Hard work and talent at root of SA’s ‘reverse colonisation’ of UK

24 Sep 2013 | Tony Leon | Original Publication:  BDlive

From salvage maestro Nick Sloane to SABMiller CEO Alan Clark and the UK deputy prime minister’s strategy director, South Africans are making their mark, writes Tony Leon

SCENES of horror from the weekend’s attack by al-Shabaab terrorists on the Westgate shopping mall in Nairobi dominated all news media in London, where this column originates, on Monday.

An almost forgotten footnote in the evolution of the al-Qaeda terrorist franchise is that three years before 9/11 internationalised its bloody brand, it killed hundreds of people in simultaneous blasts at the US embassies in Dar es Salaam and Nairobi.

But before the dark and grim headlines from East Africa defined the news cycle here, I was rather struck by the more cheering acres of news coverage originating from news makers from the southern end.

Superlatives abounded concerning South African salvage master — perhaps maestro is a better fit — Nick Sloane. The normally staid Daily Telegraph gushed that the rugged head of the multinational rescue team that righted the wrecked Costa Concordia last week off the reef of the Tuscan island of Giglio was "a cross between Prince Harry and Russell Crowe".

Given that the ship is larger than the Titanic and that Sloane’s international team consisted of more than 500 engineers, divers and welders, the sheer scale of his achievement goes beyond hype.

Since he famously called for a beer and a braai after his heroic effort, it was perhaps apt that the previous Saturday, The Times of London ran a page-length feature on relatively newly appointed SABMiller CEO Alan Clark. The article noted the extraordinary fact that this $35bn revenue generating company, which employs 70,000 people across the world, is now headed by a clinical psychologist.

Dr Clark is certainly the only global CEO to have been an associate professor in cognitive development — a post he held at the University of South Africa in the late 1980s. The fact that the CEO of London-listed SABMiller, the world’s second-biggest brewer, is South African is a consequence not of South African chauvinism but of homegrown talent.

On the subject of homegrown talent, at a rather pricey (with our depleted currency, that’s not saying much) and salubrious saloon in Soho, I enjoyed a weekend reunion with my former political strategist Ryan Coetzee. He now sits at the elbow of Nick Clegg, deputy prime minister of Britain, whom Coetzee serves as director of strategy.

Back in South Africa, he designed and implemented every successful opposition project, from the "fight back" of 1999 to more recent strategies. When we met, Coetzee had freshly returned from Clegg’s Liberal Democrat party congress in Glasgow, where the leader emerged with enhanced authority, even though his personal and party numbers are flatlining at the polls at about 9% (about half of what the party obtained in the 2010 general election).

I thought the Liberals’ conference slogan of a "stronger economy, a fairer society" bore something of the Coetzee stamp, which he confirmed. As the junior partner in Prime Minister David Cameron’s coalition government, this is an attempt to jab at both the Tories, on the issue of social fairness, and Labour, on the grounds of economic competence.

But South Africa’s contribution to current political life in Britain washes across party boundaries. In a weekend interview, Labour leader Ed Miliband, who might end up as prime minister in 2015, paid his own debt of honour to past South Africans. He recounted how among the many visitors to his parents’ "new left" home in the 1980s, presided over by his famous Marxist academic father Ralph, were Joe Slovo and his wife, Ruth First.

In fact, the assassination of First in 1982 affected him deeply. In a speech in 2010, he noted: "Some people wonder about why I got to care about politics. When something like that happens, it teaches you at the age of 12 that some things you cannot walk away from. It teaches you that political causes matter."

From the serious to the sublime and the saloons, the South African influence here — a sort of reverse colonialism — is pervasive. A Saturday night spent in the obscure hamlet of Moretonhampstead in Dartmoor led to the discovery that "Karen of Bellville", as she introduced herself, presided over its only hostelry. Same again at a sumptuous gastro pub in the city of Wells, except here the South African duo hailed from Benoni. A visit to the memorable West End production of War Horse yielded the fact that the play’s quite extraordinary puppets were created by the South African Handspring Puppet Company, founded by four graduates of the Michaelis School of Fine Art in Cape Town.

Seated next to another well-known South African here at a Sunday lunch, Financial Times columnist Lucia van der Post (daughter of the famous Sir Laurens), I asked her why South Africans did so well in the UK.

"It’s no mystery," she said. "They’re not afraid of hard work and they’re talented."

A winning combination, then, at home and abroad.

 

• Follow Tony Leon on Twitter: @TonyLeonSA OR on Facebook: facebook.com/TonyLeonSA

 

A way to keep memories of Freedom Day alive

30 Apr 2013 | Tony Leon | Original Publication:  BDlive

A vigorous press routinely reports corruption and, with an equal resoluteness, little of it is interdicted or punished, writes Tony Leon

DURING the 1990s, the hinge years of South Africa’s democratic transition, Bill Keller was based in Johannesburg as the correspondent for the New York Times. He recently revisited, in the pages of the New York Review of Books at least, our republic and penned a pithy and acute diagnosis of South Africa now and then. He described our story as simultaneously "dispiriting and inspiring".

The Freedom Day weekend provided evidence of both aspects of this paradox.

On Friday, the Mail & Guardian unveiled yet another corruption scandal — it’s almost like a weekly horror series of skulduggery in high places — concerning the alleged looting of parastatal PetroSA, and not for the first time either. My mind cast back to the 2004 general election, when the same parastatal was used as the vehicle for gross overpayments to a politically connected supplier, who promptly paid over the proceeds of his enrichment to the campaign coffers of the ruling party. Then as now, action was promised but no cuffing and charging the culprits actually happened. Thus when, on Friday, the present board airily promised to take action "to the extent that any impropriety has taken place", readers are cautioned not to hold their breath.

Keller cited as one of the crowning ironies of the new South Africa the fact that a vigorous press routinely reports corruption and, with an equal resoluteness, little of it is either interdicted or punished. Freedom of speech coexists with impunity to plunder. But had the Protection of State Information Bill been enacted in its original 2009 form, it is doubtful that even the reporting of the PetroSA saga would ever have seen the light of day.

The final passage in Parliament last week of a watered-down version of this legislation is proof of the worth of an engaged push-back by a vast sway of civil society and opposition forces acting in concert — and, to be perfectly fair, evidence of a governing party prepared to listen and act on many of the objections.

An even more ancient aphorism came to me on Freedom Day, Saturday, when the aircraft from Cape Town touched down at OR Tambo International Airport. Germany’s "Iron Chancellor", Otto von Bismarck, apparently once said: "If you enjoy eating sausages, don’t watch them being made." Undoubtedly, this has highly contemporary relevance to another current scandal, the labelling and mislabelling of our local boerewors and other meats. But Bismarck was referring to less savoury aspects of the political process. And it is a useful reminder of just what a close-run thing today’s freedom and democracy, with all their imperfections and slippages, were at the time of its bloody birth.

For example, 19 years ago to the day of our arrival, when OR Tambo International was plain Jan Smuts Airport, it was the site of the last gasp of the right-wing violence that promised to destroy our new democracy before it had even taken root — a car bomb rocked the airport, the last of a series of fatal urban explosions.

It was so loud that we even heard it at my polling station far away in the northern suburbs of Johannesburg.

"The struggle of memory against forgetting" was how author Milan Kundera described the struggle of man against power. It is also a very powerful antidote to the cynicism and ennui that beset even the most engaged local, small "d" democrats.

But then I arrived at a site of inspiration. Bobby Godsell and James Motlatsi had gathered 100 patrons at the Johannesburg Country Club to sign The Citizens Charter. Their own improbable partnership tells its own story — they first met as hostile adversaries across the great divide, which then and now separated mine management and their striking workforce. And their early encounter in 1987 took place when bad politics — South Africa was in the midst of a state of emergency — conjoined adversarial labour relations.

And yet, in the intervening 25 years, they have forged a durable partnership and they summoned us on Saturday to partner in spearheading "active citizenship".

In a word, Godsell described the time as ripe, amid all the doom and gloom gripping the land, for people "to leave the spectators’ bench and to get onto the playing field".

It is easy to dismiss the initiative as a sort of high-minded do-goodism.

Yet the very simplicity and practicality of the charter and the impressive (excluding this columnist) and hugely diverse patrons who enrolled for it, and who pitched up on Saturday afternoon, offer all South Africans the chance to do some good by doing right; from volunteering for a modest four hours of community service a month to being responsible and law-abiding citizens.

Before a feeling of hopeless indifference sweeps away the majestic promise of April 27 1994, and some of the grim events that went before it, read the charter, sign it and join in — www.citizens.za.com.

 

• Follow Tony Leon on Twitter: @TonyLeonSA OR on Facebook: facebook.com/TonyLeonSA

 

‘Dismal science’ misled efforts to fix economy

23 Apr 2013 | Tony Leon  | Original Publication:  BDlive
Our policy makers can’t do much about the debunking of academic economic debates but they can fix risk sovereign factors, writes Tony Leon

THE old joke about economists having called nine of the past five recessions wrong seemed especially true of the "dismal science" and even its most illustrious practitioners in recent days.

Two of the wisest owls in the Harvard aviary were recently proved wrong on a central assumption. Kenneth Rogoff and Carmen Reinhart were apparently checkmated by a doctoral student at the University of Massachusetts, Amherst. According to reports, Thomas Herndon, 28, said of his exposé of the basic flaws in the influential Rogoff-Reinhart 2010 study: "I couldn’t believe my eyes when I saw the basic spreadsheet error."

The paper in question is not of mere academic interest only. It has been at the heart of the recent debate on how to repair the world economy and revive it everywhere: in essence, do we spend and reflate our way out of recession or do we pull in our horns and cut public expenditure, repair national balance sheets and escape "the black hole of debt"?

Rogoff and Reinhart gave comfort and apparent empirical cover for rapid fiscal austerity, the path preferred by so-called deficit hawks, such as the US Republicans and the UK coalition government. Now, it appears that contra the central finding of the Rogoff-Reinhart study, economic growth does not fall sharply when national debt reaches 90% of gross domestic product, the percentage they had cited as the tipping point at which the walls of a national economy collapse. In other words, countries do not need necessarily to don the austerity hair shirt to boost growth on the basis (in the words of another economist, Adam Posen) that "not all debt accumulation is bad for growth". And very often, low growth heightens indebtedness rather than the reverse.

All this seems ancient and obvious history to those of the Keynesian persuasion locally and abroad. But before its local adherents from the Congress of South African Trade Unions and others in the left field apply even more pressure for looser fiscal and monetary policies, another global economic event last week, which received muted attention here, compels attention. This time it wasn’t a dispute among economists, but a message from the markets, which an aeon ago Trevor Manuel moaned were "amorphous". Formless or not, the markets decided to end the decade-long gold bull run, dropping the price of our key metal export so violently that early last week it sustained its sharpest two-day fall since 1983. If not quite amorphous, then markets crystallise, in the words of Financial Times maven John Authers, "in sharp and violent moves" as shareholders know only too well. Low Chinese growth, Japanese quantitative easing, and the Cyprus gold sell-off and less fear of inflation all played their part. Overall, the markets have taken a gloomy view of the prospects of global growth doing anything remarkable soon and have discounted the price of commodities accordingly.

Where does that leave South Africa? With skittish post-Marikana investors and a mineral regulatory regime "struggling with international best practice principles", to quote mining lawyer Peter Leon, our space in the fight for diminished investor enthusiasm was very tight. Now with a plunging gold price, it has just tightened even further.

There is a fascinating article by William Finnegan in the March 25 edition of The New Yorker about Australia’s richest, and probably most unpleasant, person, mining magnate Gina Rinehart. Buried in the account of her rise to further riches, as a result of her father Lang Hancock’s iron-ore empire, is a compelling insight into how Australia has enjoyed, despite the great recession, 21 straight years of sustained economic growth and running up big national debts to sustain its generous welfare provisions. It is also a high-wage country, whose minimum wage in US dollars is twice the federal minimum wage in the US. Yet its export growth and prosperity is significantly dependent on its mineral resources. In a word, it offers three basic factors that are glaringly absent here and in neighbouring jurisdictions: high efficiency, low sovereign risk and excellent infrastructure. Addressing the relative attractiveness and disadvantages of a developed versus frontier places of doing business, Finnegan offers this comparison: "The idea, a threat really, much repeated — that the mining multinationals will soon pick up and leave (Australia) for Africa in search of cheaper labour — ignores basic factors such as efficiency, infrastructure and sovereign risk."

He reminds readers and investors, that in January, Rio Tinto was forced to write off a $3bn investment in coal in Mozambique, largely because of infrastructure problems. It also cost the CEO his job.

Our policy makers and regulators can’t do much about the rise and later debunking of academic economic debates. But they sure can, and must, fix the risk sovereign factors which attach to our country.

• Leon is the author of The Accidental Ambassador (Pan Macmillan). Follow him on Twitter: @TonyLeonSA OR on Facebook: facebook.com/TonyLeonSA
 

 

 

Venezuela’s revolution came at enormous cost

12 Mar 2013 | Tony Leon  | Original Publication:  BDlive

Hugo Chavez’s death changes the trajectory of the developing world and models contending within it for economic progress and democratic deepening, writes Tony Leon

IN 2011, from his enforced stay at a US correctional facility, dethroned media mogul Conrad Black described his erstwhile rival, Rupert Murdoch, as "a great bad man". This seemed a suitably contradictory epitaph for Venezuelan president Hugo Chavez, whose death last week changes the trajectory of the developing world and the models contending within it for economic progress and democratic deepening.

I happened to be in the hedonistic Brazilian coastal town of Parity when the news flashed across the TV screens in a beach bar of the demise of the Venezuelan strongman, the self-styled "El Comandante". The samba music continued to play and few of the locals in this, the largest and most consequential country by far in South America, seemed particularly stirred. In Venezuela itself, however, the masses poured onto the streets in a tumult of grief.

Back in South Africa, President Jacob Zuma’s message of condolence noted how Venezuela instituted "a dramatic change to the promotion of regional integration based upon principles of social justice". Closer examination suggests that Chavez divided the region far more than he united it and that the gains of his "revolution" were purchased at great, perhaps ruinous, cost.

Zuma’s juvenile nemesis, Julius Malema, issued his own statement of grief, which observed, with characteristic understatement, how, "despite massive resistance from rented imperialist puppets, Chavez was able to lead Venezuela into an era where the wealth was returned to … the people".

Quite who the former African National Congress Youth League president had in mind as rent-an-imperialist is not clear. But even his message was mild in comparison with the statement of Venezuelan Vice-President Nicolas Maduro, who darkly hinted that the US had caused Chavez’s cancer. Thus, a handy unifying force is found in a moment of national uncertainty.

But in some revealing ways, there is a superficial similarity between Chavez and Malema beyond their chubby features and rhetorical exuberance: both grew up in rural poverty, reared by their grandmothers, and both burnt with a charismatic determination to challenge the forces of capitalism and to use their countries’ resource wealth to address the needs of the poor. Of course, the singular difference was that Chavez was fully grown up when he ascended to power in 1998. He also presided over a country, which despite 14 years of conspicuous economic mismanagement, still contains the largest oil reserves in the world.

In fact, it was the rocketing price of oil — $10 a barrel when he was first elected, rising to more than $100 a barrel at the time of his death — that allowed Chavez the means to "buy a lot of influence in the world and to purchase the support of Venezuela’s poor", in the opinion of the Wall Street Journal.

But on the positive side of the ledger, Chavez did more than buy votes and prop up bankrupt regimes such as his close ally, Cuba, where he in effect stepped in as creditor of first and last resort after the demise of the Soviet Union. As Latin American expert Jorge Heine noted: "When Chavez took over, the standard of living for most Venezuelans hadn’t changed since 1963, when half the population lived below the poverty datum line. Poverty has now been cut in half."

But this stellar achievement came at great cost: his economic populism bequeathed to his country the highest rate of inflation (and crime levels) on the whole continent, marked by chronic food shortages and infrastructural decay. Even his country’s oil wealth has reversed itself. Having nationalised the Petroleos de Venezuela oil company, and stuffed its management with his cronies, daily oil production fell by more than 1-million barrels during the course of his rule.

On the democratic side of the ledger, the balance sheet is worse: Chavez was, in the description of one of his biographers, Rory Carroll, "a hybrid — an elected authoritarian". His country’s elections were held on time but were of the free rather than the fair variety. He closed down opposition-supporting TV stations, saturated his image via state-sponsored media and packed the Supreme Court with loyalist judges. In Carroll’s view, he was "a brilliant politician and a disastrous ruler". And while he bestrode the world and regional stages as an apostle for global equality, Chavez used his petrodollars to fuel a narco-terrorist force, the Revolutionary Armed Forces of Colombia — People’s Army, in neighbouring Colombia. In fact, it is the less heralded rise of Colombia, on the back of market economic reforms and tough security policies, that allowed it to transform from narco-state to regional economic leader, second on the continent only to Brazil.

Colombia, Peru and Chile have followed the path of Luiz Inacio Lula da Silva’s Brazil, not Chavez’s Venezuela. That’s the road that leads to the social justice of which Zuma approvingly wrote last week. He just got the country wrong.

• Follow Tony Leon on Twitter: @TonyLeonSA OR on Facebook: facebook.com/TonyLeonSA    

JSC has introduced novel criterion for bench

13 Nov 2012 | Tony Leon | Original Publication: BDlive

I can attest to remarkable jurists who profoundly lacked humility, this apparently now essential quality, writes Tony Leon

INVERTING Groucho Marx’s aphorism "I don’t want to belong to any club that will have me as a member", Jeremy Gauntlett is about to launch a fifth application for membership of the South African bench, having been spurned by the Judicial Service Commission (JSC) on four previous attempts.

Perseverance is a judicial quality. Likewise consistency; something possessed in spades by Gauntlett’s nominator for the looming Constitutional Court vacancy, Sir Sydney Kentridge QC, arguably the most distinguished living advocate in both the UK and South Africa. Back in September 1987, in a speech reflecting on decades of judicial gerrymandering by the National Party (NP) government, Kentridge stated "the fact is that when judges are selected on any grounds other than ability, judicial standards must fall".

Thus the more things change, the more they stay the same. On the subject of which, there is one crumb of comfort provided for those dismayed at some of the nominations approved by the JSC. Back in the 1930s, South Africa’s Nazi-admiring justice minister Oswald Pirow noted with disgust: "The problem with political appointees to the bench is that six months after their appointment, they assume they were appointed on merit!"

Still, we must thank the JSC for introducing a novel criterion for the bench. In advancing a reason for Gauntlett’s latest rejection, it cites his lack of "humility". Having grown up in a judicial household, I can attest to some remarkable jurists who profoundly lacked this apparently now essential quality. Two of the great judges of the Natal Provincial Division, John Didcott and Anton Mostert, whose judgments and actions did much to upend the apartheid legal order, were, to put it at its politest, possessed of volcanic tempers and degrees of irascibility. The same is certainly true, both in terms of his personality and legal ability, of the first chief justice selected by the JSC in 1996, Ismail Mahomed, whose mercurial personal constitution was matched only by his respect for the national one. Apparently back then, the JSC did not consider "modesty" an essential attribute for the highest judicial office.

When reviewing Hermann Giliomee’s riveting new work, The Last Afrikaner Leaders, I was reminded of my own role, in the dying hours of the 1993 constitutional negotiations at Kempton Park, in cobbling together a compromise we called the JSC. Early on in the negotiations, my party’s suggestion that judges be appointed by a JSC was accepted, except for the most powerful division, the Constitutional Court. This matter was left over for a "bosberaad", as we then called the "lekgotla", to be convened by the NP and the African National Congress (ANC). In the week before the final days of Kempton Park, I received a phone call from then justice minister Kobie Coetsee. He told me he had just signed an agreement with his ANC opposite number, Dullah Omar, which he was faxing to me. He thoughtfully suggested that "you might want to sound the alarm!" Extraordinary, but true: the man who had just agreed to an ANC proposal to assign the power to appoint Constitutional Court judges to the president and the Cabinet, now wanted an opposition politician to blow the whistle on his agreement. I duly obliged, and after a lot of inelegant elbow twisting, literally at five minutes to midnight on the final night of the negotiations, we agreed that all judges would be appointed by the JSC.

In the 19 years since then, the JSC, intended as a bulwark against political meddling in judicial appointments, for the very reason advanced by Kentridge in his 1987 speech, has seen an inflation of politicians as members and the strong suggestion that a majority party caucus operates informally within it. It has also made it plain that racial demographics is the highest premium in its appointments, although it was only one of several criteria the constitution envisaged.

Excluding and sideling talent, however temperamental and whatever its racial origin, is not what winning nations do. Last week in Johannesburg, I had an interesting encounter with Shaun Liebenberg, the man who once turned Denel around before he left South Africa to head a major multinational in Germany for four years. I congratulated him on his decision to return recently to head up the private equity arm of a Johannesburg consulting company. He then told me a riveting statistic: there are, by his estimation, "over 30,000 South African engineers, pilots, doctors, dentists and technicians currently living and working in the United Arab Emirates".

Doubtless, many of them enjoy earning tax-free dollars, or the shopping centres or even the desert air. But doubtless if we acted on the fact that South Africa has produced some of the finest home-grown talent in the world, some of them would return to help build our country anew.

The admirable diagnostic of the National Planning Commission points in this direction. It states that "successful countries have a future orientation". Amen to that.

• Follow Tony Leon on Twitter: @TonyLeonSA

US outspokenness is a virtue worth importing

06 Nov 2012 | Tony Leon | Original Publication: BDlive

The US might be in gradual decline on several fronts, but its political contests remain in the financial stratosphere, writes Tony Leon

DURING the 2008 US presidential election, Barack Obama frequently invoked the observation of 40 years earlier by Martin Luther King, on whose shoulders his campaign stood, that "the arc of the moral universe is long but it bends towards justice".

Four years ago today, I was resident in Washington DC, where we celebrated election night with a party in the attic of our brownstone rental for a group of visiting South Africans and a few locals.

Watching the drama unfold on TV, it seemed less like political spectator sport and rather more like a shimmering event of historical redemption. Fortified by the obligatory takeaway pizzas and beers, we were all glued to the TV at that around-midnight moment when Obama passed the magic number of 270 electoral votes needed to clinch the presidency and the networks proclaimed him the winner.

I turned away, almost choking on the significance of the fact that the next occupant of the White House was part East African and that he would soon inhabit a residence built two centuries before by slaves of West African origin who, in the words of David Remnick, "had no last names or carried the names of their masters". I noticed that there were few dry eyes in our TV den as we observed the conjoining of a moment of American exceptionalism with a reminder of its more shameful past.

Tonight’s result is likely to be much closer and certainly less historic than 2008, assuming that Obama, as polls suggest, does indeed nose ahead of his Republican rival, Mitt Romney. The Washington Post-ABC News tracking poll released last week shows that, barring a last-minute surge, Obama is going to fall well shy of the 52.9% he won in the 2008 election. It might still be good enough to win, but it won’t be resounding.

The key defection among previous Obama supporters has been across the board among white voters. But although whites still constitute three quarters of the electorate, Obama has maintained his narrow lead by his high retention rate of black and Latino voters, the latter being the fastest growing group in the country.

But the standout feature of today’s US election is that it is the most expensive in the history of the planet. The US might be in gradual decline on several fronts, but its political contests remain in the financial stratosphere, and today’s exercise cost about $2bn for the rival presidential candidates and an overall $5bn for the entire cycle, including the primaries and congressional races.

Race-holding or reversion among voters was perhaps to be expected, especially in hard financial times, although even the most jaded South African would have been offended by the T-shirt worn at a Romney rally in the all-important state of Ohio, which proclaimed: "Put the White Back in the White House."

But the deep animosity, often verging on hatred, Obama inspires in the far less crude and doubtless less racist enclave of the US, big business, is one of the more surprising features of this contest.

Chrystia Freeland noted in a recent New Yorker article that Obama has served the rich "quite well".

His administration supported a $700bn bail-out of Wall Street and resisted the siren calls from the left (such as Nobel prize winners Paul Krugman and Joseph Stiglitz) to nationalise the banks. At the end of September, the stock exchange rebounded to just a few percentages below its prefinancial-crisis high. And Obama is hardly the first Democrat to inflict slightly higher taxes and more oversight of the group we now dub "the 1%". Franklin Roosevelt, the patrician and immensely wealthy president during and after the Great Depression, was dubbed a "traitor to his class".

But the invective and dollars that have been hurled by the super-elite against Obama have been astounding. One of the US’s richest men, hedge fund founder Leon Cooperman, drew a parallel between Obama’s election and the rise of the Third Reich. Blackstone’s Stephen Schwarzman compared Obama’s effort to eliminate tax preferences for private equity firms to Hitler’s invasion of Poland. In the pantheon of the mega rich, Warren Buffett stands virtually alone in holding that no millionaire should pay less than 30% of his income in taxes.

Of course all this sounds very quaint, if not somewhat amazing, to the hard-pressed business sector here at home.

They would love to pay the high-end taxes Obama proposes and doubtless wished they could sound off, in doubtless more decorous terms, like their US counterparts have railed against their president. For every boardroom exile such as Russell Loubser who speaks out, dozens retain their seats at the table, nod in silent agreement and keep their heads down and hope for the best. For all its costs and imperfections, the confidence to speak out remains an American virtue we should consider importing.

• Follow Leon on Twitter: @TonyLeonSA

Local leaders at risk of failing Berlusconi test

30 Oct 2012 | Tony Leon | Original Publication: BDlive

We have advanced down the road where know-who rather than know-how is the price of admission to corporate riches, writes Tony Leon

ON FRIDAY, Silvio Berlusconi, Italy’s former prime minister, was sentenced to four years’ imprisonment for tax fraud. The more sensational of his trials — allegedly paying "Ruby the heart-stealer", an underage dancer, for sex and then abusing his position to secure her release — still lies ahead.

South Africans will be familiar with this trope: the lurid intersection of public office, abuse of position and problems with the taxman. Earlier this year, Berlusconi opined that "political credibility is like virginity — easy to lose, difficult to maintain and impossible to regain if lost".

A number of South African politicians — serving and aspiring — are currently in the dock of public opinion on issues of credibility. In the recessionary world, reputation management and how to repair damaged credibility is a growth industry, and in South Africa there is no shortage of clients.

First in the line-up is Cyril Ramaphosa, Lonmin director and a favoured deputy presidential candidate, according to some in the camp of President Jacob Zuma. The Prince Hamlet of the African National Congress is accused, based on e-mails he wrote to fellow Lonmin executives on the eve of the Marikana mine massacre, of being "complicit in mass murder". Sunday Times editor Ray Hartley did a suitable demolition job on the accusation and on advocate Dali Mpofu, who advanced it. He described this characterisation as "an absurd and slanderous lie". But it was a less sensational communication from Ramaphosa that compels attention and invites unease, even if in the tangled web of political influence-peddling by impeccably connected businessmen it causes little surprise.

In an e-mail to Lonmin chairman Roger Phillimore about the conduct and lack of action by Mineral Resources Minister Susan Shabangu, Ramaphosa advises "we should have a discussion (with her) to see what she needs to do". The idea that a company director can tell a minister "what to do" underlines how far we have advanced down the road where "know-who" rather than "know-how" is the price of admission to corporate advancement and riches.

South Africa is perhaps an extreme example of this tendency but it hardly stands alone. Even in the US, where generally (see Mitt Romney) success in business is the prologue to political office and not the reverse, we have the case of Dick Cheney, the veritable Darth Vader of modern politics. Before he crossed to the "dark side" of approving waterboarding and other torture exotica as state policy when vice-president, he was CEO and chairman of energy giant Halliburton. But his appointment to corporate office was based entirely on his impeccable political connectivity, having served in the administrations of presidents Gerald Ford and George Bush and then for 20 years in Congress.

Next in the field of evolving local reputations is Mamphela Ramphele. An avatar of good governance, harsh critic of government corruption, apostle of transparency and, on some accounts, an aspiring political leader, she is also chairwoman of Gold Fields. The company is currently in the frame with a controversial black economic empowerment deal concerning one of South Africa’s richest mines, South Deep. Some dodgy characters and powerful politicians were included in this bonanza. Her somewhat lame response to a Financial Mail inquiry — "I was not part of the decision-making at the time" — might be technically true, but hardly inspires confidence about shouldering responsibility or sweeping out the Augean stables of the political influence-peddling of which, in other contexts, she loudly complains.

Finally we have Finance Minister Pravin Gordhan. Of a dozen or so Cabinet ministers I shepherded around Argentina during my diplomatic stint there, he probably did most to advance South Africa’s international image. This was not because some of his colleagues underperformed during their visits. Rather, it was due to his credibility as a thoughtful steward of public finances. This proved to be sweet breath on the local air of Buenos Aires, weighed down by runaway government spending and high inflation.

In Parliament last week to present his medium-term budget policy statement, he promised to rein in government expenditure by, among other things, looking closely at the number of employees in the public sector, suggesting billions of rand could be saved by identifying "ghost and surplus workers".

His credibility test lies in making good on this promise. He needs to prove he doesn’t just sign the cheques but has the will and the power to obtain quos for the quids he dispenses. A good place for him to start would be South African Airways, for which he recently provided a further R5bn bail-out. He would do well to look up the website Avcom.co.za. It reports that SAA operates with about double the world average of employees per aircraft (957 per plane). If Gordhan does not start to make the necessary cuts he promised, he too might find he fails the Berlusconi test.

• Follow Tony Leon on Twitter: @TonyLeonSA

Resolve opposition’s dilemma for the good of SA

23 Oct 2012 | Tony Leon | Original Publication: BDlive

When former president Thabo Mbeki decided the destruction of the DA was a political priority, he appointed Mosiuoa Lekota as his hit man, writes Tony Leon

WHEREVER in the world former Sasol and Anglo American CEOs Pieter Cox and Tony Trahar are these days, last week’s speech by erstwhile president Thabo Mbeki must have caused them to smile at the irony of it all.

In 2003, both men were at the receiving end of Mbeki’s invective when they said, respectively, that black economic empowerment was a "risk factor" and that the risk factor for South Africa was "starting to diminish, although I am not saying it has gone".

Mbeki accused Sasol of "bad-mouthing South Africa" and suggested that Trahar’s stance amounted to Anglo suggesting that "democratic South Africa presents the business world … with a higher political risk than apartheid South Africa".

What a difference nine years and loss of office makes. In his African National Congress (ANC) centenary lecture last week, Mbeki joined the doomsday chorus in far more direct and stark terms than these corporate titans ever did. He spoke of South Africa being afloat on a sea of troubles, characterised by "a dangerous and unacceptable situation of directionless and unguided national drift".

Mbeki is hardly alone as a latter-day canary-in-the-coal-mine warning of the noxious gases that threaten to engulf the country. The Economist, which recently upgraded Africa from "hopeless" to "hopeful", decided, also last week and after two sovereign credit downgrades, that South Africa was sliding downward toward "sad country" status. Embedded in the article is a central truth: South Africa — at the most recent general election, the spread between the governing party and the official opposition was more than 40 points — is "a de facto one-party state".

I recently noted that it is difficult to establish a real and competitive democracy (and the first adjective is conditioned by the second) on the back of such a huge deficit, especially since our much admired constitution is noticeably weak in its checks and curbs on a super-majority government. Thus the motivating spirit and finer detail of the constitution can be ignored and bypassed by the government for the simplest of reasons: because they can be.

In this context, the recent call by Democratic Alliance (DA) leader Helen Zille for a realigned and larger opposition is both politically and constitutionally necessary. But as someone who still bears the scars from the last large-scale opposition merger a decade ago, I can attest that it will not be easy.

The only party with which the DA appears to be engaged in serious discussion toward this end is the much diminished Congress of the People, which, because of the 2009 election results and despite its self-destructiveness since then, remains the second-largest opposition force in Parliament, led by Mosiuoa Lekota.

There is deep irony at play here too. Mbeki decided the destruction of the DA was a political priority, he appointed as his hit man the national chairman of the ANC — Lekota. Thus it was that Lekota, with the carrot of floor-crossing and the promise of the Western Cape premiership, tempted Marthinus van Schalkwyk to lead his New National Party rump out of the DA and into the fatal embrace of the ANC.

Four years later, when parliamentary floor-crossing, which probably did more injury to democratic deepening than many other constitutional predations before or since, was at its height, the same Lekota set about personally luring DA members across the parliamentary aisle. In one case, he even offered DA MP Rafeek Shah a "deputy ministry". When I exposed the offer, which Shah informed me of and commendably declined, Lekota telephoned me to tell me "it was only a joke". Presumably, these days Lekota is more seriously engaged in helping to broaden an opposition he once so assiduously attempted to destroy.

From the’s DA perspective, demographics represents political destiny. In last year’s municipal elections, the party’s improved performance in reaching about 24% of the vote was hailed as scaling new electoral heights and proof that the party had, at last, established a small base among black voters. Actually, only the latter but crucially important fact was new. In 2000, shortly after the formation of the DA, the party notched up more than 23% of the national municipal vote. The reason for the standstill in its total over the past decade has not been because of a failure to obtain black votes but because of the rapid decline, demographically, in its core minority — especially its white — base.

Increasing its size remains the vital and unfinished task for opposition leadership. This is a proposition about numbers. But there is another equally compelling dilemma: how to do so and retain ideological and policy coherence and not reduce the clear blue water that separates, or should divide, the opposition and the government.

On squaring this circle, not just the fortunes of the opposition but the constitutional good health of the country depends.

• Follow Leon on Twitter: @TonyLeonSA

A handy guide to staying out of the losers’ circle

16 Oct 2012 | Tony Leon | Original Publication: BDlive

On the basis that misery likes company, it is comforting, although not reassuring, to look around the globe, writes Tony Leon

WARREN Buffett, the famed US investor, noted: "Only when the tide goes out do we see who has been swimming naked." This seems an apt metaphor for diagnosing the ills afflicting South Africa and the world at present.

On Sunday, The New York Times, so often a cheerleader of South African exceptionalism, published a grim piece, as a result of the recent waves of violent strikes, under the headline, Upheaval Grips South Africa as Hopes for its Workers Fade. In similar tenor, Lex, the Financial Times’s anonymous but hugely important arbiter of investor sentiment, recently heralded South Africa’s rainbow’s end. Noting the "volatile cocktail" of flat-lining growth, currency slide, surging protests, inflationary pressure and government paralysis, it suggests a "South African Spring" will soon be upon us. This is, of course, not a reference to the seasons but to the sociopolitical revolution that gripped much of North Africa and the Arab world last year and which continues to hold Syria in its grip.

Since my return to our shores just two weeks ago, after three years away, I have been struck how we seem to be displaying collective signs of a national nervous breakdown. And this is not just the noises from the "usual suspects" in the opposition ranks and the suburban chattering classes. It appears to have afflicted, in equal measure, some significant personalities in and many ordinary, and increasingly disenchanted, supporters of the governing party.

On the basis that misery likes company, it is comforting, although not reassuring, to look around the globe. Last week, the Nobel committee awarded its peace prize to the European Union. It might have helped keep the postwar peace, Yugoslavia excepted, but the grand design of an increasingly close and more inclusive and prosperous union is unravelling, especially in its southern flank.

To return to Buffett: many of the institutions we built to bed down democracy in South Africa and the world and improve its condition do just fine when growth is up and conflict is down. But they sometimes falter when they are stress-tested by adverse currents and rough tides. The paralysis of the United Nations Security Council over Syria, the inability of the eurozone to arrest the fear of debt default in its southern flank and the difficulty of the Group of 20 in turning around the global financial crisis are three instructive examples. Simply put, some of the challenges we face are simply too big for the institutions designed to contain them.

There is much talk, as well, of the decline of the world’s hyperpower, the US, and whether it is temporary or terminal. Another endless debate concerns whether China’s rise is assured and what this means to the Pacific and beyond. The developing world is also "enjoying" a better financial crisis than developed economies, but according to the latest International Monetary Fund forecast, both are severely underperforming.

But however fundamentally these shifts in the tectonic plates of international economics and diplomacy reset the future world order, right now we are somewhat suspended in a leaderless world. Political consultant Ian Bremmer described this new order as the unstable "G Zero World".

South Africa spends much time and effort exporting to the world the example of our constitutional "miracle"; indeed, in my recent work abroad, I found it to be an excellent example of South Africa’s "soft power". However, the other day I felt obliged to ask: "If our constitution is so good, why do things seem so bad?" Perhaps the great Thomas Jefferson gave us the answer more than 200 years ago when he noted that the best constitutions are those that are "most sceptical about the virtues of the powerful". This is something Parliament and the African National Congress should remember as they go about poking into the work of Public Protector Thuli Madonsela, who appears to share this Jeffersonian scepticism.

A recent official visitor of mine in Buenos Aires, one of our Cabinet’s wiser and more distinguished members, was engrossed in reading arguably the most important recent addition to the vast literature on what separates winning nations from the also-rans. Why Nations Fail: The Origins of Power, Prosperity and Poverty, by Daron Acemoglu and James Robinson, reaches an influential conclusion. Good institutions, they argue, separate the winners from the losers. These in turn take root and flourish in countries that are "inclusive states" that give everyone access to economic opportunity. Political power in such places rests with a broad coalition or a plurality of groups. This is a relatively elite set of countries.

Far more crowded is the losers’ circle, the "extractive states" controlled by a narrow ruling elite that tampers with institutions in order "to extract as much wealth as they can from the rest of society".

As our ruling elite goes about selecting its next leader, I hope my recent visitor passes the book around the Cabinet table.

• Follow Tony Leon on Twitter: @TonyLeonSA