Broad+based+bull,+B+Day+editorial+05-05-10

Business Day 11 May 2005
=Broad-based bull=


 * Editorial**

THE raid on Telkom’s shares by Andile Ngcaba and Wiphold’s Gloria Serobe raises endless questions. The two, remember, have made off with some 6,67% of Telkom, courtesy of the Public Investment Corporation (PIC), taking with them a few high-profile personalities as co-shareholders and farming smaller parts of their stakes off to “broad-based” empowerment groups that constitute little more than decoration designed to legitimise their enrichment and that of their friends.

Question one: If government does not, immediately, take measures to prevent senior civil servants from abusing their privileged positions as policy makers to benefit themselves as private business people, won’t its commitments to ethical government become empty and laughable? Deputy President Jacob Zuma is in charge of public morality and he, perhaps of all people, badly needs to demonstrate that he has a real grasp of what is right or wrong.

Question two: What is the present value — exactly — of the personal allocations of Telkom shares to Ngcaba and to African National Congress (ANC) spokesman Smuts Ngonyama under the PIC deal? We are not interested in details of the other personal enrichments. But these two represent a serious fraying of the frontiers of honesty and the public good. If a senior ANC official can so deeply dip his toes into the nation’s wealth, why is there any point in fighting corruption at all?

Question three: Are the “broad-based” so-called beneficiaries of the largesse of Ngcaba and Serobe going to allow these fine people to get away with using them so? One of the benefits to these lucky people will be an educational training programme. Yippee! That’s probably 20000 “beneficiaries” accounted for. The Congress of South African Trade Unions is absolutely right to ask its members to get as far away from Ngcaba and Serobe as possible. Why legitimise this rubbish?

Question four: What is government going to do to rescue its empowerment programme? Assume that the top 100 empowerment deals have empowered at least 5-million so-called broad-based beneficiaries. That is a hugely generous estimate, by the way, assuming 50000 a deal. You also have to remember that only a tiny minority of the holding won by the black principals is spread to the needy — the rich keep the big slice and divide it among just a very few. So, 5-million people get empowered through all the charters and all the deals, and then what? There are still another 35-million poor citizens to go. Are they to be forgotten? What else is there to empower? If we could only manage a few hundred thousand (at best, and by stretching credulity) with Telkom, and assuming only Eskom is left to suck on, what about the rest of the people?

Question five: When will it be admitted that this has been an exercise in enrichment (a proposition not too difficult to defend, if you are honest about it) but that it has empowered only a few lucky people?

The fact is, government has vastly overestimated the ability of business to deliver happiness. Only collateral can do that — the ability to raise money based on existing wealth of some sort. Black citizens don’t really have existing wealth. They have to be given it, and the only way to do that, once the business teat is dry, is for the state to hand its entire asset base to the poor and to rent it back. It may be difficult for a middle-class debating society like the ANC to conceive of such a thing, but ownership of the great properties and companies of the state by the poor would prolong the party’s political life for decades. Government can’t overstate the effect of its delivery programme forever.

If capitalism is to survive here, it has to be popular. That means people have to be enthusiastic about it. Making well-paid folk like Ngonyama and Ngcaba even richer is no way to make anyone enthusiastic about the system.


 * From: http://www.businessday.co.za/articles/article.aspx?ID=BD4A43514 **