Unions and black business are being wooed by casino king Sol Kerzner with an offer of free shares in a gambling venture, reports Jenny Cargill
TRADE union federation Cosatu is part of a consortium negotiating with gambling magnate Sol Kerzner to bid for the lion’s share of gambling rights in the new South Africa.
And Kerzner and his Sun International group of hotels are offering the consortium a whopping sweetener — free shares in the enterprise which could be worth up to R1-billion.
Their scheme: a joint venture to plan gambling resorts. The consortium would be given its shares for nothing, presumably because it would help Kerzner tie up key casino licences.
One possible early development under consideration is the Riviera Resort on the Vaal Dam, currently owned by the other major hotel group, Southern Sun. The consortium has already been taken on a helicopter tour of this complex. There has also been a suggestion that Gallagher Estate in Midrand, also owned by Southern Sun, might be on the cards for a gambling lift-off.
The consortium, which also includes the smaller union grouping, the National Council of Trade Unions (Nactu), and such black business organisations as the National African Federated Chamber of Commerce (Nafcoc) and Foundation for African Business and Consumer Services (Fabcos), is being coy about its existence. But it is known to have had a number of discussions with Kerzner and his Sun International group of hotels about a joint gambling venture.
The consortium’s co-ordinator is lawyer Patrice Motsepe, who would not confirm the existence of the consortium. But information about the consortium has been confirmed by a number of reliable sources, including Cosatu and Sun International representatives. An announcement is expected soon, possibly next week.
Cosatu investment advisor Johnny Copelyn, who is party to the discussion, confirms that a consortium has been formed, but said a deal with Kerzner’s Sun International “was not the only route; there are a number of alternatives”.
He added: “The consortium hopes to participate in the applications for casino licences. But it is not helpful to comment on how it does that.”
Cosatu could face some criticism from its affiliates: one, Saccawu, was just this week involved in a dispute with Sun International.
Businessman Nthato Motlana is understood to have attended some meetings of the consortium, while development agency Kagiso Trust pulled out early on in the discussions. Kagiso directer Eric Molobi was not available for comment.
Less clear is the involvement of the other hotel giant Southern Sun, which has a 20 percent holding in Sun International. Meyer Kahn, chairman of SA Breweries, which owns Southern Sun, denies any involvement with Kerzner, but says SAB is talking to a variety of groups about gambling interests.
Sun International MD Peter Bacon says the consortium is just one of a number of groups, including provincial governments, with whom his company is in discussions. “We have had discussions with Southern Sun. Remember, Southern Sun is a shareholder in us,” he added.
Audrey Coleman, former human rights activist and now a member of the PWV provincial government in charge of the gambling portfolio, says she is not aware of the consortium or of any discussions with Kerzner. She notes that the Gambling Board is not yet fully constituted — it awaits the appointment of a chairman. In addition, it still has to make recommendations to the government. Agreements, therefore, would be “premature”.
Kerzner has already negotiated with the Eastern Transvaal provincial government on a new R400-million casino development in Witbank. Also, his gambling empire is now stretching to the United States, with the Montville development; and he has inveted in the Bahamas and is eyeing Israel.
If the new Gaming Board follows the recommendations of the Howard Commission of Inquiry into casinos, only 10 licences will be granted nationwide. Clearly, a PWV casino would be the pick of the bunch and a Kerzner/Cosatu/Nactu/Fabcos/Nafcoc consortium would have a strong chance of getting it.
A government hard-pressed to finance reconstruction and development might be tempted to exact enormous sums of money for licences, as Australia has done. This would favour big players like Kerzner.
Cosatu’s Copelyn argues that unions throughout the world support themselves financially through investments. Given the federation’s urgent need for funds because of foreign donor cutbacks, Cosatu recently launched the Cosatu Holding Company.
Copelyn said it was important for union investment activities to operate “at arm’s length” from union activities.
But Cosatu spokesman Neil Coleman, who is not aware of any discussions with Sun International, says the investment company is very much in its formative stages.
* Jenny Cargill is the editor of BusinessMap SA, an information service dealing with “new policy directions in South Africa”.