Consolidation or cronyism?

2011-02-19 10:27

February has been President Jacob Zuma’s month of consolidation. He has moved to fill many long-standing vacancies, both in the parastatals and in government.

This is good because long-term vacancies, like that of Transnet chief executive, were surely bad for investment and for the infrastructure drive that will underpin government’s bets on rising prosperity.

Now Transnet has a chairperson (Mafika Mkwanazi) and a chief executive (Brian Molefe), who was appointed this week.

In addition, the rudderless Telkom has a steward in Lazarus Zim, who was appointed chairperson on Thursday.

The partly state-owned telecoms company now needs a chief executive to replace Jeffrey Hedberg, who will leave before March.

Zim is a seasoned businessman and a veteran leader in fields that span the economy, mobile telephony, mining and publishing.

At government communications, Jimmy Manyi has been appointed– in one fell swoop, Zuma has put his own man in charge of propaganda while dealing with a legacy problem.

Manyi was at loggerheads with the labour department after he was suspended by the previous minister, Membathisi Mdladlana.

Consolidation is a vital step if Zuma is to achieve the vast ambitions of his first term and secure a two-term presidency.

Like all leaders, he is building his team of trusted confidants.

But he should be wary of where the lines of consolidation and cronyism cross.

Zim is an independent and organic businessman, but he has recently tied his fortunes very closely to that of the Gupta family.

There are cross-holdings between his companies and theirs across mining, publishing and now in the V&A Waterfront deal.

We would argue that the Guptas are classic cronies.

This family, now ensconced in the ANC and in the presidential bosom, has catapulted two of Zuma’s children to positions of unprecedented wealth by giving one a job at Sahara (daughter Duduzile is a director) and another (son Duduzane) a stake in the ArcelorMittal deal, which he won after his associate company, Imperial Crown Trading (ICT), allegedly siphoned mining rights in Sishen and then entered a R9 billion black economic empowerment deal to secure the steel giant’s access to Sishen.

The Guptas enjoy a significant shareholding in ICT, as they do across the economy in known and unknown ways.

In Molefe’s final months at the Public Investment Corporation, which he served as chief executive, the pension fund investor played a role in bankrolling the Gupta’s acquisition of what is now Shiva Uranium. Duduzane is a director and shareholder.

As we saw during the Transnet saga, in which former executive Siyabonga Gama was found guilty of overstepping his powers to grant tenders to politically connected companies, the transport parastatal is a big spender in the economy.

Are the Guptas gearing to enter the infrastructure economy too? Who knows?

We hope the president’s moves are designed to consolidate in order to build the democratic economy and not the crony economy.


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