In respect of the rapid decline in the value of the rand in November and December one is surprised that no mention is made by South African economists and analysts that the decline commenced on the first trading day after Dimension Data wrote off $3,5-billion of investments in the United States. In the wake of this write-down the Lex column in the United Kingdom Financial Times commented that it would appear that, aside from mining conglomerates like Billiton and Anglo American, South African companies listed abroad have signally failed to make any impact in the global market and that almost all of their revenues were still predominantly derived from activities in South Africa. In view of the poor record of investments by South African companies it was difficult to understand why the imminent listing of Investec on the UK market would prove any more successful. South African companies are fast developing a reputation for making poor investments, as exemplified by the Didata write-down and the purchase of an asset management company by the Old Mutual at an over-inflated value. Old Mutual have since written off 700-million and sold two of their offshore companies at a loss. One should recall that Old Mutual also closed two other companies soon after listing in the UK (one in Hong Kong and one in the UK). Bankers and investment analysts claim these are only paper losses and that there is no loss of investment capital. More recently Woolworths have written off the much smaller sum of R104-million of US investments.
In view of the perceived failure of South African corporate governance it is not surprising that there was a run on the rand as international investors are not unlike a shoal of sardines as evidenced in every bear market and it is not surprising that the rand is now recoverring.
The Myburgh Commission should look at the implications of these write-downs on the value of the 15% to 20% asset swops that were used by these companies when listing abroad. The commission should also investigate how Old Mutual can offer non-resident shareholders the opportunity to transfer their South African shareholdings to the UK register and what implication this has on exchange controls (I was made such an offer). Hassan Asmal, London