So, you want to be an investment banker? Sitting on yachts in European harbours watching the common folk go about their ordinary holidays? Want to fly first-class? A gorgeous wife, and your kids at the best schools? Want your bonus to look like a small city budget?
Yep, the money to be made can be mouthwatering. But there’s a price to pay behind closed doors where no-one can watch you debase yourself. You have to kiss serious ass. You bow and scrape and beg and plead. Please sir, give me your business; please sir, I’ve got this idea for your already glorious company, won’t you have a look at it? Journalists don’t make the investment banking money, but no-one tells us what to do. Well, mostly.
I am reminded what a dreadful business investment banking is by a leaked letter in circulation. It is from Martin Kingston, the impeccably-connected CEO of Rothschild in SA, to the current (but not for much longer, some say) CEO of Eskom, Phakamani Hadebe.
The letter is being hawked around by Irvin Jim, the secretary-general of the National Union of Metalworkers of SA (Numsa), as evidence of a conspiracy between big business and the state to dismantle Eskom and privatise it. He has people very excited. I’ve watched an entire TV programme about it.
“It is obvious the state is deliberately trying to collapse Eskom,” he says. “It is our duty as the working class to defend this valuable state-owned enterprise.”
In fact, though, the letter proves no such thing. All it is is Kingston trying to get in ahead of every other investment banker who can smell a flow of fees for advice and consultation as Eskom lurches, leaderless, from crisis to crisis.
“Dear Phakamani," writes Kingston on February 20 2018, “I refer to my e-mail dated 23 January 2018 in which I highlighted that, in our view, an immediate priority for the board should be an independent assessment of the financial position of Eskom, so as to assist in the development of a viable plan to restore confidence in Eskom’s financial position with all key stakeholders.”
Translated, Rothschild will do the independent assessment and develop the viable plan. The cost? More than you can count. Kingston goes on:
“We recognise that you have been focused on securing the R20bn of funding that is required to secure the short-term liquidity of Eskom, which is certainly the most immediate priority. We understand that you have made significant progress in the area which, once completed, will allow you to turn your attention to other priorities. Given Rothschild’s position as a global leader in debt restructuring advice and our knowledge and insights of the local market and the Eskom specific issues, we thought it would be helpful for you if we set out the short to medium-term focus areas that Eskom will also need to address once the immediate bridge funding has been secured.”
This fairly routine sales pitch continues to the conclusion that “there is no single solution to address Eskom’s financial sustainability” — the latter a phrase so routine that if you googled it you would come out with a thousand versions of “no silver bullet”. President Cyril Ramaphosa used that term in the context of the Eskom issue in his state of the nation address the other day and the Numsa leader has immediately, joyfully, jumped to the farcical conclusion that Ramaphosa is carrying out Martin Kingston’s instructions.
Do you laugh or cry? Jim is either going to “meet you in the streets” as he warned Ramaphosa when the president announced Eskom would be broken up into three distinct businesses, because he genuinely believes Rothschild is behind a conspiracy to wreck, dismember and sell off Eskom, or he is cynically lying to his members about the status of the letter. I think the latter. Jim knows business and helped Paul O’Flaherty save Arcelor Mittal a few years ago.
This letter has no status and, with due respect to Rothschild, it is not even very original. Its redeeming quality is that it follows tradition and process. Regiments Capital and Trillian never had to write begging letters to state-owned enterprises under state capture to get their business. They were guaranteed their business. Kingston was merely fighting his corner.
Jim’s abuse of the letter to frighten people is proof, if ever any were needed, of the value of the German practice of mitbestimmung or co-determination. On the board of every listed and private German company sit two groups, by law, other than the shareholders. The first are the firm’s bankers. The second are representatives of its biggest unions.
It means it is almost impossible for German workers not to know what shareholders know. It means it is impossible for a labour leader like Jim to lie about a meaningless letter. It means everyone in an enterprise knows the same thing at the same time. And as galling as the prospect might be to unions and corporate knobs alike here in SA now, it would ultimately build trust between them, place unions at the centre of a dynamic economy, and finally end the cycles of rumour and conspiracy that throttle our every effort to move our country forward, together.
• Bruce is a former editor of Business Day and the Financial Mail
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