My Deep Throat tells all
Anonymous businessman spills the beans…
A BUSINESSMAN – who informs me that he has political views decidedly different to mine – has written anonymously to say that he does, however, agree with the view that black economic empowerment has been poorly implemented.
Now instead of empowering the people by distributing to them a portion of the wealth that’s been dished out in the name of empowerment, the system – as has been widely accepted and is patently obvious – has enriched a favoured few, including a rich, well-educated, highly privileged white woman called Wendy Lucas Bull.
It’s understandable that among Government’s objectives has been the rapid creation of a black class of business leaders. They serve as role models, move us away from white hegemony in business, give black people a sense of pride in their achievements and provide symbols of the new South Africa.
It was also highly preferable to nationalisation of what collectivists lovingly call the commanding heights of the economy.
It was not, of course, mutually exclusive to simultaneously encourage, by fiscal and other means, the distribution of wealth through shares or straight cash payments to the millions of our poor.
One painless method would have been to persuade, encourage or even force, if necessary, all listed companies to issue a small percentage of their share capital to a fund for the masses. That could have been used for good works but, preferably, just for distribution of cash to poor people.
Governments, of course, don’t trust people to spend money wisely. That ability is reserved for public servants. However, helicopters dropping loads of cash on impoverished hillside villages would, for example, do so much more good than incompetent Government departments dishing it out – after stealing a healthy slice of it.
A study, done no doubt with tongue in cheek, in the United States determined that by applying the multiplier effect and an algorithm of personal desires for self-improvement, money dropped from a helicopter over New York’s Manhattan would have had a beneficial effect several times greater than an equivalent amount spent by bureaucrats on behalf of the poor.
But that opportunity was missed in SA’s great empowerment wave.
My correspondent refers at length in his letter to a classic example in the National Lottery (Lotto) contract of how empowerment has gone wrong. He zeroes in on Bongani Khumalo, whose curious career seems hardly to have equipped him for the position as chairman of the Gidani consortium.
As is well known, Gidani – having been selected by our Minister of Trade & Industry Mandisa Mpahlwa to succeed Uthingo as the Lotto manager – is now in legal limbo following a decision by Judge Willie Seriti in the Pretoria High Court.
Judge Seriti ruled that the National Lottery Board had failed to investigate the shareholders of both bidders. He decided, in essence, that the minister lacked all the relevant information when awarding the contract.
Freedom in general, and the judicial system in particular, owe a great debt of gratitude to Judge Seriti. He assessed the situation on totally objective grounds, ignoring in the process the interests of powerful political players.
And it seems that, in hiring Khumalo as its chair, the curious amalgam of ANC, union, Greek and reputedly Russian shareholders in the Gidani consortium did itself no favours. Whatever his merits might be, Khumalo has a business background that doesn’t fill the observer with confidence. As my anonymous correspondent writes, Khumalo “was fast-tracked through the famous affirmative action HR route to become deputy CE at Eskom in the mid-Nineties. “It was during that period – when he was one of the top three decision-makers (and the one specifically tasked with “strategy”) – the decision to (a) mothball several existing power stations and (b) not commissioning any new ones, was taken. The stupidity of that decision is now being seen in our electricity supply shortages.”
Khumalo wasn’t selected to succeed then outgoing Eskom CEO Allen Morgan but was quickly rescued by an appointment as adviser to President Thabo Mbeki on – wait for it, folks – HIV/Aids.
After that debacle, which earned us international and scientific humiliation, the State in 2001 appointed Khumalo as chairman of Transnet. Surely we were now safe from his increasingly obvious and total incompetence. But no. In September 2004 Khumalo’s minders in Government had to swallow their pride, along with their clear affection for this genius, and sacked him from the Transnet chair after a loss of R6,3bn.
That waste of taxpayers’ money came largely as a result, writes my correspondent, of the “(in)famous hedging activities undertaken by South African Airways on his watch in 2002”.
“It’s no surprise,” writes our anonymous deep throat, “that a chairman of the board who wouldn’t know the difference between a derivative and a dingo approved that ‘hedging’ and went so far as to sign a letter to the SA Reserve Bank advocating its approval by them.”
Our deep throat adds that Khumalo’s Transnet office expenses were of the order of R30m/year, including the grandly named “Office of Protocol”. From that vast structure minions ran about the country arranging Khumalo’s visits. Lifts were set aside (from the previous evening) for his personal use while senior aides rushed around ensuring that the parking bay nearest the lifts was kept available strictly for Chairman Khumalo.
After Transnet, Khumalo bumped around, from Grey Advertising to property group JHI, before landing, once again, with his bum in apparent butter at Gidani with its colourful backers.
Thus is the tale of one empowerment saga, which typifies what has sadly been the pattern in what might have been a highly productive approach to the release of SA from a racial nightmare to democracy and a dynamic free market.