Cape Town during budget week dishes up interesting chance encounters. I bumped into Brian Kantor on Friday morning in the foyer of my hotel. He quickly roped me into attending his talk to the SA Property Owners’ Association at the Capital Hotel 15 on Orange where, he relayed, once stood the cricket pitch of Sacs Rosedale, his alma mater. A concrete pitch with concrete nets.
As anyone who has ever played on a concrete pitch will know, once the pitch cracks under the AstroTurf the pace and uneven bounce can transform even mediocre bowling attacks into lethal opponents. SA is facing a barrage that would make facing the feared West Indian quartet of Roberts, Holding, Garner and Croft on a concrete pitch seem pedestrian.
The bouncers arrived with the budget, with the finance minister skilfully playing the first ball neatly off his hips, the most eye-catching element being the decision to lease out old coal-fired power stations to the private sector, a masterstroke Kantor hailed as crossing a Rubicon for what it signals — privatisation by any other name as sweet.
That rotation of strike brought his cabinet colleagues to the business end to face two more thunderbolts rising off a length in quick succession after hitting a crack in outgoing CEO André de Ruyter’s carefully composed resolve. He felt compelled to place his version of events on record and remains understandably shaken after his poisoning. Let them eat the lumpenproletariat seems to be the response to his version.
Stung by these deliveries, the comrades looked to counterattack, with a barrage of ad hominem shots, swinging with the words failure, and pulling angrily at his just transition vision. For the most part though, it was like watching another former West Indian fast-bowling great, Curtly Ambrose, wield the bat. Especially given that what seems to have stung most is not the energy-sapping revelation that roughly R1bn is looted from Eskom each month, but his comments about how embarrassing it is to attend meetings with international investors while your government speaks in Iron Curtain-era communist gobbledegook.
The perfect set-up, and now firmly on the back foot, President Cyril Ramaphosa’s administration was castled on Friday afternoon by a full straight one we could all see coming from the Financial Action Task Force (FATF) in Paris. The FATF’s greylisting of SA not only confirms and supports De Ruyter’s allegations that the ANC-led government is not serious about cleaning up corruption, but it has now writ the message large over the country for the whole world to see.
In conversation with Nedbank CEO Mike Brown on air in 2022 he likened it to a relay race, if you would allow me to mix my sporting metaphors in one column, with rules about who’s allowed to run, what stadium, age groups and so on — the framework of rules and regulations.
The first runner is the financial services sector — it is their job to know their clients and report transactions they think are suspicious, and to report certain cash threshold levels to the second runner, the Financial Intelligence Centre (FIC). The FIC’s job is to analyse all those transactions, join the dots and, if something requires investigation, hand it over to the next runner, the investigative authorities who must investigate if there’s a case. Finally, they hand it to the last runner, the prosecuting authorities.
If you look across that entire chain you’ll see that one of the FATF’s 11 identified deficiencies maps to banks and the other 10 map to various other entities in that relay race, to give you a sense of where the problems lie — at the back end getting real prosecutions to emerge from the Zondo commission, for example.
Watching the state’s case unravel this week in what was supposed to be a slam dunk among eight seminal state capture cases, in securing the extradition of the Gupta brothers from Dubai, it is clear the final runner is still competing with a limp.
Being placed on the greylist has negative implications for our country, for our financial services sector and its regulators, and will increase the cost of compliance. But I suspect it is not as material as a ratings downgrade below investment grade.
Brown agrees. “This matter has been spoken about for a long period, so it shouldn’t be a surprise to anybody. And in fact, many of the banks that we deal with on a corresponding banking basis have large operations here in SA in their own right anyway.”
The rand has tanked, but will recover, inevitably, as it has always done, and revert to its emerging market mean. Kantor believes investors and businesses must be alert to these opportunities. For all the pessimism our nadir induces, there is an equally important opportunity for the private sector to lean into state failure with its own solutions.
Attending the Dealmakers Dinner last week I was reminded that our private sector strength remains a formidable counterpoint to our public sector weakness. As the political rhetoric gets dialled up into the 2024 election the tonic can be found in ordinary South Africans doing extraordinary things in business every day, going out to bat for their communities despite our government’s penchant for spectacular collapses.
• Avery, a financial journalist and broadcaster, produces BDTV’s Business Watch. Contact him at Badger@businesslive.co.za
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