Justifying the composition of her company’s new BEE structure, ArcelorMittal (Amsa) chief executive Nku Nyembezi-Heita last month told the Mail & Guardian that “strategic” (as opposed to broad-based) black investors had been included “where the company needs assistance in a particular area”.
The M&G report continued: “For ‘strategic’, read ‘politically connected’; for ‘assistance’, read ‘lobbying with government’. So what are the lobbying fees, and to whom do they go?”
In summary: President Jacob Zuma’s 28-year-old son, Duduzane Zuma, will get shares that he will sell back to the company in four years’ time for between R46m and R104m, depending on the performance of the company. (What most middle class people might earn in two lifetimes.) The Gupta family company Oakbay, too, will get shares that will be worth between R46m and R104m. Gugu Mtshali, reportedly Deputy President Kgalema Motlanthe’s romantic partner, will get shares that in four years’ time will see her pocketing between between R30m and R70m. Plus she’ll get an immediate cash payout of R67m. Ayigobi, the investment company headed by Sandile Zungu – a member of President Zuma’s broad-based empowerment advisory counsel – will get shares that will realise between R46m and R104m.
The largest single benefit – shares and cash totalling around a R1bn – will go to Jagdish Parekh, chief executive of the Guptas’ Oakbay. He is half-owner of Imperial Crown Trading, the upstart company that was in a prime bargaining position after controversially winning a stake in the Sishen iron mine that had belonged to ArcelorMittal.
In another report in the same issue of the M&G, mineral rights lawyer Peter Leon is quoted as saying that the Department of Mineral Resources had broken the law by granting the stake in the Sishen mine to Crown Trading. Right or wrong, Imperial Crown shareholders had a gun to Amsa’s head, because of their disputed Sishen mine stake. But how did the Guptas get their stake, and how did Duduzane Zuma get a stake as large as theirs?
Nyembezi-Heita told Moneyweb radio that the Guptas had been cut in as “major facilitators” of the deal.
Asked why the president’s son’s company should get a stake as large as the Guptas’ and Zungu’s combined, the spokesperson was stumped: “I can see what you’re saying – was there a greater contribution from [Zuma’s]Mabengela Investments to warrant it? Or was it purely based on the fact that he’s the president’s son? I don’t know. I can’t answer you for sure.”
Can you believe this!
Next day government spokespeople were desperately describing the deal as “controversial, not corrupt”. It looks horribly like a standard bribery procedure to us: the bribing company rarely pays the bribe directly; it pays an agent or “facilitator” a ridiculously high facilitation fee. Ask Siemens and BAE. Ask Mr Shaik. All the facilitator has to do is use part of his remarkably generous “fee” to pay the intended bribe – as an innocent donation to a close friend or relative, naturally. This one goes one step smarter. The bribe contains an ongoing inducement for the beneficiaries to use their influence to advance actively the business prospects of their ultimate benefactor. Which could explain why, if the company does well in the next four years, the beneficiaries can get as much as double what they’ll get if it doesn’t.
The first test: how will minister Davies regulate the price Amsa pays Kumba for its iron ore – up or down? And how is he going to regulate the price of steel Amsa supplies to the South African market – up or down? Both could radically influence Amsa’s profits and share price over the next four years – up or down. Which will radically effect how much young Mr Zuma and not quite so young Ms Mtshali get to spend on presents for their friends and family come Christmas 2014.
Wait a second. Is ArcelorMittal (Amsa) not the previous ISCOR, the Iron and Steel Corporation of South Africa? Indeed, the ArcelorMittal website is still www.iscor.co.za. Was ISCOR not set up with taxpayers’ money and owned by all South Africans?
In June 2002 Business Day reported that the IDC had sold Indian billionaire Lakshmi Mittal a sack of Iscor shares at rock bottom prices – just as it emerged in the British press that Mittal had donated £125,000 to the UK Labour party around the time that Labour leader Tony Blair was writing to the Romanian government to support Mittal’s bid for a steel mill there. At about the same time a Mittal company in the US paid $600,000 to a campaign group which was seeking 40% tariffs on imported steel. This was in addition to political donations totalling $100,000 made there.
A spokesman assured Business Day that neither Mittal nor any associated company had made any donation to any political party, politician, or to the government in SA.
How the hell should we believe them?
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