Things just keep getting better for Patrice Motsepe. The mining magnate and soccer boss is South Africa’s first black dollar billionaire. But even as he catapults up the wealth stakes, it is unclear just how broad-based one of his key deals are.
Motsepe practised as a lawyer until 1994, when he founded a contract mining company called Future Mining. African Rainbow Minerals (ARM) was formed in 1997 and bought marginal mining shafts the following year. Ten short years later, he has managed to accumulate massive wealth from two primary sources: ARM, which is Harmony Gold’s empowerment partner, and a Sanlam shareholding.
Last week, Business Report said that ARM had transferred 10% of its shares into a broad-based empowerment trust, but it had refused to disclose the beneficiaries — a stance contrary to new corporate governance principles issued by the Public Investment Corporation (PIC).
In 2004, Sanlam announced it would sell an initial 8% of its shares to empowerment consortium Ubuntu-Botho. If performance targets were met, a further 4% of shares would be transferred to the consortium. By December last year, Ubuntu-Botho’s stake had risen to 9,8% of Sanlam.
The deal occurred after much criticism of earlier black economic empowerment (BEE) transactions, which were not broad-based in nature, and was meant to benefit as broad a base as possible. Motsepe put the consortium together and was tasked with finding the broad-based beneficiaries. Now it appears that there are two contradictory versions of the transition.
According to Who Owns Whom, an authority on wealth and ownership in South Africa, Motsepe has a beneficial interest of 9,74% in Sanlam. By August 28, when the company last calculated his wealth, this was worth R4,69-billion.
His ARM holdings are worth twice this — R9,96-billion at the end of August. ARM itself calculates that Motsepe’s personal stake in the company is worth R10,09-billion, as this is the value of the shares held by ARM Investments, a private company controlled by Motsepe’s family trust, as of September 3. This gives him a personal fortune of about R13-billion or just more than R15-billion if ARM’s later figure is used.
As is usual for these types of calculations, this wealth estimate does not take account of any debt Motsepe might hold.
Motsepe’s personal fortune, of up to R15,59-billion, is worth $2,15-billion at today’s prices, with a R7,24 exchange rate against the dollar. If Forbes rounds the number upwards, as is usually the case, he would be listed at number 432 on the magazine’s rich list. He would then tie with Donald Gordon, the founder of Liberty Life and only the third South African, after Nicky Oppenheimer and Johann Rupert, to be ranked on the list of billionaires.
But Motsepe is in good company. His sister Bridget Radebe is widely held to be the country’s wealthiest black woman and heads Mmakau Mining.
Problem is, Motsepe is supposed to hold only about 5% of Sanlam’s shares, according to Sanlam and its 2004 circular to shareholders, which details the transaction. Motsepe himself has not responded to questions about his Sanlam shareholding, sent to him on Monday by the Mail & Guardian.
Sanlam itself admits that it does not know the names of actual beneficiaries other than Motsepe, but made available a presentation on the structure of Ubuntu-Botho, provided by the empowerment group.
The major player in Ubuntu-Botho was a company called Sizanani-Thusanang-Helpmekaar, or Sizanani for short, which is majority-owned by Motsepe and which holds 55% of Ubuntu-Botho. Motsepe is the only director of this company and we assume that the full 55% accrues to him.
It is difficult to discover who the other beneficiaries of Ubuntu-Botho are as they are blandly referred to as “the Broad-Based BEE Group” and “the Sanlam Ubuntu-Botho Development Trust”. These two entities hold 25% and 20% of Ubuntu-Botho’s shares respectively.
According to the presentation provided by Sanlam, there are 18 investment entities, which make up the broad-based grouping. The structure certainly sounds impressive. Nine of these are provincial companies and two have trade unions as beneficiaries: the Sadtu Investment Company, Sihold, and the Nehawu Investment Company.
There are also two women’s entities, the Abafazi-Basadi Ubuntu-Botho Investments Company, which benefits women entrepreneurs, and the Ubuntu-Botho Women’s Upliftment Trust. There is a trust for broad-based church groups and a trust for youth.
Certain Sanlam employees also benefit, including non-executive directors. Four percent of Ubuntu-Botho is reserved for BEE groups and another 1% was bought by black-controlled company Metswale.
Ubuntu-Botho says that all nine provincial companies are up and running, share certificates have been issued and letters of authority have been received for the trustees. Unusually, Sizanani funded the participation of its other two partners to the tune of R62,5-million. Once the debt is paid off, the trust is supposed to have up to R60-million available for annual disbursement.