Ruling party gets a foot in at leading bank
A couple of weeks ago the financial press was full of news about the appointment of Maria Ramos as chief executive of Absa Bank. You’d expect this news to make the front page of every business digest; but not for the reasons it did. “Conflict of interest
A disciplined cadre at a leading bank
The first is whether it’s appropriate for the ruling party to enjoy a “warm” relationship with a private corporation. ANC secretary-general Gwede Mantashe claims it’s not unusual for “disciplined cadres” from the ANC to “give information to the ANC when they are moving.” Which begs the questions: “Has the ANC ‘deployed’ Ramos at Absa?” We’re sure that’s not the case – and believe Ramos would respond similarly. But the mere suggestion that private corporations can be infiltrated by political parties is frightening.
A disciplined cadre of the ANC is required to follow the organisations’ instructions. If Ramos had to report to the ANC NEC for them to ‘sanction’ her move from Transnet, just imagine the type of issues she will be called upon to discuss in the future. Mantashe’s comment also reopens the debate about the separation of party politics and state. It may be appropriate for the state (and not the ruling party) to take some part in recruiting candidates to public companies like Transnet and Eskom; but appointments to private companies must remain apolitical. Government and the ruling party have absolutely no say in who gets the top position at Absa, Anglo American or Pick ‘n Pay, for example.
In her new role, Ramos’ responsibility is to the shareholders of Absa and not a political party. Her obligation to the state is to ensure that Absa functions as a disciplined corporate citizen and makes the largest contribution to society through contributions to GDP – and state coffers by way of taxes.
Blatant abuse of shareholder rights
The second concern raised in the wake of Ramos’ political briefing is the release of market-sensitive information to a select group of individuals prior to it going public. It confounds belief that the ANC executive was informed of a corporate decision before the information was made public. Such news should be released to all market participants simultaneously to prevent so-called ‘insider’ trading.
Of course South African shareholders are quite used to this type of abuse. They’re often the last to learn about developments that could have a serious impact on the value of their shares. Directors and corporate investors in Sentula Mining sold the majority of their shares days before allegations of serious fraud at that company sent its shares plummeting. They locked in handsome profits at R24 per share, leaving ordinary shareholders clutching shares worth a mere R8.60, not to mention that these shares were subsequently suspended on the JSE.
And while directors of Vox Telecom are crying about their personal losses due to high-risk trading strategies in contracts for differences, no-one has yet asked why shareholders were exposed to such risks without their knowledge. There’s nothing worse than to learn about your telecommunications investment taking a hit of R50m or more because of irresponsible geared trading activities. But we digress...
Political about turns
Both Ramos and Marcus have impeccable track records and no-one doubts their ability to serve Absa in their respective capacities. The registrar of banks, Errol Kruger is on record that proper procedure was followed and that as outgoing head of Transnet Ramos was required to report her decision to the President of South Africa. He says there’s no doubt that the pair would deal impartially with banking matters, adding “we are speaking here of people whose integrity and ethics are not in question.”
Just a few weeks ago the ANC Youth League was up in arms when Shilowa’s wife attended a luncheon with Marcus. At that stage they claimed that Wendy Luhabe was using the opportunity to solicit funds for the breakaway Congress of the People (COPE) party. Today the wheel has turned, with opposition parties questioning the appointment of “disciplined cadres” to a bank that frequently bids for government tenders and contracts. A year from now we’ll probably look back at these stories and dismiss them as ‘storms in a teacup’ or part of the madness that goes with politics. Right now they certainly send the pulses racing!
Editor’s thoughts:
We can file the political bluster around the appointment of Ramos to Absa’s board in the ‘business unusual’ drawer. We’re sure thousands of ordinary South Africans yearn for the day when politics is totally separated from economics and the country’s corporations can get down to the dirty business of making money. Do you think Ramos’ trip to the ANC National Executive Committee was appropriate? Add your comment below, or send it to [email protected]
