Private sector needs to actively raise its voice on corruption

2010-11-13 16:08

I increasingly doubt the ­commitment of South ­Africa’s private sector to fight graft and promote good corporate governance, ­particularly when there is a quick buck to be made. Two ­extraordinary and related events deepened my scepticism this week.

First, the Sunday Times published its Top 100 companies survey, which showed the best-performing share price to be ­Labat Africa, a technically ­bankrupt shell bought by the politically connected ­owners of Aurora Empowerment Systems earlier this year.

In January, you could buy a Labat share for 5c. This week Labat shares were trading at about 75c after hitting a 52-week high in August of R1.01.
The Sunday Times calculated the share’s ­compound growth over 12 months at 775%.

A few days after this “achievement” was ­announced, several national newspapers published stomach-turning accounts of the horrific living ­conditions at ­Aurora’s Grootvlei gold mine.

Reports of no water, no ­electricity and no salaries for workers have appeared frequently since April. A colleague who visited the site reported that of the 17 cats that used to be fed from the mine’s kitchen, only two were left.

The rest didn’t die naturally.

Meanwhile, a feeding frenzy was taking place at the JSE.

Opportunistic investors were buying Labat shares in the hope that Khulubuse Zuma or Zondwa Mandela would find the magic button that would produce fat chunks of gold again.

Without any regard for the ­appalling living ­conditions of Aurora’s workers or dodgy practices like selling underground scrap metal from under the ­noses of liquidators, these ­money chasers figured it was an excellent time to pump more cash ­into the ­pockets of the president’s nephew and his ­cronies.

This crude contrariety brutally exposes the dichotomy between life in South Africa for the rich and the poor.

Government has been slack in ­stepping on the toes of businessmen christened Mandela and Zuma, and apart from a ­vigilant media, Aurora’s bosses and ­shareholders have escaped largely unscathed from this shameful ­episode.

Who better to punish ­unethical business practices and ­behaviour than those with the deep pockets, always on the lookout for a quick ­profit?

What exactly did they see at Aurora’s mines that made them deposit more cash into Khulubuse’s ­kitty?

I guess nothing more or less than the rest of us saw. My guess is they saw bright, flickering Las Vegas-style billboards with “Mandela” and “Zuma” written all over them.

The attraction was overwhelming. Who better to have on your board when you’re in a quandary and in need of ­political support?

The behaviour of Labat/Aurora’s shareholders is not the first or last example of ­money-hungry ­hyenas (thank you, Mr Vavi) who seemingly have a much greater interest in their own bank accounts than in the wellbeing of everyone who lives and works in South Africa.

In December last year, ­economist Iraj Abedian was chucked off the board of ­Wesizwe Platinum by shareholders after presenting a shocking chairperson’s account of ­misspending in the company.

This included the company paying for fresh ­oysters flown in from Knysna to Cape Town at the behest of the CEO’s wife.

Abedian was shown the door and the CEO ­re-elected to the board.

I looked at the well-off ­shareholders sitting in the plush Sandton boardroom and could easily imagine them bemoaning the state of morality in the country over tea, lamenting how ­corruption is taking over the state.

Maybe the financial media and its parochial ­analysts are also to blame for the lack of ­activist shareholders who demand clean business with their cash.

How is it possible to punt a “buy” recommendation of a company under investigation for serious allegations of irregularity and non-performance?

But there are positive signs.

For example, the ­opposition of ­Sanlam, Rand Merchant Bank, the Public ­Investment Corporation and Cosatu to the ArcelorMittal empowerment deal that would make the president’s ­family and friends instant ­millionaires.

Now we need more business leaders and investors getting out from behind the share price and making their voices – and rands – heard against corruption and unethical behaviour, even when it may cost them a few pennies in the short term.

» Basson is assistant editor of City Press.

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