Political dynasties keep the poor impoverished

2010-04-24 10:42

Sometimes I

wonder just who the establishment thinks it’s kidding? Take this advent of a

generation of mining and commodities barons with the surnames Zuma and Mandela.

At Aurora

Empowerment Systems, Zondwa Mandela and Khulubuse ­Zuma have bought and failed

to pay for a reef of poorly performing gold mines. Mandela is grandson to the

founding president; Zuma is the nephew of the current president.

Across our

continent, political ­dynasties come to own significant chunks of the economy

and become the dominant elites who block shared wealth.

Look no further

than Angola, Zimbabwe and Nigeria to see how the system works or rather how

it doesn’t.

We are headed in

this direction as is now clear.

Aurora’s workers

have been left penniless, the transactions were opaque and their shareholding

­structure is not a model of good­ ­governance.

In this year’s

major corporate coup, a vital mining right in the ­Sishen mine was granted by

­government to a company called ­Imperial Crown.

According to the

Mail & Guardian, it is now partly owned by an ­entrepreneur called Jagdish

Parekh who is reported to hold the stake ­­ on behalf of a company called JIC

whose directors include Duduzane Zuma.

JIC is owned by

the Gupta family who are leading Indian investors in SA better known for their

company, Sahara, which features Duduzane’s twin sister Dudu on its board. The

twins are the children of the ­president.

Imperial Crown

won the right to the Sishen stake out from under the nose of Kumba which had

attempted to buy it when ArcelorMittal forgot to convert its share to the new

order mining rights regime.

Now Duduzane

Zuma, via a 26% shareholding, stands to make a mint as Imperial Crown can sell

to either ArcelorMittal or to Kumba.

Both deals have

holes as deep as mine shafts in them.

Aurora has faced

violent worker protests from hungry miners whom it has promised and fail to pay

­several times now.

The mining

industry, via its ­media, is asking serious questions about the process of

granting the rights to Imperial and the lack of transparency in the deal. This

week, the Fraser Institute Mining survey, reported in the Financial Mail,

­revealed that perceptions of the ­mining industry are falling in global

rankings. One reason is because of how empowerment is implemented.

The young

members of the two ­political dynasties have opaque ­foreign backers behind

them.

In Aurora’s

case, Malaysian and Arab investors, about which little is known. The investors

could not stump up the cash so the mines are again on the market. Parekh is not

well-known in mining circles, ­according to reports. He is London-based but

South African raised and possibly exports his profits.

In the financial

press, these two stories are played as either an ­ongoing narrative of how BEE

is a shambles or as a story of amazing young entrepreneurs who just ­happen to

be called Zuma and ­Mandela.

It’s neither. In

fact, deals like these give BEE a terrible name and squeeze black businesses out

of the economy because increasingly you have to be politically connected to gain

any empowerment traction.

The two deals

represent the arrival on our shores of predator post­colonial capitalism where

political dynasties

cream off the profits from developing economies, investing little and taking

profits offshore. This is the polar opposite of what mining empowerment is meant

to do.

Young

businesspeople are the icons of the global economy today, but Zondwa, Duduzane

and Duduzile, all twenty-somethings, are not entrepreneurs in their own right.

On Aurora’s

website, Zondwa Mandela’s profile notes his political pedigree and says: “His diverse network and

access to high-end individuals would prove to be a great aid in the prospects of

business interests.”

Entrepreneurs

generally build their own companies, have specialties and put in 10 000 hours of

practice of doing what they are good at, ­according to Malcolm Gladwell’s book

Outliers.

These

politically connected young businesspeople are rented by ­foreigners and local

businesspeople who know how cronyist systems work.

Take the Guptas.

When President Thabo Mbeki was in power, they ­befriended the minister in his

­Presidency, Essop Pahad. He now sits on Sahara’s board. As soon as the ­political tide turned and Jacob Zuma ­became ANC

president, the Gupta’s co-opted the twins as ­business ­partners.

This week,

Minerals Resources Minister Susan Shabangu questioned about the Imperial Crown

affair, said it was very wrong to exclude relatives of politicians from mining

rights deals, reported Business Day.

The official

sanctioning of such crude cronyism means the shared prosperity and well-governed

­economy South Africa needs will never be ours.

Instead, we have

chosen the path of elite accumulation that is a cul-de-sac of everything the ANC

says ­ it stands for.


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