The company that preceded Lonmin was once dubbed ‘the unacceptable face
of capitalism’ by a British prime minister. Tiny Rowland, man who turned
the company into an international colossus, wore the slur happily. In
the aftermath of the Marikana shootings, it seems like not much has
changed since his day. By SIPHO HLONGWANE.
The deaths
of dozens of people on August 16 has thrown South Africa into a frenzy
of outrage, grief and soul searching. President Jacob Zuma announced
that the following week would be declared one of mourning. Over the
weekend the situation had calmed down at Lonmin’s Marikana shaft, close
where the shootings happened, but the dead had yet to be fully
identified and a breakthrough to the deadly wildcat strike action had
not been found yet.
On Sunday, Lonmin issued an ultimatum to its employees: if they did not return to work on Monday, they could be fired summarily.
“The final ultimatum provides RDOs [rock drill operators] with a last
opportunity to return to work or face possible dismissal,” the company
statement said. “Employees could therefore be dismissed if they fail to
heed the final ultimatum.”
News reports out of Marikana said that the news was greeted with
anger. The unsanctioned strike would continue unless the miners got the
300% pay hike they were demanding. The ultimatum came at a time when many friends and family of injured
or dead miners were still trying to deal with the fallout of the
shooting.
“London-based Lonmin accounts for 12% of global platinum output. It
is already struggling with low prices, weak demand and may miss its
annual production target of 750,000 ounces as the quarter to the end of
September is typically its best,” Reuters said.
The ultimatum seems callous, and harkens back to the company’s unflattering roots on the continent.
Lonmin has always battled with unions in South Africa, but this
particular incident is a nightmare on a scale that it will never have
seen before.
Roland ‘Tiny’ Rowland was a British man (born Walter Furhop in India
to German parents) who came to southern Africa in the aftermath of World
War II to escape the heavy tax regime in England and to enjoy the
higher standard of living that European colonialists enjoyed in Rhodesia
(present-day Zimbabwe). He soon ingratiated himself well with African
politicians.
The Independent said, “He became a pillar of the social circuit in
Salisbury, southern Rhodesia – now Harare, the capital of Zimbabwe –
earning his living as an upmarket car dealer. He soon discovered that
his undoubted charm and dazzling smile worked well on African
politicians eager for respectability and access to Western capital and
know-how.”
In 1961 he was chosen to head the London and Rhodesian Mining Company
(Lonrho) and quickly changed the way the company made money. He made
the business depend heavily on his personal contacts and diversified
swiftly. After that, he made some very risky calls on drawing up
accounts, which spooked pension fund investors and lead to a commission
of inquiry. The company then appointed non-executive directors to try to
keep Rowland in check. The certain fight came when he tried to hide
certain financial information from the board and the directors tried to
get the company shareholders to jettison the volcanic chairman. The
decision went the other way instead. It cemented Rowland’s reputation as
something of an escape artist. The pension fund investors immediately
dumped Lonrho’s shares.
The British prime minister at the time, Edward Heath, disgustedly
labelled Lonrho an “unpleasant and unacceptable face of capitalism".
Rowland famously replied that he didn’t want to be its acceptable face.
Lonrho’s dealings in Africa were often viewed with suspicion. He was
often accused of helping out less-than-savoury regimes in various ways,
especially at times when the thrust of global opinion was not
particularly favourable.
“In the 1980s he was accused of helping the Marxist government of
Mozambique manage its agricultural resources, and he increased Lonrho's
South African holdings while sanctions against the Apartheid government
were still in place,” the BBC said. “Then in 1992, Mr Rowland
controversially sold a stake in some of Lonrho's hotels to the Libyan
leader, Colonel Gadaffi, only three years after the Lockerbie bombing
which was attributed to Libyan terrorists.”
The board was especially stung by the Gadaffi revelation, and
unseated him as chairman in October 1995. He was removed from the board
of the company he had turned into a vast conglomerate the next year, and
died in 1998.
At the news of his death, the eulogies from African leaders were
extremely flattering. “He made an enormous contribution, not only to
South Africa, but to the whole of Africa," said former president Nelson
Mandela, who had bestowed upon him the Order of Good Hope in 1996.
Two months before Rowland’s death, the company was split, and Lonrho
Plc. was created to handle the non-African businesses and mining assets.
In 1999 the company changed its name to Lonmin and narrowed its
portfolio to the platinum metal group in the Bushveld Complex of South
Africa.
The company struggled continuously with unions, both in its North West and Limpopo operations. In May last year, the company sacked more than 9,000 workers at its Karee
mine near Rustenburg – then reinstated them afterwards. That particular
call was made after a wildcat strike spurred by an internal union power
struggle.
The company’s current CEO, Ian Farmer, was appointed in 2008.
According to Bloomberg Businessweek, the company paid him £1,220,629
(R15,860,000) in 2011. His pay that year was 293 times more than what
rock drill operators working at Lonmin’s Marikana mine earn.
The presidency issued a statement
on Sunday saying that North West Premier Thandi Modise and the
ministers of mineral resources Susan Shabangu, police Nathi Mthethwa,
social development Bathabile Dlamini, co-operative governance Richard
Baloyi, labour Mildred Oliphant, defence and military veterans Nosiviwe
Mapisa-Nqakula, health Aaron Motsoaledi, state security Siyabonga Cwele,
and home affairs Nkosazana Dlamini-Zuma would be deployed to Marikana
to coordinate and lead support to the families and relatives of the dead
or injured miners.
At that point, Lonmin’s representatives still had not shown face at
the Marikana squatter camp, where the majority of the strike action had
been concentrated. And now Lonmin, the company that was at the centre of
the great calamity, has issued new threats to the rock drillers. The
fact that the dead and injured, more than hundred of them, are still not
even identified, seems of little importance.
Unacceptable face of
capitalism indeed, Lonmin.
Source: Daily Maverick
Informed people live longer
Showing posts with label Lonrho. Show all posts
Showing posts with label Lonrho. Show all posts
Monday, August 20, 2012
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
Subscribe to:
Posts (Atom)