The former unionist turned businessman and media mogul, Marcel Golding, hardly ever grants interviews. But he recently spoke to journalist and member of Parliament Ben Turok in a wide-ranging interview about his company, its owners and the ordinary workers who are benefiting. Turok started by asking him about when he first conceived of a trade union-owned company.
Marcel Golding : When I was at the height of the union era, there were about 700Â 000 people in the mining industry. Today there are only 300 000. [We needed] stronger independence for the unions and to find a way to become financially stable.
There were three things we wanted. One was investments and to change the way in which we generated subscription fees.
One of the things we pioneered was to take a percentage of the worker’s income. So, every time we would negotiate for another percent, that percent would go to the union.
The second issue: How, in a democracy, could the working people benefit from the economic transformation, how could they really become a stakeholder in the economy?
And then the third was that workers entering Cosatu were essentially focused on the political battle of bringing down apartheid. They did not focus on the traditional issues of trade unions, such as benefits for workers. I thought that it was appropriate that we also begin to focus on benefits for workers and their families. How do you make sure that the sons and daughters of miners get out of the grip of being miners and clothing workers? How could we create a platform for them to be educated and play a different role in this country?
We needed resources that could create wealth, and that led me and Johnny Copelyn and other people to debate the whole question of economic transformation. We came up with one model — which at the time was severely criticised — but we came up with a model that we thought was appropriate for mineworkers and clothing workers: an investment trust that is wholly owned by workers and their unions, but separated from their unions. The union’s dependants and families ought to be beneficiaries of the trust, but they should not be involved in the business.
You have the union at the top, and the Chinese wall between the union and the business is an investment trust. At the bottom you have the business. The investment trust is not the business. The investment trust is the custodian of the value that is going to be created, which will then be distributed to working people. The money is not to go to unions to make them self-sufficient, it is not to go to pay money to union officials; it goes to the families and clothing workers and others we believe should benefit from charitable donations.
But the trust is dependent on a business?
On a business that creates the wealth. That’s how I saw my role — to create the wealth, put it into the trust and then the trust decides how it will benefit the community.
What kind of business was it?
Johnny and I were working with two different unions. Johnny was working with the clothing and textile union and I was working with the mineworkers. I founded the mineworkers investment company and we pursued individual activities.
The first thing we did was buy a whole range of mining stores and list a company called Mothomo on the stock exchange, a private investment company that owned stores and clothing shops. We generated considerable wealth and it was the first time we took to buying and selling materials on the mines. Effectively, we harnessed the collective buying power of the workers on the mines. From a R3million investment we created a R30million base.
Then Johnny and I agreed that, instead of competing, we should join forces and share our assets. We established a joint company called Amalgamated Union Investments. It was a merger of the clothing and textile workers’ and the mineworkers’ investment companies. We pursued that for about two years.
You effectively became a businessman who benefited workers?
Yes.
You seem to have moved fairly naturally into the business environment, but not on the basis of self-enrichment, unlike many who have followed you. Why do you think that has happened?
One has to accept that as a natural consequence of democracy. Before, in apartheid, we had no choices; in a democracy, you have real choices.
But many of the people who have taken your trail have now seen economic enrichment. The choice is about making money — for most people.
Yes. You see, the problem we grappled with was this: How in a society dominated by capitalism can you create both collective wealth and individual wealth? The debate is not “I have been made wealthy by the process” but “can I get wealthy in the right proportion to the collective?”
But it seems to me that the sort of things that motivated you are not what motivates most people who go into business.
I suppose it is how you see the world. For us, we just see ourselves as social entrepreneurs.
How do you define a social entrepreneur? What is distinct about it as opposed to a conventional entrepreneur?
I think it is trying to make a meaningful impact in society through your business by creating jobs and opportunities, but also other things. We created new jobs; we created opportunity.
What do you actually do as a businessman? What is your job?
Well, I am chairman of Hosken Consolidated Investments (HCI) and, within the company, I have a very specific responsibility. I’m in partnership with Johnny Copelyn — the CEO — because it was our concept, our idea.
I spend a lot of my time in meetings or on the phone or evaluating opportunities that land up on my desk or meeting people about business opportunities. People ask, “Do you want to invest in this? Do you want to do this? Do you want to do that?” I spend a lot of time listening and a lot of time thinking. I don’t read as much as I would like to. I travel a lot to keep up to date on what is happening globally.
That’s a nice portrait of a chief executive. What is it that your companies do?
HCI is a private equity company. It is listed on the stock exchange. It is “private” because 90% of its assets are unlisted. So, to get access to the value of those underlying assets, you have to buy HCI shares.
We are not a traditional private equity business because we do not normally buy assets and sell them. When we get good assets, we hang on to them — we buy more.
So you’re a holding company?
We’re a private investment holding company.
How many companies do you hold?
Twenty.
What do they do?
Well, we are big in two sectors. Our biggest sector is casinos, gambling, hotels. That’s the Tsogo Sun group, where we own about 70 hotels across Africa and South Africa and some of the largest casinos in the country. The second area we are involved in is media. We own e.tv in partnership with VenFin, which is part of the Rupert group. We own Yfm, which is one of the largest regional radio stations in Johannesburg, and then we own a whole lot of other businesses. We own the Golden Arrow Bus Services in Cape Town and we own Clover, one of the largest milk companies.
You are all over the place. Radio, gambling, transport …
That is what private equity is about. It is about taking opportunistic positions on businesses.
How do you feel about your casino role, in light of your earlier positions on ethics?
You cannot treat people as children, but we have a social responsibility to educate. At the same time, people must decide whether or not they should gamble — that is their choice.
Is there not a contradiction between your social ethos and what you do through HCI casinos? Isn’t there a conflict there? You know all about capitalism. There are fundamental moral issues and ethical issues in capitalism, as we all know, and once you go into business, you land in the middle of those conflicts. In the casino industry, these are severe. How would you respond to that?
These businesses have created many, many jobs in the country because they link to hotels, they link to a whole range of other entertainment places. They are huge cash generators. And because these assets are owned by the union, a lot of the money goes back to the union.
What money is that?
The profits and dividends. They come through the company back to the holding company, so in the end the final owner beneficiary would be the workers’ investment trust.
Of the casino?
Yes.
I’m sorry, I am not with you. I thought it belonged to HCI?
Yes, but HCI has shareholders and one of the largest shareholders is the Southern African Clothing and Textile Workers Union’s (Sactwu) investment company. They are the largest shareholder. They own about 40% of the company. They own more than R3billion in HCI.
They are beneficiaries of that income and that income is going back into bursaries, et cetera. But let’s talk about the philosophical issue here. If we were not doing it, who else would be doing it? I am not a gambler, but these are businesses that created huge jobs and opportunities. They are huge cash generators and substantial private money goes back into philanthropic purposes, into the investment trust. The other important point is that I do not want to punt myself as the custodian of the moral values of this society.
But you said that one of your roles was to be the custodian of the values of the business?
Yes, but I am not going to elevate myself above society and say, “I think gambling is wrong. I think drinking is wrong. I think smoking is wrong.” I might have a view on it, but I am not going to propagate those particular views. I don’t drink, I don’t smoke, I don’t gamble. I suppose as one gets into a democracy these are the real conflicts and differences that one has to manage. These are the choices that people have and we recognise the problems. Yes, people gamble their money. The moral choice is for each one to decide and not for me to decide.
Now, let’s go to e.tv, which we all know and watch. I am a particularly strong critic of the kind of American junk that our TV — not only e.tv, but also SABC — shows. There is a moral problem within our country and I would argue that some of our youngsters are misbehaving because of these films. Do you have to show sex and violence? I’m putting you on the spot.
I don’t mind being put on the spot. In the end, it gets back to this fundamental proposition of who am I to decide what is good and what is bad. If I show things they want, they will watch my station. If I show things that they do not want, they will not watch my station. If they do not watch the station, I lose money and I go out of business.
The fact of the matter is that there is an important balance between commercial issues and social responsibility and we have that. We provide an enormous amount of public service in the economy through social responsibility.
How?
The commercial films are the films that are watched. I cannot ignore that. If I don’t show them, I will lose an audience; if I lose the audience, I lose money. I can then close the business, and if I close the business, all the 400 people who work for e.tv will not get any work.
A large part of what we show on e.tv, 45%, is local content. Three hours a day of news, local shows. We do shows that people want, that affect their life, their contradictions, their aspirations.
About 90% of our staff have never worked in TV before. I mean, people go from the call centre, answering telephones, to becoming producers. My secretary became the head of publicity. That is the other side of the business. We had a staff function over the weekend and I told them it is not only about money. For a number of people, opportunities have been given to them so that they can live out their dreams. During apartheid, they could never get a job like this because it was only whites and Afrikaners that predominated. Now 90% are black, 70% African.
But it doesn’t mean we don’t give whites jobs. There are a lot of youngsters that come here, they work for nothing, they want to come. Whoever wants to work, whoever has got the enthusiasm, who’s got the discipline, who wants to contribute — here is a space for them, as long as we see those things. I’m not interested in their colour, I’m interested in their attitude.
Tell me more about social responsibility.
Well, HCI has a huge HCI Foundation. It is capitalised with about R400million in value. It distributes hundreds of bursaries every single year to disadvantaged students. That is besides the bursaries that are distributed by Sactwu.
Sactwu?
Sactwu’s foundation is also big. Their asset base is about R3billion.
Which is invested in HCI?
Which is invested in HCI, but they get dividends. They spend about R20million a year on philanthropic activities and in HCI we spend a similar amount of money — R20million a year. And our business is only 10 years old. We give bursaries, we do healthcare and big Aids initiatives and we are looking at housing as a third opportunity.
You know, Cyril Ramaphosa said in Time magazine that he believes the accumulation of some basic capital is needed before you can go into production. But critics say that BEE is just about making money out of stock exchange transfers, without creating new value by productive activity. They are not producing anything. What’s your take on that?
The world is changing. Some of the greatest contributors of wealth are intellectual entrepreneurs. There is no more physical production. I think people are losing an appreciation of the complexity of the society that we are moving in. Some of the greatest creators of wealth are in services.
One has to accept this fundamental proposition that the best allocator of resources is the market. It is not the only, but probably the more efficient, allocator that will decide. Do we give dividends back to the shareholders, to allow them to fund bursaries, or do we use the money to invest to create more wealth? That’s the reality.