Global South African News Wrap - 7 December 2012

7/30/2019 Global South African News Wrap - 7 December 2012

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Global South African News Wrap 7 December 2012

Banks bent over backwards for Zuma

All the president's willing benefactors: Part two

All the president's willing benefactors: Part one

Zuma payments: South Africans have a right to know

Auditors' secret report reveals how millions flowed to President Zuma

Motlanthes Indecision May Have Cost Him South African ANC Post

Not a good year for reconciliation

Habib preferred candidate in race for Wits university rector

Now up to Motlanthe to step forward, say Limpopo, Western Cape

Yes for super tax sure bet at Mangaung

Future of SA mining is up for grabs at Mangaung

Motlanthes life in danger Lekota

Motlanthe secures top ANC nomination in Western Cape

SA slips further on corruption index

ANC hard line on media confuses

Business gets serious over lobbying at Mangaung

Controversy dogs ANCs reconvened conferenceNet1 shares down 56% on US probe

ANC shrugs off warning on risks to SA mining

SA must climb value chain and spread gains Davies

Stark difference in images of our two main political parties

Outcome of Doha climate talks important for SA

Members complain to Luthuli House

Affirmative action to stay until equity achieved, says minister Mantashe denies ANC arranges leadership

Deals gave him power

Simelane out of the NPA

Ramaphosa poised for a big role in government

Finance gurus could raise NEC credibility

Chaos still besets ANC nominations

States fund creates 745 jobs, costing R4m eachMotlanthe: if ANC's house crumbles, voters will move


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ANC dashes Mbalula's ambitions

Motlanthes silence career-limiting

Is there life in DA after Helen Zille?

Millions stolen 'for ANC elders'

Cwele welcomes constitutional challenge to secrecy bill

State targets ease of doing business in South Africa

Mangaung may be a repeat of Polokwane

ANC has no handle on own changes

Zuma in headlines over perks for brothers

South Africa must be part of Agoa for sake of neighbours

ANC showdown could be fresh start for Motlanthe or a return to the past

Motlanthe rejects deals to secure top job at Mangaung

Nkandla: Lindiwe won't let up

Back-room huddle to save Motlanthe


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7 December 2012Mail and GuardianCraig McKune

Banks bent over backwards for Zuma

After 1994, South Africa's biggest banks bent over backwards to accommodateJacob Zuma, who regularly splurged on credit.

Contrary to sound practice, the banks often tolerated his actions. At least in the caseof Absa, this was explicitly though internally justified on the basis that Zuma was"politically" and "strategically" valuable.

On numerous occasions Zuma, often through Schabir Shaik as his "financialadviser", promised the banks that his various benefactors would repay his debts, andin some instances they did. But inevitably Standard Bank, Absa and Nedbank,among others, got their fingers burnt.

Zuma's banking troubles first peaked after Standard Bank bonded a property of his in1995. The bank had extended the bond despite Zuma having defaulted on a bondwith a different bank months before.

By 1997, the Standard Bank bond was in arrears and Zuma's overdraft on a chequeaccount there exceeded R100 000. The bank put its foot down, cancelling his creditcard and obtaining a court order against him, but it abandoned this order in 1998.

Disappointment In 2002 Standard Bank appears to have dropped its pursuit of the R128 300overdraft and in 2005 it wrote off Zuma's bond account just less than R200 000 as bad debt.

This did not stop FNB from granting Zuma a R900 000 bond for Nkandla after asenior bank official wrote: "I am sure that the powers that be will assist us where weneed to bend the rules a little." Zuma benefactor Vivian Reddy had to stand security,though.

From 1996 to 2004, Zuma also built up a R214 000 overdraft at Nedbank, whichpolitely noted its "disappointment" at Zuma's lack of response to their queries.

But Zuma's relationship with Absa was most telling. When Zuma opened his accountin 1998, Absa business centre manager Raymond O'Neil attempted to justify thedecision despite Zuma's bad credit record with Standard Bank and Nedbank, whichhe specifically noted.

O'Neil wrote in a memorandum that Zuma was likely to be elected South Africa'sdeputy president the following year and Nelson Mandela was going to settle hisdebts. Apparently quoting Zuma, O'Neil said that Zuma's "bank balance was the lastitem on his mind, with more important matters regarding the country and the provinceto focus on".

According to O'Neil: "We recommend the opening of [the] Unique package accountfor Minister Zuma, based on his strategic positioning and importance to the group."Within three months Zuma's account was in overdraft and he had, once again,exceeded his overdraft limits.


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As Absa's patience wore thin in 2000 and bankers noted in records that Zuma'sconduct was "unacceptable", there was indeed a R2-million cheque received fromMandela, but apart from R100 000 that stayed in his account, the rest immediatelyflowed out.

Although Zuma's financial position tended to be cash-starved at the time, in 2001 Absa signed him on as a Absa Private Bank client, which is usually reserved for those with more than R1-million to invest in markets.

Once again this was noted to be a political decision, seemingly in line with chief executive Nallie Bosman's view, stated in bank records, that "in terms of all financialmatters" Zuma was considered "a strategic client".

But soon after this Zuma was hugely overdrawn, much to some bankers' chagrin. According to a note by one of them: "The conduct leaves much to be desired, but wehave little option but to live with this client in view of his position."

7 December 2012Mail and GuardianSam Sole, Stefaans Brmmer

All the president's willing benefactors: Part two

Here are the people the auditor's report identifies as having paid more than R7-million to benefit Jacob Zuma between 1995 and 2006.

A hand-drawn diagram on the back of an unrelated October 2000 account from theUniversity of Zululand reflected the following plan: "R1m from Paris to Mauritius.From Mauritius to A Moodley Trust a/c and then to Juli's Trust a/c."

Anand Moodley was Shaik's attorney and, KPMG says, it is possible that "Juli"referred to Mahomed.

On July 12 2004 Zuma issued a cheque in favour of his Nkandla builder, EricMalengret, for R120 000.

KPMG reveals that a credit transfer of R120 000 was made into Zuma's account thesame day. The funds originated from the J Mahomed Attorneys trust account. Thesource of the funds is unknown.

On August 12 2004 Zuma issued a cheque in favour of Malengret for R30 000.

Two credits, totalling R30 000, were transferred into Zuma's account the same day,R20 000 from Mahomed's firm's trust account and R10 000 from its businessaccount.

The sources of the funds are unknown, says KPMG.

It appears that Zuma may also have benefited through Mahomed's trust account

from another arms deal company, Ferrostaal, which led the consortium that won thesubmarine contract.


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On July 6 2005, a R281 000 cheque, drawn on her trust account, was deposited intoa Wesbank account to make up Zuma's arrear payments on a Mitsubishi Pajero 4x4.

According to KPMG, it appears the funds came to Mahomed through three similar deposits into another of her accounts, two of which bore the reference "Ferroman".

Ferroman was a local Ferrostaal subsidiary with a black economic empowermentcomponent.

Mahomed herself was a director of Ferroman, which was intended to be a vehicle for pursuing Ferrostaal's offset obligations arising out of the submarine deal.

Vivian Reddy R324 110

Durban businessperson Vivian Reddy appears to have become involved in fundingZuma's Nkandla development when financial pressures made it difficult for Shaik'scompanies to pay.

On November 3 2000, Reddy lent R50 000 to Zuma's builder, Eric Malengret.

KPMG notes: "We understand that Reddy indicated that the funds had beenadvanced to Malengret as a result of cashflow problems Malengret experienced dueto the development for Zuma and due to Zuma's tardiness in reimbursing him for work completed."

Reddy later also stepped in to assist Zuma with arranging a home loan from FirstNational Bank.

According to KPMG, Zuma applied to FNB for a home loan on June 7 2002 in theamount of R650 000. "V Reddy" was indicated as having accepted responsibility topay the monthly instalments.

A fortnight later, Reddy also signed a suretyship, binding himself for up to R400 000should Zuma default.

FNB confirmed to Reddy on December 12 that the bond over the property had beenregistered in the amount of R900 000.

The loan was repayable over 20 years at R12 117 a month and it was noted thatthe debit order would be raised against Reddy's cheque account.

KPMG found Reddy serviced the bond account until May 25 2005, when Zuma tookover the payments. The value of the payments until then was R274 110.

On April 8 2006, the outstanding balance on the bond was R854 229.

Zuma did attempt to begin to repay Reddy in 2004 but he needed help (SeeKhulubuse Zuma).

Reddy has said publicly that he has been repaid in full.

In response to the Nkandla public- works scandal, Zuma recently told Parliament: "Iengaged the banks and I am still paying a bond on the first phase of my home."


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Replying to questions on these payments in the 2003 Parliamentary investigation,Zuma "indicated that there was a verbal agreement between him and Fukude andthat it was not an interest-free loan", says KPMG.


All the president's willing benefactors: Part one

Here are the people the auditors' report identifies as having paid more than R7-million to benefit Jacob Zuma between 1995 and 2006.

After 1994, both Nkobi and Shaik were proponents of the Malaysian Bumiputera

model, a concept that entailed the establishment of businesses aligned with apolitical party.

When Nkobi died in September 1994, Shaik found himself shut out by the ANChierarchy.

In May 1995 Nkobi's successor, Makhenkesi Stofile, wrote to Shaik telling him that,after a meeting with ANC officials, he was considered to "have no position within the

ANC" and Stofile had been instructed to cut off communication.

The KPMG report notes: "It is during this time when the name of Zuma startedsurfacing in documents at our disposal Shaik ceased to act on behalf of the ANC(in an official capacity) but continued his business dealings under the name of theNkobi group, involving Zuma in various instances."

It was then that Shaik also began to style himself variously as Zuma's "financialadviser" and "economic adviser". Zuma, fresh from exile and with a large andgrowing collection of dependants, was open to Shaik's assistance.

The first payment to Zuma took place on October 25 1995 and the KPMG reporttraces how a pattern of mutual favours developed.

KPMG notes: "It is evident that Zuma at various points, and especially with regardto the relationship of the Nkobi group with the Thomson group of companies,attended meetings and visits with representatives of the Nkobi group on issues thatwere of interest to the Nkobi group."

With his brother Chippy heading defence acquisition, Shaik was well placed tobenefit from the decision in the 1990s to re-equip the navy. Early on, he sought analliance with the French defence conglomerate Thomson-CSF.

Thomson was also seeking access to and business from the new ANC elite. TheKPMG report sketches how cynically the French calculated their success, which theybelieved would be dependent on pleasing the politicians and choosing the "right"

local partners.


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And the abrasive Shaik was vulnerable. Parallel to its relationship with him, Thomsonwas wooing Reuel Khoza's CNI group, perceived to be more favoured by ThaboMbeki, then the deputy president.

Zuma was Shaik's trump card and, as the report makes clear, he shamelessly used

his proximity to Zuma to cajole or bully his way into deals.Zuma's key interventions came in July 1998 when he accompanied Shaik to ameeting in London with one of Thomson's top executives to reassure the French of Shaik's suitability and later in Durban, where he was present when the formalallocation to Nkobi of a shareholding in Thomson was confirmed.

In turn, Zuma was not shy about taking advantage of the financial resources Shaikprovided (sometimes grudgingly, given his own precarious cash position).

By way of illustration: Zuma's reliance on funding from Shaik grew from one paymentof R3 500 in 1995 to 176 payments totalling R534 858 in 2004 and, finally, 61payments totalling R819 333 in the first six months of 2005, ending just after Shaik'sconviction for bribery. The total over 10 years: R4 072 500

By then, the real ambivalence of the Zuma-Shaik relationship had been captured in away not even KPMG's figures can match.

Shaik's secretary testified that her boss had complained about "politicians",exclaiming one day that he "has to carry a jar of Vaseline because he gets fucked allthe time, but that's okay because he gets what he wants and they get want theywant".

Nelson Mandela R1-million-plus

Jacob Zuma seems to have been identified fairly early on as a financial "problemchild" by Nelson Mandela.

The KPMG report quotes from a 1998 internal Absa memo when the bank wasconsidering taking on Zuma, then the ANC deputy president, as a client.

The memo referred to the supposed fact that Zuma had been disciplined by Mandelaand then-ANC treasurer Mendi Msimang over the conduct of his financial affairs. Italso stated that Mandela had apparently agreed to settle Zuma's debts "this info tobe handled strictly confidential".

"The source of the payment could not be disclosed to us at this stage. The amount tobe paid will be R1.5-million," the Absa memo said.

However, no funding appears to have been received from Mandela until October 2000, when the then retired president endorsed a R2-million cheque to Zuma.

R1-million of that was destined as a donation to the charitable education trust Zumahad founded and was duly paid over by Zuma.

Whether the other R1-million was intended for Zuma's personal benefit is unclear.

Zuma issued a cheque for R1-million to an account in the name of the Development Africa Trust that had been opened by Durban businessperson Vivian Reddy.


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February 22 and March 5 1999: Two payments of R20 000 each to a Zuma accountwith Mercedes-Benz Finance for a Mercedes-Benz E-Class 230. Zuma had been inarrears since buying the vehicle the year before and Mercedes had issued asummons;

June 9 1999: R40 000 to a Zuma cheque account;June 17 1999: R50 000 to Zuma's bond account for the Killarney flat. This is the dayafter Zuma was inaugurated as deputy president. The bond account had beenhabitually in arrears since at least 1997, towards the end of which Standard Bankobtained a debt judgment and nearly sold the flat in execution;

August 15 2001: R183 000 to Zuma's account for the Mercedes E230. This was tosettle the account in full after it had again fallen into serious arrears following Kgl'sFebruary and March 1999 bailouts; and

August 23 2001: R600 000 to Zuma's bond account for the Killarney flat. This was topay the bulk of the outstanding amount after Zuma had made no further paymentssince Kgl's June 1999 bailout.

KPMG presents a trail appearing to show that the payments of R183 000 andR600 000 flowed from a R1.19-million transfer to Kgl's Cay Nominees from a clientaccount at a British law firm.

The audit firm speculates that the payment might have been "another structure for transferring funds" from Thomson-CSF after only the first R250 000 tranche of theR500 000-a-year French bribe had reached Shaik through a sham "service provider"contract six months earlier.

The Scorpions appear to have abandoned attempts to force disclosure of themoney's source in London when Kgl and Zuma went to court to stop them in 2007.

When the parliamentary ethics committee investigated Zuma in 2003 for allegedlynot declaring benefits, Kgl and Zuma claimed to the committee that the R656 000known by then to have passed from the former to the latter was an interest-bearingloan repayable after 10 years.

7 December 2012Mail and GuardianNic Dawes

Zuma payments: South Africans have a right to know

In just over a week, delegates sent to Mangaung by ANC branches will vote whether or not to retain President Jacob Zuma.

It is a grave decision for the party that was central to our liberation from apartheidand what has been a remarkably successful transition to democracy.

We believe it is one that delegates must make with the fullest possible knowledge of each candidates suitability for high office.


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Zuma and those around him have fought, however, to prevent both the courts andthe public from learning the truth about the corruption allegations against him andsome of his closest associates.

In the process they have ridden roughshod over the justice system and put at risk the

basic institutional framework of democracy, undermining the National Prosecuting Authority (NPA), the courts and intelligence agencies.

The KPMG report on Zumas financial affairs we are reporting on and posting to our website makes it very difficult for him to continue the charade. It paints the mostdetailed and distressing picture available of a kept politician, not just unable, butunwilling to live within his means, dependent on an array of benefactors to fund hislifestyle and willing to grant some of them favours in return.

The report also makes it clearer than ever that the 2009 decision to drop criminalcharges was political rather than legal.

As the Sunday Times reported a fortnight ago, prosecutors were confident that their case could withstand the "spy tapes" and the claim that some of his political enemieswere trying to manage the timing of the charges to his disadvantage. Reading thereport with Judge Hilary Squiress damning findings in the Schabir Shaik trial, it ishard to disagree with them: the president has an overwhelming case to answer.

His supporters may object that in publishing the report now we are "attempting toinfluence the outcome of Mangaung".

We are unabashed, however, in playing what we believe is the proper role of thepress - providing the information that enables South Africans to make informed

choices in the exercise of their rights.That has not stopped the state from using every tool at its disposal to imposeignorance. When this newspaper sought to show how Zumas confidant andspokesperson, Mac Maharaj, had lied under oath to investigators, we werethreatened with criminal prosecution and, even though we withheld sensitiveinformation pending court permission to release it, the editor and two journalists nowface criminal charges.

When the Sunday Times recently sought to publish documents showing how stronglyprosecutors had felt about their case against Zuma, it faced an interdict attempt.

The Democratic Alliance won a Supreme Court of Appeal order that the NPA handover the spy tapes so that their relevance to the legality of the decision to dropcharges could be properly tested. Months later, both the prosecuting authority andZumas legal team are seeking ways to avoid compliance.

We are short-circuiting this process of denial, delay and obfuscation by exposing theentire report to public scrutiny.

We are doing so without seeking prior comment from Zuma or others named in it.This is a diversion from our usual practice and it is not one we have undertakenlightly.


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The right of reply is an important journalistic principle and we ordinarily offer it inadvance of publication.

In this case we have decided instead to offer full right of reply after publication,because it has been our own experience - and that of other newspapers - in dealing

with material emanating from the arms deal investigation that an opportunity tocomment is treated by the state as an opportunity to prevent publication.

The press code provides that "a publication should seek the views of the subject of serious critical reportage in advance of publication, provided that this need not bedone where the publication has reasonable grounds for believing that by doing so itwould be prevented from publishing the report, or where evidence might bedestroyed or sources intimidated".

Although we would have preferred to publish comments from those affected with thereport, we are convinced that the risk of being prevented from publishing it at all wasreal.

We are also convinced that the report is a substantial and credible document, basedon an assessment of hundreds of thousands of pages of documents obtained byinvestigating authorities and conducted by experts in forensic accounting.

We invite comment from those implicated by the report itself and will publish it on our website immediately.

Furthermore, we will publish in print and online detailed responses from Zuma andothers identified in our reporting if they are forthcoming.

This is what Judge Hilary Squires said at the conclusion of the Shaik trial: "If Zumacould not repay money, how else could he do so than by providing the help of hisname and political office as and when it was asked And Shaik must have foreseenand, by inference, did foresee that if he made these payments Zuma would respondin that way. The conclusion that he realised this, even if only after he started thedependency of Zuma upon his contributions, seems to us to be irresistible."

The KPMG report supplements that inference with fresh evidence for which JacobZuma has provided no plausible explanation. He must now do so if he wishes toremain in office and avoid prosecution.


Auditors' secret report reveals how millions flowed to President Zuma

An auditors' report lays bare how a range of benefactors funded a recklesspresident's lifestyle by more than R7-million.

The report exposes the president as a "kept politician" - a financial freeloader whoaccepted money and favours on a routine and increasingly extravagant basis notonly from his so-called financial adviser, Schabir Shaik, but also from other benefactors, including Nelson Mandela.


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Running to about 500 pages, the "draft" report - although it is understood to be thefinal version - is based on tens of thousands of documents Scorpions investigatorshad seized from Shaik, Zuma and others.

The report contains dramatic new disclosures including:

Former president Mandela came to Zumas rescue with a R1-million chequeon June 23 2005. This was just nine days after then-president Thabo Mbekifired Zuma as his deputy and three days after the NPA announced it wouldcharge Zuma. The Mandela transfer, which has never been reported before,suggests that the retired elder statesman intervened directly in the battlebetween Mbeki and Zuma to back the latter in his hour of need. Before this,Zuma was more than R400 000 overdrawn on his various bank accounts;

Payments ordered by Shaik continued, and in fact accelerated, long after theM&G revealed in November 2002 that the Scorpions were investigating Zumaand long after Shaik was put on trial in 2004. Payment even continued for ashort period after Shaiks conviction in June 2005, until Shaik resigned as

Zumas financial adviser the following month. Altogether 783 payments fromShaik or his Nkobi group for Zumas benefit were identified, amounting toR4 072 500 - well beyond the figure of about R1.25-million known at the timeof Shaiks trial. Zuma appears to have repaid less than R500 000 of this bythe end of February 2006;

KPMG asserts that Zuma benefited from benefactors other than Shaik andMandela to the value of at least another R3-million. They included politicallyconnected businessperson Jrgen Kgl; Zumas friend, Nelspruitbusinessperson Nora Fakude-Nkuna; Durban mogul Vivian Reddy; Zumasnephew Khulubuse Zuma, who provided cash that was used to partially repayReddy; Zuma attorney Julie Mahomed; some unknown benefactors; andFrench defence company Thomson-CSF. It was Thomson (later renamedThales) that promised a payment of R500 000 a year for Zumas benefit in thenotorious "encrypted fax", although only R250 000 is known to have beenpaid;

It appears that Zuma may also have benefited from another arms dealcompany, Ferrostaal, which won the submarine contract; and

Large commercial banks bent over backwards to accommodate Zumabecause of his political position and accommodated Shaik because of hisassociation with Zuma. This was despite the fact that Zuma had a terriblecredit profile and defaulted regularly.

The KPMG report was prepared on the Scorpions instructions ahead of Zumas high

court appearance in Pietermaritzburg in September 2006.Prosecutors had applied for a postponement to formulate a new charge sheet basedon additional material seized during the August 2005 raids that followed Shaiksconviction - including, for the first time, raids on Zumas home and office.

They also asked for time to deal with Zumas challenge to the legality of those raids.

Judge Herbert Msimang refused the postponement and the case was struck from theroll without the report being tabled.

It remained hidden throughout the protracted legal battles that saw the NPA clear thepath to prosecution and until April 7 2009 when the then acting national director of


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public prosecutions, Mokotedi Mpshe, buried it by deciding to abandon the case justdays before the national election that propelled Zuma to the presidency.

Against the views of the prosecuting team, Mpshe ruled that Zumas rights to a fair trial had been poisoned by perceived meddling revealed in the so-called Zuma spy

tapes.Now the M&Gs disclosure of the wealth of evidence available to the prosecutiondeepens the controversy surrounding Mpshes decision. It also raises the stakes for the Democratic Alliance bid to have that decision reviewed.

Finally, it lays bare in excruciating detail the ongoing recklessness of Zumasfinancial relationships. Those relationships not only lay the basis for the currentNkandla scandal, but expose fundamental questions about Zumas fitness for office.

For instance:

Payments in cash to Zuma - as opposed to the settling of bills and debts -increased annually from R10 000 during 2002 to payments amounting toR181 800 during 2005. Cash payments during the first four months of 2006amounted to a staggering R305 500.

Zuma blithely incurred large debts - for cars, property, loans, building hisNkandla homestead - without bothering to consider where the money wouldcome from. There were times when not even the first payment due clearedthe bank owing to insufficient funds in his account.

In the words of the report: "The financial position of Zuma deteriorated over time,mainly as a result of the fact of the shortage in daily funding required to fund his

lifestyle ... Zumas cash requirements by far exceeded his ability to fund suchrequirements from his salary ...

"The predicament that Zuma found himself in from the early years did not result inreduced spending on his part. Shaik, as the claimed financial adviser, also did notreduce it. In fact, Shaik funded the shortfall Spending continued "

Sometimes this infuriated Shaik, such as in October 2000 when he ordered thatconstruction cease on Nkandla's first phase.

Builder Eric Malengret told the Shaik trial that Shaik had exclaimed: "Does he [Zuma]think money grows on trees?"

But Zuma simply countermanded Shaik and told Malengret to carry on.

The report revives the spectre of the "mutually beneficial symbiosis" - the term JudgeHilary Squires used when he convicted Shaik in 2005.

Whatever struggle bonds Shaik shared with Zuma, the former could not fund Zumasspending from his own resources.

The report finds Shaik was able to fund no more than 13% of the funds that weremade available to Zuma.


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The balance had to be funded from the Nkobi group. This placed Shaiks cash-starved companies under immense pressure.

KPMG says: "The general decline in the net cash resources for the group has adirect correlation with the amounts that we identified as having been paid for and on

behalf of Zuma

As the cash balances of the Nkobi group decreased, the paymentsmade for and on behalf of Zuma increased."

In return, Shaik made blatant and repeated use of his connection with Zuma. SaysKPMG: "It is evident that at least Shaik considered the association with Zuma and hiswider political connectivity as a key driver to the success of the business activities of the Nkobi group

"We could not find any evidence in the documentation at our disposal of Shaik beingadvised or requested by Zuma not to engage in such activities, despite numerousexamples indicating his [Shaiks] approach."

Shaik is often presented as the arch-manipulator in the relationship, but the scale of the payments to Zuma and the extent of the pressure this outlay placed on Shaik andhis companies emerges very clearly from the report, raising questions about whowas really using whom.

7 December 2012Bloomberg

Motlanthes Indecision May Have Cost Him South African ANC Post

Kgalema Motlanthes failure to openly challenge South African President JacobZuma for the leadership of the African National Congress threatens to leave himsidelined in the ruling party.

Nominations made by ANC members ahead of a party election next week showZuma could win backing from about 70 percent of the 4,500 conference delegates toretain leadership for a second five-year term. Zumas supporters dropped Motlanthe,63, from their list of preferred candidates for the top six party positions, with mostopting for Cyril Ramaphosa, the union leader turned tycoon, to replace him as deputy

ANC leader.

Zuma, 70, who wrested control of the ANC from Thabo Mbeki in a party election in2007, has faced little opposition to his re-election as party leader even as hisadministration battles to curb a 26 percent unemployment rate and public protestsover a lack of housing, water and other services. Motlanthe abided by a party ban oncampaigning and refused to say if he would contest the presidency, a strategy thatmay have backfired.

ANC members are wondering if they want a leader who is not willing to take aposition, Sipho Seepe, a political analyst in Pretoria, said in a Dec. 3 phoneinterview. Its a reluctance which shows a certain degree of cowardice.


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Rand Weakens

The 100-year-old ANC led the fight against white segregationist rule and hasdominated South African politics since sweeping to power under Nelson Mandela in1994. If Zuma is re-elected at the ANCs national conference from Dec. 16-20, he

becomes the partys presidential candidate in the countrys next vote scheduled for 2014.

The incoming ANC president is faced with restoring investor confidence in anenvironment of slowing growth. The rand has declined 5.5 percent against the dollar since Moodys Investors Service downgraded South Africas credit rating on Sept. 27.The currency was trading at 8.7086 against the dollar as of 11 a.m. in Johannesburg.

Motlanthe yesterday praised Zuma in a lecture organized by the ANC tocommemorate its centenary. Zuma was instrumental in political talks that led to thefirst all-race elections in 1994 and in helping to end violence between the ANC andrivals in KwaZulu-Natal, Motlanthe said, according to the South African Press

Association.

President Jacob Zumas life is exemplary of how positive thinking thrives against allodds, the Johannesburg-based SAPA quoted Motlanthe as saying.

Still Agonizing

Zuma won majority support in six of the nine provinces, while Motlanthe won backingfrom the other three. The partys electoral commission will now approach candidatesfor the top six positions to determine if theyre willing to accept nomination.

I am still agonizing over it, Motlanthe told reporters in Pretoria on Nov. 30. I donthave to be in a position of leadership. I have never regarded myself as having apolitical career.

Motlanthe, a former labor leader, served as president of the country for eight monthsbetween the time Mbeki was ousted from his post and Zuma installed after April 2009elections. As deputy president he has been responsible for coordinating the buildingof new power plants, improving railways and expanding ports, while also overseeingthe governments anti-AIDS program.

Ramaphosa Nominated

Even the people who are very loyal to him might have been discouraged by the factthat he hasnt made clear that he is prepared to stand, Somadoda Fikeni, a politicalanalyst at the Pretoria-based University of South Africa, said in a Dec. 3 phoneinterview. This is hardly a way of contesting this race.

Motlanthe says he isnt interested in striking deals with various factions within the ANC that would allow him to retain his post. That may lessen his chances of winninga top post in the party and pave the way for Ramaphosa, who is the second- richestblack South African, according to Johannesburg-based Sunday Times newspaper.

Motlanthe is clearly trying to play quite a principled game, said Zwelethu Jolobe, a

political analyst at the University of Cape Town. I have yet to see a candidate who


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has been successful on that basis. For the position of deputy president, it looks likeRamaphosa pretty much has it in the bag.

Ramaphosa, 60, hasnt said whether he will contest the election. Party officials mayyet broker a deal in which Motlanthe retains the deputy president post by agreeing

not to challenge Zuma, while Ramaphosa is persuaded to refuse the No. 2 spot,Seepe said.

Many senior ANC members want to avoid a repetition of the divisive leadership battlethat occurred at its last elective conference in 2007 when Mbeki was ousted andhope to still reach consensus over posts, said Daniel Silke, a political analyst andauthor of Tracking the Future: Top trends that will shape South Africa and theWorld.

The ANC cannot withstand another tear in its political fabric, Silke said in a Nov. 30phone interview from Cape Town. This is a short-term patchwork job.

7 December 2012Cape TimesPage 6Cobus Coetzee

Not a good year for reconciliation

Cape Town - Only one-third of South Africans interact across racial lines, whiledisapproval of inter-racial marriages and integrated schools is on the increase.

These are just some of the findings of the South African Reconciliation Barometer released by the Institute for Justice and Reconciliation (IJR) in Cape Town onThursday.

We didnt think that 2011 was a good year for reconciliation, but 2012 was evenworse. The question is, how long will we be able to string along like this? said IJRexecutive director Fanie du Toit.

The research found nearly half, or 43.5 percent, rarely or never speak to someone of another race. This happened as many people lived in informal settlements and ruralareas and did not have formal employment.

Between 2003 and this year the levels of interaction between races have rarelychanged, except in 2004 and 2009 when they sharply declined compared to theprevious year.

These were both election years.

Research over the past nine years shows there are still 40 percent of South Africanswho almost never talk to people of other races, while more than 60 percent of thecountrys residents dont socialise with people of other races.

Altogether 3 565 people were interviewed during April and May this year across allprovinces.


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The interviews were done face-to-face in six different languages and wererepresentative of the countrys gender, age and racial demographics.

The findings show 27.4 percent of South Africans interact with a person they believeto be of another race always or often, on an ordinary weekday, while a quarter (25.9

percent) talk sometimes.In 2012 only 17.8 percent of South Africans always or sometimes interact with peopleof other races in their homes or friends houses.

The report notes levels of cross-racial socialisation have changed little during thepast three years, while fewer people (expressed as a percentage of the sample) talkto other people of a different race compared to 2011.

Certainly, latent and overt stereotypes, fear or trepidation about others, and evennaked racism have contributed to static levels of interaction and the slow pace atwhich social bonds are being forged, the report found.

A large number, or 41.4 percent, also find people of a different races ways andcustoms difficult to understand.

A quarter of people feel economic inequality creates the biggest division betweenrace groups, while disease, political parties, race, religion and language also dividethe nation.

South Africans who live in affluent households in urban areas are the most likely tosocialise across racial lines, while rural dwellers and people living in homogenoustownships and informal settlements are the least likely.

Despite the divisions, 61.8 percent believe national unity across historical divides isdesirable but levels of agreement are lower among white (49 percent) and coloured(50 percent) youth.

Altogether 38.8 percent say they want to know more about others customs and 23.2percent say they want to interact more with people of other races.

Not everyone approves of racial integration. An increasing number of peoplecompared to last year disapprove of inter-racial marriages.

Altogether 42.7 percent of white young people, between 15 and 34 years, woulddisapprove the most if a close relative were to marry someone of a different race.This is more than white adults (30 percent).

The research also found that disapproval of school integration has been on the risesince 2010. Two years ago less than 10 percent of people disapproved while thisyear nearly 15 percent were against it.

Fewer people object to having neighbourhoods in which they live integrated.

7 December 2012Business Day


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Page 4Karl Gernetzky

Habib preferred candidate in race for Wits university rector

UNIVERSITY of Johannesburg deputy vice-chancellor Adam Habib has emerged asthe top candidate for the position of vice-chancellor at the University of theWitwatersrand. Incumbent Loyiso Nongxa, is to leave the post in May, after a 10-year stint.

It will fall to the new vice-chancellor to manage the tension between financialsustainability and a long-term vision of being a world-class institution.

The Wits senior appointments selection committee is set to table its report to the Witsuniversity council on Friday. Comments by some members of the committee suggestProf Habib is the preferred candidate for the post.

The university is also set for a shakeup in senior management positions, with thepost of vice-chancellor (academic), to be advertised next year.

The post of vice-chancellor (finance and operations) has already been filled byincumbent dean of the faculty of humanities, Tawana Kupe. Prof Kupe assumesoffice next year.

Prof Habib, has already submitted his vision for Wits and has been throughinterviews, as have two other candidates: Yunus Ballim who is Wits deputy vice-chancellor (academic), and Liesbeth Botha, the executive director of materials

science and manufacturing in the senior management team of the Council for Scientific and Industrial Research.

A candidates vision needs to build into Wits existing vision to 2022. The latter includes a push for enhancing Wits international reputation as a research institution,as well as lowering the staff-student ratio.

Along with this is raising the proportion of postgraduate students at a time whenmanagement and academics are deadlocked on a range of issues, includingbenchmarking academic standards, as well as research funding.

At the same time, Wits together with SAs 22 other public universities, is set to see anominal decrease in state funding of 1%, 2% and 3% over the next three years.Institutions are also under pressure not to increase student fees.

First on the agenda for the new vice-chancellor will be the tense labour relations atthe institution. Wits academic and support staff this year twice engaged in one-daystrikes.

Negotiations are expected to resume next year, and although academics suspendedtheir strike, they are adamant their demands are reasonable and affordable.

Prof Habib said in an interview on Wednesday that both the University of

Johannesburg and University of KwaZulu-Natal had reaped the benefits of encouraging productivity and research among academic staff.


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Prof Habib said Wits would need to balance increasing undergraduate enrolmentwith teaching loads. The university would also need to focus on the shifting higher education landscape and possible changes to funding formulas, despite Witsstrength in science and engineering which are both priority areas for thegovernment which could see the institution benefit.

Prof Botha said finding a balance between undergraduate enrolment rates andacademic pay and research time, could present opportunities for the institution.

Wits also needed to attract "third stream" income such as state support for poor students, and policy incentives to ensure that talented students were retained for postgraduate studies.

Prof Ballim declined to comment until the process had been concluded.

7 December 2012Business DayPage 3Natasha Marrian and Bekezela Phakathi

Now up to Motlanthe to step forward, say Limpopo, Western Cape

IT IS now up to Deputy President Kgalema Motlanthe to declare his availability andaccept nomination for the African National Congresss (ANCs) top job.

This was the view of provincial leaders from Limpopo and the Western Cape on

Thursday after the two provinces came out in support of Mr Motlanthe at their delayed nomination conferences.

Mr Motlanthe has now been nominated by three ANC provinces as well as the ANCYouth League to replace President Jacob Zuma at the partys national conference inMangaung later this month. But he has still not indicated whether he would acceptnomination.

In Limpopo, the ANC electoral commission announced that Mr Motlanthe hadobtained 268 votes, and Mr Zuma received only seven. There were 437 eligiblevoters in the province and 275 cast their votes. Limpopo will take 501 delegates toMangaung.

In the Western Cape, Mr Motlanthe trumped Mr Zuma by a mere nine votes.

Speaking after a two-day-long second attempt at holding the gathering, Limpopoprovincial secretary Soviet Lekganyane welcomed the endorsement of Mr Motlantheby branches.

But it appears Mr Motlanthes silence over whether he will stand still weighs on hissupporters.

"We are not imposing Motlanthe on the ANC, we are also not forcing it down his

throat. But he must consider, and if he thinks it is opportune, he can declare hisavailability," said Mr Lekganyane on the sidelines of the conference in Polokwane.


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The province nominated ANC treasurer-general Mathews Phosa as deputypresident, Sports Minister Fikile Mbalula as secretary-general, national executivecommittee member Thenjiwe Mtintso as deputy secretary-general, North WestPremier Thadi Modise as chairwoman and Human Settlements Minister TokyoSexwale as treasurer.

Western Cape provincial secretary Songezo Mjongile, who has been calling for change, also said it was now up to Mr Motlanthe to avail himself. "He is eligible to beelected to any position in the ANC and, as such, members that have met in this PGC(provincial general council) have pronounced on his name it is up to thoseindividuals now to declare their availability or not," Mr Mjongile said.

The roads to the Limpopo and the Western Cape gatherings were rocky, with bothfailing to successfully conclude the first time around. The ANCs top brass then gavethem a second, and last, shot.

In Limpopo on Wednesday, the province began registering delegates at 9am, but alarge group of Mr Zumas supporters were excluded from the process. The groupwas eventually allowed to register late on Wednesday night and the actualconference began early Thursday morning. The drama did not end there, as Mr Zumas supporters abandoned the conference, saying they were unhappy with somedelegates credentials. They were not allowed back in.

"The margins were humiliating for them. They wanted to save themselves fromembarrassment," Mr Lekganyane said.

In the Western Cape, Mr Phosa emerged as the choice of most delegates for theposition of deputy president. Mr Mbalula was nominated to take over from GwedeMantashe as secretary-general and Ms Modise as his deputy.

Mr Sexwale was nominated for treasurer and Ms Mtintso who is also a former deputy secretary of the ANC was nominated for the position of nationalchairwoman.

Western Cape provincial chairman Marius Fransman, who backs Mr Zuma, said "itwas quite tight but we respect the outcome".

"It is obviously not an issue of disappointment now we can safely say there are 90votes that we will be taking to Mangaung in the context of at least 2,400 other votesand that is the situation that we are seeing, I am very comfortable with this," he said.

Mr Zuma has the support of two provinces taking the largest delegations to thenational conference, KwaZulu-Natal and the Eastern Cape. Mr Zuma also has thebacking of the Free State, Mpumalanga and the North West.

7 December 2012Business DayPage 3Carol Paton

Yes for super tax sure bet at Mangaung


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FOR those who have been on tenterhooks to see what the African NationalCongress (ANC) will resolve on economic policy at Mangaung, the waiting is quitesuddenly over.

Comments from the head of the ANCs economic transformation committee Enoch

Godongwana to Bloomberg News on Wednesday, that in all likelihood the ANCwould opt to increase mining taxes in line with the proposals on the table, are a frankassessment of Mangaungs likely outcome.

The surprise that followed his statements are more surprising than the statementsthemselves.

The writing has been on the wall since the publication of the ANC-commissionedpaper "State Intervention in the Mining Sector" (Sims) and has been pretty much castin stone since the ANCs policy conference in June. At that meeting a lengthy andtense debate was held on the issue of nationalisation, followed by even more tensenegotiations over the wording of the final statements.

The recommendation from the policy conference very clearly endorsed the Simsdocument, which rejected "wholesale nationalisation" and supported "strategicnationalisation", by which was meant the question would be decided case by case ,and going by evidence available.

A small but important development was that while the Sims document suggested "asuper tax" on windfall profits, the policy conference stopped short of saying exactlywhat form the tax should take.

Instead it said: "The state must capture an equitable share of mineral resource rents

and deploy them in the interests of long- term economic growth, development andtransformation."

For Mr Godongwana, who is at pains to point out that he is not pre-empting theoutcome of the conference, the point is that there is unanimity within the ANC thatdespite the contribution of mining companies to the fiscus, the "equitable share" isnot being captured at present.

"At the policy conference we said capture the rent. What we have not specified iswhat form of tax precisely, because that is a technical matter.

"While the present regime does not capture the large profits being earned throughsome commodities, the counterargument to a super tax is the volatility of commodities. It is not an easy choice, and government is doing that technical work,"he says .

The Treasury, al though it has made no public comment, is known to be stronglyopposed to the super-tax proposal . Its stance on the matter seems to be part of thereason why commentators were surprised by Mr Godongwanas statements.

Some mining companies had already persuaded themselves the idea was off thetable.

But while the Treasury in the past was able to hold the line on matters it considerednonnegotiable, those days appear to be coming to an end .


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There is no possibility, regardless of the appeals from the Treasury or the amount of noise from credit ratings agencies, that the commitment to raise mining taxes will notbe endorsed at Mangaung.

The moderates among whom Mr Godongwana is included could still have

difficulty in holding delegates to this formulation. After the policy conference therewas dissatisfaction over the formulation, with the left saying the resolution waswatered down by the economic transformation committee.

At the last two ANC national gatherings it has become fashionable, if not essential for ones credibility, to be seen to actively support nationalisation. Thus a long queue of people, who dont normally bother themselves with economic debates, have now

joined the discussion with enthusiasm, in what Minister of Planning Trevor Manuelhas described as "vuvuzela politics".

This was brought on by the ANC leadership battle, where nationalisation became the ANC Youth Leagues proxy for a factional attack on President Jacob Zuma.

Hopefully, with that issue settled and Mr Zuma on his way back to power, the frenzywill subside. This will make the job of the moderates easier and agreement on theformulation of "capturing an equitable share of mineral resources rents" a formality.

7 December 2012Business ReportPage 18Donwald Pressly

Future of SA mining is up for grabs at Mangaung

While the media focus has fallen on the politics and elective processes of theupcoming ANC national conference in Mangaung, some key economic policy issueswill be thrashed out, which will have a significant impact on doing business in South

Africa.

The state onslaught on the mining sector will reach fever pitch at the conference. Although Enoch Godongwana, who remains the partys economic transformationcommittee chairman despite getting into hot water over dodgy union deals, says thatnationalisation is not on the agenda, state intervention in mining will with little doubt

be ramped up considerably.

Only yesterday, the government announced, after its cabinet meeting onWednesday, that steps would be taken to dampen the prices of iron ore and steel. Itis envisaged that export taxes be raised significantly to quell the global appetite for this countrys raw mineral products.

The idea, of course, is to force more of these goodies on to the South African marketto enforce local beneficiation and uptake of steel. It is good in theory, at least.

But with all government interventions, the result is normally a distortion in the marketwhich will, most likely, not pan out to be beneficial to the taxpayer. Take, for instance,the establishment of the African Exploration Mining and Finance Corporation(AEMFC), the state-owned mining company that focuses on supplying coal insweetheart deals with Eskom.


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The AEMFC received a plug of R120 million from the CEF, previously known as theCentral Energy Fund. This is the only reason it has been able to carry on trading as astand-alone state-owned company that is supposedly in the process of exiting fromthe CEF umbrella.

Then there is Alexkor, the state diamond mining company, which has rewritten theformula for mining management incompetence. It is simply a financial black hole. Inthese two examples, there has been absolutely no obvious benefit to the taxpayer. If anything, much of their highly overpaid management have simply become rich. Theyhave achieved just the opposite of the intention to expand the states role to benefitthe masses.

Despite this overwhelming evidence that the model of a greater state role in theeconomy doesnt work, Godongwana, in an interview, said that the ANC shouldignore the warnings of Moodys Investors Service and Standard & Poors and imposetaxes and more aggressive redistributive policies on the mining sector at Mangaung.

According to the State Intervention in Mining report written some months ago, super-

profit taxes are a jolly good idea.

Former Reserve Bank governor Tito Mboweni warned that nationalisation was just aruse by some to plunder national resources. Yet one suspects that the prevalentthinking in the ruling party tends towards the radical positions.

Chamber of Mines chief executive Bheki Sibiya told the Cape Town Press Clubrecently that the powers that be he meant political, religious, union andcommunity organisations must cease their witch-hunt against the crown jewel, themining sector. He warned that the sector faced some 10 000 job losses in the firstquarter of next year and was already struggling to survive. Nearly 60 percent of platinum mines did not make a profit. He also said the recent downgrade of thecountrys credit rating was a vote of no confidence in the political leadership.

He said if an additional mining tax was introduced, the ANC would send the signalthat it did not want a sustainable mining sector. They want to kill the economy.

6 December 2012The New AgeSiyabonga Mkhwanazi

Motlanthes life in danger Lekota

Cope leader Mosiuoa Lekota has entered the ANC leadership battle by claiming thatDeputy President Kgalema Motlanthe was threatened not to contest the presidencyof the ruling party.

Lekota told journalists in Cape Town yesterday that Motlanthes life was in danger for challenging President Jacob Zuma for the ANC leadership.

The deputy president of the ANC and the country has been openly threatened that if he stands against Zuma he is placing his life in danger, Lekota said.

However, the ANC dismissed Lekotas claims saying he was the last person to talkabout election contests as he was leading a directionless party.


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ANC spokesperson Keith Khoza said Lekota could not even run Cope.

Cope is in tatters, said Khoza, adding: If there is anyone who needs advice it isTerror Lekota.

He said the ANC had programmes and it was going to an elective conference nextweek.

What can Terror Lekota tell us about leadership? The Cope leadership has beeninstalled by the courts, Khoza said.

Lekota said the current ANC government had been the worst government in manyyears.

He said the march on the Goodman Gallery by the ANC leadership to protest againstthe Spear painting, depicting Zuma with his genitals exposed, was in violation of

freedom of expression.He said the Marikana tragedy was the last straw as the government had failed toprevent the incident from happening.

Lekota added that the overall performance of the ANC government left a lot to bedesired. Out of a total of 10 he said he would give the ANC government a one-and-a-half.

Khoza said it was evident that Lekotas analysis was questionable.

You can expect that from a bitter former ANC member. He has poor judgment.

Whatever he says, people will judge it with suspicion, Khoza said.

Lekota also said they would challenge the Protection of State Information Bill and theTraditional Courts Bill in the Constitutional Court.

He said they were concerned that there was no public interest defence clause in theprotection of state information bill and that the traditional courts bill took away theright of women to be involved in the running of their villages.

He said they wanted the latter to be withdrawn from Parliament.

6 December 2012Business DayStaff writer

Motlanthe secures top ANC nomination in Western Cape

DEPUTY President Kgalema Motlanthe has been chosen as the Western Cape African National Congress (ANC) nominee for party president, provincial secretarySongezo Mjongile said on Thursday.

Both the Western Cape and Limpopo had missed the November 30 deadline toconclude the leadership nomination process ahead of the ruling partys Mangaung

elective conference later this month.


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Mr Motlanthe won by a small margin, receiving 99 votes to President Jacob Zumas90.

Sports and Recreation Minister Fikile Mbalula was endorsed for the position of secretary-general, with 96 delegates supporting him against incumbent Gwede

Mantashes 85.The final list saw Mathews Phosa nominated for deputy president and Thandi Modiseas deputy secretary-general. This was after a revote.

Earlier national executive committee (NEC) member Cyril Ramaphosa wasnominated as Mr Motlanthe's deputy, and Jessie Duarte as deputy secretary-general.

Mr Mjongile said voting for the remaining positions would continue after thenominees failed to get an outright majority.

Delegates had been gathered at the Cape Peninsula University of Technology,where the provincial general council was being held, since 4pm on Wednesday.

Members of the ANC NEC task team including Public Service and AdministrationMinister Lindiwe Sisulu, Health Minister Aaron Motsoaledi and Gauteng Premier Nomvula Mokonyane had travelled to Cape Town on Wednesday for thereconvened nomination conference.

On Wednesday, provincial ANC chairman Marius Fransman said: "We believe thatthe conference will happen very smoothly, because the Western Cape leadershipwont need to deal with disputes, as that will be done separately by the NEC taskteam."

Last week, two attempts to conclude the provinces nomination process collapsed, asa result of the provincial executive committee not having the authority to rule over branch disputes.

Controversy in Limpopo

Meanwhile, the conference in Limpopo was still mired in controversy on Thursdaymorning, following complaints on Wednesday that some delegates were beingexcluded and bogus delegates being registered to attend the gathering in their place.

The conference was abandoned last week after violence broke out at the gathering inthe hotly contested province.

Registration kicked off by mid-morning on Wednesday but the process was far fromsmooth with tense stand-offs between supporters of Mr Zuma and those backing Mr Motlanthe.

There was a heavy police presence, both at the registration and conference venue.This included check points on the road leading to the venues and a command centreat the conference hall.

By late afternoon many waited at the registration venue, some complaining that they

were not allowed to enter despite being legitimate delegates.


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Two men, believed to be supporters of Mr Zuma, were arrested on Wednesday nightwhen a group of people tried to force their way into the conference centre. Theyallegedly pelted police with stones when officers tried to talk to them.

The men will appear in the Polokwane Magistrates Court on public violence charges

soon.On Thursday morning, police spokesman Brig Hangwani Mulaudzi said: "Thesituation is now calm. We are still having deployments in identified areas even atthe conference centre itself."

He added: "We will be there until the conference finishes, and I think we did the beston our part since yesterday (Wednesday) because now the situation is calm.However, we are not working alone because there is a private security company aswell."

6 December 2012Business DayPage 5Karl Gernetzky and Wyndham Hartley

SA slips further on corruption index

SOUTH Africa now ranks 69th of 176 countries considered in TransparencyInternationals corruption perception index for this year. Local commentators,however, are not surprised that the country has shed five places in the index, whichwas released on Wednesday.

South Africa has fallen 31 places in the past 11 years, and it ranked behind Ghana,Namibia, Rwanda and Lesotho in this years edition of the index. South Africa ranked38th out of 91 countries in the 2001 survey.

The index measured perceived levels of corruption in the public sector, bribery, theabuse of public resources, secrecy in decision making, anticorruption laws andconflicts of interest in respect of government officials.

There are a raft of complaints before Public Protector Thuli Madonsela. The SpecialInvestigating Unit also has a mountain of corruption proclamations on its table, andauditor-general Terence Nombembe has found numerous irregularities in hisinspection of the books of state entities. Hundreds of corruption charges againstPresident Jacob Zuma were dropped on dubious grounds, and he is now embroiledin allegations that state coffers were raided to make improvements to his privatehome.

Democratic Alliance (DA) spokesman on the standing committee on public accountsDion George said yesterday the trend was "hardly surprising". SA shed 14 places inthe past three years under Mr Zuma, he said.

Over the past year the government has shown a "lacklustre" response to publicsector corruption, and the year was characterised by "Nkandlagate", continuedfailure to permanently appoint the head of the Special Investigating Unit, and arefusal to adopt legislation that would prohibit officials from doing business with thestate, said Mr George.


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The African National Congress had also rammed the "secrecy bill" throughParliament, and few criminal charges resulted from breaches of the Public FinanceManagement Act pointed out by the auditor-general.

Corruption Watch executive director David Lewis yesterday said the results were not

surprising as the "survey echoes what we hear in the thousands of reports fromordinary people confronting corruption daily". While many leaders in the public andprivate sectors were deeply concerned about corruption, "the public cant help butsee the disjuncture between strong words and weak action," Mr Lewis said.

DA correctional services spokesman James Selfe recently said: "The DA is shockedat the pervasive nature and extent of corruption and maladministration in governmentin South Africa".

Special Investigating Unit probes were being undertaken into 32 municipalities (24 of which were in North West alone), six national departments, 12 provincialdepartments (from Limpopo, Mpumalanga, Gauteng and the Eastern Cape) as wellas three parastatals.

Earlier this year Ms Madonsela said corruption was endemic in South Africa. "If wedont deal with corruption decisively, it will not only affect good governance, but it hasthe potential to distort our economy and to derail democracy," she said.

6 December 2012Business DayPage 4Sam Mkokeli

ANC hard line on media confuses

IS IT you? I asked Sthembiso Msomi, the political editor of the Sunday Times, as itbecame clear that the SABC had blacklisted us on Tuesday night. He looked at meand retorted, with a casual laugh: "Its you."

I turned to the Financial Times Southern Africa bureau chief Andrew England. Healso laughed, saying he was not the reason a Metro FM debate we were going toparticipate in was called off. I was looking for reasons why the show was canned. Itfelt like one of us had dragged the team down. It was like we had an outcast among

ourselves, or we were all counterrevolutionaries that were not to be allowed to getclose to the microphones at the station.

We were invited to discuss Mangaung and how the media has covered the process.We were some what nervous, being print journalists, while waiting for the clock to hit8pm. A few minutes later host Sakina Kamwendo told us that the show could not goon. She had been instructed by her boss to cancel it. She gave no reasons andcarried on with the topic of the evening.

She had an open line, where callers discussed the medias coverage. Outside thestudio, we were left looking for answers. At the back of our minds was the 2007blacklisting scandal, under Snuki Zikalalas leadership of the SABC. I dontremember how the victims of that blacklisting felt then. They included Karima Brown,Business Day political editor at the time.


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A big part of me knew there was no reason for me to be blacklisted call me naive.I have not "dissed" anyone to the extent that I could be banned. Topics like Nkandlahave been too depressing for me, to the extent that they are not on the tip of mytongue. And I am not anti this Mangaung candidate, or pro that one.

I also knew the other journalists were not the kind of guys who could end up on ablacklist. Mr Msomi is the most measured and balanced political journalist inJohannesburg, and Mr England an absolute pro.

It dawned on me what had happened was a tsunami in a tea cup. Ideally, it should beignored. But it has happened before, and it will happen again.

The SABCs explanation on Wednesday was that the composition of the show wasnot balanced. We were all from the same media stable.

You need to have been hiding under a faulty tower to not know the distinctionbetween the Sunday Times and Business Day. We share a building, and the SundayTimes publishers own half of Business Days publishers. The other half is owned byPearson, the publishers of the Financial Times.

As for us journalists, we dont even share a fax, let alone ideas. We compete. In factMr Msomi teased me later that I was the persona non grata, for having interviewedDeputy President Kgalema Motlanthe last week.

The other excuse offered by the SABC management was that the African NationalCongress (ANC) was not invited to the show, to convey the views of the other side.What other side? The show was on journalists, and for journalists.

Above all, does it take a call from higher up to have a show cancelled in order toachieve a balanced debate?

Going to the SABC, I had expected quite an interactive show, with the listenerscalling in. The shows regular listeners are not fools some of them are active ANCmembers. They are capable of calling in to correct a guest. The SABC did not needto protect the ANC. If it felt so strongly, it could have called the ANC to be on theshow via telephone. Not ideal, but it is still better than the short-sighted bullyapproach of the SABC men in suits. You do not need to cancel an entire show toachieve balance.

That makes sense at the SABC: silence people to achieve diversity of views. Thereis always the temptation to think that the call came from the higher-ups at LuthuliHouse. But do not jump to conclusions. It is quite possible that an overzealousadministrator took it upon himself to save the ANC. Its not difficult to see why thatcan happen. The SABC is full of people who do not have qualifications or therequisite skills, but who believe they have to impress Luthuli House in their everydaydecisions.

I called ANC secretary-general Gwede Mantashe on Wednesday, to ask if the ANChad given an instruction to the SABC. His answer was an emphatic no. "Its their (SABC staffs) stupid decision, write that!" he said.

For once I agreed with Mr Mantashe. I dont see why he would instruct the SABC onhow to run its affairs.


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The master blaster in him enjoys a scrap too much, to such an extent that the idea of him calling in on a debate show where the ANC was tried in absentia, is not far-fetched.

But the abuse of political journalists by Luthuli House politicians easily makes us

door mats for the SABCs bureaucrats. They have heard South African CommunistParty general secretary Blade Nzimande on his favourite topic: the bourgeois mediais bad.

Mr Nzimande has also criticised the SABC for broadcasting stories about former ANC Youth League leader Julius Malema, in the aftermath of his expulsion from theparty. That is an equivalent of a flour bomb, if you are a manager at the SABC,without the journalistic or editorial management know-how. You are bound to feel thepressure from the likes of Mr Nzimande. It is not surprising that anything Mr Malemarelated hardly makes the news nowadays, unless it portrays him in negative light.

Last year, the ANC revealed it was monitoring the attitudes of journalists who wroteabout the party, down right to "attitudes of individual journalists".

My name appeared in one of the monitoring reports, "for negative and neutralreports". I laughed this assessment of "attitudes" off when I realised they did notknow their political commentators from their journalists.

They had studied reports by a colleague who writes about legal and constitutionalmatters. Yet they saw fit to list him in the table with political analysts. Luthuli Houseshard-line approach to the media is potentially confusing to those in Auckland Park.Hence "stupid decisions" reign supreme.

6 December 2012Business DayPage 3Carol Paton

Business gets serious over lobbying at Mangaung

FOR the first time in the run-up to an African National Congress (ANC) electiveconference, business has produced official lobbying documents, in the hope of influencing policy outcomes.

In the past, business relied on its own key individuals to lobby key individuals in thegovernment, but all that has changed in the five years since Polokwane. The ANCnow really does set the parameters of policy, rather than belatedly getting to hear of government policies and programmes that dont always fit with the letter and spirit of resolutions.

But organised business especially big business has lost influence both withinthe ANC and in the government, hence the new direct efforts to lobby the ANCseconomic transformation committee. This committee, chaired by former publicenterprises deputy minister Enoch Godongwana, is responsible for drafting theeconomic discussion papers and will play a leading role in writing the final resolution

on the economy that emerges from the Mangaung conference.


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The loss of influence came with the departure of Thabo Mbeki as the head of government and the ANC. Mbeki established mechanisms such as the bigbusiness working group through which channels of communication wereestablished. The captains of industry complained about the efficacy of the forum, butsince its demise under President Jacob Zuma, they may now regret what they havelost.

The best channel of communication, though, was that between trusted friends Mbekiand ANC heavyweight and business luminary Saki Macozoma which frequentlysaved the day when the going got rough. Although Macozoma is still president of Business Leadership South Africa, which represents the biggest companies on theJSE, Business Unity South Africa (Busa) and not the richer, more resourced body isthe official channel through which the government talks to business.

Busa, which counts Business Leadership South Africa as member, lacks the realclout that the latter wields in the economy. Rather than accurately reflecting"organised business" or "real business" Busa is best described as "political

business". While it is active in the National Economic Development and Labour Council it is astoundingly ineffective, sends low-key individuals without anysubstantial business or political connections, and communicates badly. Busas keyrole has been in the selection of delegations to accompany Zuma on foreign visits,using the power of the state to latch onto business opportunities.

Not surprisingly, then, the lobbies have come forward of their own accord. But howeffective have they been in persuading the ANC to take the needs of businessseriously?

The first emerged under the auspices of the Banking Association of South Africa,which wrote a response to the ANCs economic transformation document. Later, CEsof several of the top banks met members of the economic transformation committee.In their paper, the banks challenged the philosophical approach of the ANC to theeconomy, arguing against the "developmental state" and in favour of a "facilitativestate", of which the primary role in the economy would be creating a better environment for doing business.

This is really the nub of the problem: if the state was to focus simply on getting thebasics of the business environment right, business, job creation and the economywould be so much stronger. But asking the ANC to change its philosophical outlook particularly as expressed in a conference resolution, which (in the ANCs book)must be "revolutionary" is really a fruitless exercise.

The banks had a little more success in getting across one of their key points: their opposition to a policy of prescribed assets classes one of the suggestions made inone of the ANC papers. By clearly indicating their openness to some kind of voluntary approach to this, the banks probably did the savings industry a bit of afavour. The likelihood of a preference for prescribed assets of finding its way into thefinal resolution, is small.

The second lobbying group was the Manufacturing Circle, a group whose keyinterests a competitive exchange rate, industry support measures and protectionfrom "unfair" competition often run counter to the more free-market approach of the financial sector. The manufacturing sector, however, has a ready-made advocatein the ANC in the form of Trade and Industry Minister Rob Davies, who can be


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expected to push for them not just in Mangaung, but at every available opportunity.Their voice does help to strengthen his hand.

If the economic transformation resolution from Mangaung includes an insistence thatthe government does all it can to flatten the electricity price, their constant lobbying

will have a worthwhile payoff.

6 December 2012Business DayPage 3Natasha Marrian

Controversy dogs ANCs reconvened conference

THE African National Congresss (ANCs) reconvened provincial nominationconference in Limpopo was mired in controversy on Wednesday, with complaintsthat some delegates were being excluded and bogus delegates being registered toattend the gathering in their place.

The conference was abandoned last week after a group of "violent hooligans"wearing T-shirts with President Jacob Zumas face printed on them disruptedproceedings, forcing delegates to flee the venue, provincial spokesman MakondeMathivha said at the time.

Six members of the ANCs national executive committee (NEC) were sent toLimpopo on Wednesday.

Earlier, Limpopo provincial secretary Soviet Lekganyane said NEC members sent tohelp with reconvening the nomination conference would not be welcome becausethey had vested interests.

But ANC spokesman Jackson Mthembu said the NECs decision on any matter,including deployments to Limpopo to resolve nomination problems, was binding."Such an irresponsible and un-ANC statement does not only undermine the decisionof the NEC, it also fails to acknowledge that the NEC carries full responsibility for thesuccess of the pending 53rd national conference," Mr Mthembu said.

The NEC met on Monday to discuss the situation after Limpopo, the WesternCape and North West missed last Fridays deadline to conclude the nominationprocess ahead of the partys national electoral conference in Mangaung this month.

North West held its conference on Sunday after parallel gatherings were held onSaturday. However, some North West delegates complained that they were excludedfrom the gathering. They have threatened to take the matter to court if it is not dealtwith by the party leadership.

The ANCs top brass gave both Limpopo and the Western Cape a last shot to wrapup their business. Failure to do so would result in the provinces forfeiting their nominations. They would, however, still be allowed to nominate from the floor of theMangaung conference.


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In Limpopo, registration began about mid-morning on Wednesday. But the processwas far from smooth, with tense stand-offs between supporters of Mr Zuma andthose backing his deputy, Kgalema Motlanthe, for the ANC presidency.

There was a heavy police presence on Wednesday, both at the registration and

conference venues, and this snuffed out any chance of events turning violent.Dozens of delegates at the registration points wore T-shirts bearing the face of Mr Zuma. Songs in his support blared from parked vehicles. By late afternoon manywere waiting at the registration venue, some complaining that they were not allowedto enter, despite being legitimate delegates.

By 6pm the conference had not started. A source, who wished to remain anonymous,said the provincial leadership and the NEC "deployees" had met to iron out disputesover delegates allowed to attend.

The national team included Police Minister Nathi Mthethwa and former spy boss BillyMasetlha. It is understood that many of the disputes which led to the collapse of thegathering last week still remain.

The source said the provincial executive committee (PEC) had "walked out" of themeeting with the national leaders, and the PEC members were determined to goahead with the conference minus the national team. But a PEC member disputedthis, saying the meeting had merely moved to the conference venue.

Another source from the pro-Zuma faction said the PEC wanted to go ahead in theabsence of the electoral commission, meant to preside over the gathering.

He also alleged that bogus delegates had been brought in to replace genuine ones atthe conference, to prevent nominations from swinging away from the PECs preferredcandidate, Mr Motlanthe.

Meanwhile, by early evening on Wednesday delegates at the Western Capenomination conference were still going through the registration process without muchincident.

6 December 2012Business DayPage 1Thabiso Mochiko

Net1 shares down 56% on US probe

SHARES in Net1 UEPS Technologies have lost half of their value since the companyrevealed that US authorities have launched a probe into a tender it won in South

Africa.

The North Gauteng High Court ruled in August that the R10bn social grants tender the company had won was "illegal and invalid" and a complaint was laid with theHawks in May.


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On Wednesday, Net1s share price plummeted 47.8% to close at R35. It dropped 8%on Tuesday, bringing the total loss to over 56%.

Net1, which is listed on the JSE and Nasdaq, on Wednesday assured the market thatthe investigation into the tender by the US justice department and the Securities and

Exchange Commission did not mean that it had been found guilty of wrongdoing.The two organisations are probing whether Net1, or any of its subsidiaries,employees or associates, bribed government officials to secure the tender todistribute social grants to more than 15-million beneficiaries.

The tender was awarded to Net1s subsidiary Cash Paymaster Services early thisyear and AllPay, the losing bidder, took the matter to court.

Both Net1 and AllPay were given leave to appeal some sections of the ruling and thematters are expected to be heard early next year.

Anthony Norton, a partner at Nortons Incorporated which is representing AllPay, saidon Wednesday that, in terms of the Prevention and Combating of Corrupt Activities

Act, anyone in authority who had a reasonable suspicion of potential contraventionsof the act involving R100,000 or more was obliged to report it to the police.

AllPay had reported the matter to the Hawks in May, Mr Norton said.

"Given the fact that ... Net1 is listed in the US, it appeared inevitable that the USauthorities would take an interest in this matter and AllPay was advised by its USattorneys to report the matter to the department of justice, which it did," Mr Nortonsaid.

"Net1 recognised that the announcement of these investigations raises questionsand concerns about the company and its Social Security Agency contract," thecompany said on Wednesday.

Net1 said the investigations were not findings of wrongdoing on the part of anyperson and that it was "fully co-operating".

The US authorities could be investigating contraventions of the Foreign CorruptPractices Act, which prohibits payments to foreign officials to induce them to act inviolation of their duties.

It applies to any corrupt action by US businesses and nationals in another country.Companies found to be in violation of the act face fines amounting to millions of dollars and people found guilty of breaking the law might face jail terms.

Democratic Alliance social development spokesman Mike Waters said onWednesday he would ask Social Development Minister Bathabile Dlamini to co-operate fully with the US authorities.

Department of Social Development spokeswoman Lumka Oliphant on Wednesdaysaid there were legal processes under way and "all the parties involved were co-operating". She said the department had not received any correspondence from law

enforcement agencies outside South Africa.


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6 December 2012Business DayPage 1Monde Maoto

ANC shrugs off warning on risks to SA mining

GLOBAL analysts warned on Wednesday that South Africa was losing even morelustre as a destination for mining investment, but the African National Congress(ANC) once again brushed off their concerns, insisting that changes would be madeto the mining regime at the partys conference later this month.

Mining companies operating in South Africa intend investing $3bn in projects over the next 19 years, compared to $55bn in Australia and $33bn in Brazil, according toresearch by global advisory firm Deloitte Touche Tohmatsu, released onWednesday.

South Africa has mineral resources worth an estimated $2.5-trillion.

Mining companies across the globe were concerned about higher costs, resourcenationalisation, corruption and skills shortages, the Deloitte research showed.

Mining executives in South Africa have been warning for months that they will notinvest in a climate of policy uncertainty.

Anglo American CE Cynthia Carroll on Tuesday called on the government to

establish clear regulations, as mining companies had decades-long investmenthorizons and would not invest "if there is a fear of arbitrary and unpredictableregulatory change".

Deloittes annual Tracking the Trends in the Mining Sector report placed South Africa12th out of 20 countries that mining companies intended investing in over the next 19years.

Its report said that this year was a "watershed year" for the South African miningindustry.

"It was the year in which the labour relations framework was tested beyond breakingpoint, with tragic consequences, and a spread beyond the mining sector," the reportread.

"It was also a year in which companies had to balance rising costs and fallingcommodity prices and balance the demands of workers, communities, government,regulators and shareholders."

Tony Zogbhby, Africa mining leader for Deloitte SA, said on Wednesday that for asecond year in a row, mounting costs topped the list of key issues affecting themining industry. South Africas mining industry was mature, which was a huge factor when making investment decisions.


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"The gold miners have to go deeper underground and invest in new machinery... theplatinum miners will have to tackle degrading ore for platinum group metals," Mr Zogbhby said.

He said one of the reasons for investors flocking to Australia rather than South Africa

was the scarcity of capital, and the need to contain rising costs.The ANC will ignore ratings company advice and call for an increase in mining taxes,Enoch Godongwana, the partys economic policy head, said on Wednesday.

He said the party must ensure that the lives of poor black South Africans improve or risk giving an opportunity for populist leaders to stir up social unrest and erode the

ANCs dominance.

"Unless we do some radical transformation, well create fertile ground for anuncontrollable revolution," Mr Godongwana said.

Moodys Investors Service and Standard & Poors have downgraded South Africasdebt, citing slower economic growth, after the worst mining strikes since the end of apartheid and political pressure to raise spending.

"Were kind of in a Catch-22 situation because there are people who listen toMoodys and when we go out there and raise money, it becomes expensive," Mr Godongwana said.

"We may take a hit. Weve got to make a choice, do we please Standard and Poorsand Moodys or do we deal with the kind of constituencies were facing? Werewalking that tightrope."

While Mr Godongwana ruled out the ANC conference agreeing to any form of minenationalisation, he said increased taxes on mining were possible.

The party had not identified which minerals would need higher taxes as delegatesneeded to consider the effect on the mines, he said. "It may well be that we will notincrease tax on gold because most of the gold mines are marginal."

Nomura International economist Peter Attard Montalto said Mr Godongwanascomments flew in the face of expectations that the ANC would shy away fromspecific policy pronouncements at its conference. "If what Mr Godongwana says isactually enacted ... then (credit rating) downgrades in the first quarter of next year actually become more likely again."

International credit insurer Coface said in its third-quarter report on the miningindustry, released on Wednesday, that "all indicators suggest a negative trend, withreduced production and profitability levels".

"The long-term effect of the recent strike action is still to be realised, with the foreigninvestment confidence index at a 10-year low," Saijil Singh, lea

Global South African News Wrap - 7 December 2012

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Transcript of Global South African News Wrap - 7 December 2012