SA+diplomat+in+lucrative+BEE+deal,+Cameron+and+Cobbett,+Moneyweb

Moneyweb, Posted: Wed, 08 Feb 2006 15:00 | © Moneyweb Holdings Limited, 1997-2006
=SA diplomat in lucrative BEE deal=


 * Jackie Cameron and Julius Cobbett**

South Africa’s High Commissioner in Gaborone, Botswana, Eunice Komane, is a beneficiary in a lucrative Black Economic Empowerment (BEE) deal involving international investment banking group Merrill Lynch.

Komane is part of the Tselane Basadi consortium which is participating in a transaction that aims to transfer up to 15% of Merrill Lynch SA to black hands by 2009.

The deal, said Merrill Lynch on Wednesday, includes:


 * The Merrill Lynch Black Employees Trust for the benefit of current and future employees at 2,5% (potential for up to 9%);


 * The Merrill Lynch Education Trust, dedicated to tertiary financial services education of black students at 1%; and


 * Tselane Basadi, a consortium including: Dr Namane Magau, President of the Businesswomen’ Association and board member of Santam and Murray & Roberts; SA Post Office chairperson Badirileng Mokone; and Dr Sebiletso Mokone-Matabane, CEO of Sentech and former chair of the Independent Broadcasting Authority.

Merrill Lynch SA CEO Adam Horowitz declined to divulge the value of the transaction, saying it is subject to a confidentiality agreement. Dr Magau said only of the financial details: “Yes, we’ll make money.”

The funding of the deal was done internally. Horowitz explained that this will prevent the company from being pressured into disclosing confidential client information to an external funder.

The BEE beneficiaries will acquire a stake in Merrill Lynch & Company, a liquid stock traded on the New York Stock Exchange.

Although the value of this stake is confidential, it will represent 8,5% of the holding company’s stake in Merrill Lynch South Africa. The beneficiaries will also have 8,5% of the voting rights of the South African entity.

“The unique structure of this transaction will provide the BEE parties with access not only to the value of the South African operations of Merrill Lynch but also to the value of Merrill Lynch’s businesses on a global basis through the owning of Merrill Lynch common stock,” said the investment bank in a statement.

Magau and Horowitz emphasised that there would be focus on growing the skills of women as a result of this transaction, and said that diversity is important for Merrill Lynch globally.

Merrill Lynch announced that Tselane Basadi will also “work with the company to expand its investment banking businesses in the region”.


 * Too close for comfort?**

When asked whether it was potentially ethically problematic including a diplomat in the deal, Horowitz said the details have been cleared by regulators in New York. “American banks are probably the most regulated in the world,” he said of why a foreign corrupt practice would not be tolerated.

The participation has been “declared upfront” as far as is required in South Africa and elsewhere, he said.

However, some of Merrill Lynch’s competitors may think differently. Having a diplomat on board with political and government contacts could put Merrill Lynch at a distinct advantage in dealings in the region.

And it would probably seem unfair to those civil servants who aren’t allowed to moonlight for extra cash that a senior public servant like Komane has easy access to this type of money-making opportunity.

Head of the Government Communication and Information System (GCIS), Joel Netshitenzhe, said: “My understanding is that people who are employed in public service are allowed to participate in these deals, but with the consent of their political principal or executing authority (minister).”

As long as there is the “relevant declaration” and individuals meet the criteria and various regulations of government, deals where diplomats are involved should not be problematic, he said.

The Department of Foreign Affairs would not comment on the matter yesterday. Its officials were studying the media release put out by Merrill Lynch.


 * From Mouldmed to Merrill**

Meanwhile, the Merrill transaction adds a touch of class to Tselane Basadi’s colourful portfolio. Previous BEE deals struck by the consortium include suspended small cap counters Mouldmed and Bryant.

Tselane acquired a 26% stake in a Mouldmed subsidiary for R13m after the maker of multi-purpose urinals was suspended for qualified accounts. Before suspension, the entire market capitalisation of Mouldmed was some R3m.

At the time, Namau told //Moneyweb// that she was excited about the deal because Mouldmed’s subsidiary, Rest Recuperation Retreats, had the potential to attract tourists and retain doctors.


 * From: http://72.14.203.104/search?q=cache:O0qV8tw8598J:www.moneyweb.co.za/shares/financial_services/886306.htm+Eunice+Komane+site:http://www.moneyweb.co.za/&hl=en&ct=clnk&cd=1&gl=za**

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