Ramaphosa’s untangling of interests poses business challenges
JEANNE VAN DER MERWE and ANDREW TRENCH
As newly-elected ANC deputy president Cyril Ramaphosa starts untangling his myriad business interests, his departure may spell bad news for the companies whose fortunes he helped create.
Experts doubt Ramaphosa will be able to effectively distance himself from his R2.4 billion business empire, especially as many of the businesses rely so heavily on Ramaphosa’s personality for their success.
Ramaphosa’s spokesman Steyn Speed declined to answer detailed questions about how Ramapahosa would handle his business interests.
He said it was “premature” to talk about specifics until a review of his interests which Ramaphosa had initiated was complete.
City Press sketched out Ramaphosa’s web of corporate interests two weeks ago, which include current and former directorships in more than 150 companies that straddle most major sectors of the economy, and positions on the boards of Standard Bank, Lonmin, chairmanship of Bidvest and MTN’s boards, and co-chairmanship of Mondi Plc.
He is also the main “developmental licensee” for the South African division of the McDonalds multinational fast food chain.
Mining analyst Peter Major said most of Ramaphosa’s business partners would probably prefer him to retain his interests in a blind trust, as this would enable them to continue tacitly trading on his name.
UCT associate law professor Tshepo Mongalo said Ramaphosa should relinquish any business interests that involve regulated industries.
“The example of the former Prime Minister of Italy, Silvio Berlusconi, is a clear example of an untenable position of a senior political official where the exercise of independent and unfettered discretion is very difficult, if not virtually impossible,” he said.
Major said that while a blind trust would probably be the quickest and easiest way for Ramaphosa to distance himself from his business interests, a public listing of Shanduka would be the most transparent.
“Once a company is listed it would be possible to place his shares in a non-voting bloc, it’s easier to value the company or to sell chunks.”
Mongalo questioned whether a blind trust – used all over the world by businessmen entering politics, and also the route followed by Human Settlements minister Tokyo Sexwale after his appointment in 2009 – would be effective.
“No-one can ever be sure that the owner of the blind trust does not have influence over what it contains, let alone how it is run subsequent to its constitution,” he said.
He likened a blind trust to the common practice of someone excusing themselves from a meeting in which they have a direct interest.
“It is difficult to monitor whether the mere fact that the influential member of the board has an interest in a transaction would not by itself sway the other members of the board to vote in favour of the transaction, thereby making the recusal of a conflicted member a potent weapon for self-enrichment,” he said.
Mongalo said even if it were possible for Ramaphosa to liquidate all his business interests, the strong allegiances he had built up over many years, “the influence, perceived or otherwise, of decision-making to benefit hard-earned achievements and relationships may be very hard to resist”.
Retired judge and corporate governance expert Mervyn King said Ramaphosa ought to resign all his board appointments and put his equity interests in a blind trust “of which the trustees must be people of known integrity, professionalism and gravitas”.