Former Reserve Bank employee and now senior economist at Efficient Group, Dawie Roodt, says there are 170 billion good reasons why the state would want to get its hands on the assets of the Reserve Bank.
He says last year’s failed attempt by the public protector to alter the mandate of the South African Reserve Bank may be a prelude of what’s to come.
Assets worth R170 billion are reflected on the Reserve Bank’s balance sheet as belonging to the state – most of them unavailable for state spending. The state will have to borrow R224 billion in the current fiscal year to finance its budget, and will be looking for any cash it can lay its hands on.
Of the R170 billion Reserve Bank assets belonging to the state, R70 billion was accumulated when Trevor Manuel was finance minister and tax revenues exceeded budget projections. The economy was powering ahead and foreign inflows meant too much money was in circulation, with the danger that inflation would ratchet out of control. An amount roughly equivalent to R70 billion was transferred from the state to the Reserve Bank to take some of this money out of circulation, but with the agreement that this money could not be used for state spending in the future. It was a smart idea by Treasury, which seems to have anticipated that a future administration would make a claim on this money. These funds now sit on the Reserve Bank balance sheet as a liability to the state.
The Reserve Bank also holds about R100 billion in forex that belongs to Treasury, but this too may only be used for foreign currency transactions, and is not available for domestic state spending.
Roodt says the state would love to get its hands on this money to help solve some of its budgetary constraints: “R170 billion would solve a lot of problems, like SAA, Eskom and other state-owned entities, which have huge debt obligations falling due. I suspect this was the reason the public protector last year brought out a report recommending a change in the Reserve Bank’s mandate. Though this was rejected by the High Court, I believe we may see further attempts to weaken the Reserve Bank.”
Last year public protector Busisiwe Mkhwebane attempted to have the Constitution amended to change the Reserve Bank’s mandate, which is to protect the value of the currency. The Constitution also requires the Reserve Bank to perform its functions “independently and without fear, favour or prejudice”, but in consultation with the cabinet.
Mkhwebane also ordered Absa to repay a R1.12 billion Reserve Bank bailout stemming from its acquisition of Bankorp in the 1980s. Absa and the Reserve Bank are opposing this, and the matter is currently before the court. The attempt to alter the bank’s mandate was rejected by the North Gauteng High Court, but Roodt believes that this was not the final attempt to capture the Reserve Bank.
Zimbabwe is best remembered as the country that clocked up a jaw-dropping inflation rate of 231 million percent a year.
That insanity came abruptly to an end in 2009 when the country adopted the US dollar and South African rand as the official means of exchange.
How did it get to this Olympian inflation rate? The same way it always happens, by rampant money printing.
Less well known is what happened immediately after this. The ruling Zanu-PF party lost its outright majority in the 2008 election and was forced to share power with the opposition Movement for Democratic Change (MDC). In came opposition member of parliament Tendai Biti as finance minister, and in a 30 minute speech to parliament he announced the end of virtually any form of government interference in the economy. No more exchange controls, no more price controls, no more import permits needed. Government was getting out of the business of trying to regulate the economy.
Within weeks, shortages of fuel and food had vanished and once-empty supermarkets were stacked to the roof. Inflation, which just a year previously had been doubling every few hours, fell to minus 7 per cent. Within two years, Zimbabwe’s inflation rate was the lowest in the southern Africa region. The economy grew at an average 8% a year over the next four years, albeit off a bombed-out base. Zimbabweans could scarcely recognise the country in which they were living. Entrepreneurs were making money hand over fist. They were buying cars, going on overseas holidays and sending their kids to the best private schools.
This free market experiment came to an end in 2013 when Mugabe won outright control in an election most believe was stolen, and reverted to form, reintroducing exchange and other controls.
If crisis makes its own opportunity, here is a case in point. Zimbabwe had hit such a low ebb, it was ripe for the kind of radical free market economics that frighten the bejeezus out of other countries.
Regulators have an innate fear of anything that moves freely and without hindrance. Take exchange controls, which we Africans have endured our entire lives. South Africa has had exchange controls since the apartheid years, a policy mindlessly extended under the African National Congress-led government.
The great fear is that removing exchange controls will lead to a flight of capital and all the attendant dangers that implies to the balance of payments, inward investment and tax revenue.
Zimbabwe’s experience is quite the opposite. Government tax revenue shot up nearly eight-fold in four years, and there was no shortage of foreign currency. The balance of payments did deteriorate, but this was partially offset by much higher inward investment flows.
MDC opposition member of parliament Eddie Cross, an economist by training, says this flowering of economic prosperity should be heeded by other countries. “We could solve Venezuela’s problems (with inflation and shortages) in an hour,” he told Moneyweb.
That’s right. He is saying we should look at Zimbabwe as a model for economic reform.
Two months ago, Robert Mugabe was deposed in a soft coup after 37 disastrous years at the helm. His successor, Emmerson Mnangagwa, through cut from the same party political cloth as Mugabe, made a decent impression at the recent Davos confab, promising sweeping reforms and respect for democratic outcomes. Though as Cross points out, he hasn’t followed this up with substantive reforms.
Zimbabwe’s next election comes up in June, and there is a real chance the country will have an opposition party in government, or at least a coalition. That holds out the exciting prospect of a free market finance minister such as Tendai Biti once again taking over the country’s purse strings.
If that’s the case, Zimbabwe, with a population among the best educated in Africa, is a miracle waiting to happen. I’d put money on it.
This article first appeared at Moneyweb. Pictured below: Narius Moloto, head of trade union federation (NACTU).
There are now more people receiving social grants in SA than there are people with jobs.
Finance Minister Malusi Gigaba’s budget highlighted the predicament government finds itself in: there are 17.6 million people receiving grants, against the 16.2 million people with jobs in the country.
In 2001 there were 12.5 million people employed and just 4 million people receiving social grants, according to an Institute of Race Relations survey. The number of people on social grants has exploded more than four-fold in 17 years, while the number of official jobs has gone up just 30% over the same period. Aggravating the situation is the growth in public sector jobs from 2.1m to 2.7m since 2008. Public servants’ salaries – which are more than a third higher than the private sector average – now account for nearly half the annual budget.
“This situation is not sustainable,” Dawie Roodt, chief economist at the Efficient Group, told the Austrian Business Chamber at a post-budget briefing in Sandton last week. “I disagree that this is a conservative or reasonable budget, as some have claimed. It is an awful budget. SA has become a country of social upliftment, rather than a country of economic upliftment. We’re among the most highly taxed countries in the world, and there is no apparent recognition of how we got here or how we are going to get out of this mess.”
Rather than trying to focus on job creation, Roodt says the government should be looking at economic growth as the primary engine of job creation, flanked by privatisation, massive infrastructure development and a world class skills development programme.
Mike Schussler of Economists.co.za says a worrying aspect of the structural dependence being created in the country is that of the roughly 16 million people with jobs, 10 million are in the formal sector and only 7.5 million of those pay tax. “If you add people who are pensioners, we are on our way to having 19m people who are dependent on some form of social grant or pension. This leaves the few who are working to carry the burden. This cannot continue.”
The returns that South Africans receive on their taxes are abysmal. SA learners score among the worst in the world when it comes to maths and science, due in part to the high learners-to-educators ratio: 32 in SA versus 24 for the rest of the world. This is despite spending 22.5% of the budget on education each year. Social assistance will account for R197 billion or nearly 13% of the budget in the coming fiscal year. Coming in just behind this is interest spending, which will swallow R180 billion or 12% of the budget.
Narius Moloto (pictured above), leader of the Pan African Congress and secretary-general of trade union federation Nactu (National Council of Trade Unions), says while the tax base is becoming smaller, government welfare grants are ballooning out of control – a situation that is unsustainable, even in the short term: “The cash grants system is another form of political patronage and does not encourage upward progression in the economy. The way it is structured at present entrenches dependency. With some of this money that is being spent on social grants, we could have established cooperatives and micro-enterprises in poor communities with a view to permanently weaning them off welfare. That’s not happening and the programmes aimed at job creation are not working.”
One quick way to cut spending is to eliminate the provinces, which are little more than super-Bantustans with mini-presidents, says Moloto. “SA is over-administered. There’s huge duplication between national, provincial and local government. We can save billions a year by eliminating this duplication.
The Michael Komape trial wrapped up on Friday in the Limpopo High Court in Polokwane, with counsel for the family, Vincent Maleka, asking Judge Gerrit Muller to compel the provincial Department of Education to attend to the dire state of school sanitation in the province (Limpopo is one of nine South African provinces).
Five-year-old Michael drowned in a pit toilet at a school near Polokwane in 2014. Limpopo’s Department of Education has already admitted liability for the death. It now remains for the court to decide on the amount of damages to be awarded to the family, which is seeking compensation for emotional shock, trauma and grief.
The state has opposed calls for so-called Constitutional damages on top of the common law damages being claimed by the family.
Much of the argument in the last two days centred around whether the Limpopo Department of Education should be compelled to address the sanitation backlog of schools in the province, and by what means.
The court raised the prospect of a so-called structural interdict, which would likely compel the Department to address its sanitation backlog within a fixed time period.
Maleka (pictured right) argued against this on the basis that it would require each violation of the interdict to be argued afresh in court. The Department was unlikely to comply with a structural interdict, given its tardiness in addressing the existing sanitation backlog in schools, he said.
He asked instead for the judge to develop a common law remedy which would allow specific damages for grief, or alternatively for damages specifically related to violations of the family’s Constitutional rights, such as the right to life, dignity and equality.
He also asked for a declaratory order declaring that the Department has failed in fulfilling certain of its Constitutional obligations. Such an order would have a practical effect, said Maleka. It would hold the Department accountable for its violations of the Constitution, and it would vindicate the rights of Michael Komape and other learners in the province.
It would also give teeth to the Constitution, in that basic education envisaged by the Constitution is impossible without functional school toilets.
“There surely cannot be justice for Michael Komape if the defendants are allowed to plunder the public purse to pay the damages for their willful negligence without any further sanction. As we stated earlier, this case requires a judicial sanction that is exemplary and the declaratory order is an important component of the groundbreaking relief that we ask this Court to grant,” said Maleka.
Oral evidence in November last year showed the Limpopo Department’s sanitation and toilet system to be among the worst in the country. Even the Department’s own annual reports show the extent of the sanitation backlog in the province’s schools. The court heard evidence that funds earmarked for sanitation infrastructure went unspent several years in a row and were then returned to the Provincial Treasury.
In his heads of argument, Maleka pointed to the legacy of apartheid-era discrimination that afflicted rural schools. “We submit that the fact that Michael was an African learner living in a village in Limpopo and that he died in a school toilet is not a coincidence. It is precisely because Michael was an African learner at a rural public school that he died and that he died in the manner in which he did. It is difficult to argue that this could have happened to a learner of another race or in an urban school. It follows then, that this type of pain, suffering and grief could not have befallen anyone other than a rural African family.”
Judgment was reserved. It remains to be seen whether this turns out to be a precedent-setting case that provides backbone to the Constitution and holds government departments accountable for their actions and omissions. This is the outcome being sought by Maleka and public interest law firm SECTION27, which is representing the Komape family. If the Komapes are successful in their case, it will force government departments to examine their actions in light of Constitutional rights to equality, dignity, and to life. It will force government departments to re-prioritise budgets to avert the kind of tragedy that befell Michael Komape in 2014.
As we launch into the New Year, there are some positive developments to consider as we ponder the plight of over-indebted consumers, the push-back against entitlement politicians, and the message trickling across the Limpopo from Zimbabwe as it confronts a glimmer of hope.
The change of leadership in Zimbabwe is a signal to the rogues in our own country who expect to lead forever, as if this were an heirloom of entitlement. Adolf Hitler promised the 1,000 year Reich, Ian Smith of Rhodesia said his racist party would likewise rule for 1,000 years, Jacob Zuma said the ANC would rule till Christ returned. It’s time to start counting the days and months whenever some fool politician starts making predictions.
Old man Bob Mugabe has gone, along with his wife and entourage, and the new incumbent, Emmerson Mnangagwa, promises free and fair elections and a revitalised economy. Hell, they’re even talking of giving some stolen farms back to whites. I’m betting on Zim becoming the great African success story of the next five years, regardless of which party eventually rules. Mnangagwa is no saint, as the families of slaughtered Ndebele in the early 1980s will tell you (when upwards of 20,000 supposed political opponents were shot or buried in mine pits), but he understands what has to be done to claw the country back from the brink of outright ruin that it has faced for close on 15 years.
There is no other way out of this mess: Zimbabwe has 90% unemployment, and the only way to create jobs is to let the private sector in. A SA-style Truth and Reconciliation Commission is needed to expose the architects of the plunder and fratricide that sent nearly half the population into exile. That’s a crime against humanity, and while the army cleaves tightly to Mnangagwa’s tailcoat, this will not happen. But in time it will.
Meanwhile, foreign investors are waiting on the sidelines, but they will not jump until there are solid assurances that their property will not be confiscated by arbitrary indigenisation rules and policy changes. This realisation will eventually trickle across the Limpopo to SA, where investment has similarly evaporated.
2017 will go down as the year the tide turned against corruption. President Zuma will soon be gone and his successor, assuming it is Cyril Ramaphosa, will start to rebuild the ruling party around traditional ANC Charter values of human rights and respect for voters. He will have to if the ANC has any hopes of maintaining a majority in the 2019 elections. 2017 was also a year in which the courts started to rein in lawless behaviour by the banks, making it harder to repossess homes for a pittance.
It’s that time of year again when we celebrate Christmas and recount the achievements and follies of the year. The ANC goes into its elective conference this weekend to pick a new leader, with Cyril Ramaphosa taking the lead in several polls. If elected, he has one monumental job ahead of him to slow the runaway train of corruption and graft that has characterised the ruling party elite under President Jacob Zuma.
We’re a bit better informed about events now, thanks to some sterling work by Jacques Pauw whose book The President’s Keepers seems to have been read by just about everyone with an email address (thanks to the soft copy version that did the rounds, in case the security establishment tried to pull it). It’s a depressing read for the most part, but fall-down funny in places. It concludes that Zuma had to become president to stay out of prison for more than 700 charges of corruption. This utterly compromised man allowed the Gupta family to capture state-owned companies and make ministerial appointments. We learn that Zuma would not submit his tax returns before or during his presidency, lest the source of his funding became known. He was surrounded and pampered by criminals and gangsters. It’s astonishing just how close these guys managed to get to the levers of power.
We also learn that here is a man who has never had an honest job in his life, and whose bills were paid by others – including former President Nelson Mandela who gifted him R3m to clean up his debts, and get his affairs in order. This didn’t last long. Around the time Zuma defenestrated Thabo Mbeki as leader of the ANC, he tried to open a bank account with Absa Bank.
From The President’s Keepers by Jacques Pauw: “Benefactors showered Zuma with white envelopes while banks were at his feet. When the cash-starved politician approached Absa in the late 1990s to open an account, his bad credit record with Standard Bank and Nedbank should have disqualified him. But the business centre manager wrote in a memorandum that Zuma was likely to be elected South Africa’s deputy president soon and that his ‘bank balance was the last item on his mind, with more important matters regarding the country and the province to focus on’
“Within three months, Zuma’s account was heavily overdrawn.”
Surely a case of reckless ending if ever there was. In any event, Zuma will soon be history but may still pull strings from behind the scenes, particularly if his former wife Nkosazana Dlamini-Zuma wins the race for leader of the ANC. She will have her hands full keeping her ex out of court and away from the mountain of charges against him.
One of the great victories of the year is the triumph of the free press in SA against an onslaught from the dissemblers in government. Bell Pottinger, the PR firm, is no more. It’s racially charged campaigns against “white monopoly capital” and in favour of “radical economic transformation” (code for theft) have been exposed for what they are – attempts to deflect attention from the crooks in government.
The Democratic Alliance has taken over the running of Joburg, Pretoria and Port Elizabeth (it’s run Cape Town for much longer) and has been drip-feeding stories of corruption under the previous ANC administrations to the voters. Another book by Crispian Olver, How to Steal a City, details how Nelson Mandela Bay “was entirely captured and bled dry by a criminal syndicate.” Olver is an ANC insider sent in to clean up corruption in the city. What the criminals wanted were the tenders so they could pillage the public purse: building, transport, you name it, they had it all wrapped up. Which explains why warehouses full of buses remain unused and thousands of houses paid for by the public taxpayer remain unbuilt. The scale and audacity of the theft is breathtaking. Olver is a brave man, who admits he had to have bodyguards to protect his life while investigating the criminal syndicate that took over the city.
Another victory is the call by the Parliamentary Standing Committee for Public Finance for an inquiry into banking abuses, including the use of “bouncers” to repossess cars without following the correct legal process; the repossession of houses and other assets without issuing so-called Section 129 notices (in terms of the National Credit Act) which notifies the debtor that legal action is about to commence unless the arrears are settled; and the issue of summonses by banks without attaching the original documents purportedly signed by customers. When challenged on this, the banks claim the originals were destroyed in a fire. This fire should have been designated a crime scene, since banks were able to foreclose on thousands of South Africans with recreated documents that – astonishingly – have been accepted by the courts.
And on this basis an estimated 100,000 homes have been repossessed by the banks since 1994. One of the oddities of SA law is that repossessed houses could be sold at sheriffs’ auctions for a fraction of their worth because the rules specifically disallowed reserve prices to be put in place. So in addition to losing a roof over their heads, bank customers were left with staggering debts to the bank. This is a form of debt slavery that most never recover from. The good news is this type of behaviour by the banks is no longer going to be tolerated by the courts. The new court rules require a reserve price to be put in place, so we will no longer see homes being sold for R10 and R100 as we have seen in the past.
Credit must go to activists such as King Sibiya of the Lungelo Lethu Human Rights Foundation and Advocate Doug Shaw, who have been calling the banks out on this nonsense for years. In November, the government gazetted new court rules which provide far greater protection for home owners – any application for repossession and sale in execution must include market and municipal valuations for the property. And banks will have to show that they have tried other less aggressive ways to recover their outstanding loans.
The law is at last recognising that the Constitutional right to dignity and housing takes precedence over a bank’s right to recover its loans. This will force banks to take a more humane approach to loan recovery, and provides far greater ammunition to customers in periods of financial distress.
I predict that there will be a few more major victories in the courts for abused customers. I am aware of several that are now close to finality. These victories will forever change the way the banks deal with customers.
It wasn’t just the banks that were dealt a snot-klap in 2017. Steinhoff’s accounting shenanigans has shown again that we should not always trust what we are told by the gatekeepers, such as the A-list accounting and law firms. KPMG and McKinsey were neck deep in Eskom’s corrupt activities, and have suffered dearly for their sins.
So there is plenty to celebrate as the curtain draws on 2017.
Michael Komape was five years old when he drowned in a pit toilet at Mahlodumela Primacy School in Chebeng Village, outside Polokwane, on 20 January 2014.
The shocking story made news across the world, and raised questions about the governance of Limpopo Province’s education department.
On Monday the Limpopo High Court in Polokwane will begin hearing a claim for damages by Michael’s family against the National Department of Basic Education and the Limpopo Department of Education. This case is set down for three weeks and SECTION27 is acting as the family’s legal representative, with Vincent Maleka from Thulamela Chambers as the senior counsel.
Michael’s parents, James and Rosina Komape, remember clearly the day he passed away, but are reluctant to talk of the details that will form part of their case against the state. It is apparent that the family has not recovered fully from the terrible events of that day.
The undisputed facts are this: On 20 January 2014 Michael fell into a pit toilet at Mahlodumela School and drowned in a sea of human faeces. Some hours later his body was retrieved by the fire department.
The toilets were demolished that same day and within weeks new toilets were erected in their place. The evidence of the dilapidation which claimed Michael’s life now lies buried underground at Mahlodumela School. Though some photographs of the deadly toilets were captured on a smart phone and will be presented to the court this week.
More than 225 applicants, mostly from Gauteng townships, have launched a suit in the Constitutional Court, claiming damages from the big banks for home repossession abuse. The applicants are also asking for a criminal investigation into banking executives involved in this abuse. This article first appeared in Groundup.
The applicants are claiming R60bn from the banks for unlawful repossession of homes since the Constitution came into effect in 1994. This figure is based on the average estimated loss of home equity value multiplied by the roughly 100,000 homes repossessed in SA since 1994. Home equity is the difference between the market value of a property and the amount still owing on a mortgage loan.
The Lungelo Lethu (“Our Rights”) Human Rights Foundation is the driving force behind the suit, and has spent several years putting the case together in collaboration with advocate Douglas Shaw.
The first applicant is Innocent Gwisai, whose home was repossessed and sold at auction for a fraction of its worth after he fell into arrears with his bank loan. Other applicants include Ernest Mashaba, John Mojaki, Solomon Nhlapo and Victor Zuma, whose cases of homerepossession were previously reported in Groundup.
Nedbank, Absa, FirstRand Bank and Standard Bank are cited as respondents in the case, as well as the National Credit Regulator, the Minister for Justice and Constitutional Development, the SA Human Rights Commission and the High Court Rules Board. All applicants had their homes repossessed after supposedly falling into arrears on their mortgage bonds. The homes were then sold at auction for a fraction of their market value through sheriffs’ offices around the country, according to the court papers. Shaw, who is representing the applicants, estimates homeowners have lost close to R60bn in foregone home equity as a result of the banks’ repossession practices.
South Africa’s sale in execution practices are considered among the most abusive in the world according to research by Shaw, since they allow for homes to be sold at auction with no reserve price. This has resulted in some homes being sold for as little as R10, and then on-sold by opportunistic buyers for hundreds of thousands of rands. In many cases, it is the banks themselves that are buying these houses at sheriffs’ auction and then selling them for a profit.
The applicants want the director of Public Prosecutions “to look into the criminal liability of the directors of each respondent bank for knowingly selling properties for less than their value after the constitution was introduced, and report back to this court within six months from the date of this order.”
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.
Mark Caruso, the CEO of Australian mining company MRC, has filed defamation suits against activists and lawyers opposed to mining ventures.
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.