Mboniso Sigonyela
The two listed companies that have on their boards South Africa’s former defence minister, Joe Modise, who is embroiled in the government’s arms procurement scandal, still stand by him.
In so doing they risk damaging publicity, should he be arrested like his comrade, former African National Congress chief whip Tony Yengeni, for his alleged role in the R43-billion arms fiasco.
A spokesman for Modise, who chairs the Labat Africa and Dynamic Cables boards, told Moneyweb that the former defence minister is critically ill. ”He has scaled down his business activities and has restricted himself to a few meetings only at his home.”
The arrest of Yengeni makes it more likely that the country’s anti-corruption units may pounce on ANC stalwart Modise. His name often crops up in reports on the arms scandal. But the two empowerment companies have stood by him and seem prepared to take the risk of embarrassment should he be arrested.
Modise was among former ANC MP Andrew Feinstein’s ”top five” possible arrests to follow that of Yengeni. Feinstein’s opposition to the handling, and apparent corruption in the arms deal, earned him the wrath of his superiors in the ANC. He later resigned his seat.
There has always been speculation that the association with Modise is dragging Labat down. The share price has been hovering around the 20c level since the beginning of the year. This seems unfair given the company’s performance for the six months to June. Labat doubled its earnings over the period, reported a R15-million cash position, and is well positioned to gain from the rand’s weakness because of its strong dollar revenue.
Neither Dynamic Cables nor Labat was available for comment. But Labat CEO Brian van Rooyen has previously dismissed speculation on Modise’s impact on the share price. Instead he has attributed it to depressed investor sentiment, especially towards black empowerment companies.
Newspaper reports have also linked Modise to another controversial project, the Coega Industrial Development in the Eastern Cape. Moneyweb