South Africa

After a hard day negotiating their latest BEE Deal, the ANC cronies BEE businessmen took the afternoon off.

 

The Fat Cats just keep on getting fatter....any respect I had for BEE as a program flew out the window this past week. It is now perfectly apparent what BEE is -- a form of wealth expropriation designed to enrich a small clique of the politically well connected. Witness the following (bit long but well worth it to get the blood flowing):

 

Three government officials are beneficiaries of two deals announced this week. The head of communications in the Presidency, Murphy Morobe is a shareholder in Lereko, which has secured part of a 7% stake in Sun International. Foreign Affairs spokesperson Ronnie Mamoepa and presidential adviser Titus Mafolo have been allocated 8% and 3% respectively of Phatsima, which has taken a 20% stake in Aerosud. Mafolo, who has landed two lucrative deals in a week, is also a shareholder in Lereko.

 

South Africa’s ambassador to The Netherlands, Hlengiwe Mkhize, is an existing shareholder of Aerosud, with an 8% stake. Aerosud features in a R6,4-billion government deal to buy eight military transport aircraft from European aircraft giant, Airbus. The purchase means that two local manufacturers, Denel and Aerosud, will manufacture components worth R3,2-billion for Airbus.

 

A further concern is that the politically connected continue to dominate BEE transactions. Manne Dipico, Popo Molefe and Valli Moosa, members of the ANC’s national executive committee, its top ­decision-making body, feature in two of this week’s deals. In addition, Max Sisulu, an executive director and general manager at Sasol, is a beneficiary of the Aerosud deal. Sisulu chairs the ANC’s economic transformation committee. And Cheryl Carolus, formerly ambassador to Britain, gets a 4% stake in De Beers Consolidated Mining, a 100% subsidiary of De Beers, housing its South African operations.

 

Analysis of the deals shows that the share allocation continues to be highly unequal between high-profile and rank-and-file BEE beneficiaries. Dipico, with a R342-million stake in De Beers’ South African operations, gets 4 600 times that of an ordinary employee beneficiary in De Beers deal. Just seven people — Dipico, Barend Petersen, Moss Mashishi, Carolus, Wendy Lucas-Bull, Dolly Mokgatle and Thandi Orleyn — get R1-billion of De Beers’ R3,8-billion allocation.

 

In the Aerosud deal, just four people — Herman Mashaba (54%), Mamoepa (8%), Mafolo (3%) and Sisulu (3%) — get 68% of the BEE allocation. Mkhize’s 8% stake brings Aerosud’s BEE shareholding to 28%. Heightening the risk of conflicting interests is the fact that state-owned or state-controlled entities feature in two of the three deals. The Public Investment Corporation sold the 7% stake worth R392-million in Sun International to Dinokana, in which Lereko is the lead investor with a 28,05% stake.

 

At the same time, the Industrial Development Corporation sold its 20% holding in Aerosud to Phatsima. The value of the stake has not been disclosed. Dipico and Molefe are former premiers of the Northern Cape and North West provinces respectively, while Moosa is a former Cabinet minister. Lulu Gwagwa, a lead investor with Molefe and Moosa in Lereko, is formerly deputy director general of public works.

 

Lereko’s principal empowerment deal to date, before Sun International, was the 7,5% stake it took in Imperial. The consortium’s website details its other investors as Eric Molobi, Monhla Hlahla, Seth Phalatse and Tsheko Ratsheko. Meanwhile, former communications director general Andile Ngcaba appears set to grow his telecommunications empire through the probable purchase by Dimension Data of a controlling stake in Plessey from Worldwide.

 

Worldwide has told the M&G that it intends selling the 51% stake, as it wants to focus on the energy sector. Dimenson Data, which has Ngcaba as a 26% empowerment investor, owns 49% of Plessey and has a pre-emptive right to the other 51%. A deal is understood to be imminent. It is unclear whether Ngcaba will take a direct stake in Plessey. While controversy has been growing around empowerment, mainly because a few high-profile individuals have featured in so many deals, the Aerosud and Sun International deals break new ground in that the beneficiaries include government officials, Mamoepa and Mafolo, and Morobe, respectively.

 

Previous deals have allocated stakes to ANC office bearers, including ANC Secretary General Kgalema Motlanthe, who landed 7% of Pamodzi, and Smuts Ngonyama, who got an undisclosed stake in Telkom, as part of the Elephant consortium. Moosa, Molefe and Dipico are ANC national executive committee members, joining NEC members Saki Macozoma and Cyril Ramaphosa, who have notched up a string of BEE deals. A nexus appears to be emerging, with some of the BEE beneficiaries popping up in multiple BEE companies. Titus Mafolo has stakes in both Phatsima (Aerosud) and Lereko (Sun International).

 

Dipico, lead beneficiary in Ponahalo Investment Holdings, which has a 50% stake in Ponahalo, which in turn has 26% of De Beers Consolidated Mines, is a co-investor in Pamodzi with Motlanthe.

 

A growing empire

 

Former communications director general Andile Ngcaba looks set to up his stake in the information and communication technologies (ICT) sector, writes Lloyd Gedye. Worldwide African Investment Holdings has announced that it will sell its 51% stake in Plessey South Africa, which it jointly purchased for R1,6-billion with Dimension Data Africa (DiData) in 1998.

 

DiData is 75% owned by Dimension Data Plc and 25% by an empowerment consortium lead by Ngcaba. Dimension Data, which owns 49% of Plessey, has pre-emptive rights on Worldwide’s 51% stake. Kevin Handlesman, of DiData investor relations, confirmed that the company held pre-emptive rights, but said it was currently in a closed period before its results were announced and could not comment.

 

Analysts told the Mail & Guardian this week that it was likely that Dimension Data Africa would purchase the stake, but reiterated that a deal was always dependent on price. An analyst said that Ngcaba had shown his ability to open certain doors and it would probably make sense for DiData to involve him in a possible Plessey deal. However, he added: “I am concerned that this brings him into a greater conflict of interest situation due to his shares in Telkom.” Plessey South Africa is a key supplier to Telkom.

 

In May this year Ngcaba concluded a deal with the Public Investment Corporation in which the Elephant consortium bought a 10,1% stake in Telkom, paying for it over five years. gcaba is thought to have secured a 1,15% stake in Telkom for himself, worth R887-million at current prices. Another analyst said that if Dimension Data was to exercise its pre-emptive right, Ngcaba would be involved either through his stake in Dimension Data Africa or directly in Plessey SA. The analyst said the deal would offer Dimension Data a simplified structure and access to Plessey’s cash flow.

 

What a friggin joke! While the talking heads continue to wax lyrical about benefitting the majority, it is obvious the exact opposite is taking place. Particularly galling is the oh-so-obvious desperate lunge by those in government who are petrified that some sort of 'cooling-off' time period might be legislated, thus holding them back from plunging their snouts into the trough ASAP. A truly sickening display!

 

What gets to me even more is that there seems to be no limit to the greed, the sheer avarice that is displayed by these BEE Kings...is once enough? No! Well how about twice? NO! Three times...and so it rolls on,  a disgusting and unseemly spectacle. They seem to be screaming on a daily basis  "SCREW EQUITY! I'M GETTING MINE, NOW!" All this set against the Prez. and Kgalema Motlanthe railing against the "unseemly accumulation of wealth" :

 

ANC secretary-general Kgalema Motlanthe warned earlier this week that the sorry state of the organisation could be blamed on the "cancer" of moral decay and corruption among members.

 

Motlanthe dedicated an entire section of his organisational report to the issue under the heading: Lead us not into temptation - the challenge of renewing our revolutionary ethics.

 

You know Kgalema its a bit hard to hear you when you're mouth is so full of gravy (checkout the Pamodzi deal above)! Seriously this farce has got to stop, these people are robbing the rest of us blind and doing it with the full support of the law.

 

This is not Equity. This is not Justice. This is just about a bunch of greedy piggies rolling in the gravy...