NewEra takes heart at US ruling on securitisation
The New Economic Rights Alliance (NewEra), the public interest group that is fighting the local big banks to stop them from selling off their clients’ debt to third parties, has taken to heart a judgement by a US court on this practice.
NewEra unsuccessfully took the banks to the South Gauteng High Court last month seeking to interdict them against this practice, known as securitisation.
US bankruptcy judge Robert Grossman of Central Islip, New York, recently ruled that the Mortgage Electronic Registration Systems (Mers) was not an agent of the banks that owned the mortgages.
NewEra said yesterday this was an important case because it certified what the non-profit organisation had maintained all along. Unfortunately, Raymond Dicks, the legal advisor to NewEra, did not answer his cellphone to satisfy this newspaper’s curiosity about what the judgment’s implications are for South Africa.
Grossman is reported to have said he knew his decision would have a “significant impact” on the US property market.
“Mers’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by law,” he ruled. “Mers did not have the authority, as ‘nominee or agent’, to assign the mortgage absent a showing that it was given specific written directions by its principal.”
The judge said Mers and its partners made the decision to create and operate under a business model that was designed in part to avoid the requirements of the traditional mortgage-recording process.
“The court does not accept the argument that because Mers may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”
There has been a flurry of debate about the appropriateness of state-owned companies sponsoring – quite handsomely – the New Age newspaper’s televised breakfast interactions with prominent politicians, most of them from the ruling ANC.
Other “political” breakfasts that have largely gone unnoticed are those hosted by the Progressive Business Forum (PBF), which is the ANC’s business networking agency. It not only holds regular business breakfasts with politicians locally, but sends top politicians with South African business delegations on trade missions outside the country’s borders.
Last week Renier Schoeman, the former deputy foreign minister and co-convener of the forum, co-ordinated a delegation’s visit to Kenya. It included 60 business leaders representing 50 companies, led by Deputy Trade and Industry Minister Elizabeth Thabethe.
Schoeman said that, apart from Investec, the companies were mainly small and medium enterprises. The others included Moon Cloud 44, solar company Mzamzi, Amabhela IT, Blue Lounge IT and Construction, Crescendo Venture Capital, and Vision View Productions. They paid about R25 000 a head to attend.
In a statement released by the ANC’s communications department, Schoeman reported that they were welcomed in Kenya by the permanent secretary of the trade ministry, Abdul Razak Adan Ali, at a PBF function in Nairobi.
A business seminar was co-hosted by the PBF and the Kenyan National Chamber of Commerce and Industry. It was attended by Kenyan Deputy Trade Minister Manson Nyamweya, the secretary of external trade Simon Chacha Nyang and chamber chair Stephen Mbugua.
Thabethe told the Kenyans that areas of growth for investment in South Africa included energy, including gas, petroleum and renewables, and health.
It seems that the International Relations and Trade and Industry Departments’ work is being done – perhaps more effectively – by a political party agency.
New Age breakfasts
While DA leader Helen Zille is arguing that the curious funding of the New Age business breakfasts are tantamount to a new Information Scandal – although she herself was caught with her political pants down after the New Age reported that she had thanked Telkom for sponsoring one when she, herself, was a guest – the state-owned companies which were approached for comment didn’t see anything wrong with the sponsorship.
Pynee Chetty, the Telkom spokesman, rejected the idea that it was a state-owned company – pointing out that the state had a minority shareholding in the listed company. It will sponsor another breakfast at which President Jacob Zuma is a guest on February 15, the day after the opening of Parliament. Chetty said: “Telkom does not sponsor breakfasts of any politicians.”
This was important “for the national development agenda, and Telkom is proud to be involved in facilitating this discourse”. It believed that it was “critical that matters of mutual interest are discussed between South Africa’s political and business leadership”. Telkom evaluated each sponsorship proposal. “This sponsorship provides opportunities.”
However, the quantum of the sponsorship was confidential.
While the Passenger Rail Agency of SA and Eskom had not responded to questions about their sponsorship of the breakfasts, Mboniso Sigonyela, the Transnet spokesman, said all the state-owned logistics company’s publicity and advertising activities “are done in accordance with our communications and reputation management objectives aimed at enhancing the image of the company”.
The partnership on the broadcasts was one of its “image-building exercises and is catered for in our branding and advertising budget”. Transnet sponsored a breakfast in December, at which the new top six ANC leaders were hosted by the New Age. Transnet Freight Rail boss Siyabonga Gama and Transnet chairman Mafika Mkwanazi were also present.
It probably all just proves that there is no such thing as a free breakfast.
Edited by Peter DeIonno. With contributions from Wiseman Khuzwayo and Donwald Pressley.