05 Mar

Why South Africa Is Ripping Up Its Mining Rules Again

South Africa’s mining industry is a prime example of the nation’s stark imbalances. Its highly paid, mainly white male executives oversee hundreds of thousands of mostly black workers labouring in deep and dangerous operations.

To spread the nation’s wealth more equally, in 2017 the government revised its mining charter to require that companies give more ownership to black shareholders.

The industry lobby group sued to stop this, saying that the changes were illegal and would deter future investment. Now, corporations, labour unions and mining communities are pinning their hopes on President Cyril Ramaphosa and his new mines minister to find a solution that everyone can live with.

1. Why were the rules changed in the first place?

Despite earlier versions of the mining charter designed to increase black ownership and benefits, the ruling African National Congress has said companies have still been too slow to share South Africa’s mineral treasures.

Former Mineral Resources Minister Mosebenzi Zwane, an ally of then-President Jacob Zuma, argued that more stringent regulations were needed to ensure “radical economic transformation,” a loosely defined concept championed by Zuma aimed at speeding up the redistribution of wealth. Zwane published his new Mining Charter on June 15.

2. What were the changes?

While some parts of the new rules were murky, it didn’t appear to include the “once empowered, always empowered” principle, which companies had relied on to count previous sales to black investors to reach a 26 percent black-ownership requirement, even if those investors later sold their shares to whites or foreigners. (There was disagreement about whether the principle applied in the previous versions.)

Zwane’s new rules also raised the ownership mandate to 30 percent. The chamber considers other contentious changes to include a requirement for holders of new mining rights to pay at least 1 percent of annual turnover to black shareholders, before and in addition to distributions to all shareholders.

To read the full article, click here.

23 Feb

South Africa Minister Brown `Inadvertently’ Misled Lawmakers

South Africa’s anti-graft ombudsman has found Public Enterprises Minister Lynne Brown inadvertently misled parliament about contracts that existed between the state-owned power utility and a company linked to the Gupta family, and has given President Cyril Ramaphosa 14 days to take action.

“By inadvertently misleading parliament, Minister Brown violated” the executive ethics code, Public Protector Busisiwe Mkhwebane said in a report posted online.

In June last year, the anti-graft ombudsman started a probe into Brown after website amaBhungane reported power producer Eskom Holdings SOC Ltd. paid Trillian Capital Partners Pty Ltd. 266 million rand ($22 million) in fees even though the existence of a contract had been denied.

Trillian, a financial-services firm, is linked to the Gupta family through business associate Salim Essa, who was its principal shareholder until he sold out in July.

According to the information the minister received from Eskom, no payments were made, “but it subsequently emerged that Eskom had indeed made payments to Trillian,” the Department of Public Enterprises said in a statement on Thursday.

“When I became aware that senior Eskom officials deliberately misled me, I immediately informed parliament’s ethics committee and the Public Protector of the false information,” Brown said in the statement.

“I instructed Eskom’s board to take disciplinary action against those who conspired to mislead me, parliament and the country,” she said. “After the Eskom, Trillian incident I instructed the department to strengthen oversight mechanisms to avoid a repeat,” said Brown.

Ajay, Atul and Rajesh Gupta have been accused of using a friendship with former President Jacob Zuma and a business relationship with his son Duduzane to try and influence cabinet appointments and secure lucrative state contracts.

None of the siblings appears to be in South Africa and while the state has moved to prosecute Gupta associates in the days since Zuma was ousted, it’s unclear how the country will recover the billions of rand that are allegedly missing.  Zuma and the Guptas have denied wrongdoing.

Source: https://www.bloomberg.com/news/articles/2018-02-23/s-african-minister-lynne-brown-accused-of-misleading-lawmakers