Smuts Ngonyama, the African National Congress’s head of presidency, originally stood to be one of the biggest individual beneficiaries from the possible sale of a R6,6-billion stake in Telkom to a consortium led by former director general of communications Andile Ngcaba.
Ngonyama has repeatedly denied that he has a financial interest in the deal, saying he is merely an adviser, sanctioned at ministerial level to pull other parties together.
Asked by several journalists if he had shares in deal, he said he did not, and suggested he would be happy to accept whatever compensation Ngcaba saw fit to give him.
”I said: ‘Andile, it’s your call. But I didn’t do it for any material gain, and don’t feel obliged,’” he told the Financial Mail in mid-November.
But according to a document acquired by the Mail & Guardian he was in fact, one of several ”strategic” shareholders in Ngcaba’s Elephant Consortium, and was represented as such to the funders of the deal.
The list of shareholders, which appears in documentation prepared by Elephant in an effort to allay the concerns of state financing bodies, raises fresh questions about the most controversial empowerment transaction of 2004.
Confronted with the document Ngonyama repeated his denial, saying that if he was a shareholder he did not know anything about it.
Others on the list include Dali Mpofu, architect of the information and communication technology (ICT) empowerment charter, and Jim Myers, who, as the local head of Texas-based telecoms firm SBC, played a central role in the original purchase of the Telkom shares by international strategic equity partners.
A shareholder in the consortium told the M&G that its structure had now changed to accommodate the wishes of the Public Investment Commissioners (PIC).
”Jim Myers is no longer a shareholder, neither is Smuts,” he said.
Myers’s initial involvement in the consortium may nevertheless sharpen concern over the ”revolving door” approach that enabled Ngcaba to parlay his policy choices at the Department of Communications into potentially massive private wealth.
Myers worked closely with Ngcaba during negotiations that led to the 1997 purchase of 30% of Telkom by Thintana — a joint venture between SBC and Telekom Malaysia.
He also played a headline role in the controversial shareholder agreement between Thintana and the government that locked in a high degree of management control for Thintana, and was one of the lobbyists responsible for persuading Ngcaba to extend Telkom’s monopoly period.
He did not return calls requesting comment.
Barend Hendriks, who worked in the South African diplomatic mission in Malaysia from 1995 to 1999, is also on the list.
A political firestorm broke out last month after Ngcaba announced that he and Wiphold CEO Gloria Serobe would lead a group to buy the shares, which amount to 15,1% of Telkom. Thintana had already sold the balance of its stake on the open market.
Criticism from the Congress of South African Trade Unions (Cosatu), the Democratic Alliance, and the ICT community focused not only on concerns over ”elite empowerment”, but on possible conflicts of interest. These arise from Ngcaba’s role in creating legislation that protected Telkom’s monopoly rights, and his new job as chairperson of Dimension Data, which competes with Telkom in various areas.
Ngonyama attracted particularly intense criticism from Cosatu general secretary Zwelinzima Vavi, who accused him of complicity in the ”parasitic accumulation of capital”.
The PIC, which manages government pension funds, stepped in, with the support of Minister of Finance Trevor Manuel, to buy the stake ahead of Elephant, but it is now negotiating to sell the shares on to the consortium if price issues, a sound financing model and a more broad-based structure can be agreed on.
The document dates from before this intervention. It is described as ”an addendum to the offering memorandum” after negotiations with Thintana and the banks funding the deal — Nedcor Capital and Absa Corporate and Merchant. It reveals in detail how Elephant unsuccessfully tried to persuade the PIC and the IDC that it had addressed their concerns.
Ngonyama is on record as saying his role was to facilitate an agreement between Ngcaba and Serobe, who were at one stage competing for the stake.
This claim is borne out by the structure of Elephant, which, at the time the document was drawn up, had two component substructures — Lion and Buffalo — that housed the Ngcaba and Serobe interests respectively. Each planned to take 33% of the consortium, with a further 33% set aside for broad-based groups. These, the document claims, could not be identified before the deal was finalised.
It is striking, given the prominence assigned to Serobe’s role in early accounts of the deal, that Wiphold had only a minority stake in Buffalo, with the rest going to ”Directional Value Add Partners” such as Myers, Ngonyama, Mpofu, Hendriks, Blue Label, and Africa Venture Partners, an investment firm.
The precise scale of Ngonyama’s, Mpofu’s, Hendriks’s and Myers’s private interests are not clear, but they appear to be substantial.
Each is listed in the document along with unnamed ”key strategic individuals” who together account for a fifth of Elephant’s shares. Were the consortium to succeed in buying the entire stake warehoused by the PIC, its portion would translate into more than R1,5-billion at current prices — although the figure is likely to be trimmed by financing costs.
Both Ngonyama and Mpofu referred all queries about the deal to Serobe .
Serobe declined to answer any questions, saying she would prefer to keep her business out of the newspapers.
”Any document that doesn’t come from me, you can ignore,” she said, and went on to warn that journalists speculating about the deal would ultimately be embarrassed, because the final outcome would be ”very credible”.
”Rather write a nice beach-party article,” she suggested. ”People are already in Plett, and this is of no interest to them. Write about bikinis and fun, and that kind of thing.”
Related articles
Elephants in SNO country?