Why isn’t the PIC going after other companies it lost money to?
DAILY MAVERICK - OPINIONISTA / 25 NOVEMBER 2019 - 14.44 / JESS DUARTE
Besides appealing to the sensitivities of media ownership in South Africa, there is, however, another aspect of concern to the current proposed action the Public Investment Corporation wishes to take against the Sekunjalo Group. This is the question of fairness. To reduce these two important issues, diversity in media ownership and fairness, to a particular person is neither helpful nor progressive. We must ask whether the corporation has taken similar action against other companies in which it has invested heavily in the past.
The democratic dispensation with all its freedoms and rights that we enjoy in South Africa today cannot and must not be taken for granted. An important influence on this rights-based order, led by the ANC for decades, is the fourth estate and in particular, broadcasting and print media in our country.
In 1992 already, when the birth of democracy was on a cliff’s edge, the ANC adopted its Media Charter, setting out the organisation’s fundamental belief in the freedom of the press, but also ensuring that an environment is created that promotes media freedom and diversity. A critical institution advanced therefore by the ANC was the establishment of the Media Development and Diversity Agency (MDMA).
This charter also came within the context of the media playing a pivotal role as a pillar in the apartheid edifice. The ANC understood that the media often served as a mouthpiece to that illegitimate regime, providing a rationale and even at times intellectual support to apartheid. One just needs to review Hennie van Vuuren’s book, Apartheid Guns and Money, to understand the symbiotic relationship between the National Party and the media establishment at the time, many of whom still exist and thrive in a free South Africa today. The small sections of the media at the time, which advocated for the freedom of our people, did so led by the ANC.
At its 53rd National Conference in 2012, the ANC noted that print media continues to be a contested terrain and that ideological battles, and power relations based on race, class and gender in our society continue to be reflected in the South Africa media. Whether one agrees with the ANC or not, our organisation noted that print media continues “to position itself as the main determiner of the public agenda and opinion”.
The 2012 ANC conference went on to highlight reports by the MDMA and print media at the time indicating that despite the changes that had taken place in the print media space since 1994, the reality of the lack of diversity had not changed much. Eighteen years into democracy, in 2012, only 14% of the average ownership in the mainstream print media was in black hands. Female participation at board and management levels was at a devastating 4%.
It would have been in this context that eight months later, the ANC would have welcomed the acquisition of Independent News and Media SA by South Africans and more importantly that it was now under black ownership. The group was previously owned by the Irish company Independent News & Media and the Irish had voted to agree to sell the media group to the Sekunjalo Independent Media consortium.
At the time, the deal was structured so that its shareholders included workers and others, in what was then termed, “broad-based, value-adding partners”. The Competition Commission approved the deal, based on government policies of empowerment and other regulatory frameworks. The ownership of this media house was not only representative of the South African populace, it was also in local hands and we expected it to reflect more honestly on what was happening in the country rather than prioritising foreign owners.
Other than appealing to the sensitivities of media ownership in South Africa, there is, however, another aspect of concern to the current proposed action the Public Investment Corporation (PIC) wishes to take against the Sekunjalo Group. This is the question of fairness. To reduce these two important issues, diversity in media ownership and fairness, to a particular person is not helpful, nor is it progressive. We must ask whether the PIC has taken similar action against other companies in which it has invested heavily in the past, where shareholder value plummeted, ie: AfriSam.
A number of commentators have recently highlighted the case of Steinhoff and it should be noted that there are more companies involved than just Steinhoff.
A Fin24 report, “Steinhoff corporate fraud beyond what anyone envisaged, inquiry hears”, on 14 August 2019, indicated that the Commission of Inquiry into the PIC heard of the involvement of the partnership between Lancaster and Steinhoff. The PIC had provided a loan to Lancaster to acquire a 3% stake in Steinhoff. The loan was valued at R9.35-billion. By December 2017, the report continues, Steinhoff’s share value had dived by as much as 98% leading to losses for both Lancaster and the PIC.
Yet, in the aftermath of the Steinhoff crash, according to an earlier Fin24 report titled, “Jayendra Naidoo steps down from Steinhoff supervisory board” on 18 January 2018, the same person who founded Lancaster was also the co-founder of the J and J Group. By 14 August 2019, an SABC News report titled: “PIC wanted to further invest into Steinhoff: Naidoo”, reported that ownership of Lancaster was then divided between the Government Employees Pension Fund, owning half of Lancaster, the owner of the J and J Group and an empowerment entity, owning a quarter each.
We would imagine that when the Steinhoff shares slid to the bottom and the PIC had to write off its billions of Rands in investment in relation to this loan, Lancaster no longer existed. Or does it? If it does exist, then why is the PIC not going after Lancaster to recoup its investment and if it does not exist, then why is the PIC not applying for liquidation of the J and J Group, as it is going after the Sekunjalo Group, which is a separate entity from Sekunjalo Independent Media?
Any business venture involves risk. The PIC knew this when it entered into ventures with Lancaster, Sekunjalo and many others. For the purposes of diversifying our economy, we must encourage and support black businesses. While we can never condone wrongdoing, it is not helpful that specifically black businesses such as Sekunjalo or even the J and J Group are targeted.
What we are appealing for is fairness. What applies to the J and J Group must certainly apply to Sekunjalo as well as any other BEE player.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER