Schabir Shaik’s trial, the Oilgate controversy and the intense public debate over the Telkom empowerment process have focused attention on whether the Malaysian model — with its interpenetration of politics and economic empowerment — is being duplicated here.
In the mid-1990s South African state officials made a pilgrimage to Malaysia to see its empowerment policy, bumiputra, in action.
After the advent of the New Economic Policy, introduced in 1972 following brutal ethnic strife, indigenous Malays vastly expanded their economic share relative to the dominant minority Chinese. Malay ownership of listed companies rose to 25% by 1990; rapid economic growth lifted millions out of poverty and racial tensions seemed subdued.
“In 20 years Malaysia created a whole new class,” said Loyiso Mbabane of the University of Cape Town’s Graduate School of Business.
The South African policy wonks were following business people — often senior African National Congress figures — looking for opportunities in the boom years before the Asian financial crisis.
“Almost every empowerment icon got an early break in Malaysia,” said a well-informed businessman. The bigger transactions included investments by state oil company Petronas in Engen, and Malaysia Telekom’s purchase of an effective 15% stake in Telkom, while deals were cut in tourism, construction and IT.
Malaysian firms were comfortable in South Africa, in part because they expected the ANC to involve itself in empowerment just as Mahathir Mohammed’s United Malay National Organisation (UMNO) had driven bumiputra.
In Malaysia, political deployment is entrenched and largely unabashed. Party officials are placed in senior positions in companies large and small, state-owned and private, and UMNO itself invests directly.
This has created an officially sanctioned cronyism, which has seen the party’s chosen “winners” grow hugely wealthy — particularly when they are bailed out by the government. But it has also created a certain political accountability, which enables UMNO to keeps its hands on the levers of the economy while pursuing an ambitious development agenda.
It was this, and the benefits of economic participation, that initially attracted the ANC to the Malaysian model, and early indications were that it would go the same route.
Ultimately, as the Durban High Court has heard, the ANC adopted a different approach to empowerment, strongly influenced by Malaysia but without the same reliance on crony relationships or direct party management of outcomes.
But Oilgate, the Telkom privatisation and the Shaik trial show that elements of the Malaysian model persist, apparently without the political control Mahathir exercised.
The appointment of Penuell Maduna and Max Sisulu at Sasol, for example, has not turned the company into the government’s darling. Sasol has come in for robust criticism from both President Thabo Mbeki and Public Investment Commission chief Brian Molefe over perceived heel-dragging on transformation.
Nevertheless, former communications director-general Andile Ngcaba will cream off R700-million from Telkom’s privatisation, which he helped organise, and the ANC’s Smuts Ngonyama will also receive a “substantial” sum. But the government, in the form of the PIC, did intervene to limit the bonanza. And Oilgate, which looks like a very Malaysian quid pro quo, in South Africa is considered a scandal.
Shaik’s belief that the Malaysian model would prevail apparently gave him unjustified confidence in Jacob Zuma’s protection.
“In South Africa it has not been suggested it is appropriate to use political connections to secure business,” said Mbabane. To the extent that this approach had marked local empowerment, he argued, business was as guilty as the politicians.
“A few years ago it was considered acceptable for a company to pick up someone like Cyril Ramaphosa on the basis that he would reduce your political risk because he was a member of the ANC’s national executive committee,” he said. “Business is unashamed about hiring highly skilled black individuals, then saying they’ll add value through political connections and ability to win contracts. It takes two to form a corrupt relationship.”