world stage
Belinda Beresford
Reminiscent of a blonde Benoni bombshell, Old Mutual is to export itself on to the international stage and have an image overhaul. Whether the change from a South African mutual society to an internationally listed company brings it the same success that moving to Hollywood has done for Charlize Theron remains to be seen.
As far as the financial markets are concerned, Old Mutual has been South Africa’s sleeping giant. With a reported 30% share of South African life business, Old Mutual plc is likely to be one of the three largest companies on the Johannesburg Stock Exchange. It is expected to be in the benchmark FTSE 100 index of the top companies on the London Stock Exchange.
Old Mutual’s shift to the United Kingdom means that South Africa’s major heavyweights will or are planning to have primary listings overseas. This prospect has stirred debate about the risk of South Africa losing its family silver. Old Mutual received government approval after overcoming government sceptism at the prospect of another major institution leaving the country.
Minister of Finance Trevor Manuel said the size of the Old Mutual plan made it unique, and it would provide many people with their first “direct stake in the economy” through the demutualisation share windfall.
The government’s concerns were heard in Manuel’s statement: “Firms will not be allowed to delist from the JSE to list offshore. Only dual listings in which the firm retains its primary listing in South Africa will be considered.”
Old Mutual chair Mike Levett said the moves provided a “win, win, win” situation for the organisation, its policyholders and Southern Africa. Old Mutual would benefit from easier access to capital – especially hard currencies such as sterling. Inclusion in the FTSE 100 is advantageous. Many international investment companies are required to invest at least partially in such shares, and they will be required purchasing for companies running index-related unit trusts and mutual funds.
But the move was negatively received by one New York-based analyst who specialises in South Africa. He said: “I think it’s terrible the asset of the nation is moving to London for no viable reason.” Analysts have voiced concern that South African companies may have a tough time competing in an international arena. Old Mutual will face competition such as AMP and Fidelity.
But the analyst said the news could be good for the rand, which is likely to strengthen as investors will need rand denominated securities.
The government gave its approval after certain guarantees were made. Old Mutual is to stay South African, with assets remaining here. Exchange control approval will be needed to export any assets and it will come under the South African regulatory and tax authorities.
Merrill Lynch has estimated that if Old Mutual shares had been available on December 10, they would have been worth between R11 and R14 a share, giving the company market capitalisation of R33- billion to R41-billion. This figure was calculated on assumptions about the future of Old Mutual and circumstances around the conglomerate which may be incorrect. So when the company’s shares do hit the trading screens the price could be much higher or lower.
Good news is that Old Mutual’s financial details will be more open to scrutiny as it is forced to comply with international accounting rules.
The effects of Old Mutual’s demutualisation and listing plans will be most immediately felt by the 3,2-million policyholders about to gain a windfall of free shares.
Old Mutual has finally released details of its demutualisation. Each qualifying policy- holder gets 200 shares, plus another share for each R300 of value of the policy, and another share for every R100 of the “with profit” part of the policy. Full-time employees of the Old Mutual group or financial services subsidiaries at the beginning of this year will also qualify for free shares.
For those policyholders wanting to convert their shares into cash, Old Mutual will offer future shareholders a “keep/sell option” where the company will sell the shares when it lists, and not charge any commission. The price will be dependent on interest from institutions to whom Old Mutual will offer unwanted shares.
@`Slim Danie was hit squads’ banker’
T he United Kingdom Court of Appeals was this week presented with sensational affidavits claiming that Danie Cronje, Absa’s chair since 1997, co-ordinated secret funding for the previous government’s dirty tricks operations.
The affidavits provide detailed information about the secret relationship between the banking giant and the former South African Defence Force’s directorate of covert collection and the infamous Civil Co- operation Bureau (CCB), essentially a government-sponsored hit squad.
The papers were compiled by Michael Oatley, a former senior member of Britain’s intelligence agency, MI6, who was also a former under-secretary of state in the British government.
Oatley says Cronje “was the most senior person responsible for the financial and banking arrangements, supporting operations carried out by the covert security networks of the old regime”.
Oatley was recruited by businessman Julian Askin to research Absa’s close relationship with the National Party’s covert operations to bolster his long- running court battle with the banking giant, which has been waged in the UK and South Africa. Askin became embroiled with Absa in late 1989/early 1990 during the famous Tollgate saga.
Oatley was an officer of the UK’s secret intelligence service (military intelligence department) for 32 years.
He was roundly slagged off by the Financial Mail in March last year, when that newspaper cast serious doubt on his motives, suggesting his alarmist report at the time might be intended simply as part of a marketing campaign:Askin and Oatley, it said, had done “little more than promise big [but had] delivered little”.
This time round, though, Oatley is more descriptive. Askin’s arrest in Italy after he fled to avoid arrest in South Africa was “brought about by the influence of the then South African ambassador to Rome, Glen Babb, using the credit and connections … built up over years during which Italy had covertly acted as a major supplier of military equipment to South Africa in contravention of international sanctions”.
Rather more pertinently, Oatley describes how he went about collecting evidence from South African covert operatives. They were prepared, he claims, to provide information only if Oatley guaranteed they would not be personally identified because they believed they, or their families, “would face violent retribution if it became known to Cronje or Absa that he [they] had discussed these matters with me”.
Cronje, they said, was widely known as “Slim Danie” – the word “slim” being described by Oatley as Afrikaans slang for clever (tricky).
Oatley alleges that Cronje was responsible for “a number of years for the funding arrangements of DCC [the directorate of covert collection] and its subsidiaries, and of other special forces units. He controlled by the holding and disbursement of funds allocated for the use of these units … and had a complete and detailed knowledge of all the covert organisations and front companies established by DCC.
“Cronje was also involved in the misappropriation of large sums of money which were abstracted from covert funds and taken out of the country … He had sole responsibility for arranging foreign currency transactions in support of covert operations.”
Oatley’s affidavit concludes that Askin, for whom arrest warrants in South Africa remain valid, would put his life in immediate danger should he return to this country. Quoting a senior South African Police Service officer with whom he says he spoke last month, Oatley says “he understood very clearly why Askin was regarded as a serious threat to the interest of leading members of the Afrikaner business community … If Askin were to be arrested and imprisoned in South Africa, he said, he would certainly not survive.”
When the Mail & Guardian asked Cronje for an interview this week, Absa’s group consultant (special projects), Christo Faul, responded: “You will no doubt have seen from the papers served in this matter, copies of all of which we assume you have received from Askin, that his allegations are denied under oath both by Absa and Cronje.
“We have sought the advice of our solicitors and counsel instructed in these proceedings, who have advised that it would be inappropriate for us to grant interviews at this stage of the proceedings.”
Pretoria advocate Eberhard Bertelsmann, who represented victims of apartheid death squads during the Harms commission hearings into alleged dirty tricks operations in the 1980s, is cited by Oatley as being at the receiving end of an intimidatory campaign of innuendo by telephone.
Calls were made to his home when he was not there and were aimed at Bertelsmann’s wife, and sometimes implied that Bertelsmann was engaged in an extramarital liaison.
These calls suggested Bertelsmann was under observation, a fact Oatley says was confirmed on two separate occasions when bugs planted to intercept his telephone calls were discovered. These devices were typical, says Oatley, of those widely used by South Africa’s covert operatives.
Contacted in Windhoek, Bertelsmann declined any comment but his own evidence, in the form of an unsigned affidavit – Bertelsmann says he was denied permission by the Pretoria Bar to sign the document – is unambiguous.
Bertelsmann has represented the families of murdered activists Anton Lubowski and David Webster as well as present Minister of Justice Dullah Omar and Director General of the Office of the Deputy President Frank Chikane.
Discussing the Harms commission, Bertelsmann considers the roles played by various CCB operatives, including “Slang” van Zyl, Ferdi Barnard, “Chappies” Maree and Calla Botha. These men denied complicity in the murders of Lubowski and Webster, but Barnard was later found guilty of Webster’s murder and Maree, Van Zyl and Botha were cited by a Windhoek inquest as being involved in the Lubowski killing.
The relevance of these associations become clearer after Bertelsmann makes it plain that he was informed that he was targeted during hearings of the Harms commission for elimination. He says an attempt was later made on his life when the braking system of his car was sabotaged.
Bertelsmann says that from 1997, he was involved in investigations relating to the “lifeboat” provided to Bankorp (later Absa) and immediately became aware he was again under both telephone and visual surveillance.
Subsequently he established that Absa “had instructed a private detective agency to investigate the identity of my clients as well as the movements of some who have provided information to Askin”.
These investigations were carried out by “`Slang’ van Zyl and `Chappies’ Maree [who were] instructed by Absa, through Van Zyl’s private detective agency, to carry out the investigations”.
Bertelsmann makes it plain that his information is that Askin’s movements were monitored, that any communications system he employed was scrutinised and that his life is in danger: “Askin’s life would be at extreme risk if he were to come to South Africa at any stage and for any purpose.”
All these allegations are roundly rejected by Cronje. In an affidavit to the court submitted last month, Cronje says insinuations that Absa has any intention of harming Askin or people who gave him information “are denied in the strongest possible terms”.
Cronje also rejects any suggestion that Bertelsmann’s involvement in the investigation of the Bankorp “lifeboat” resulted in him or his clients being placed under surveillance by Absa.
And Cronje flatly denied that Absa retained Van Zyl and Maree to do this work – although he does confirm that Van Zyl’s detective agency, Tactical Risk Control, was employed to investigate three insurance claims on behalf of Absa Insurance.