Going into the dark

The previous post was headlined “The ANC’s surprising return to form” and it stayed as the face of this website throughout a week in which we were reminded of the nest of corruption our president emerged from.

… oh yes, and a week when the ANC in parliament passed the Protection of Information Bill – with sneaky abstentions from three of their MPs. (Gloria Borman actually abstained, Ben Turok walked out and Salam Abram said he would have abstained if he could have made it to the sitting.)

… and a lot else has gone wrong such that it is difficult to even pierce the gloom.

Many of these issues have been done to death, but briefly on Mac Maharaj:

The Mail&Guardian weekly newspaper and the Sunday Times (and now City Press) revealed different pieces of evidence that appear to prove that French arms company Thales channeled money to Mac Maharaj, then Minister of Transport (also, crucially, architect of Zuma’s rise and key strategist behind Zuma government) a few months before Thales was awarded a credit card licence tender (worth about R265 million) by Maharaj’s department in 1996.

The more revealing points are that the alleged middleman, Zuma’s financial advisor Shabir Shaik, was sentenced to 15 years in prison for, amongst other things, securing a bribe from Thales for Jacob Zuma’s protection in the arms deal. Thales country manager Alain Thetard allegedly signed or originated both the agreement that channeled money to Maharaj through his wife Zarina as well as the encrypted fax spelling out the payment for Zuma and the protections and advocacy those payments were for.

The issue is Zuma only avoided prosecution for corruption and racketeering because it was shown that there was political meddling in the prosecution – not because there was not a prima facie case for him to answer (his financial advisor went to prison for securing the bribe for his boss … you don’t get more prima facie than that!)

The leaking of the evidence is undoubtedly linked to the conflict between Zuma and the faction of which Julius Malema is a part. In fact the Youth League has made it clear that it plans to raise issues associated with Zuma’s sexual conduct as well as the fact that his (Zuma’s) friends and family have benefited financially (and overwhelmingly) from his presidency. Some of Malema’s key backers were insiders to the arms deal scandal and it would have been an easy matter for evidence against Mac and Zuma to emerge from some of those quarters.

At the very least the accusation (and reminder) that the Zuma presidency is deeply tainted by this history will hurt his  re-election bid at Mangaung.

… while the ANC itches to get more fingers on the economy

Late last week it emerged that there are proposals to tax ‘unbeneficiated’ mineral exports and to force the South African fund management industry to own a specific amount of government and SOE bonds in ‘draft of draft’ reports from the ANC Economic Transformation Committee – that were due to be discussed by the ANC NEC this weekend.

Both Bloomberg and Reuters have got hold of these, but the ‘final drafts’ take a less prescriptive approach, according to committee chair and key ANC economic policy strategist (and deputy minister Economic Development) Enoch Godongwana.

The ANC aches to get its hands on the IDC’s Public Investment Corporation’s investment power – especially as assets under management (mostly public sector pensions) topped the 1 trillion Rand mark in March.

The prescribed assets idea and strategies to force beneficiation – all in the service of the jobs drive – have been on the fringes of government thinking for years and are flirted with in much of the motivation that led to the NGP.

I don’t think these proposals will ever be legislated in this form.

A pre-Mangaung policy conference (in May according to the Business Day and June according to Bloomberg/Reuters) will make recommendations but the decision will only be made in December 2012.

The ‘nationalisation of mines’ draft proposal was also expected to be delivered to the NEC this weekend. I haven’t seen it or read any reports about it, but I expect a shift in the tax regime, a tightening up of the Charter and a plan to strengthen the African Mining Exploration and Finance Company (AEMFC) – which is the much vaunted “state owned mining company”. Together these fall well short of the ANCYL nationalisation proposals, but still weaken the investment case for the industry as a whole.

(Note, that these ideas proposed by think-tanks within the ruling party are essentially grappling with ways to make the economy more supportive of the transformation project. The problem, though, is one of trust. Giving this ANC is led by the kind of people named in the first few paragraphs of this post, more control over central aspects of our lives feels stupid. I just don’t trust them any more.)

… meanwhile

… Cabinet approved the publication of the Broad-Based Black Economic Empowerment Act Amendment Bill that plans to fine companies up to 10% of revenues for ‘fronting’- and allows for companies to lose points on one part of the balanced scorecard for failure to achieve targets on another.

This is the first major attempt to give B-BBEE serious teeth (outside of mining licensing where the legislative and regulatory teeth are already pretty sharp.)

My own feeling is that resources for ‘deracialising’ the SA economy are limited; cheating is a problem, but the fact that the process is too often indistinguishable from a bribe of the political class is the bigger failing the new amendments ignore.

There’s my happy little corrective for an early Monday morning.