DA criticises deal for failing to be broad-based black empowerment

The parade of state-owned and private assets into the hands of politically connected black South Africans reached something of an apogee yesterday when former communications department director-general Andile Ngcaba, African National Congress (ANC) spokesman Smuts Ngonyama and former Transnet finance director Gloria Serobe emerged at the head of a new consortium to buy a 15,1% stake in Telkom.

The stake, which is valued at about R6bn, belongs to the Thintana consortium, made up of USbased SBC Communications and Telekom Malaysia.

SBC Communications confirmed yesterday that "subject to conditions that are expected to be met no later than November 15, Thintana's remaining stake in Telkom will be sold to an empowerment consortium led by Andile Ngcaba and Women Investment Portfolio Holdings, advised by Smuts Ngonyama".

This will also add much-needed empowerment to a company that has come under fire for lacking a strong black shareholder especially as unions place pressure on the telecoms company over the possibility of retrenchments.

But this confirmation comes despite repeated denials by Ngcaba recently that he was part of the consortium negotiating the purchase of this R6bn stake.

It was also something of a surprise as media reports in recent weeks have suggested that talks with the consortium had been suspended.

All parties remained tightlipped yesterday, refusing to provide details of what conditions remained to be filled, clarity over how this will be funded and the exact role to be played in this deal by the ANC's head of the presidency, Ngonyama.

SBC's spokesman in the US, Walt Sharp, refused to provide details of discussions until the company filed further details with the US Securities and Exchange Commission. Telkom said it could not comment on what was essentially a private deal between its shareholders and a buyer.

Ngcaba, Ngonyama and Serobe could not be contacted.

This transaction has drawn a heated response from critics over the close link between government and private sector empowerment deals. Democratic Alliance (DA) communications spokeswoman Dene Smuts slammed the consortium's deal with Thintana last night.

"This is a great opportunity missed for true broad-based empowerment because this deal once again features members of the elite who in this case are far too close to the ruling party for comfort," she said.

Smuts pointed out that Ngcaba had "barely left the department of communications", while Ngonyama still remained a top politician.

The DA had put a proposal to the Telkom board for the stake to be purchased by a broad-based "people's consortium".

Institute for Democracy in SA political analyst Judith February said this deal raised "uncomfortable political questions".

"The danger is that this could entrench the perception that government officials might use their public positions as a springboard to launch themselves into the private sector," she said.

February said this again highlighted the need for rules governing the "revolving-door" syndrome of those moving from government into business.

With acknowledgement to Rob Rose and Business Day.