from the editor

Finweek English Edition - - CONTENTS - JANA MARAIS

bil­lion­aire in­vestor and phi­lan­thropist War­ren Buf­fett likes to say, “Only when the tide goes out do you dis­cover who’s been swim­ming naked.”

What he means is that it is easy to make money in the good times – it’s dur­ing the tough times that man­age­ment’s real busi­ness acu­men comes to light.

Well, the tide’s gone out, and there are a whole bunch of peo­ple run­ning for cover. Look­ing at SA Inc., the ob­vi­ous ex­am­ple would be Lon­min (see pages 13 and 30). The world’s third-largest plat­inum miner, which sits on some of the rich­est plat­inum de­posits in the world, is ask­ing for a share­holder bailout for the third time in just six years. Yes, low prices have a role to play, but how much of its trou­bles – labour, high-cost shafts, BEE rat­ings – are ac­tu­ally the re­sult of poor man­age­ment over the years?

Here I want to let cur­rent boss Ben Ma­gara off the hook – by the time he, and most of the cur­rent team, joined, the dam­age to Lon­min was al­ready done. It’s all the well-paid CEOs who came be­fore Ma­gara – par­tic­u­larly Ian Farmer and Brad Mills – who should be stand­ing with their swim­ming trunks around their an­kles.

MTN would be an­other ob­vi­ous ex­am­ple. In the good times, no share­holder asked any tough ques­tions about its op­er­a­tions in Nige­ria, or its op­er­a­tions any­where, for that mat­ter. As long as it was print­ing money, no­body cared. That has all changed in the past two weeks af­ter the Nige­rian reg­u­la­tor im­posed a record $5.2bn fine on the op­er­a­tor, a fine roughly equal to a quar­ter of its (now much di­min­ished) mar­ket cap­i­tal­i­sa­tion at the time fin­week went to press. So far, no de­tailed an­swers have been forth­com­ing.

On a na­tional level, we have also messed up. When the times were good – and they were good for all com­mod­ity ex­porters – we should’ve fo­cused on build­ing other sec­tors of the econ­omy to re­duce our re­liance on min­ing, and putting re­serves away for a rainy day. What hap­pened in­stead was a gov­ern­ment spend­ing frenzy that’s led our debt to nearly dou­ble as a pro­por­tion of GDP. Well, the tide is out, and there is no beach towel in sight.

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