Many “black diamonds” have clearly abused the system, compounding the error of wealth distribution, says Lavan Gopaul.
Durban - The new South Africa has witnessed the advent of affirmative action and black economic empowerment as a course of action for employment and wealth equity.
The evolution of these concepts over the span of almost a quarter of a century has resulted in gross abuse at the expense of the masses, for whom this was to be an economic panacea.
Evidence confirms that most JSE listed companies have either misunderstood BEE or arrogantly ignored the programme since black ownership stands at 3% of public listed companies.
According to bdlive.co.za, “the ownership scorecard has a target of 25% for direct black ownership. There is no target for indirect ownership, which occurs where an institution or other investor owns shares on behalf of beneficiaries and there may not be direct participation by the beneficiaries in the voting rights”.
While Alec Hogg, quoting the JSE statistics, reports that the number stands at 23%, this however is not a record of direct ownership since 10% is in the form of complex BEE schemes involving high interest debt and derivatives and 13% via indirect ownership through unit trust and insurance companies.
The path followed by many of the JSE listed companies was to award large blocks of shares to politically powerful individuals, a system designed to ensure that reciprocity of contracts or tender awards would be forthcoming.
The result was the creation of a group of super wealthy “black diamonds”, which include Cyril Ramaphosa, Tokyo Sexwale and Patrice Motsepe, a cluster with political gravitas awarded millions of rands’ worth of shares.
These large listed entities have clearly abused the system, many of the directors of these companies count as board members on multiple companies, this further compounding the error of wealth distribution.
The study of the number of black directors on the JSE by Empowerdex records an improvement of black directors from 485 to 1 046 during the period 2006 to 2012. However, the study is flawed in that it does not include duplicity.
A case in point is Patrice Motsepe who has more than eight appointments concurrently. He may not be in a position to properly contribute to the boards that he sits on.
Motsepe’s positions:
* Non-executive director, Sanlam Life Insurance Limited, 2006 – present.
* Non-executive director, Sanlam Limited, 2004 – present.
* Non-executive director, Absa Bank Limited, 2004 – present.
* Deputy chairman, Sanlam Limited, 2004 – present.
* Executive chairman, African Rainbow Minerals Limited, 2004 – present.
* Non-executive chairman, Harmony Gold Mining Company Limited, 2003 – present.
* Chairman, Naledi Mining, 1997 – present.
* Chairman, Future Mining, 1995 – present.
* Chairman, Teal Exploration and Mining Incorporated
* Director, African Fashion International.
* President and owner, Mamelodi Sundowns Football Club.
It may be the case that the appointment is without actual contribution at the board level and merely “colouring” for BEE and affirmative action purposes.
* Lavan Gopaul, an economist and investment analyst, is a senior academic member of the Mancosa Graduate School of Business.
** The views expressed here are not necessarily those of Independent Media.
The Mercury