Flash Briefing: CR and the Guptas: What the president knew – Zondo; SA’s fishy powership deal; Tencent punished; US powers up

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  • The ANC allowed looting, president Cyril Ramaphosa said at the Zondo Commission of Inquiry, with his comments hitting world headlines. The influential Financial Times of London says Ramaphosa’s remarks are his most direct admission yet of the party’s failings in the so-called state capture era. But, it reports, Ramaphosa stopped short of a full apology and said “the recognition of these facts does not mean that the ANC is itself corrupt or uniquely affected by corruption”. The Zondo inquiry is investigating claims that Zuma allowed the Guptas, a business family, to control cabinet appointments and state contracts for the benefit of their mining-to-media empire before the party replaced him with Ramaphosa. The President was probed by lawyers on what he knew about the role of the Guptas in funding the ANC. Take a listen.
  • Like Zuma’s dodgy nuclear deal, Energy Minister Gwede Mantashe’s powership deal is deeply suspect and frankly reeks of corruption. So says the leader of the opposition Democratic Alliance, John Steenhuisen, who says the deal locks South Africa into a 20-year contract to purchase expensive, dirty power when the cost of clean renewable energy is falling every year. The Council for Scientific and Industrial Research (CSIR) has estimated this deal will cost South Africa R218 billion over 20 years. ‘That is a truly vast commitment.’ He notes that powerships, which are ships on which a power plant is installed, are currently popular among  failed or failing states such as Ghana, Mozambique, Sierra Leone, Gambia, Senegal, Sudan, Beirut, Iraq and Pakistan which are currently using powerships on contracts of two to five years. Under Mantashe’s deal, we’ll be paying R2.30 per kilowatt hour while Saudi Arabia has just signed a power purchase agreement for solar power at an equivalent to 15c per kilowatt hour. Worse still, this price will most likely increase over time in real terms because the liquified natural gas we’ll be importing to fuel these ships is priced in dollars and linked to a carbon tax, both of which are likely to push the price up in South African Rands.
  • The US economy expanded rapidly in the first quarter, growing at a 6.4% annual rate and extending what economists project will be a robust, consumer-led recovery from the pandemic this year, reports BizNews Premium partner, The Wall Street Journal. The jump in US gross domestic product in the first three months of the year, reported by the Commerce Department on Thursday, put the size of the economy slightly ahead of where it stood a year earlier, just as the pandemic reached the US. The gain was fuelled by a flood of federal cash to households and rising vaccinations. Consumer spending soared, with households shelling out the most for big-ticket items such as cars and furniture. The S&P 500 – and index of the biggest publicly listed companies in the US – has risen 10% since Mr. Biden’s Jan. 20 inauguration. The index is on course for its strongest performance since the start of Mr. Roosevelt’s first term in 1933, when it surged 80% after a spectacular crash in the Great Depression, according to a Dow Jones Market Data analysis, says The Wall Street Journal. By comparison, the S&P 500 rose 5.3% in the first 100 days of President Donald Trump’s term in early 2017 and on average has gained 3.2% over that period in presidential terms since Herbert Hoover’s in 1929. Investors say it is no surprise that bountiful government spending, increasing Covid-19 vaccinations, growing faith in the economic reopening and continued support from the Federal Reserve have powered the latest leg up in the stock market. Many, though, say it is a mistake for stockholders to focus too much on political questions like which party occupies the White House because corporate earnings and economic growth have a much greater influence on the market.
  • China is preparing to slap a fine on Tencent Holdings as part of its antitrust crackdown on the country’s internet giants, Reuters said, citing people with knowledge of the matter. Tencent may face a fine of at least 10 billion yuan ($1.6bn), which is less than the $2.8bn levied upon fellow titan Alibaba Group, according to the report. The company faces penalties for not properly reporting past acquisitions and investments for antitrust reviews, as well as for anticompetitive practices in some businesses, particularly in music streaming, the news agency said. Tencent underpins Amsterdam-listed Prosus and the JSE’s Naspers – which dominates the South African stock exchange.

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