Mutual benefit and elite capitalism’s failure
In June I reached out to Trevor Manuel and Peter Moyo after Moyo’s sacking by Old Mutual. My interest in the matter was informed by my stakeholder role in Old Mutual and an expectation that it and other companies that find themselves in similar positions should be proactive in paying attention to all stakeholders.
In an academic paper published by Edward Freeman in 1984 on stakeholder theory, he contends that it provides a vehicle for connecting ethics and strategy. Firms that diligently seek to serve the interests of a broad group of stakeholders will create more value over time.
Manuel has played a critical role in SA’s economic
development, as a worker and activist in the 1980s, as trade & industry and finance minister in the 1990s, as leader of the international financial architecture team in the IMF, and in the process leading to the adoption of our National Development Plan.
I met Moyo during the conversion of the Transnet Pension Fund, when his team assisted us in the process. Later he became a client of the Industrial Development Corporation, where I worked for 11 years with Sango Ntsaluba and Bulelani Ngcuka in a company called Amabhubesi.
I believed that put me in a position to reach out to those close to them so that a solution to stakeholder value creation could be found. However, I learnt the horse had bolted: both had adopted fixed positions, with complete disregard for the possible destruction of stakeholder value.
It has taken me three months to write this column on the matter. My argument is that the failure of SA capitalism to transform itself into an inclusive, dynamic system of accumulation; the externalisation of operations to the UK; and the political settlement between business and the political elite led by the ANC that led to BEE legislation are all being played out in the Manuel-Moyo fiasco.
This is not just a conflict-ofinterest fight but a fight between two black elites, one a former politician who was hired to legitimise Old Mutual’s transformation, and a BEE beneficiary who has used the legislation to his advantage, enriching himself by using a platform that hired him as MD.
The silence of many stakeholders reveals the cracks in SA stakeholder capitalism, particularly in relation to the role of black directors and executives. Many companies are dependent on a political and business elite and do very little to transform their companies internally or with respect to their suppliers. This reinforces the apartheid economy as black directors and executives are brought in to sugar coat an exclusive system of accumulation. No word has been heard from Old Mutual’s 30,000 or so employees, nor from the shareholders.
The Manuel-Moyo conflict symbolises an important lesson about the creation of an elite that forgets its place in the broader society.
Under normal circumstances in the boardroom this would have amounted to a slap on the wrist, but for the black elite it plays itself out in the public arena.
It also shows the weaknesses of the race-based system of accumulation that is articulated by BEE legislation, and the difficulties of transforming an apartheid economy into an inclusive economy for all. Manuel and Moyo should be asking themselves whose interest they are serving in this matter.
In the eyes of many, Old Mutual is pandering to the interest of two individuals instead of seeking to serve the interests of the broad stakeholder group by creating value over time.
● Mondi is a senior lecturer in the Wits School of Economic and Business Sciences.