How the Guptas inflamed racial tensions in South Africa

Written by Ciaran Ryan. Posted in Journalism

This article first appeared at Acts.co.za

The rise and fall of the Guptas and their capture of a president will be studied in political and PR classes for generations to come. The good news is they are a spent force.

For a lesson in how to capture a country, you might want to study the rise and fall of the Gupta family. Originally from India’s state of Uttar Pradesh, the Gupta brothers (Ajay, Atul, Rajesh and nephew Atul) arrived in South Africa in 1993 to set up a modest enterprise, Sahara Computers, that would serve as the cash engine to bankroll the capture of the country. These guys didn’t just dream big, they had a plan and knew how to implement it.

Over the next 24 years the empire expanded into mining, engineering, steel, newspapers and TV. But what’s more impressive is their astonishing political clout and their toxic influence on the racial climate in South Africa.

When journalists and opposition parties started exposing the extent to which they had captured the president and were making key ministerial appointments, the Guptas hired London-based PR firm Bell Pottinger to turn the tide of public opinion. It was at this point that racially inflammatory phrases such as “white monopoly capital” and “radical economic transformation” started spewing from the mouths of politicians. The intention was to stir anti-white tensions. We now know that Bell Pottinger dreamed up these phrases to deflect unwanted attention from their clients. This week Bell Pottinger’s CEO James Henderson issued some kind of an apology suggesting his firm had been played for fools by the smooth-talking Guptas.

“At various points throughout the tenure of the Oakbay (one of the Gupta companies) account, senior (Bell Pottinger) management have been misled about what has been done. For it to be done in South Africa, a country which has become an international beacon of hope for its progress towards racial reconciliation, is a matter of profound regret and in no way reflects the values of Bell Pottinger,” said the statement.

Whether Bell Pottinger can survive this remains to be seen, but the outrage across South Africa and beyond is something to behold. Even our billionaire deputy president and former trade union leader Cyril Ramaphosa, with one eye on the presidential post and another on the surging sea of anger, accused the PR firm of stoking racial tensions.

Banks cream it off bounced debit orders

Written by Ciaran Ryan. Posted in Uncategorized

This article first appeared in Moneyweb.

Fees charged by banks for bounced debit orders range from R5 to R150.

Banks are raking in between R500 million and R800 million a month from bounced debit orders. That’s a sizeable portion of the banks’ non-interest fee income each year for little more than running a piece of computer code.

Fees for bounced debit orders range from R5 for Capitec clients to R150 for Absa and Nedbank clients. The question arises why the fees vary from the reasonable to the ridiculous.

It’s a question bank customers in Australia, New Zealand and the UK started asking several years ago, leading to class action suits against the banks in these countries. The class action suits in the UK and Australia failed because the courts found the fees for bounced debit orders and other charges reasonable if they formed part of a basket of services. SA’s financial regulations are less prescriptive, so the chances of a class action suit succeeding here are much better, according to financial services legal consultant, Leonard Benjamin.

Defamation suits fly over mining controversies

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Mark Caruso, the CEO of Australian mining company MRC, has filed defamation suits against activists and lawyers opposed to mining ventures.

Social worker John Clarke

Australian mining company Mineral Commodities Limited (MRC) and its CEO Mark Caruso are suing six environmental activists and attorneys, including social worker John Clarke (pictured above) and environmental lawyer Cormac Cullinan, alleging the mining company and its CEO were defamed. Also being sued for defamation is Mzamo Dlamini, a spokesperson for the Amadiba Crisis Committee, an organisation formed in 2007 to stop mining of titanium in the Wild Coast area.

MRC has been involved in a long-running dispute with Pondoland community members over its plans to mine mineral sands at Xolobeni on the Wild Coast. Last year the Amadiba Crisis Committee lodged a high court application to have the Xolobeni Mining project on the Wild Coast ruled as unconstitutional. If successful, it will have far reaching implications for the mining industry in South Africa, as it will require companies to adhere to the international human rights benchmark of “prior, free and informed consent” of local landowners before any mining project can proceed.

Last year MRC announced its decision to disinvest from the Xolobeni Mining project and sell its shares to its BEE partner. It was originally granted a mining licence at Xolobeni in 2009, but this was revoked in 2011 because of unresolved environmental issues. Some environmental activists argued that MRC’s disinvestment was strategic, and will retain a crucial though low-key role in the mining project going forward. A new application to mine the area is currently with the Department of Minerals and Energy Affairs.

Also being sued for defamation are two attorneys at the Centre for Environmental Rights (CER), Tracey Davies and Christine Reddell, and activist Davine Cloete, who are accused of making defamatory statements about MRC’s subsidiary company Mineral Sands Resources (MSR) and its director Zamile Qunya during presentations at the University of Cape Town in January this year. This relates to comments during the presentation claiming poor environmental practices by the company’s Tormin mineral sands project on the West Coast.

All six are defending the summonses, claiming these are nothing more than SLAPP suits (Strategic Lawsuit Against Public Participation) intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defence until they abandon their criticism or opposition.

Cullinan, in his reply to the summons, says the defamation action constitutes an abuse of the court process, as “there is no reasonable prospect of a court finding that (Cullinan’s) statements constituted wrongful defamation…”. He defends his public statements as protected speech in that his comments were true or substantially true, a genuine expression of opinion, and in the public interest.

In papers before the Cape High Court, Caruso and MRC claim Clarke insinuated that the company was involved in the murder of Pondoland community activist Sikhosiphi “Bazooka” Rhadebe, who was gunned down last year by unknown assailants. This claim of defamation was based on an interview Clarke gave the Daily Maverick.

“The intention of (Clarke) in making the statements as aforesaid was to convey the innuendo that (MRC) had been involved in the murder of Rhadebe and resorted to criminal conduct, including murder, as a means of silencing and pressurising opposition to its operations and, by so doing, facilitating its ongoing operations, including the acquisition of mining licences,” says Caruso’s summons. “The innuendo is wrongful and defamatory of (MRC) and was made with the intention of injuring (MRC) in its reputation.”

Clarke, in his reply, says he was quoted inaccurately in the article and did not insinuate that MRC was involved in the murder of Rhadebe. Caruso appears to have doubled down on Clarke, expanding the numbers of defamation claims against him from seven to 18, representing a total damages claim of R5 million. This was after Clarke filed his response to the summons issued by Caruso and MRC.

Dlamini is also accused of defamation after apparently claiming in a radio interview that the company was involved in the assassination of Rhadebe.

Clarke has been an avid campaigner against mining on the Wild Coast, and often gets his message across in unorthodox ways (see below).

 

He says he never insinuated that Caruso or MRC were behind the murder of Rhadebe, though says his life has been threatened by certain community members opposed to the work he is doing (Moneyweb is in possession of the name of the individual alleged to have threatened his life).

Caruso also claims Clarke defamed MRC in a Cape Talk radio show when he accused it of human rights abuses, and of the “rapacious exploitation” of the Tormin mineral sands project, a beach sands project 400km north of Cape Town in which Caruso is involved.

Clarke replies that other than the misquote in the Daily Maverick, all other comments he made in respect of Caruso and MRC were substantially true and were made in the public interest.

Dlamini’s defence at this stage is largely procedural, claiming Caruso and MRC did not properly serve him with a summons.

The summonses served on the activists and lawyers claim MRC’s reputation has been damaged by the alleged defamations and it has suffered financial damage as a result. Clarke denies any financial damage has been suffered by MRC as a consequence of what he has said, and that any damage incurred was self-inflicted.

Cullinan, a prominent environmental lawyer based in Cape Town, is also accused of defamation over an interview he gave on Cape Talk radio where he alleged MRC was engaged in a policy of buying off certain traditional leaders as part of a colonial-style divide and rule tactic. Cullinan also alleged that lists of supposed supporters of mining activity in the area contained forged names as well as dead people. Caruso argues that listeners are led to believe that MRC resorted to “criminal conduct, including fraud, to overcome opposition to its operations at Xolobeni (where the mineral sands operation is based)”, and that it bribed and corrupted third parties to support its mining operations. MRC and Caruso are each claiming a total of R1.5 million from Dlamini and Cullinan.

How Nedbank sold a family home for R10

Written by Ciaran Ryan. Posted in Uncategorized

Here’s a case where Nedbank repossessed a Katlehong home for R10. You read that right. Ernest Mashaba and his family have been put through a decade of hell and have been evicted four times, each time re-occupying the house, believing the bank had made a mistake. Here’s the kicker: Ernest Mashaba never missed a payment and has written confirmation that his mortgage loan is fully paid up. His story is little different from that of John Mojaki of Randfontein, who also has written confirmation from Nedbank that his loan is paid up. His house has also been sold behind his back. “The only way they will get me out of here is in a coffin,” says Mojaki.

 
Ernest Mashaba (pictured above with his son Sipho) and his family have been evicted four times from their home in Likole Extension 1 in Katlehong, near Johannesburg. Now they face eviction for the fifth time.

Each time the sheriff and “red ants” arrive to remove their belongings from their home, Mashaba and his family re-occupy the house they say they paid for in blood, sweat and tears.

“The house is mine,” says Mashaba. “I took out a loan with the SA Perm (later acquired by Nedbank) in 1993 and never missed a payment. I have paid for this house in full. So why am I being evicted?”

It’s a question GroundUp put to Nedbank, which replied as follows: “It is worth noting that there is a significant amount of time that has lapsed in these matters. As a result, the process of investigating such matters tends to be complicated and therefore very lengthy.

“We assure you that we take the issues that you have raised very seriously and will do whatever we can to resolve these issues for our clients. It is not in our nor the client’s interest to repossess properties. We also encourage and invite clients to contact us as soon as they experience financial hard times, so we can try to find the best solution for them.”

No-one, it seems, is exactly sure how Mashaba ended up in this position – least of all Mashaba, now retired after spending most of his working life as a security guard at the nearby Knights Hospital. In 1993 he took out a R41,485 loan with SA Perm to acquire his dream house in Katlehong. By all accounts, he diligently paid his loan off by way of a monthly R585 debit order. But in 2006, the sheriff arrived at the house and said it had been sold to a new owner. Some time before this, it seems Nedbank had taken a default judgment against him, though Mashaba never received a summons, nor was he ever shown the alleged judgment. And if he was in arrears, the bank never informed him of this nor of its intention to take legal action against him.

The price paid by Nedbank for Mashaba’s house at the auction was R10.

The price paid by Nedbank for Mashaba’s house at the auction was R10. You read that right. Nedbank says this is deceptive as it credited Mashaba’s account with the full amount of the loan outstanding. Yet Mashaba continued his monthly repayments, oblivious to the fact that his house had a new owner.

Be that as it may, Mashaba and his family have been put through a decade of hell, waiting for the next visit by the sheriff.

The first eviction was in 2006, when the Mashaba family’s belongings were dumped on the street. As soon as the sheriff left, they moved back as they believed there was a mistake. Their attempts to convince the sheriff that they were up-to-date on their payments fell on deaf ears. Mashaba and his family were evicted a total of four times – in 2006, 2007, 2009 and 2011. In 2015, Absa applied to the South Gauteng High Court for his home to be sold in execution yet again. A study of the deeds register shows that the house has been sold multiple times over the last 11 years. All of this happened behind Mashaba’s back, yet each time the sheriff turned up to evict him, he had to suffer the humiliation of having his possessions thrown onto the street.

In November last year the house went on auction and was sold to an estate agent. Mashaba attended the auction and approached the buyer with documents proving that he had bought and paid for the house in full. The buyer pulled out of the sale. Mashaba remains in his house.

His fight is far from over. The sale in execution order remains in force, so it may end up being auctioned again by the sheriff.

King Shaka International – an airport in desperate search of passengers

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Noseweek.

First costed at R3.15 billion, by the time Durban’s King Shaka International Airport was completed in 2010, it had cost anything between R7.6bn and R9bn. This kind of cost overrun is chicken feed when stacked against Eskom’s Medupi and Kusile power stations, but it set in motion a chain of events that helps explain some of the bizarre decisions coming out of Airports Company of SA (ACSA). King Shaka is one of the nine airports managed by ACSA. In February, Minister of Transport Dipuo Peters fired half the board of ACSA, ostensibly to strengthen it, but left in place CEO Bongani Maseko who was fingered last year in a forensic report that detailed several instances of procurement irregularities.

This is just one instance of political interference in the running of ACSA. A far graver interference was the decision in 2006 to force ACSA to build the King Shaka International Airport without a feasibility study having been carried out and in defiance of all commercial logic. This decision lumbered ACSA with crippling debt which it has been forced to service ever since.

In March this year, minority BEE (Black Economic Empowerment) shareholders in ACSA brought an application before the High Court in Pretoria challenging the “commercially illogical” decision by the airports regulator to lower tariffs by 35.5%, which would cut revenue by R1.8 billion by 2018 and remove all prospect of the company’s being able to declare a dividend to shareholders.

The tariffs went into effect on 1 April, but the matter has now been placed under judicial review. These tariffs benefit airline operators and passengers, but not ACSA shareholders, who long ago gave up hoping for a decent return on their investment.

Just a few years ago, in 2011, when ACSA had completed a massive airport upgrade programme, it was granted a staggering 133% increase in tariffs by the regulator. Why would ACSA now apply for a reduction in tariffs? None of this makes much sense unless, as minority shareholders have argued, one understands that ACSA has abandoned its commercial mandate due to political meddling. Minorities want nothing more than to sell their shares back to the state and have been trying for years to do so at something approaching fair value. Instead they have been offered 40% of net asset value.

The only buyer for these shares is the government which, nearly 20 years ago, lured investors into ACSA with promises of privatisation and an eventual listing on the stock exchange. Based on these promises, it got Aeroporti di Roma (ADR) to purchase 20% of the company for about R890m in 1998, or R8.19 a share. This valued ACSA at about R4bn at the time. When it became clear the government had no intention of listing ACSA, ADR sold its shares to the Public Investment Corporation (PIC) for R16.75 a share, making a decent return on its investment. No such luck for the minorities, who have now turned to the courts for relief.

Dudu Myeni’s time at SAA may be up

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Dudu+Myeni+XXXHistory was made this week when the SAA Pilots Association (SAAPA) and Organisation Undoing Tax Abuse (Outa) brought an action to have SAA chairperson Dudu Myeni declared a delinquent director.

As far as is known, this is the first time legal action of this nature has been brought against a director of a state-owned company. Dudu Myeni’s time at SAA may soon be up.

Last year finance minister Pravin Gordhan demanded a reshuffle of the SAA board as a precondition for extending a R15 billion guarantee to the technically bankrupt airline, but mysteriously left Dudu Myeni untouched. Her tenure as chairperson at SAA is up for review in September this year, so she may have vacated the chair by the time the legal case is argued in court. But SAAPA and Outa say they will pursue legal action against her regardless.

Should SAAPA and Outa win their case, Myeni will be barred from holding an executive or director position in any South African organisation for at least seven years. That would mean she would have to resign as chair of the Jacob Zuma Foundation and the SA Association for Water Utilities. In December last year the Kwazulu-Natal High Court ordered her to step down as chair of the Mhlathuze Water Authority for unlawfully extending the board’s tenure by six months.

We now know from Outa’s revelations surrounding SAA and the court case brought by Mhlathuze Water Authority’s suspended CEO, Sibusiso Makhanya, that Myeni has a habit of purging management and board members who get in her way. She’s done the same at SAA. The airline has had more than half a dozen CEOs in as many years, including Vuyisile Kona and Nico Bezuidenhout, virtually all of them departing in acrimonious circumstances. Meanwhile, the losses continued to mount.

The latest court case is likely to be a drawn out bare knuckle fight to the death. Myeni will argue – as she has done already – that reactionary forces within the airline are opposed to transformation, of which she is the champion. It’s always someone else’s fault. She went so far as to publicly attack her own pilots as spendthrifts living high on the hog in foreign destinations.

South Africa’s great road swindle

Written by Ciaran Ryan. Posted in Journalism

Joburg highwaysThis article first appeared in Noseweek (March 2017).

It’s long been known that South African motorists have been fleeced when it comes to road construction costs, but by how much has always been a matter of speculation.

Now we have a better idea. The Gauteng Freeway Improvement Project (GFIP) to upgrade the highways between Joburg and Pretoria, originally costed at R4,6bn in the mid-2000s for a 340km upgrade, ended up costing just shy of R18bn for 193kms. After a year-long study involving whistleblowers, road engineers and quantity surveyors, Organisation Undoing Tax Abuse (Outa) concluded that the 193km freeway improvement project should have cost no more than R8bn, even allowing for cost escalations and other contingencies. That’s a R10bn overcharge, enough to build 40 Nkandlas (the name of President Jacob Zuma’s taxpayer-funded private residence in Kwazulu-Natal).

The client in this case was none other than SA National Roads Agency (Sanral), which paid an average of R86.6m per kilometre, between two and three times what comparable roads in Africa (and SA) would cost.

If the R10bn cost overrun is correct – and several industry insiders claim it is – how did the construction companies pull it off? And why are no construction executives in jail for this swindle?

In 2006 there was a secretive road contractors meeting attended by Basil Read, Concor (part of Murray & Roberts), Haw & Inglis, Grinaker LTA and Raubex where the colluders agreed to allocate tenders for the construction of roads. At this meeting it was also agreed that those firms not interested in winning tenders would nevertheless submit “cover bids”, which are sham bids intended to lose while lending legitimacy to the tender process. The losers would receive compensation, or “loser’s fees”, from the winners.

How we miss Mbeki and Manuel

Written by Ciaran Ryan. Posted in Journalism

Their economic record beats anything that came before or after

This article first appeared in Moneyweb

Former SA President Thabo Mbeki

Former SA President Thabo Mbeki

If we are to measure our political leaders on economic performance alone, Thabo Mbeki was our best president in the last 30 years, and Trevor Manuel our best finance minister.

As the accompanying graph shows, President Jacob Zuma has been bad for growth, but arguably better than FW De Klerk, who had to contend with the tail end of apartheid and international sanctions – which deprived SA of the capital it needed for growth and investment.

President Nelson Mandela had a mixed performance, with economic growth veering between -2% and +2%, for many of the same reasons confronted by De Klerk. Foreign investors remained wary of SA’s democratic experiment, as shown by the sluggish growth in foreign direct investment (FDI), until Mandela ventured overseas and exercised his considerable charm in enticing investors to these shores. But it was Mbeki who reaped the benefit of Mandela’s international outreach. Under President Zuma, FDI growth has come to a virtual stall.

Mbeki delivered the most consistent economic growth – admittedly helped by a commodity boom which ended abruptly as his term of office came to a close in 2008 – and Trevor Manuel as finance minister for 13 years, until 2009 delivered the lowest budget deficits. Manuel’s steady hand on the fiscus was likewise aided by the aforementioned commodity boom, which fattened tax receipts and reduced the need for large budget deficits.