2005-11-09,+Crony+capitalism,+or+what,+Star

= Top government officials in BEE deal =

The Star, Johannesburg, November 8, 2005

By Roy Cokayne and Nalisha Kalideen

Two senior government officials and the widow of a former minister have just become partners in an empowerment transaction with aircraft components' producers.

Presidential adviser Titus Mafolo and Foreign Affairs spokesperson Ronnie Mamoepa, formerly from the Presidency, are shareholders in Phatsima Aviation, a company that acquired a 20% shareholding in Centurion-based aircraft components and aerostructure producer Aerosud Holdings.

Herman Mashaba, founder of haircare firm Black Like Me, owns a 54% stake in Phatsima.

Jackie Modise, wife of the late former defence minister, Joe Modise, was also appointed as a non-executive chairperson.

The ambassador to the Netherlands, Hlengiwe Mkhize, is a another black economic empowerment partner who had acquired an 8% stake in Aerosud previously.

While all government officials involved stated they had declared their interests in the deal, and independent observers said there was no conflict of interest in their involvement, the country's main opposition party, the Democratic Alliance, slammed it as another example of "crony capitalism".

"This is yet another deal in which people with close ANC-government connections have benefited from a BEE project. This appears to be yet another example of how BEE has degenerated into crony capitalism instead of broad-based empowerment," DA spokesperson Helen Zille said.

But Mashaba hit back. "Do they expect us to have deals with our enemies? I will always work with people I know and like," Mashaba said.

He added that the deal was a strategic business decision.

"I didn't do this because I have a political agenda; I did this for commercial reasons. If I've done a bad deal, then I'm a bad businessman," Mashaba said.

The deal, which came into effect at the end of last month, increased BEE ownership in Aerosud to 28%.

The balance of the shareholding in Aerosud is held by company founder members Paul Potgieter, Pierre Dippenaar, Yoram Tchetchik and Deon Labuschagne.

Phatsima Aviation acquired its 20% shareholding from the Industrial Development Corporation (IDC). The price paid was not disclosed.

Zille said the DA was particularly interested to know what Phatsima Aviation paid to the IDC for the shares it acquired.

"We will be studying this deal very carefully and asking the appropriate questions in parliament,"she added.

But Mashaba said no one should be so naive as to expect businesspeople to reveal all the details of their transactions.

"You can't live in a naive world. People are tough out there. If it is not a good deal, I'm the one who is going to lose money," he said.

Mamoepa, who has an 8% stake in Phatsima, would confirm only that officials involved in the government had declared their interests in Phatsima.

From: http://www.thestar.co.za/index.php?fSectionId=128&fArticleId=2984996