For SA’s sake, empowerment must shake off its crony history

When blue-chip gold miner Gold Fields had to resort to doing an empowerment deal set up seven years ago by the now notorious duo of Gayton McKenzie and Kenny Kunene, close associates of President Jacob Zuma, it was in hindsight the template of how business would henceforth be done in South Africa. Just a year into his presidency, it was a sure sign business would be conducted differently.

In what must count as one of the most cynical of empowerment transactions, of which there have been many, it appeared that the mining house had roped in ANC luminaries such as national chairwoman Baleka Mbete in a consortium with other well-connected investors. The deal, which had all the hallmarks of being rushed, seemed to be fashioned with the simple aim of ensuring that the mining licence for the jewel in South African gold mining, South Deep, was safeguarded.

It was a deal struck in 2010 with black investors who offered only proximity to power as their unique selling point. Just how it was struck — and the players involved — raised red flags at the US Securities Exchange Commission, because of bribery implications. Two years ago, the SEC cleared the mining house, but it should have had us all alarmed that two felons had managed to walk through the boardroom of one of the country’s biggest and most important companies.

The fact that the management of a blue-chip mining house had to deal with such characters — who have once again emerged on the scene ahead of the ANC’s elective conference in December — to meet a constitutional imperative, namely empowerment, is alarming. But that has been how the game has been played over the past decade. Up until the headlines started appearing on the capture of the National Treasury about two years ago, markets, investors and most of us had all but ignored the deterioration of the country’s business environment.

As we digest the weekly drip of scandal around our main parastatals — Eskom, Transnet and SAA — we should remember just how deep the rot has become, and that it’s not reserved for the public sector.

US consultancy firm McKinsey played the game according to the new rules. Please the political principal and all else falls in to place. Auditing firm KPMG followed suit by doing business with the Guptas, against its own reservations, perhaps. Just how these firms did it will one day make for an intriguing piece of literature.

The biggest tragedy, at the heart of it all, is the capture of South Africa’s empowerment project. For the consultancy firm to move from being just one of about 10 firms bidding for work with South Africa’s major parastatals to virtually the only one, it had to have a local and black empowerment partner. The powers that be gave it the options, which boiled down to really one name, the Gupta-associated Trillian. It played the game and through that partnership, as has become abundantly clear, it got all the honey from our major state-owned enterprises. Those entities that weren’t too profitable, or abysmally run, like SAA, were contracts left to rivals such as Bain & Co.

KPMG knew some years ago that in dealing with the Gupta family it was in some rather murky waters. Still, it stayed on board and kept billing its clients.

If South Africa Inc is to change its trajectory, the first thing we need to deal with is the hijacking of the national project of transformation. It’s been manipulated for longer than a decade, to suit the purse strings of a select few. Black entrepreneurs and professionals who aren’t in the correct circles have watched plates fly over their heads like unknown guests at a traditional wedding ceremony — a terrible experience. Communities have long been forgotten in this scramble.

But guess what? Empowerment targets have been met, the boxes for the BEE scorecards checked. Such continued abuse will only lead us down this road again, no matter who our political masters are.

Communities have long been forgotten in this scramble