US blacklists Guptas; Power stations not for sale; Cell C asset sale; Pathway to Brexit deal

By Linda van Tilburg

  • The US Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned Ajay, Atul and Rajesh Gupta as well as Salim Essa for their involvement in corruption in South Africa. In a statement, the Treasury said that the Guptas and Essa, described as members of a significant corruption network in South Africa, had leveraged their political connections to engage in widespread corruption and bribery, capture government contracts and misappropriate state assets. The Treasury’s under-secretary for terrorism and financial intelligence, Sigal Mandelker, said the decision demonstrated the US government’s unwavering commitment to supporting the rule of law and accountability in South Africa. The implications of the move by the US are that US entities will be forbidden from handling the assets of the Gupta family and Essa and doing business with them. The statement also said that as a result of the action, all property and interests of the Guptas and Essa in the US or controlled by Americans were blocked and should be reported to the OFAC.
  • President Cyril Ramaphosa has poured cold water on proposals by Finance Minister Tito Mboweni that Eskom would sell some of its power plants to help settle its debt. He told lawmakers in Cape Town that South Africa was not inherently in the business of selling power stations. Eskom’s new plants were its “crown jewels” and should be retained while the old ones were unlikely to find buyers, he said. In a policy paper published in August, Mboweni suggested that the sale of Eskom’s generating facilities could raise R450bn, which equates to its entire debt.
  • South African factory output has shrunk for a third straight month in August. Manufacturing production declined by 1.8% from a year earlier compared with a revised 0.7% drop in July. The contraction was less than the median estimate of 11 economists in a Bloomberg survey who predicted a 2.5% contraction. The largest declines were in the iron and steel, non-ferrous metal products and machinery sectors. Manufacturing accounts of 14% of gross domestic product and output is very sensitive to power-supply constraints.
  • Cell C has put core parts of its business up for sale as it struggles with R9bn of debt and deepening losses. Bloomberg sources say that Cell C’s fibre-optic network and base of billed customers are up for grabs. The carrier is also in talks to sell access to some of its wireless frequencies to larger rival, MTN. The asset sale is said to have attracted interest from MTN, Vodacom and Telkom, but all three declined to comment. Cell C commented by saying it would look at any opportunity that would assist with the company’s long-term viability and sustainability. Any opportunity needed to undergo a due diligence process that took into account all stakeholders.
  • After harsh words and a stalemate on Brexit negotiation with the UK a mere three weeks from the 31st of October date to leave the EU, British Prime Minister Boris Johnson and his Irish counterpart, Leo Varadkar say they see “a pathway to a Brexit deal”. Johnson met with Varadkar in a private meeting in north-west England. Varadkar told reporters that his meeting with Johnson was very positive and very promising and that he was absolutely convinced that both Ireland and the UK wanted an agreement.  He said he believed it was possible to agree on a treaty that would allow Britain to leave the block in an orderly fashion by the end of October.