[Marxism] Problems and Realities

sartesian sartesian at earthlink.net
Sat Apr 22 10:53:39 MDT 2006

>From the Financial Times  4/18/06:

Last September, an unknown gunman shot and killed Brett Kebble, a
colourful and well-known white South African mining magnate. The
murder – still unsolved by police – took place on a road near Melrose
Arch, an upmarket Johannesburg office precinct where the city’s black
and white power-brokers mingle. It shocked a business community that
prides itself on rectitude and respect for the rule of law. Phumzile
Mlambo-Ngcuka, South Africa’s deputy president and a former minerals and
energy minister, eulogised Mr Kebble, who was celebrated for his role in
deals that increased black ownership of the economy, as a “great South

Seven months later, her words are ringing hollow as forensic auditors
unravel Mr Kebble’s messy corporate legacy. They have discovered that
the slain businessman defrauded two mining houses he headed, Randgold &
Exploration and JCI, of nearly R3.5bn (£323m, $577m, €474m), about R1bn
of which shareholders will never recover. Auditors are also uncovering
evidence of extensive financial ties between the late businessman and
prominent members of the ruling African National Congress and its youth
league. A list found on Kebble’s desk after his death, headed “Loan
Account”, included the names of several ANC heavyweights.

The ANC has denied any knowledge of loans to its members by Kebble, and
R&E’s caretaker management are unsure of the list’s significance. In any
event, the businessman made no secret of his ties with top ANC
politicians. He was an open supporter of Jacob Zuma, the party’s deputy
president and former South African deputy president, who now faces rape
and corruption charges. Kebble was known for hosting a lavish annual
party for ANC MPs at JCI’s Cape Town headquarters.

Still, the scandal has fuelled a growing outcry over crony capitalism in
Africa’s largest economy. It coincides with the recent publication of a
report by South Africa’s auditor-general establishing that 11 ministers
and deputy ministers in Mr Mbeki’s government failed to declare
directorships of companies. The list was later whittled down after
protests or explanations by the officials. However, the business
interests of two, including Ms Mlambo-Ngcuka, are being investigated

Among about 6,000 lower-level government employees, auditors found 1,678
cases of undeclared business interests. Shauket Fakie, the
auditor-general, tells the Financial Times that the exercise revealed
“that there’s some scope for conflict of interest” among government
representatives, in­cluding through ties to companies do­ing business
with government, which he will examine in a separate report.

President Thabo Mbeki has sounded the alarm on the issue, warning
recently about “the abuse of membership of our movement to gain
positions of state power in order to use these positions for personal
enrichment and benefit”. The trade-unions federation Cosatu, the ANC’s
smaller partner in government, claims there is a “massive crisis in our
public service” and that politicians’ business conflicts represent “a
dangerous cancer eating into the body of our democracy”. The ANC has
given a team the task of drawing up new guidelines for members with
corporate interests. “There’s the danger that politics becomes a proxy
of competition for resources,” says one member of the party’s National
Executive Council familiar with the process, who requests anonymity.
“That’s something the ANC wants to nip in the bud.”...

...If unchecked, corruption could invite a populist backlash that might
over time threaten the ANC’s political dominance and South Africa’s
macro­economic and political stability. Already, some of Mr Zuma’s
supporters are decrying the economic ascent of politically connected
people since Mr Mbeki entered office in 1999. Resentment towards the new
ruling class abounds on the Friends of Jacob Zuma website, whose
“Messages of Support” section – more than 100 pages long – makes for
disturbing reading. “Those black folks enriching themselves with the
spoils of our democracy will one day answer through a second revolution
against capitalists,” a man named Thabo warned in a recent posting....

However, Black Economic Empowerment (BEE), South Africa’s attempt to
redress the racially skewed patterns of ownership bequeathed by
apartheid, is in some cases blurring the lines. While most South
Africans outside the political fringes support BEE as a historical
necessity in a country that until recently aggressively disenfranchised
blacks, the process has been rife with unintended consequences.

BEE is a series of guidelines drawn up by government in consultation
with business during Mr Mbeki’s presidency. The rules require
white-controlled companies to do more business with majority blacks,
notably through the sale of equity stakes to black-controlled consortia.
At its best, BEE represents a pragmatic compromise between white capital
and black political power that will bolster the country’s future
economic prosperity and political stability. Middle-class blacks with
new jobs in business or the public sector are already an important
driver of South Africa’s 5 per cent rate of gross domestic product
growth as the country enjoys its longest economic expansion in years.

Some big companies, such as Old Mutual, the insurer, have used BEE to
bring in talented investors with the task of drumming up new business
among majority blacks. BEE guidelines requiring companies to favour
black subcontractors in tenders are helping to nurture a new crop of
small and mid-sized companies.

However, black empowerment has in some cases lent itself to cynical
manipulation, if not outright abuse. Many white companies have taken the
path of least resistance, choosing partners largely on the basis of
their ANC connections rather than any demonstrable business acumen.
South Africa’s white-dominated business “doesn’t know what’s going on in
government half the time”, says one businessman with an intimate
knowledge of BEE. “Access to parties and decision-makers is denied, so
they rely on BEE partners to access them on their behalf.”

South Africans differ as to whether the phenomenon of politically
connected “BEE tycoons” such as Tokyo Sexwale – a member of the ANC’s
NEC whose companies hold options on BEE stakes in mining company Gold
Fields and Barclays-owned bank Absa – is regrettable or to be expected.
Joel Net­shitenzhe, head of government communications, argues that most
talented blacks under apartheid were drawn to activism for want of other
choices and are understandably now gravitating toward business. “People
with the courage and the initiative to participate in the struggle are
in various leadership positions,” he says. “Naturally, as you open up
[business] opportunities, they are the ones who would take advantage of
those opportunities.”....

....However, the new elite is extremely narrow and incestuous,
increasing the potential for conflict. South Africa’s current rulers
rose from a small group of ANC activists, many of whom became acquainted
in exile. Several members of Mr Mbeki’s cabinet are married to each
other or to prominent business figures. Ms Mlambo-Ngcuka was lambasted
in the media recently when the news emerged that she had flown on
holiday to the United Arab Emirates last Christmas at taxpayers’ expense
and stayed as a guest of the Emir in Abu Dhabi. Although the visit was
originally described as private, it was later revealed that her
entourage included Thuthukile Mazibuko-Skweyiya, a businesswoman with
interests in oil and minerals and wife of Zola Skweyiya, social
development minister. Ms Mlambo-Ngcuka’s husband Bulelani Ngcuka, also
on the trip, runs a prominent BEE company active in property.

Some BEE deals have arguably harmed the public interest. In a widely
criticised transaction concluded last year, the black-controlled
Elephant Consortium bought 6.7 per cent of Telkom, South Africa’s
dominant fixed-line telecommunications provider and one of the country’s
largest companies. Elephant is headed by Andile Ngcaba, a former
director-general in the department of communications. This job gave him
inside knowledge and oversight of Telkom, whose high tariffs have been
identified by analysts as a bottleneck impeding the South African
economy. Mr Ngcaba’s investment partners included Smuts Ngonyama, ANC
spokesman. Defending his role in the deal, Mr Ngonyama was quoted saying
he had not joined the anti-apartheid struggle “to stay poor”....

....One danger is that the next generation of South Africans may come to
see politics or government service as a path to riches. This may already
be happening. The ANC Youth League, while radical in its rhetoric, now
counts many members with expensive cars and business investments,
exposed during the collapse of the Kebble empire. Some ANCYL members who
benefited from deals with Kebble now claim he defrauded them.

However, the Kebble affair contains a cautionary tale for the new South
Africa. For all the cars and other gifts auditors claim the mining
magnate bestowed on political allies, not one of the BEE deals he
concluded survived his business empire’s collapse.

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