Foreign investors line own pockets

CONGRATULATIONS to Thekiso Anthony Lefifi for his excellent article “Shattering the FDI myth” (April 20) exposing how South African interests have been harmed by four major foreign direct investment deals.

Perhaps a future article could address the betrayal of South Africa’s interests by the offshore listings and transfer of head offices by our two largest mining houses — Anglo American and Gencor (taken over by BHP Billiton) in the late 1990s.

Since departing, these companies have pursued a relentless path of disinvestment of their South African assets.

One can only wonder how these companies were able to hoodwink South African authorities into granting them permission to list offshore. Presumably, they must have convinced the authorities that their offshore listing would provide easier access to capital at a lower cost, which would lead to the expansion of their operations in SA.

Anglo American chairman Julian Ogilvie Thompson said in 1996: “While we see our future as a mining house rooted in South Africa, and are committed to seeking every opportunity for expansion at home, new opportunities opening up in Africa and internationally will facilitate a determined expansion of our mining and selected industrial interests abroad.”

But this vision of Anglo American as “a mining house rooted in South Africa” proved short-lived. In 1999, the miner transferred its head office to London and its primary listing to the London Stock Exchange.

Was it just naivety on the part of the exchange control authorities, which permitted these companies to desert South Africa? Or was it politically motivated, as alleged by Moeletsi Mbeki, who has claimed the introduction of black economic empowerment was part of a deal “to allow those oligarchs who wanted to shift their company’s primary listings and headquarters to London to do so”?

Whatever the reason, the loss of South Africa’s two largest mining houses relegated the country from a predominantly domestically based mining industry to an industry controlled mainly by foreign companies with little commitment beyond the narrow interests of their mining projects. — Ian Robinson, Johannesburg