A headline in one of the country’s largest newspapers a few weeks back told us that five of the members of the African National Congress’s national executive committee (NEC) have amassed R1,5billion from empowerment wheeling and dealing.
The Sunday Times based its story on the publication of its annual Rich List, which calculates the wealth of leading South Africans based on their shareholdings in JSE-listed companies.
The five — Saki Macozoma, Cyril Ramaphosa, Popo Molefe, Mohammed Valli Moosa and Smuts Ngonyama — have collectively raked up wealth of R1,5-billion and are part of a small coterie of well-connected ANC leaders who have been dubbed the usual suspects, because they feature in so many black economic empowerment (BEE) deals.
Ngonyama is a member of the Elephant Consortium, which has a R6-billion stake in Telkom and is ranked fifth on the Rich List. The other four NEC members are ranked 35th, 36th, 64th and 65th respectively. Other prominent ANC members who feature on the list are Patrice Motsepe (fourth) and Tokyo Sexwale (24th).
A review is now under way in the ANC to limit the number of BEE deals any individual can conclude, and to set up rules to govern the private interests of ANC members.
Remarkably, though, based largely on the same Rich List, a handful of whites have done extraordinarily well through their close association with empowerment.
Just four of these individuals have collectively amassed at least R1-billion. They are John Copelyn, Mark Wilcox, Robert Nisbet and Marc Ber.
Copelyn, one place ahead of Macozoma and two ahead of Ramaphosa, is in 34th place on the Rich List. He is the CEO of holding company HCI, which has sprawling interests, from e.tv to casinos. Copelyn’s fortune is worth R525-million, according to the Rich List.
The former unionist says the shares he owns are valuable because the HCI share price has been among the best performing on the JSE, having escalated from R1,60 four years ago to R47. This excludes dividend payments.
“Among the reasons for this success is the fact that institutions owning about 280-million out of 380-million shares in HCI voluntarily sold their shares back to the company in January 2002 for R2,37, despite advice from the company that the underÂlying value was significantly higher, and despite public statements by Marcel [Golding] and myself that we would not be selling our own shares.
“This is the primary reason that Sactwu [South African Clothing and Textile Workers Union] succeeded in concentrating its shareholding in HCI. Likewise Marcel and myself.”
Golding, a former parliamentarian, occupies 48th position on the Rich List, with assets worth R360-million.
Copelyn says he and Golding have been at the helm and that “the success of the company has, to some extent, been the result of our success in managing it.
“These successes include turning around e.tv, which most wise investors wrote off as unavoidably bankrupt, including our international partners Warner Brothers, who we bought out (cheaply as it turned out) at R13 to the dollar.”
Other opportunities identified by HCI include Golden Arrow buses. The Tsogo Sun group, Johnnic, Yfm, Mettle, Clover, Johnson Crane Hire, BSG and Syntell.
Copelyn says HCI has provided a multibillion-rand capital base to Sactwu members and their families. “It has developed its own foundation focused on social development and capitalised this at about R400-million, half of which was a donation from Marcel and myself.
“This foundation provides bursaries to about 700 students who wouldn’t be able to afford university and technikon fees on their own.
“There is hardly a management team in the country that has made as significant a contribution to growing a social base for broad-based black empowerment as we have done.
“I don’t believe I should be targeted because I am white,” says Copelyn. “It should make no difference if I was as black as the majority of shareholders and directors I work for, or as white as the rest of them.”
Wilcox, who is the 60th richest South African, chief financial officer of Mvelaphanda, has assets worth R252-million, according to the list.
Wilcox has built his fortune as the second-largest shareholder after Tokyo Sexwale in the empowerment conglomerate.
Sexwale has assets worth R978-million. Wilcox, whose shareholding in Mvelaphanda is roughly one-third that of Sexwale’s, did not respond to a request for comment.
The Rich List says Macozoma’s stakes in Standard Bank and Liberty Life through holding company Safika are worth R520-million.
Not on the list is Safika’s financial director, Marc Ber, who owns 10% of Safika. Macozoma holds 20%.
Safika says its directors value Safika Holdings at R1,45-billion. “This takes into account the estimated value of Safika Holdings’ underlying investments, less the debt related thereto.”
This valuation is somewhat lower than the Rich List, with Macozoma being worth R280-million and Ber about half that at R140-million.
While the Elephant Consortium makes fifth place on the Rich List with assets of R6-billion, Newshelf — the largest single shareholder in MTN, controlling a R14-billion stake — is not included on the list.
MTN says that, as of December last year, Newshelf had 14,62% of MTN’s total voting rights. Nisbet has 5,6% of Newshelf. MTN says the Newshelf transaction, where its shares were bought from state pension fund administrator, the Public Investment Corporation, “was actually a buy-in by management and eligible staff, but weighted to support BEE”.
“The computation of the value of the participation ratios can only be performed in December 2008, as the funders participate in the upside of the value created through growth in the share price,” says MTN.
“The computations are complex and interdependent on numerous factors but, to give some perspective, if the current share price was appropriate in December 2008, then the value at that time of Nisbet’s participation in Newshelf, assuming that full vesting takes place [only 50% has vested to date] would be less than R100-million.”
Queen BEE
The Peotona Group, led by Cheryl Carolus, has been prominent in recent months, obtaining stakes in De Beers, the IQ Business Group and Fenner SA, and making deals with La Farge Industries and La Farge Mining.
Former First Rand executive Wendy Lucas-Bull, a 15% shareholder in Peotona, says it includes a Section 21 company. “My role is running the development company focused on job creation through smart partnerships.” She says all Peotona’s transactions are 100% debt financed, so the net asset value of the company is zero. It also has no cash flow; the directors meet their own costs. Value will accrue over time, assuming that dividend and capital growth exceed the cost of interest.
She says beneficiary trusts within Peotona are likewise encumbered with debt. While she sees cash flows to be positive in the long term, at the moment the trusts rely on donor funding and the private sector to support their activities.
Lucas-Bull says her passion is to make a difference to the country’s development. — Kevin Davie