Keeping their heads down and operating behind the scenes, South Africa's white business elite have managed to maintain their economic position. When the curtain finally came down on South Africa’s apartheid in 1994, it happened in a way that none of the key players had predicted. Both the African National Congress (ANC) and its opponents in the white supremacist National Party were surprised that they could reach an accommodation through dialogue and negotiation rather than armed force.
In the negotiations that had followed the release of Nelson Mandela and unbanning of the ANC, the parties sealed an unspoken deal. This handed political power to the black majority and left economic power in the hands of whites. There was to be no seizure of white assets, although there were, of course, plans to gradually achieve a more equitable balance of wealth.
Black economic empowerment?
Indeed, there were already plans afoot to bring the leadership of the ANC into the fold. White business magnates had begun to transfer assets into black hands in order to incorporate those at the top of the new political order. The new policy was ‘Black Economic Empowerment’ (BEE). As the commentator Moeletsi Mbeki put it: “BEE was, in fact, invented by South Africa’s economic oligarchs, that handful of white businessmen and their families who control the commanding heights of the country’s economy, that is mining and its associated chemical and engineering industries and finance”.
He pointed out that the policy was adopted well before the ANC came to power. In 1992, Sanlam Limited, a cornerstone of Afrikaner capital, helped create the flagship black empowerment company New African Investments Limited – led by Nthato Motlana, Nelson Mandela’s former doctor. Further deals followed and soon the new BEE elite were well-entrenched.
On the face of it, the policy was a success. A more equitable sharing out of the spoils of economic development came about, creating a new black bourgeoisie. At the same time the ANC abandoned its more radical economic policies allowing rich whites to continue enjoying a very pleasant lifestyle. A considerable proportion of South African assets were transferred to the BEE elite, but even at their height, these transfers were smaller than they appeared. As my colleague Paul Holden points out, the total value of BEE deals were around R250 billion ($30 billion), still a drop in the ocean when compared with the total value of private sector resources of R6 trillion ($700 billion).
Worse still, the BEE transfers were loans, not gifts. The companies had to earn profits and from these profits the loans would be repaid. That was at least the theory. In reality, many of the new black elite had little or no experience of business and a good number of the BEE companies were soon in difficulties. As the government’s own assessment of the problems of BEE rightly put it, this led to contracts being signed by people who lacked the necessary capital: “This has encouraged debt-driven deals that are likely to work only when the economy is growing rapidly and company profitability is expanding significantly”.
Soon the new elite were scrambling around to find a way out. They hit on a plan to nationalise the mines. This would transfer a sizeable chunk of their problems onto the shoulders of the state, which could buy them out at favourable rates. At this point they hit a stumbling block. The ANC’s left-wing allies, the unions of COSATU and the South African Communist Party opposed this solution.
The Communist Party openly attacked those who called for nationalisation. The party declared that it had warned against the use of state finances to bail out the new rich and came out strongly against “diverting billions of Rands of public funds to serve the interests of a narrow black (and white) capitalist stratum”.
Nor was it just a question of “bailing-out debt-ridden BEE capital”, according to the party. They reported that mine union officials had been quietly approached by members of the new black elite, asking for their support. They were told, “Why don’t you support the nationalisation of the mines? If government takes over the mines they will turn to us to run them.” The Communist Party accused the right in the ANC of being seduced by the emerging black capitalist class.
White business
While black business is in a relatively precarious position, their white contemporaries have worked hard to secure their privilege. For a start, they have kept their heads down and operated behind the scenes. Business South Africa, which whites controlled, merged with the Black Business Council in October 2003 to form Business Unity South Africa. Not all black businesses appreciated the change, and some broke away from the new body in 2009. Nonetheless, the white business community had found a convenient new home for their interests. From here they could lobby the ANC government.
Some in white business went further, joining the ANC’s Progressive Business Forum. Its stated purpose is to open direct links with the ruling party. Within a year of its formation, the forum was being portrayed in the press as a means of “buying face-time with cabinet ministers and senior government officials”. The ANC responded briskly that there was “nothing untoward about this”.
Today it is clear that the Progressive Business Forum is a potent means of raising money for the party. A seat at President Zuma’s table at a banquet held in Johannesburg in June 2012 was going for no less than R500,000 ($60,000).
This is not the only way the ANC has raised money from business. An investigation in 2006 by the Institute of Security Studies revealed the existence of a group of companies controlled by a firm called Chancellor House, which quietly accumulated stakes in minerals, energy, engineering, logistics and information technology. This has been a major source of funding for the ruling party and has resulted in inevitable conflicts of interest. “More often than not, these business opportunities have been dependent on the government’s discretion – the award of state tenders, mineral rights and the like. The ANC, as ruling party, has been both player and referee”, says the report.
“As it has always been”
Nearly two decades after the ANC came to power, the black middle class is both powerful – through its influential role in the ANC – but also dependent on the party for its position. It is insufficiently well-resourced to stand on its own feet and reliant on state contracts and BEE legislation for its positions. The white elite, on the other hand, are better endowed and better resourced. Some have moved to become consultants rather than hold formal positions in companies. Others have moved some or all of their wealth offshore – treading the trail blazed by companies formerly listed in South Africa like Old Mutual and Anglo-American, which are now listed on the London stock exchange. At the same time, white business has learnt to live with the ANC in government, working behind the scenes rather than raising their voices in public.
President Zuma summed up the situation rather astutely when he addressed ANC’s policy conference on June 26, 2012. Much had been achieved since taking power in 1994, he said, but much still had to be done. The president went on to outline the key issues that had to be tackled – among them were economic relations, which, he said, were still largely unchanged.
When the end of apartheid came, he said, “We had to be cautious about restructuring the economy in order to maintain economic stability and confidence at the time. Thus, the economic power relations of the apartheid era have in the main remained intact. The ownership of the economy is still primarily in the hands of white males as it has always been.”
Further reading: Think Africa Press' review of "Who Rules South Africa?" and interview with the authors Martin Plaut and Paul Holden.
Source:
Showing posts with label Moeletsi Mbeki. Show all posts
Showing posts with label Moeletsi Mbeki. Show all posts
Monday, August 20, 2012
Saturday, February 18, 2012
South Africans Suffer as Graft Saps Provinces
When she moved from a cramped room in a boardinghouse to her very own bungalow on a speck of land here last year, Jeanette Munyai became one of the millions of South Africans given a decent home by an ambitious government program inaugurated at the end of apartheid. House-proud for the first time in her life, she immediately planted corn, pumpkins and tomatoes on a patch of her yard. Only two things were missing: running water and electricity. “They told us water and light was coming, but we are still using the bush as a toilet,” she said. “We are waiting.”
Ms. Munyai and her neighbors are unlikely to get water or electricity any time soon. The provincial government is broke, and the dry pipes and powerless plugs have for her and many others come to symbolize the heavy toll graft and cronyism have taken in this impoverished northern province.
Corruption has long bedeviled South Africa, but the crisis here in Limpopo Province has pushed the common practice of doling out overstuffed government contracts to people with friends in high places to its logical conclusion: bankruptcy. Provincial officials overspent their budget by an estimated $250 million, much of it on questionable — or blatantly fraudulent — government payments and contracts with private businesses enjoying close ties to the politicians leading the province. “There is evidence emerging that some of these service providers are politically connected, and many of them may have gotten those tenders in dubious kinds of ways,” said Kenneth Brown, deputy director general in the Treasury Department.
Dan Sebabi, leader of Limpopo’s branch of Cosatu, the powerful coalition of trade unions that is allied with the governing African National Congress, put it more bluntly. “You have leaders who are politicians by day, businessmen by night,” he said. Graft and wasteful spending have sapped the government’s ability to tackle inequality. Only 3 of 39 government departments were pronounced clean in audits by South Africa’s auditor general last year. Only 7 of 237 cities passed muster the year before. “We thought that South Africa could be different from the rest of the countries that came before us on the African continent,” said Gilbert Kganyago, leader of Limpopo’s branch of the South African Communist Party. “But at the rate that things are happening, we have actually caught up to the African scenario quite more quickly than we might have thought.”
A recent report by the auditor general found that in the last fiscal year, government officials and their relatives won $15 million in contracts for work with the Defense Department, the Tax Service and the Department of Home Affairs, among others. And that does not come close to accounting for the many millions of dollars quietly awarded to friends and other associates, experts note.
Almost from the moment it was elected to govern in 1994 after decades of fighting to end apartheid, the A.N.C. has struggled with allegations of graft. Jacob Zuma, the current president, took office only after a bevy of corruption charges against him were dismissed amid accusations of prosecutorial misconduct. But corruption has become so entrenched that it is eating away at the nation’s soul, said Zwelinzima Vavi, secretary general of Cosatu, in a recent speech to announce the formation of an antigraft organization, Corruption Watch. “We are moving towards a society in which the morality of our revolutionary movement — selflessness, service to the people and caring for the poor and vulnerable — is being threatened,” Mr. Vavi said. “If we do nothing it will be swept away by a tidal wave of a culture of individualism, a ‘me first’ attitude and to hell with everyone else. Some argue that we are already a society where only the fittest survive and dog eats dog.”
Corruption is a particularly serious problem in provincial governments, which are responsible for delivering many of the services needed by the poor. Many powerful regional politicians use their offices to enrich their friends, forming a coterie of wealthy elites reminiscent of the tribal chieftains the apartheid government used to administer the tiny, nominally independent bantustans where blacks were forced to live.
Limpopo has the nation’s second-highest proportion of people living in poverty — 62 percent, according to the South African Institute of Race Relations. The average unemployment rate for the province is 40 percent, but it is much higher for blacks and young people. Signs of waste and fraud are everywhere. Pipes that were supposed to bring clean drinking water to parched, impoverished communities were laid improperly and burst, requiring the whole job to be done again, according to local officials. Tiny government houses like the one in which Ms. Munyai lives are crumbling only months after being built. Since she has no water, she uses her toilet as a storage closet and has to walk several blocks to a shared pump several times a day. Roads paved a year ago are already covered with potholes. “This road is not more than two years old,” said Geoffrey Tshibvumo, a local councilor from the Congress of the People, a party that broke away from the A.N.C., as he bounced along a rural road in the province one afternoon. “They spent millions on it, and it is already spoiled.”
The crisis here has been brewing for some time. Late last year, the province ran out of money and asked the central government to lend it about $130 million. But the central government balked at handing over such a large sum without first taking a close look at the province’s books. A quick survey of its accounts showed that the state treasury was in chaos. State officials had made $360 million in unauthorized payments, and millions of dollars’ worth of contracts had been awarded without competitive bidding, the central treasury said.
The Education Department had 2,400 more teachers on its payroll than it was budgeted for, and 200 “ghost” teachers, who drew salaries but did not actually exist. The department had overspent its budget by almost $40 million even before ordering textbooks and other supplies for the coming school year. In the Health Department, more than $50 million worth of goods had been improperly ordered, leaving almost nothing for salaries for government nurses and doctors. Public works contracts showed evidence that they had been manipulated, the Treasury Department said, to increase the cost of projects — and presumably the profits of the contractors. Consulting fees ate up a quarter of the infrastructure budget.
Big contracts tended to go to a small handful of companies, many of them run by close associates of the province’s top politicians, according to provincial government documents. Some officials had been warning that the province was headed for a crisis. One whistle-blower in the Health Department sent a memo to a senior official in February 2011 outlining major problems with a contract for medical supplies. The prices for bandages and dressings had been inflated, the whistle-blower said, and the department could not possibly use the quantities ordered.
In addition, officials ordered more than $30 million worth of items in the last days of the fiscal year, most of it “labels and forms that are not critical or lifesaving drugs,” according to the memo. Prices for other items were wildly inflated. The national attention to the crisis in Limpopo is in no small part a reflection of the politics of the province. It is the home of Julius Malema, the polarizing leader of the A.N.C.’s youth league, who was suspended from the party for five years for his incendiary remarks and harsh stance against the president, Mr. Zuma. Limpopo’s provincial leader, Cassel Mathale, is a close political ally of Mr. Malema.
But many other provinces face a lesser version of the same crisis, analysts say. “It is not unique to Limpopo — it is all over the country,” said Moeletsi Mbeki, a political analyst and businessman. “It is a general form of self-enrichment by the politically connected.”
Mr. Brown, the deputy director general at the treasury, said that politics played no part in the decision to intervene in Limpopo. The crisis threatened the country’s financial reputation. “If you are sitting in New York and you are an investor in South Africa and you see a provincial government that cannot pay its teachers and nurses,” he said, “what does that tell you about South Africa?”
Source: New York Times
Ms. Munyai and her neighbors are unlikely to get water or electricity any time soon. The provincial government is broke, and the dry pipes and powerless plugs have for her and many others come to symbolize the heavy toll graft and cronyism have taken in this impoverished northern province.
Corruption has long bedeviled South Africa, but the crisis here in Limpopo Province has pushed the common practice of doling out overstuffed government contracts to people with friends in high places to its logical conclusion: bankruptcy. Provincial officials overspent their budget by an estimated $250 million, much of it on questionable — or blatantly fraudulent — government payments and contracts with private businesses enjoying close ties to the politicians leading the province. “There is evidence emerging that some of these service providers are politically connected, and many of them may have gotten those tenders in dubious kinds of ways,” said Kenneth Brown, deputy director general in the Treasury Department.
Dan Sebabi, leader of Limpopo’s branch of Cosatu, the powerful coalition of trade unions that is allied with the governing African National Congress, put it more bluntly. “You have leaders who are politicians by day, businessmen by night,” he said. Graft and wasteful spending have sapped the government’s ability to tackle inequality. Only 3 of 39 government departments were pronounced clean in audits by South Africa’s auditor general last year. Only 7 of 237 cities passed muster the year before. “We thought that South Africa could be different from the rest of the countries that came before us on the African continent,” said Gilbert Kganyago, leader of Limpopo’s branch of the South African Communist Party. “But at the rate that things are happening, we have actually caught up to the African scenario quite more quickly than we might have thought.”
A recent report by the auditor general found that in the last fiscal year, government officials and their relatives won $15 million in contracts for work with the Defense Department, the Tax Service and the Department of Home Affairs, among others. And that does not come close to accounting for the many millions of dollars quietly awarded to friends and other associates, experts note.
Almost from the moment it was elected to govern in 1994 after decades of fighting to end apartheid, the A.N.C. has struggled with allegations of graft. Jacob Zuma, the current president, took office only after a bevy of corruption charges against him were dismissed amid accusations of prosecutorial misconduct. But corruption has become so entrenched that it is eating away at the nation’s soul, said Zwelinzima Vavi, secretary general of Cosatu, in a recent speech to announce the formation of an antigraft organization, Corruption Watch. “We are moving towards a society in which the morality of our revolutionary movement — selflessness, service to the people and caring for the poor and vulnerable — is being threatened,” Mr. Vavi said. “If we do nothing it will be swept away by a tidal wave of a culture of individualism, a ‘me first’ attitude and to hell with everyone else. Some argue that we are already a society where only the fittest survive and dog eats dog.”
Corruption is a particularly serious problem in provincial governments, which are responsible for delivering many of the services needed by the poor. Many powerful regional politicians use their offices to enrich their friends, forming a coterie of wealthy elites reminiscent of the tribal chieftains the apartheid government used to administer the tiny, nominally independent bantustans where blacks were forced to live.
Limpopo has the nation’s second-highest proportion of people living in poverty — 62 percent, according to the South African Institute of Race Relations. The average unemployment rate for the province is 40 percent, but it is much higher for blacks and young people. Signs of waste and fraud are everywhere. Pipes that were supposed to bring clean drinking water to parched, impoverished communities were laid improperly and burst, requiring the whole job to be done again, according to local officials. Tiny government houses like the one in which Ms. Munyai lives are crumbling only months after being built. Since she has no water, she uses her toilet as a storage closet and has to walk several blocks to a shared pump several times a day. Roads paved a year ago are already covered with potholes. “This road is not more than two years old,” said Geoffrey Tshibvumo, a local councilor from the Congress of the People, a party that broke away from the A.N.C., as he bounced along a rural road in the province one afternoon. “They spent millions on it, and it is already spoiled.”
The crisis here has been brewing for some time. Late last year, the province ran out of money and asked the central government to lend it about $130 million. But the central government balked at handing over such a large sum without first taking a close look at the province’s books. A quick survey of its accounts showed that the state treasury was in chaos. State officials had made $360 million in unauthorized payments, and millions of dollars’ worth of contracts had been awarded without competitive bidding, the central treasury said.
The Education Department had 2,400 more teachers on its payroll than it was budgeted for, and 200 “ghost” teachers, who drew salaries but did not actually exist. The department had overspent its budget by almost $40 million even before ordering textbooks and other supplies for the coming school year. In the Health Department, more than $50 million worth of goods had been improperly ordered, leaving almost nothing for salaries for government nurses and doctors. Public works contracts showed evidence that they had been manipulated, the Treasury Department said, to increase the cost of projects — and presumably the profits of the contractors. Consulting fees ate up a quarter of the infrastructure budget.
Big contracts tended to go to a small handful of companies, many of them run by close associates of the province’s top politicians, according to provincial government documents. Some officials had been warning that the province was headed for a crisis. One whistle-blower in the Health Department sent a memo to a senior official in February 2011 outlining major problems with a contract for medical supplies. The prices for bandages and dressings had been inflated, the whistle-blower said, and the department could not possibly use the quantities ordered.
In addition, officials ordered more than $30 million worth of items in the last days of the fiscal year, most of it “labels and forms that are not critical or lifesaving drugs,” according to the memo. Prices for other items were wildly inflated. The national attention to the crisis in Limpopo is in no small part a reflection of the politics of the province. It is the home of Julius Malema, the polarizing leader of the A.N.C.’s youth league, who was suspended from the party for five years for his incendiary remarks and harsh stance against the president, Mr. Zuma. Limpopo’s provincial leader, Cassel Mathale, is a close political ally of Mr. Malema.
But many other provinces face a lesser version of the same crisis, analysts say. “It is not unique to Limpopo — it is all over the country,” said Moeletsi Mbeki, a political analyst and businessman. “It is a general form of self-enrichment by the politically connected.”
Mr. Brown, the deputy director general at the treasury, said that politics played no part in the decision to intervene in Limpopo. The crisis threatened the country’s financial reputation. “If you are sitting in New York and you are an investor in South Africa and you see a provincial government that cannot pay its teachers and nurses,” he said, “what does that tell you about South Africa?”
Source: New York Times
Tuesday, August 31, 2010
'ANC is the party of the black middle class'
Mbeki, who wrote Architects of Poverty: Why Africa's Capitalism Needs Changing, was speaking as a guest lecturer on Thursday at the University of the Free State (UFS) in Bloemfontein, to third-year and honours economics students. "You just have to look at the types of houses that the ANC government builds for ordinary South Africans," he said. "If you had a party that was a pro-working-class party, it would not have built these so-called RDP houses that are being built by the ANC government. The unions have all along been under the illusion that the ANC is the government of the working class, and [Zwelinzima] Vavi and them are now beginning to realise that this is not the case." His comments came on the same day Vavi delivered his strongest condemnation yet of Zuma's government at a press conference in Johannesburg. The general secretary of Cosatu said that the alliance was "dysfunctional" as the strikes continued, slamming the corruption of the state.
Mbeki said the striking public-sector workers faced a special dilemma. "They think the ANC is their ally but at the same time they feel they are not getting any benefits out of this alliance. Therefore you are beginning to get a very acrimonious environment emerging between the public-sector unions and the government." On Monday, the government went back to the negotiating table with unions after President Jacob Zuma demanded they do so. They have put an offer on the table of a 7,5% increase and an R800 housing allowance, just shy of union demands of 8,6% and R1000. Workers were on Tuesday voting on whether to accept the offer.
Meanwhile, Mbeki also weighed in on the Protection of Information Bill and the proposed media tribunal, which have brought the media and the government on to a collision course, saying the ANC government was trying to muzzle the media because it wanted to safeguard corruption within government. "The question of freedom of information is very closely linked to the rise in corruption in the government," he said. "What the politicians are doing is that they are trying to hide that corruption. The media in this country have been playing a very critical role in exposing cases of corruption. That is why Vavi now has bodyguards." He said he recently met the outspoken Vavi, who was surrounded by four bodyguards. The Cosatu leader said he was getting death threats because he was opposing corruption in government, according to Mbeki.
Moving on to economic policies, he called South Africa's the "worst in the world" because they benefited people who were already rich and prevented the emergence of entrepreneurs. "In fact, one of the serious downsides of black economic empowerment [BEE] is that it takes people who should normally be entrepreneurs and who should be creating new companies and new jobs out of that space and just makes them wealthy. BEE has been a disaster because it created this massive economic inequality; it created this class of idle rich who have tons of money but do nothing."
Mbeki has been vocal about the failures of BEE in the past, in contrast to his brother, who championed those policies. His lauded book, published in 2009, argued that Africa's faults lay primarily with its rulers and political elites, who keep their fellow citizens poor while enriching themselves. In his lecture on Thursday, he said under-investment in the economy was having dire consequences in terms of unemployment and poverty. According to Mbeki this, coupled with the growth of Black Nationalism, was actually driving down the ability of the economy to absorb labour. "What really lies at the bottom of our economic problems in South Africa is that we have too much of a one-party dominance of our political system. We need more competition in our political system and until we realise the policies of the ANC are not going to change," he said.
Mbeki worked as a journalist in the past, winning the prestigious Nieman Fellowship and working at the BBC. After returning to South Africa from exile in 1990, he was appointed head of communication for Cosatu and media consultant to the ANC. However, by 2006 he was on a controversial list of commentators blacklisted by the SABC for what was seen as their anti-ANC views. In addition to being a private business entrepreneur and director of several companies, he is the deputy chairperson of the South African Institute of International Affairs, an independent think-tank based at the University of the Witwatersrand.
Source: Mail & Guardian
Friday, March 13, 2009
The arms dealer who flies Zuma
Ivor Ichikowitz, the arms and oil broker who laid on his company jet to ferry Nelson Mandela to a Jacob Zuma election rally in Transkei, has made a career from turning political connections into profit. Last December Ichikowitz flew Zuma in the luxuriously converted Boeing 727 to Lebanon and Kazakhstan for what the Mail & Guardian understands were African National Congress (ANC) fundraising and business meetings.
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Monday, March 24, 2008
The Prince of Mines
Patrice Motsepe entered the mining business when South Africa ended apartheid. Today the onetime lawyer and avowed capitalist is the country's first black billionaire.
On a brilliantly sunny Thursday in January, Patrice Motsepe, a vigorous 46-year-old with regal posture, is striding through a gleaming shopping mall on the Cape Town waterfront. Suddenly a crowd forms. A half-dozen employees from the Build-A-Bear Workshop ask for his autograph. Two giggling young women roll up their sleeves as Motsepe signs their arms with a black marker, smiling while admirers snap photos with cell phones. An older woman approaches Motsepe and nearly swoons, grasping his arm and laying her head on his chest as he pats her back and murmurs thank you in Xhosa, one of the six African languages he speaks.
All this is not for a movie star or entertainer but for South Africa's first black billionaire. Over 15 years Motsepe, preaching free market capitalism, turned a low-level mining services business into the country's first black-owned mining company, African Rainbow Minerals, with 2007 revenue of $875 million. Driven by the Asian commodities boom, ARM's share price has rocketed in the past year from $12 to $24, pushing the value of Motsepe's net worth to $2.4 billion. Motsepe, a lawyer by training, serves as ARM's executive chairman, with a 42% stake in the company. He also owns a 5.5% stake worth $295 million in Sanlam, a publicly traded financial services company outside Cape Town.
By billionaire standards Motsepe has a modest lifestyle. His three sons attend prestigious private schools, but he has only one home, in the affluent Johannesburg suburb of Bryanston, and no yacht or plane. His one indulgence is to own the Mamelodi Sundowns, a soccer team. It doesn't tarnish his star quality that he's married to one of South Africa's most glamorous women, a medical doctor turned fashion impresario.
But for all the adulation, in South Africa such success comes with a price: being labeled an oligarch. Even many blacks have complained that the country's 1994 transformation from apartheid to democracy has benefited only the elite few. The criticism stems from laws that require substantial black ownership in certain industries, including mining. A handful of politically connected individuals have grown enormously wealthy as a result. One of Motsepe's sisters, Bridgette Radebe, who's married to transport minister Jeffrey Radebe, heads a mining company and is said to be among the wealthiest black women in the country. "It's called crony capitalism," says Moeletsi Mbeki, 62, brother of South Africa's president and an outspoken critic of the race-preference laws. "It's an anticompetitive system."
Motsepe concedes he benefited from the system yet says that his success was no handout, as he began building his mining business before the laws started taking effect in 2005. He says, "The legislation came way after we did our deals."
Motsepe and his family were in a better position than most to take advantage of the end of apartheid. Born in the sprawling black township of Soweto (next to Johannesburg), where his mother had grown up, Motsepe is a member of a royal clan within the Tswana tribe. He is, in fact, a prince.
Motsepe's father, Augustine Motsepe, was a critic of the apartheid regime. Before his son Patrice was born, Augustine was banished by the government to Hammanskraal, a rural area north of Pretoria where the government thought he could do less damage (he named his son after Patrice Lumumba, head of the Republic of the Congo and one of the first black African postcolonial leaders). There he opened a grocery store and then a beer hall and restaurant. "People don't know that there were very successful black businessmen in the years of apartheid," says Motsepe.
Though one of Patrice's maternal great-grandfathers came from Scotland, the old government classified the Motsepes as African. The family had to pull strings to get their seven children admitted to an Afrikaans-language Catholic boarding school that was officially designated for so-called "coloreds," South Africans of mixed race. From age 6, Motsepe spent school holidays working behind the counter in his father's store, where he says he learned his earliest lessons about business. "Whenever my father made a profit, he always plowed it back into the store," Motsepe recalls.
He graduated from the University of Swaziland and then became one of the few black law graduates of the University of the Witwatersrand in Johannesburg, designated whites-only by the apartheid government (Motsepe had to apply for an exemption to attend). In 1988 he joined Bowman Gilfillan, one of South Africa's largest corporate law firms, and in 1993 he became the firm's first black partner. Energetic and affable, Motsepe never wore his race on his sleeve, says Bowman partner and longtime Motsepe lawyer and confidant Neil Rissik.
Indeed, ask Motsepe about what it was like to grow up as a black man under the violent, racist apartheid regime and he responds with bromides. "The apartheid system was very bad for our people, very bad," he says blandly, switching quickly to the positive. "Only in South Africa could you have a change in government without civil war. If there wasn't the depth of love and caring among our people, this would not have happened."
Source: Forbes Magazine
On a brilliantly sunny Thursday in January, Patrice Motsepe, a vigorous 46-year-old with regal posture, is striding through a gleaming shopping mall on the Cape Town waterfront. Suddenly a crowd forms. A half-dozen employees from the Build-A-Bear Workshop ask for his autograph. Two giggling young women roll up their sleeves as Motsepe signs their arms with a black marker, smiling while admirers snap photos with cell phones. An older woman approaches Motsepe and nearly swoons, grasping his arm and laying her head on his chest as he pats her back and murmurs thank you in Xhosa, one of the six African languages he speaks.
All this is not for a movie star or entertainer but for South Africa's first black billionaire. Over 15 years Motsepe, preaching free market capitalism, turned a low-level mining services business into the country's first black-owned mining company, African Rainbow Minerals, with 2007 revenue of $875 million. Driven by the Asian commodities boom, ARM's share price has rocketed in the past year from $12 to $24, pushing the value of Motsepe's net worth to $2.4 billion. Motsepe, a lawyer by training, serves as ARM's executive chairman, with a 42% stake in the company. He also owns a 5.5% stake worth $295 million in Sanlam, a publicly traded financial services company outside Cape Town.
By billionaire standards Motsepe has a modest lifestyle. His three sons attend prestigious private schools, but he has only one home, in the affluent Johannesburg suburb of Bryanston, and no yacht or plane. His one indulgence is to own the Mamelodi Sundowns, a soccer team. It doesn't tarnish his star quality that he's married to one of South Africa's most glamorous women, a medical doctor turned fashion impresario.
But for all the adulation, in South Africa such success comes with a price: being labeled an oligarch. Even many blacks have complained that the country's 1994 transformation from apartheid to democracy has benefited only the elite few. The criticism stems from laws that require substantial black ownership in certain industries, including mining. A handful of politically connected individuals have grown enormously wealthy as a result. One of Motsepe's sisters, Bridgette Radebe, who's married to transport minister Jeffrey Radebe, heads a mining company and is said to be among the wealthiest black women in the country. "It's called crony capitalism," says Moeletsi Mbeki, 62, brother of South Africa's president and an outspoken critic of the race-preference laws. "It's an anticompetitive system."
Motsepe concedes he benefited from the system yet says that his success was no handout, as he began building his mining business before the laws started taking effect in 2005. He says, "The legislation came way after we did our deals."
Motsepe and his family were in a better position than most to take advantage of the end of apartheid. Born in the sprawling black township of Soweto (next to Johannesburg), where his mother had grown up, Motsepe is a member of a royal clan within the Tswana tribe. He is, in fact, a prince.
Motsepe's father, Augustine Motsepe, was a critic of the apartheid regime. Before his son Patrice was born, Augustine was banished by the government to Hammanskraal, a rural area north of Pretoria where the government thought he could do less damage (he named his son after Patrice Lumumba, head of the Republic of the Congo and one of the first black African postcolonial leaders). There he opened a grocery store and then a beer hall and restaurant. "People don't know that there were very successful black businessmen in the years of apartheid," says Motsepe.
Though one of Patrice's maternal great-grandfathers came from Scotland, the old government classified the Motsepes as African. The family had to pull strings to get their seven children admitted to an Afrikaans-language Catholic boarding school that was officially designated for so-called "coloreds," South Africans of mixed race. From age 6, Motsepe spent school holidays working behind the counter in his father's store, where he says he learned his earliest lessons about business. "Whenever my father made a profit, he always plowed it back into the store," Motsepe recalls.
He graduated from the University of Swaziland and then became one of the few black law graduates of the University of the Witwatersrand in Johannesburg, designated whites-only by the apartheid government (Motsepe had to apply for an exemption to attend). In 1988 he joined Bowman Gilfillan, one of South Africa's largest corporate law firms, and in 1993 he became the firm's first black partner. Energetic and affable, Motsepe never wore his race on his sleeve, says Bowman partner and longtime Motsepe lawyer and confidant Neil Rissik.
Indeed, ask Motsepe about what it was like to grow up as a black man under the violent, racist apartheid regime and he responds with bromides. "The apartheid system was very bad for our people, very bad," he says blandly, switching quickly to the positive. "Only in South Africa could you have a change in government without civil war. If there wasn't the depth of love and caring among our people, this would not have happened."
Source: Forbes Magazine
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