PREMIUM FREE TRIAL LONDON — Respected business leader Russell Loubser has come out swinging at deepening corruption personified by South Africa’s state capture. The man who pioneered futures trading in SA and, as CEO, directed the turnaround of a bankrupt JSE, pulls no punches in this hard hitting interview with my Biznews colleague Gareth van Zyl. In September 2012, Loubser resigned very publicly as a director of South African Airways – using the opportunity to voice frustration at the incompetence and commercial ignorance of a government department then run by Malusi Gigaba, SA’s new finance minister. Half the other members of the SAA board, including chair and ANC stalwart Cheryl Carolus, followed Loubser out the door. In this excellent interview Loubser explains why he has no time for Gigaba and SAA chairman Dudu Myeni. Or, indeed, the “thugs” who now run the political party he once seriously considered joining as a member. He dismisses the ANC’s wordy policy statements as nothing other than a vehicle for self-enrichment by channeling state resources to their crony capitalist puppeteers. This excellent interview is a powerful contribution to the State Capture debate, cutting straight to the chase in typical Loubser style. Millions of South Africans have been waiting for a business leader to tell it straight. They need wait no longer. – Alec Hogg
Russell, its been a few years since Alec Hogg last interviewed you. What are you up to these days?
Yeah. As I said, I think you can describe it as ‘I’m playing the back 9 of my career’, which means that I’m very involved from a non-executive point of view with the FirstRand Group. I’m very happy to be involved from a non-executive point of view with the FirstRand Group because it’s a management that I can trust absolutely. The ethics are unquestionable and I can also understand the business because that’s my background – because banking has become (and can be very, very technical, complicated, and complex) – so every third month, I’m very busy. In between, I’m less busy, which is fantastic so I’m still involved.
Obviously, the last time that Alec spoke to you was back in 2015 and then before that, I think it was in 2012.
Yes.
That was when you just walked away from SAA as a Director.
Yes.
Can you tell us what was going through your mind the day that you walked out?
That’s another one of the tragedies of South Africa’s SOEs where (and it has to start at the top); the shareholder, which at that stage (and still is) – the Department of Public Enterprise (DPE) – was hopeless, really. The minister of DPE at that stage, was our current Finance Minister, Malusi Gigaba. What do I mean by hopeless? When I started my three-year membership of the board in 2010 right in the beginning, I did my homework and I asked basic questions. For example, why does South Africa have not one but three wholly-owned airlines. You’ve got SAA, which owns Mango 100%. SAA is wholly-owned 100% by DPE and then, separately, DPE also owns 100% of SA Express. At that stage, they were all cutting each other’s throats, competing against each other, being investigated on more than one occasion for Competition Commission issues. I asked a basic question: Why do we have three that operate in that way? Yes, they compete and they act in different markets, but why is it structured the way it is? I got that question to be asked of DPE. No reply whatsoever. No interest in the question for the three years that I was on the board of SAA. It wasn’t the first time I had asked the question but it was getting really severe at the beginning of 2012 where I said, and got the finance function of SAA, to ask of DPE, “Guys, we are trading in insolvent circumstances. We need DPE to speak to National Treasury, to at least get a guarantee”. Although, a guarantee doesn’t really solve an issue. All a guarantee allows you to do is to borrow money that you can’t afford to service. You either capitalise SAA properly or let’s close the thing down. This was at the beginning of 2012. No response whatsoever from DPE.
There’s a complete lack of urgency and understanding of commercial realities. That shareholder that was headed by Malusi Gigaba; [he is] is now the Minister of Finance. So we shouldn’t now be surprised that things are not really getting better from a financial point of view. It was also during Malusi Gigaba’s term as the Minister of DPE that he came out very strongly with this concept: State-owned enterprises will be used to achieve state objectives. Now, we know what that implies. That implies ‘get hold of the procurement budgets of state-owned enterprises in order to achieve state objectives’ and we know that implies. That is: dish out deals for pals. This management…this theft has been going on for quite a long time. It’s a tragedy that in South Africa, you’ve basically got the Guptas saying, “There is no politician or bureaucrat that we can’t buy”.
Even sadder than that is the fact that there’s no pride or sense of shame from our politicians to say, “I’m sorry. We are not prepared to be captured.” In fact, it’s the opposite. It’s like walking around with signs attached to their backs saying, “Available to be bought” and that’s the tragic situation that we have in South Africa at the moment. If you look at our crop of politicians and bureaucrats and you say, “Well, is there anyone that can’t be bought or hasn’t already been bought?” You only have to accept the first bribe and then you’re compromised forever. You can never undo that. That’s the irritating situation we find ourselves in at the moment where one family can just come in and basically, just capture anything to do with government. That’s the fact of the matter.
Did you ever have any conversations with Malusi Gigaba?
It’s impossible to get to speak to the man. There’s no sense of urgency. These issues that I’ve raised, were raised over and over again, in 2012 – no interest in even discussing or recognising that there is a problem. If you look at that you say, “Well, that’s not really surprising because none of those people have ever run anything of significance – ever.” Look at him. He’s come up through the ANC Youth League. This is not the ANC Youth League of Mandela’s time. This is a delinquent organisation and still is. In fact, it just gets worse year after year. When people have never achieved or built up anything themselves – ever – then you can understand why there’s no concept of what’s important and what’s not important. What’s dire? What’s not dire? What’s serious? What’s urgent? There’s no concept of that.
Even if there were, the main objective is ‘get hold of the procurement budgets of these big state-owned enterprises and use them to dish out largesse’ – that’s the objective. It’s not to serve the country.
What do you make of him now being Finance Minister with the cloud of the Guptas over him as well?
He’s unqualified for the job and he’s compromised. That’s the situation. That’s the harsh reality of the situation. The amazing thing is that he actually thinks that he can do the job, but maybe that’s not top of the agenda item. It’s get control of various positions, that’s the important issue.
Are you concerned?
Of course, because it means that the country operates way below its potential. Now these things can change for the better, but there’s no guarantee that will happen.
Over the weekend Treasury decided to give SAA another bailout of R2.2bn. What are your thoughts on that?
Like we’ve seen, just look at Comair, there’s no question that SAA can be turned into a profitable organisation. But then it needs a few things to change and with the right management and non-interference from the shareholder, there’s no question that SAA can be turned around. With the current attitude of the shareholder and the current board, Chairman, management etc. there’s no ways it’ll be turned around because the intention is not to run it at a profit.
So, you look at that situation and say, “Okay, do we need an SAA?” Well, the harsh reality is, we don’t actually need an SAA. But there’s nothing wrong with having a state-owned entity that’s washing its face and delivering a good service and that can be achieved, but not with the current mentality of the shareholder as to why is the state-owned enterprise there in the first place. And, of course, the current mentality of the chairperson and the board. If you don’t sort that out, you will not fix it, you’ll just incur loss after loss after loss.
Talking about Chairperson, Dudu Myeni, there was a scandal that erupted last week when she was in Parliament. It emerged that she had flown BA down from Durban to Cape Town to attend that particular briefing. The reason was because there weren’t any available first class tickets on SAA. What do you make of her and especially that scandal?
To me, a scandal and Dudu Myeni belong in the same sentence. There’s no intention of running SAA properly from that Chairperson whatsoever.
You had a few interactions with her?
We were appointed to the board at the same time and when she attended board meetings, she had nothing to say. There are many board meetings that she did not attend. When she said something, it normally didn’t make sense. Then that person gets appointed to be the chairperson. I mean, that’s not surprising. Remember, you have to go back, bearing in mind what are the objectives of state-owned enterprises. They will be used to set to achieve state objectives.
Parliament has made noises, especially from the likes of Yunus Carrim, that her position may be under fire. If she had to go, do you think that the problems at SAA would start to subside?
Well, it’s a start. It’s the same with Zuma. If Zuma goes, does that solve our problems? No, but it’s a good start. In fact, you cannot expect things to get better without that type of change starting, but it’s only a start. Remember the rot goes deep here, both from an SAA and a government point of view.
What is the endgame in this? Is government going to have no choice but to sell this airline, to start the ball going on privatisation?
Well, you can’t sell it. I mean, you can’t even give it away, but again, you know, with this government, you can’t seem to talk normal economics to this government. That seems to be a secondary or a third consideration as to do you run things properly, efficiently or at least wash their face etc. That doesn’t seem to be the objective of this government and remember this government is to a large degree captured. So it’s beholden and how do you capture somebody? Well, it’s obvious. You get them to accept bribes, simple as that. You only have to accept one bribe being a compromise forever. Then it’s not so easy to turn things around. So, can this continue? Yes, of course, it can continue. It shouldn’t, but it can. It requires strong principle people to take a stand.
What do you make of the recent firing of Pravin Gordhan? You were included on a list of executives who threw their weight behind him when he was coming under pressure especially from the likes of the NPA and the Hawks.
Well, he was standing in the way of the so-called state objectives. He was refusing to buckle, he was refusing to be part of this looting exercise, and if you are not part of the looting exercise, then you must expect to be removed from positions of power. The opposite side of that coin is if you are put into positions of power, the only reason you are put there is not because you are expected to do a good job, it’s because you are expected to tow the line from this looting point of view.
What do you think about the future of South Africa amid all of this noise that’s going on at the moment?
I’m very optimistic from the point of view that there are enough good people, black and white, who are getting more and more fed up day-by-day with what is going on. This type of standing up to the corruption didn’t exist if you go back and this started long ago. This started with the very first arms deal that we did, but in those early days you didn’t have people standing up to the corruption. You are now having that more and more. We see all types of examples of that, whether it’s the municipal elections, whether it’s protests, whether it’s senior black leaders speaking up, senior black politicians speaking up, you see it more and more.
Now that’s a very good thing and you have to start at the top. If you start at the top and start rooting out the corruption at the top and if you replace it with non-corrupt people, that will eventually filter down. It’ll take a long time, but it has to start somewhere and that’s the place to start, at the top. That can easily happen, but there’s no guarantee that it can happen. This looting can continue. If it does continue, then obviously our future looks worse. It’s as simple as that. It doesn’t mean to say that there’s no future, it just means that the future looks worse by the day because the looting is taking place and it’s going to very specific people and those people have no regard for the future of South Africa or South Africans.
Business in SA has been criticised before for being quiet on some of these issues. Should business be doing more to ensure that the boards of these state-owned companies and the way these companies are run is done in a less corrupt way?
Well, business can do a lot to improve that situation, but remember business doesn’t have any political power. It’s the politicians that have the political power and black and white business is standing in line to help, but to help in an honest fashion and that’s not welcomed by the present government because the present government is not interested in thinking long-term and improving the lives of all South Africans.
The present government is interested in looting because it’s beholden. The strings are being pulled, they can’t always make decisions. Even if they wanted to, they can’t make the right decisions because they are beholden, they are compromised, they’ve been captured. That’s what’s often forgotten. They might want to change now, but you only have to accept one bribe and then there’s that mark against you and then your handlers can call that one up at any time and say, “So, don’t start getting clever now, trying to be honest now. Remember what happened there?”
Do you think that the ANC can reinvent itself or is it doomed?
Not with the current leadership. You know, this is not Madiba’s ANC. This is a completely different ANC. I nearly joined the ANC in 2000. I had a few meetings with a very good friend of mine who was an ANC member at that stage and I couldn’t find anything with Madiba’s ANC that I disagreed with completely. Now with the ANC [of today], I get this taste of vomit in my mouth when I think of the ANC because it is a completely different ANC. It’s an ANC of thugs. Okay, so your question is, “Can it change?” Yes, it can change. Nothing is the same forever, but not with the current leadership.
In 2019, when we have national elections, do you think that the ANC will [be voted out possibly]?
Well, that’s when the populous must vote and then we must see what type of country people want South Africa to be. Because they can’t use the argument anymore that we didn’t know. It’s out there. You don’t even have to be able to read, you just have to listen to what is being said by all types of media, all types of people. Nobody can claim ignorance anymore. That’s the way it gets done in a democracy, use your vote.
Do you think that 2019 will be a watershed year?
Yes, I do.
Any inclination of which way you’ll vote?
Well, it will never be for the ANC and remember in 2000 I nearly joined the ANC. It’s a thug party – that’s what it is at the moment.
Russell, it’s been great talking to you today. Thanks a lot for taking the time to chat to us.
Sure, my pleasure.
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