well as promising them a meeting in South Africa at a later stage. "This has not transpired yet," said Zizi Kodwa, Zuma's communications adviser.
Source: Mail & Guardian
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