As a regular reader of the M&G I often admire your excellent work in investigating and exposing malfeasance. However, the article “How the Dutch rapped Naspers over the knuckles for tax, while its BEE scheme flopped” (online, 1 September 2016) and “Unveiled: Naspers’s Dutch courage and BEE belly-flop” (print, 2 September 2016) lacks basic research and fact checking.
The article vilifies Naspers for being commercially savvy and managing its tax affairs like any multinational corporate entity in the world. It further tries to conflate two entirely unrelated matters and uses that as the basis for innuendo.
The separate matters are as follows:
One: Naspers is in a tax dispute in the Netherlands where it supposedly has a token presence. In various countries Naspers sometimes gets tax rebates; sometimes it pays in more. Naspers is constantly discussing elements of tax with several tax authorities and some aspects will go to arbitration in courts. Unlike some internet companies, Naspers has a high effective tax rate – the consolidated rate has consistently been between 30 and 35% of profits in the past years. In addition Naspers recognises that the tax it pays is an important element of its broader economic and social contribution to the countries it operates in. In the past financial year the group paid over R12 billion in taxes in the key countries in which it operates.
The innuendo of a token presence in the Netherlands is rather humorous: the group employs 128 people in Hoofddorp, including the CEO, Bob van Dijk.
Two: An investment in the Media24 Welkom Yizani BEE share scheme was less profitable than an investment in Naspers shares on the JSE would have been. This is obviously true and amounts to comparing apples and oranges.
In South Africa Naspers has two group subsidiaries: MultiChoice and Media24. Both companies launched BEE share schemes in 2006. MultiChoice’s Phuthuma Nathi scheme is in fact very successful. As an illustration, a person who invested R2 000 when the scheme was launched now has shares valued at close to R30 000, having yielded a total dividend of R10 400 to date.
Since pay television has performed better than print media (which is in decline globally), the MultiChoice scheme has obviously outperformed the Media24 scheme.
When Welkom Yizani launched it was oversubscribed five-fold. In 2008 we were hit by the global financial crises, slowing economic growth and the disruption of print media by the internet. In light of the headwinds Media24 is facing and the effect this has had on Welkom Yizani shareholders Naspers has forgiven a total of R762-million debt in the scheme. This means the scheme is now debt free.
While the media industry globally will remain challenging in the years ahead, Media24 is widely respected for its innovation and diversification to ensure growth for its shareholders.
I am disappointed that the M&G has conflated two entirely separate issues in an attempt to fabricate a narrative which simply cannot be substantiated.