COSATU Media Monitor, 5 February 2010

Black economic empowerment (BEE) - a key government policy intended to redress the wrongs of the past that left South Africa's black majority economically disenfranchised - has failed.

That was the message yesterday when Kgalema Motlanthe, the deputy president, delivered the inauguration speech at the first meeting of the BEE Advisory Council.

Motlanthe stepped in when President Jacob Zuma, the chairman of the council, cancelled to take two days leave, after a week of torrid publicity about his personal life.

Zuma launched the council late last year after delays of more than two years.

"The percentage of black-owned companies registered at the JSE is disappointingly low," said Motlanthe.

"We also have to admit that the 'broad-based' part of BEE has seemed elusive. In the main, the story of black economic empowerment in the last 15 years has been a story dominated by a few individuals benefiting a lot."

Adding that broad-based economic empowerment was intended to benefit all sectors of the previously disadvantaged population and not a few individuals only, Motlanthe urged people to look at empowerment more broadly, "beyond business deals and shareholding in companies".

"We have to think creatively about ways in which we can increase the extent to which communities, workers, co-operatives and other collective enterprises own and manage existing and new enterprises and increase their access to economic activities, infrastructure and skills training."

Minister of Trade and Industry Rob Davies told the meeting that his department would be analysing the impact of the implementation of broad-based BEE on an annual basis. Empowerment targets would be adjusted as required.

He emphasised that the impact of broad-based BEE, particularly the big deals, needed research.

At its first meeting yesterday, members of the council, including Jerry Vilakazi, the chief executive of Business Unity SA (Busa), talked about investigating the sustainability and structure of BEE deals, because some did not seem to change the lives of the poor.

This could mean the end of BEE deals where performance is tied to the share price. Most of these deals collapsed when the global financial crisis kicked in two years ago.

Because they were financed through special purpose vehicles (SPV), BEE partners ended up in debt when the financial markets slumped.

The SPV structures have attracted widespread criticism from BEE practitioners and observers in the past two years.

"Most members of the council raised their concerns about the appropriateness of these structures. We discussed that the council would have to be empowered with enough resources to deal with this," Vilakazi said.

These comments reflect the country's deep disenchantment with the empowerment process, which has come to be seen as a means to instant wealth for people with political connections and influence, while ordinary people have largely continued to live in poverty.

Service delivery protestors, trade unions, opposition parties and community organisations used this failure and the growing wealth gap to slam the government and its transformation policies, which began with Nail and Metlife in 1997.

In recent years, even where high-profile empowerment deals have included provision for share schemes for staff and community groups, consortiums led by big names have taken the lion's share.

Motlanthe was also critical of gender transformation, pointing to the small percentage of black female managers who occupied top and middle management levels of private and public organisations.

The first meeting of the council will be in the next six to eight weeks, where a constitution will be adopted.

Azar Jammine, the chief economist at Econometrix, said this talk was misdirected, adding that the government had to focus on education to have employable people.

1.2 Spin doctors give bosses edge over union

By Terry Bell, Business Report, 5 February 2010

The first casualty when war comes is truth, an adage from 1917 that remains valid today. And not just with officially sanctioned butchery and mayhem; truth can be crippled during lower-level contestation between political parties and on the industrial front, either by malice, conscious manipulation or simple misconception.

In every strike, at times of wage negotiation deadlocks and other stand-offs between employers and workers, propaganda pours forth - mostly on the side of the employers. This is the province of the spin doctors, those who massage facts, sometimes to the point of wholesale fabrication; providing answers that frequently confuse rather than clarify.

For the most part, unions do not possess the wherewithall to hire spin doctors and their responses often lack the sophistication of those from the other side of the industrial divide. In these situations, documentary evidence becomes vital, as does persistent questioning that is not deflected by often confusing and contradictory answers.

The ongoing case of the Transport and Omnibus Workers' Union (Towu) and the controversial transport company SA Roadlink provides a good example.

For several years, Towu and the company have been at loggerheads over working conditions and union recognition. A series of fatal accidents and cases of unroadworthy vehicles, pulled off the road by police, highlighted claims by the union that the company was in breach of various regulations; that it was cutting costs to a dangerous degree.

"But while there were many complaints, nothing ever seemed to be done about this," says Towu general secretary Gary Wilson. So the union last year tried a new tack: SA Roadlink was reported to the Advertising Standards Authority.

Towu maintained that the company falsely claimed in its advertisements that there were pretrip safety checks on all coaches, that there were two drivers assigned to every long-haul journey and that drivers were tested before employment and given "advanced driver-skills testing every three months".

The allegations were not refuted by the company. However, it was pointed out that, between September and December last year, "a new management and new policies" had been put in place.

As a result, all the complaints except that of skills testing every three months did not apply and the complaint was only "partially upheld".

The union celebrated: "We take credit for these things having been done because if we had not made such a fuss they may never have happened," says Wilson. But he feels there was also a cost: a tougher line against the union.

"Not so," says SA Roadlink's new media officer, Lumka Oliphant. She also supplied a report presented in August to the parliamentary portfolio committee on transport. Prepared by Road Traffic Management Corporation (RTMC) chief executive Ranthoko Rakgoale, it claimed that, in terms of "bus crashes", SA Roadlink had a better road-accident record than most other transport operators.

What she did not point out was that the report was rejected outright by the portfolio committee, which ruled that it was highly distorted and had not compared like with like.

Rakgoale was requested to redraft and resubmit a report on bus accidents that compared the records of long-distance public transporters and the ratio of accidents that resulted in injuries and deaths.

No new report has been submitted. However, Rakgoale has had his hands full since September, following the leaking of a confidential financial audit report into the affairs of the RTMC.

Gross financial mismanagement is alleged in a corporation where executive directors last year apparently voted themselves a 389 percent pay rise.

Such machinations have largely passed the union by: officials and organisers are more interested in gaining recognition and in fighting battles over what they claim are unfair practices. But one such skirmish backfired this week.

The union had lodged a complaint that Zinyashe Patrick Mutema, who claimed he was a driver, was dismissed by the company after joining the union. In his letter to Towu, Mutema wrote: "I want to know (whether) is it a crime or offence to join (a) union, because when I join(ed) the union, I was informed by my employer of (the termination of) my employment contract."

Yet, so far as both Mutema and the union are concerned, no contract exists. But this week the company pointed out that Mutema was not a driver. In what should be a wake-up call to unions, Mutema admitted that he was a mechanical assistant: he had said he was a driver because he thought this more prestigious position would ensure prompt union attention to his case.

What it did do, was (to) enable the firm to point out that, if Mutema had lied to his own union: "What else may he be lying about?" He was a "casual worker" and this fact had been "communicated to him".

But no contract was produced and this, as the union keeps stressing, is the point, whatever claims to job title Mutema may have made. So the skirmishing continues, although, towards the end of this week, there were hopes that some small hint of industrial peace might be in the offing. It was triggered by the company agreeing to wage negotiations on Wednesday.

Such agreement implies recognition of the union. However, Oliphant maintained this week: "There is no signed recognition agreement. There were talks last year... nothing final came out of it."

Yet she admits that the company deducted union subscriptions from wages in November. But this was because "our payroll administrators had been informed of a possible union agreement, hence the deductions were made in November". "This was an error and all monies were paid back to the employees concerned."

However, I yesterday received a copy of a recognition agreement, dated October 23, 2009 and signed by the union and by SA Roadlink human resources manager, Johann Viljoen. By telephone, Viljoen acknowledged that the agreement existed and that wage talks with the union would take place next week.

"We live in hope, but I'm certainly not holding my breath," says Wilson.

1.3 Mboweni 'needs cleansing'

iAfrica.com, 5 February 2010

Article By:

The National Union of Metalworkers of SA (Numsa) on Thursday welcomed Tito Mboweni's appointment as chairman of Nampak.

Numsa said it hoped the former SA Reserve Bank governor would have an opportunity to see the "brutality of his conservative and neo-liberal policies he advanced at the Reserve Bank, as reflected amongst the workers at Nampak".

The union said in a statement that Mboweni's appointment should be about "cleansing himself by transformation and better conditions of employment for workers at Nampak".

It said Nampak's executive was dominated by whites and reflected the white apartheid executives.

"Mboweni's fabled intellectual status and ideological orientation earned him admiration amongst the workers given the progressive labour legislations he introduced as first minister of labour."

'Get in line with unions'

That status and admiration should guide him by pushing transformation, as opposed to being a political hock for white capital to accumulate and expand their profits interests, the union said.

"As Numsa, we hope that Mboweni will accord trade union formations -particularly Numsa - a comradely opportunity for robust and cordial engagements on the pressing and key demands that should pre-occupy his agenda."

The union argued that the agenda had to be in sync with numerous National Economic Development and Labour Council commitments of saving jobs and the creation of decent work.

Board vote 'unanimous'

In a statement on Wednesday, Nampak announced that its non-executive chairman Trevor Evans had decided to step down as chairman and director of the company.

"At a meeting on February 3, 2010, the board unanimously resolved to appoint Mr Tito Mboweni, the former governor of the South African Reserve Bank, as chairman of Nampak with effect from June 1, 2010," it said.

Evans would step down as chairman on May 31, 2010.

1.4 Youth League now targeting Nicky Oppenheimer

Shabangu on way out and Cronin a liar, league claims

By NKULULEKO NCANA,TIMESLIVE, 5 February 2010

Mining mogul Nicky Oppenheimer has become the latest high-profile figure to earn the wrath of the ANC Youth League for opposing its call for mineral resources to be nationalised.

In its latest missive, in which it suggested that Minerals Minister Susan Shabangu's career would soon be over, and that SACP leader Jeremy Cronin is dishonest, the youth league accused Oppenheimer of trying to protect "his ill-gotten wealth".

The Youth League was angered by Oppenheimer's recent statement in which he welcomed Shabangu's declaration that nationalisation of the mines will not happen during her lifetime.

"It is totally dishonest and criminal for Oppenheimer to say he agrees with ... Shabangu ... By saying mines will not be nationalised in her lifetime, Shabangu is referring to her lifetime as minister of minerals, because we doubt that she will be a minister for a very long time," said youth league spokesman Floyd Shivambu.

He then accused Oppenheimer of applying double standards by opposing nationalisation in South Africa, because his De Beers diamond giant was already in mining partnerships with governments in Botswana, Namibia and Canada.

"De Beers is an inconsistent and immoral, inhuman corporation, whose development and growth was at the expense of many innocent lives," he added.

Shivambu, who is also a member of the SACP, then turned his attention to Cronin - who has recently renewed his criticism of the youth league's call.

The SACP on Wednesday warned that the nationalisation debate ran the risk of "dividing the ANC" if not raised for "principled reasons".

The youth league accused Cronin of authoring the SACP statement, saying he was imposing his personal views on the ANC's ally.

Cronin recently accused the Youth League of "grandstanding", objecting to its threat not to support any ANC leader who opposed its views.

"Threatening comrades that you won't vote for them in the future elective conference unless they support your position is infantile and unhelpful," Cronin wrote in an online SACP newsletter.

The Youth League retorted by calling him a "liar".

"The ANC Youth League is acutely aware that what was presented as views of the SACP Politburo are personal, reactionary views of Jeremy Cronin, who forever succeeds in misleading the Communist Party.

"The SACP's support for nationalisation is couched with doubts and aspersions intended as questioning the legitimacy of the ANC Youth League to raise the debate.

"The Communist Party should intensely look within itself and ask the question of why is it that all the personal beliefs of one Jeremy Cronin become the views of the Communist Party," Shivambu said.

1.5 Mandela celebrates 20 years of freedom

Washington Post, 4 February 2010

JOHANNESBURG -- Nelson Mandela, fellow veterans of South Africa's anti-apartheid struggle and family have raised glasses of bubbly to celebrate the 20th anniversary of his release from prison.

Mandela was released Feb. 11, 1990 after 27 years in prison, most of it spent on Cape Town's Robben Island. In video released from a celebration at his Johannesburg home Thursday, Cyril Ramaphosa, an ANC leader who helped organize Mandela's welcome two decades ago, proposes a toast in which he says that Mandela remains an inspiration and that the sacrifices he made would never be forgotten.

Mandela's former wife, Winnie Madikizela-Mandela, and some of their children and grandchildren are seen joining the celebration in the video released by Zinc Media, a production company owned by Mandela's daughter Zindzi Mandela. Zinc is preparing a documentary about the anniversary called "Conversations About That Day".

Mandela, who turns 92 on July 18, had largely retired from public life.

1.6 ANC welcomes Ntsebeza appointment

Citizen, 4 February 2010

JOHANNESBURG - The Tshwane ANC on Thursday welcomed the appointment of advocate Dumisa Ntsebeza to probe allegations of mismanagement by city manager Kiba Kekana.

It viewed the appointment by the Tshwane city as “positive and progressive”.

Spokesman Matome Motloutse said Ntsebeza would oversee a team tasked to investigate all allegations of mismanagement and maladministration levelled against Kekana.

“... We hope that his appointment will expedite the investigating process and bring this matter to finality without delay.

“This will also provide an opportunity to find out if there has been any wrongdoing by any person in the municipality to the detriment of the functioning of council.

"This process will further remove any doubts about the city’s commitment towards clean and good governance. We believe that this investigation will give Kiba Kekana a fair opportunity to clear his name of any wrongdoing on his part.”

Motloutse said the ANC would continue to provide political oversight on the city’s administration to ensure effective service delivery.

“We firmly believe that this step demonstrates the ANC’s commitment of strengthening governance and the implementation of zero- tolerance towards mismanagement and maladministration.”

Kekana was placed on precautionary suspension in October last year pending investigations into maladministration, irregularities and misconduct against him.

1.7 Nationalisation debate may hurt SA's reputation - Greenhill

Creamer Media, 4 February 2010

CAPE TOWN (miningweekly.com) - The nationalisation of the mines debate, which has become a hot topic in recent days, could have a negative impact on attracting foreign direct investment (FDI) into South Africa and raising capital on foreign markets for local mining projects.

While the debate on nationalisation had not had a noticeable effect on the local bourse to date, JSE business development and marketing director Noah Greenhill told Mining Weekly Online that such a public debate was not good for South Africa's reputation as an attractive investment destination.

Greenhill stated that the very public debate on the issue would make it much harder to attract foreign investors and companies to invest in South Africa and to list on the local bourse.

It would be more appropriate to deal with the subject of the nationalisation of the mines within the confines of the African National Congress (ANC) rather than at a public level, he said.

Greenhill's comments follows a spat between the ANC Youth League and Mining Minister Susan Shabangu, who told delegates at the Mining Indaba that the nationalisation of mines would not be adopted "in [her] lifetime".

Shabangu told delegates at the mining conference that the nationalisation of mines was not a government policy.

Subsequently, the ANC said that it welcomed the discussion document on the nationalisation that the ANCYL had submitted to the party and said that it would engage through "proper ANC structures".

Some South African mining companies also noted that the ability to raise capital offshore would also be negatively affected by the heated nationalisation debate.

Speaking to Mining Weekly Online, Witwatersrand Consolidated Gold Resources' (Wits Gold) CFO Dirk Urquhart said that the public debate on the issue of nationalisation of the mines would pose a significant challenge for South African companies with local projects as foreign investors would be wary of investing while there was no clarity on the issue.

This was of particular concern to Wits Gold as the company was aiming to raise offshore capital later this year for its De Bron gold prospect.

Wits Gold investor relations manager Hethan Hira said in an interview that the company was under way with the prefeasibility study for the De Bron prospect.

It was expected that the prefeasibility study, which was being undertaken by Turnberry Projects, would be completed by the end of this month or early next month.

Urquhart stated that an analysis of work undertaken for the scoping study so far indicated that the outcomes would be very positive.

The Wits Gold board was expected to make a decision on further progress of the project in July.

Urquhart added that it was likely that Wits Gold would take the project to bankable feasibility stage by the end of the year. However, in order to progress to bankable stage, the company would need to raise capital offshore.

Wits Gold had a secondary listing on the TSX and it was probable that the company would raise the necessary capital in Canada.

The nationalisation of the mines debate would not make the process of raising offshore capital impossible, but it would make it very difficult, said Urquhart. Thus, the debate was of concern for the Johannesburg-based junior gold miner.

It was important to understand that the South African mining sector needed FDI in order to sustain and grow the sector and that South Africa was competing with a wide range of other attractive investment destinations, he noted.

1.8 Nationalising of mines on way, but not this lifetime
AUBREY MATSHIQI, Business Report, 5 February 2010

NATIONALISATION is in the air. In fact, climate change activists are concerned about the potentially debilitating effects the hot air generated by rumbustious exchanges between the African National Congress (ANC) Youth League and Mining Minister Susan Shabangu seem to be having on the South African political climate.

What is the source of the heat? I suppose it depends on who you ask. As a self-appointed askee, it is my national, patriotic and revolutionary duty to give the most germane and cogent of explanations.

A few years ago, I was invited to the 62nd anniversary of the ANC Youth League’s founding by stalwarts such as Anton Lembede, Nelson Mandela, Walter Sisulu and OR Tambo. No, I was not invited by Lembede, Sisulu, Tambo and Mandela. At the time of the invitation, Fikile Mbalula was still in charge of the league. Julius Malema was in training. BEEsinessman and ANC luminary Tokyo Sexwale gave the keynote address on behalf of Madiba, whose in-laws had kept him in Mozambique against the will of the youth league.

What struck me was the speech by former president Kgalema Motlanthe . He argued, correctly, that SA needed a vehicle through which her developmental needs would be funded. The example he gave was that of free compulsory education for all. To this end, Motlanthe said SA needed to set up a state mining company whose profits would finance our developmental priorities.

I suspect the youth league was in some ways inspired by Motlanthe’s speech. Mbalula must be commended because his leadership training programme has produced Malema, a leader of progressive young thinkers, who understands the import of Motlanthe’s policy advice. It is for this reason that I am not surprised that the league is calling for the nationalisation of mines. I am still investigating whether they are calling for the nationalisation of private mining companies, too.

As expected, the media, in the spirit of reporting future crimes, is awash with reports of future anxiety. They argue that the call for the nationalisation of mines will cause nervous breakdowns in the markets. Contrary to the unfair expectations of market ideologues, the South African Communist Party (SACP) has grown up. It no longer supports nationalisation. This explains why Malema was booed at a congress of “yellow communists” last December.

But some among us believe that the call for nationalisation is nothing but an attempt by the youth league to fill the Kebble gap. It is even rumoured that the late mining mogul, Brett Kebble, was responsible for a steady flow of expensive gifts to youth league leaders. Those who are responsible for these nasty rumours are convinced that the youth league needs the proceeds of nationalisation to finance the ever- widening Kebble gap.

I assure you that Shabangu played no part in spreading these rumours despite her argument that mines will be nationalised over her dead body. Actually, that’s not what she said. She said the dastardly act of nationalising mines would not be perpetrated in her lifetime, maybe in the lifetimes of others, but not hers.

On the other hand, Malema et al say nationalisation of mines will happen in the “not too distant future”. I am confused. Should it not be the other way? It seems the leaders of the youth league, because time is on their side, should be telling the world that nationalisation will happen in their lifetimes, and Shabangu should be assuring nervous investors in the national executive committee of the ruling party that it will not happen in the “not too distant future”.

If you ask me, the mineral wealth belongs to us. Therefore, those who want to extract it for profit must enter into a contractual arrangement with the state according to which the larger portion of mining proceeds must go to the people.

When the time comes, I suspect the ANC will adopt a resolution in which it says that the nationalisation of mining “remains a long-term policy goal”.

Not in your lifetime, comrade.

1.9 Pioneer told to 'shut up and pay'

By Florence de Vries, Business Report, 5 February 2010

Pioneer Foods has been told to "shut up and pay" the fine of R195 million for its role in the bread cartel from 1999 to 2006.

Analysts said yesterday that the group was lucky not to have been slapped with a fine of about R1.1 billion instead.

However, Pioneer chief executive Andre Hanekom was unrattled when he said he was confident it would be able to settle the fine "should they have to pay it in the first place".

He would not comment on the Competition Tribunal's findings until it had been properly studied. Though he admitted that the group had not made provisions for a fine in last year's financial statements, Hanekom said the group would not raise the price of bread and it was "unlikely" that some of its staff would be retrenched.

"It is business as usual."

The Competition Tribunal on Wednesday levied a fine of close to R200m on Pioneer, the highest levied by the tribunal in the controversial four-year-old bread cartel case.

"The tribunal has made it abundantly clear that the fine could've been much stiffer, so it's best they shut up and take their punishment," said Chris Gilmour, a retail analyst at Absa Asset Management.

The tribunal's R195m fine constitutes an administrative penalty of 9.5 percent of Sasko's 2006 bread turnover for the Western Cape as well as 10 percent of Sasko's 2006 national bread turnover (excluding the Western Cape). The tribunal's 60-page document stated that it could impose a penalty of the group's total turnover ranging from R396m to R1.57bn, which was sought by the Competition Commission, but decided against it. "Pioneer has been blase about this matter since the beginning, but their senior management has come out of this looking disgraceful. If they incur the wrath of the tribunal, they may end up getting a bigger fine," Gilmour said.

The allegations were based on an investigation launched in the Western Cape in 2006 and extended nationwide in 2007. The cartel involved Tiger Brands, which had been fined R98.9m, while Premier sought and was granted leniency in exchange for information. Foodcorp paid an administrative penalty of R45m.

According to Funeka Beja, an analyst from Afena Capital, the fine of R195m shaved off R1 a share from the group's earnings of R3.50 a share last year.

"They will likely raise more debt," she said, adding that the group had a lot of capacity to do so. "Last year, its debt equity ratio was 14.2 percent. It would be easier for them to raise short-term debt and pay it off through operating cash flows," she said.

According to Beja, the R195m came in well below market expectations, which varied between R165m and R393m. But analysts agreed that Pioneer likely felt cheated as it had expected to be fined for the Western Cape case amounting to about R38.4m only.

Cosatu spokesman Patrick Craven welcomed the penalty and added that any fine on the company did not hit those directly responsible for the price-fixing.