Cyril Ramaphosa parks his money

2014-06-01 15:00

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Deputy president has signed a deal with Phuthuma Nhleko, but few details are available, including if he has sold his stake in Shanduka

South Africa’s new deputy president, Cyril Ramaphosa, has made a point of distancing himself from his business interests to take up his new position?–?but questions still linger about the transparency of the process.

Ramaphosa’s company, Shanduka Group, announced a merger with former MTN chairperson Phuthuma Nhleko’s Pembani.

However, nowhere in the announcement does it say that Ramaphosa has sold any of his investments.

The announcement merely states that this merger “will enable” him “to exit his business interest in Shanduka” to focus on politics. Shanduka will not explain what this means.

Last year’s Sunday Times Rich List put Ramaphosa’s net worth at R2.2?billion, although this only took into account his directly and indirectly held listed investments.

Ramaphosa’s interests span the entire economy?–?from Bidvest to Mondi, MTN Group, Standard Bank, Coca-Cola and McDonald’s, to name a few.

He has held numerous directorships and recently stepped down from all the boards on which he has sat, such as MTN, Lonmin, Mondi and Bidvest.

In a previous interview with City Press, Shanduka CEO Phuti Mahanyele said the company had a net asset value of just under R10?billion.

Shanduka has 21 shareholders and Ramaphosa’s family trust, Tshivhase Trust, is the majority shareholder with a 29.63% stake. At face value, this would make the trust worth at least R2.9?billion.

Ramaphosa has stepped down as executive chairperson of Shanduka. The company merged with Pembani Group?–?co-founded by Phuthuma Nhleko, who was MTN CEO at the time Ramaphosa was chairperson?–?in a deal that remains mysterious.

Despite this announcement, Ramaphosa has neither said if he was selling his stake in Shanduka, nor if Shanduka was selling any of its investments. It is therefore unclear if Ramaphosa has distanced himself from his substantial interests in the economy.

Pembani, which was previously known as Worldwide African Investment Holdings, holds numerous investments, including Engen, BHP Billiton Energy Coal SA, Exxaro and AfriSam. Worldwide was started by Nhleko and former SA Airways boss Khaya Ngqula, who has since resigned from Pembani.

The combined entity will have a gross asset value of more than R13.5?billion and will be chaired by Nhleko.

Shanduka’s acting spokesperson, Kelebogile Shomang, would not answer questions, saying only that the parties involved would not be commenting further on the transaction until various conditions were met.

The choice to use Nhleko’s Pembani has also raised corporate governance issues and perhaps illustrates the close relationship between Ramaphosa and Nhleko.

Media reports have suggested that Ramaphosa will keep assets that are not regulated by government. This may mean that he will keep Coca-Cola Shanduka Beverages and McDonald’s SA. Shanduka owns 70% of each of these, but this has not been confirmed.

He could also be following former minister Tokyo Sexwale by placing his investments in a blind trust.

This is not an unusual move for politicians. Political figures such as former US president George Bush, British Prime Minister Tony Blair and Israeli Prime Minister Benjamin Netanyahu all opted for blind trusts to secure their business interests.

According to attorney and tax practitioner Andrew Duncan, technically there is no such thing as a blind trust in South Africa.

However, it is accepted in business practice following trends in the UK and the US.

He said that in South Africa, trustees were appointed and have control over the trust and beneficiaries have a right to know what is happening.

“It would have to be in the trust deed that none of the beneficiaries has a right to know,” said Duncan.

“But I think it’s a sham. Trustees will always tell their bosses what’s happening.”

He said if the trustees were completely independent and have had no link to Ramaphosa at all, then this approach could be considered a blind trust.

Dion George, DA shadow minister of Parliament’s standing committee on public accounts, said the move was a sensible one and showed that Ramaphosa had presidential ambitions.

“He clearly wants to separate himself from his assets because with a blind trust you still have the investment growth of your assets, but you don’t really know or are involved in the details of where the investments are.

“I think it is a very sensible thing for him to be doing, given his position and his possible aspirations, and it sounds like he is preparing himself for something.”

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