ection>
Anthea Jeffery
BEE
Helping or Hurting?
TAFELBERG
Foreword
Some thoughts on the book you hold in your hand
This is a book about an idea; an old idea, dreamed up during the Enlightenment and adopted as holy writ by European and North American liberals in the second half of the twentieth century. It goes like this: since all humans are born equal and ability is equally distributed across all races, outcomes would be identical if not for distortions caused by injustice and racial discrimination.
There was of course a second great theory on the causes of inequality, but it fell into infamy with the collapse of communism. By the time Nelson Mandela stepped out of prison in 1990, the Marxist-Leninist view was completely discredited, leaving the African National Congress with no choice other than to abide at least in the short term by the softer rules of non-racial liberalism, which sought equal racial representation in everything from Springbok rugby teams to medical school admissions.
Apostles of this form of redress believe that any discrepancies between races are the fruit of historic injustice. By 1990, a surprisingly large number of white South Africans had come to share this view. Under apartheid, unjust outcomes were legislated into being by a government determined to keep blacks in menial positions. As the injustice became more and more apparent, business began to defy discriminatory laws. The first affirmative action programmes were launched in the early 1990s, the first black economic empowerment ownership deals at much the same time. As Anthea Jeffery reminds us, these initiatives were voluntary; white South Africans had come to realise that redistribution was morally correct and politically inevitable and therefore opted to move before they were ordered to do so by the incoming African National Congress.
Private initiatives failed to meet the ANC’s goals, though, and after 1998 the campaign for redress moved into a more coercive phase, with Parliament passing laws requiring both business and other institutions to transform or face penalties. Most businesses accepted this, reasoning that resistance would be pointless and damage minimal provided that the new laws were equally enforced on everyone: if all shoe factories, for instance, were required to give an identical percentage of ownership to black partners, black economic empowerment or BEE would become just another overhead in the shoe sector, easily passed on to customers. Some businesses took a more risky stand, warning that the new laws would stifle growth, heighten inefficiency and encourage corruption; a line that inevitably elicited charges of racism from the ANC. It was hard for the layman to know where truth lay, and after a while, you began to feel it didn’t matter anyway, because the debate about economic justice continued interminably, without any resolution. Beyond a certain point, readers began to yawn and turn the page.
Actually, that’s unfair. It was I who grew bored and turned the page, thereby becoming one of the journalists John Kane-Berman would later accuse of ‘sleeping through the revolution’. That is why the contents of this book came as such a shock to me. Each page I turned brought dumbfounding revelations. By the time I reached the halfway mark I was trembling with outrage and bombarding friends with distressed SMSes and emails. Are you aware, I said, that the ANC government has drawn up a ‘final policy proposal’ allowing it to expropriate 50 per cent of farmland without compensation being paid to the farmers concerned? And that the Constitutional Court has already given its indirect blessing to such a move? And that the Department of Trade and Industry is in the process of abrogating our trade treaties with 13 key European countries, thereby signalling to these former friends that their South African assets are now liable to seizure at any moment?
At this point I discovered that most of my friends and journalistic colleagues had also slept through the revolution. Some twirled fingers at their temples behind my back, as if to say, nutcase. Some drew my attention to statements from the World Bank or Goldman Sachs, describing South Africa as a paragon of wise economic governance. The novelist and businessman Steven Sidley accused me of ‘hysterical’ exaggeration. ‘If what you say about Anthea Jeffery’s book is true,’ he said, ‘whites and rich blacks and all foreign investors would already be fleeing. This would be the only conversation in the media.’ But then he started checking Jeffery’s facts, and had to concede that her arguments were if anything understated.
You must understand that Jeffery is not an investigative reporter who digs up secrets. Her great skill is the ability to see hidden patterns in fields of information that lie openly in the public eye, ignored by everyone else. In 2012, she began to apply this formidable weapon to a raft of documents generated by an ANC policy conference in Midrand.
It was clear at the time that the ANC had come to a crossroads. Nearly two decades of state interventions had turned South Africa into Africa’s first welfare state, with a huge and growing black middle class plus a small band of black billionaires, catapulted into super-wealth by BEE legislation. On the other hand, there were many in the ANC alliance who felt change had not gone nearly far enough. Some were communists who wanted to rip up the 1996 Constitution and revive the dream of a Soviet-style revolution. Others were acquisitive Black Power activists who felt black individuals were entitled to own a much larger share of South Africa’s factories, businesses, land and mines.
The upshot was a slew of radical new policy proposals, many of which were endorsed at the ANC’s subsequent Mangaung Conference, where President Zuma famously announced that the second phase of the South African revolution was about to begin. The rest of the media reported the speech and fell asleep. Jeffery, almost uniquely, kept her eye on the ball, tracking new policies as they moved into draft bills and, in most cases, into measures already adopted by Parliament, if not yet given the president’s assent.
And so it came to pass that most journalists missed the most important story of the post-apartheid era. In the run-up to our 2014 general election, the ANC was usually portrayed as a centrist movement committed to the National Development Plan, a programme whose moderate precepts were endorsed by the Democratic Alliance and warmly applauded by the World Bank, the IMF and foreign investors. With the ANC now sprawled across the centre like a large and complacent elephant, the media sought drama in the utterances of outsiders like Julius Malema and Joseph Mathunjwa, presented as dangerous radicals whose attacks were rattling the ruling party. The resulting Punch and Judy show was amusing but totally misleading. While the nation chuckled at Malema’s antics, ANC policymakers were quietly working on a scheme that would render him totally irrelevant.
You laugh? I would caution you to wait until you’ve read Jeffery’s dissection of the Protection of Investment Bill of 2013, which strips foreign investors of the right to appeal to international arbitrators if the South African government seizes their assets. Or the Mining Amendment Bill of 2013, which allows government to take control of oil or gas fields developed by private companies and pay whatever compensation it pleases. The same law imposes massive new penalties on mine owners who fail to meet black ownership requirements. Other legislation now exposes directors to jail terms of up to ten years for ‘indirectly’ (that means unintentionally) ‘undermining’ BEE objectives, while already onerous empowerment requirements are being ratcheted up under the new generic codes.
Also of interest is the draft 2013 Expropriation Bill, which empowers thousands of officials at all three tiers of government to expropriate property of virtually any kind. This should be read in conjunction with the aforementioned Investment Bill, which allows them to do so without compensation – provided that they are acting as ‘custodians’ for the disadvantaged masses. As Jeffery notes, this law would in theory enable the state to confiscate your business and then invite members of the previously disadvantaged caste to apply to run it without paying you anything.
Those who think the Constitutional Court would surely stand against this should think again: the relevant provision is taken directly from a recent ConCourt judgment, which is now being turned into a general principle of law.
And so on, and so on. All these rules and rulings have been reported in the press, but often in a way that omits or downplays their most important aspects. It is only when you look at what they actually say – and then put all the rules together, as Jeffery has done – that you see the big picture, which is