Surve’s Citizen redux, except this time it’s State pensioner’s funds wasted

A friend in academia who studies these things says the ANC is using the old Apartheid Government’s political playbook. He likens Jacob Zuma to PW Botha – a seriously flawed but powerful central character with no scruple about using State resources to enforce his will. ANC electioneering, too, is a carbon copy of the fear-driven “Swart Gevaar” (Black Danger) campaign Botha’s National Party used to good effect. There is much similar in their “Media Capture” strategies, witness the absolute control of the national broadcaster – and advertising support for sympathetic newspaper groups (for Perskor and Naspers substitute INM and Gupta Media). The National Party went too far, though, when using taxpayer money to create The Citizen newspaper – the expose’ of which was dubbed the “Info Scandal” and terminated the careers of numerous leading Nat politicians. Mindful perhaps of that danger, instead of tapping Treasury the ANC dipped into State employees’ retirement funds to support an Iqbal Surve-led consortium’s purchase of Independent Media. The quickest way to sow the seeds of destruction is to overpay for an asset – and in this case the inexperienced buyers coughed up R2bn for a business worth at most R1bn. As veteran journalist Ed Herbst shares here, judging by the only publicly available source, it’s now a case of pensioners’ good money being thrown after bad. – Alec Hogg  

By Ed Herbst*

Iqbal Surve
Dr Iqbal Survé

“Conducted in parallel with the extremely dangerous phenomenon of ‘state capture’, the process of consolidating our democracy is endangered by ‘media capture’ and the incremental obliteration of critical voices.”

Helen Zille in an open letter to Dr Iqbal Survé, owner of the INMSA newspaper chain

As a reporter who interviewed Info Scandal personalities like Dr Connie Mulder and Eschel Rhoodie in 1977/78, I was intrigued by the following paragraph in Allister Sparks’ magisterial new book, The Sword and the Pen:

Around that time Rhoodie had also met a former CIA agent whom he described only as a ‘Mr Brown’, who told him that ‘the only way to control the media was to own it or to own some of the senior people in it.’ A sliver of advice that shaped Rhoodie’s entire career. (P361).

That related to the establishment of the Citizen but does the current situation in post-apartheid South Africa not reflect an even more egregious situation in that pensioners’ money seems to have been allocated by government agencies to purchase an entire newspaper chain with no apparent expectation of the money ever being paid back?

I ask the question because of what happened in parliament on 12 April at a meeting of the Finance Standing Committee, when the Public Investment Corporation (PIC) and the Government Employees Pension Fund (GEPF) handed out documents relating to their Annual Performance Plan for 2016.

Dr Daniel Matjila, Chief Executive Officer, PIC and Mr Abel Sithole, Principle Executive Officer, GEPF then took the Finance Standing Committee members through the documents and responded to questions.

Not all the questions it would seem.

Reporter friends who were present told me afterwards that David Maynier, Democratic Alliance Shadow Finance Minister, specifically put to Dr Matjila the question first raised more than four months ago by James Myburgh of Politicsweb and, subsequently, by myself on this website: Has Sekunjalo paid back any portion of the hundreds of millions of Rands advanced by the PIC for the purchase of influential newspapers such the Cape Times, the Cape Argus, The Star, Pretoria News, Sunday Independent, Diamond Fields Advertiser, Daily News, The Mercury, the Sunday Tribune, and the Zulu daily newspaper Isolezwe?

Read also: James Myburgh: How independent is Surve’s Independent with R900m PIC debt?

Two things struck me about the minutes of this meeting. The first was that the members of the committee received no documents prior to the meeting. The second was that Maynier got no response from either Dr Matjila or Mr Sithole to his question about whether Sekunjalo has made any attempt to pay back any portion of the multi-million rand loan made more than two and a half years ago or any of the rapidly-accruing interest.

I append the relevant sections of the minutes in italics below:

Discussion

Mr S Buthelezi (ANC) asked whether it was possible to receive the documents of the meeting prior to its occurrence, as the Committee could not have an intelligent discussion without the documents beforehand.

Mr D Maynier (DA) said that several Members had raised the question of the GEPF’s investment mandate, and it would be useful if the Fund could present a copy of its investment policy/mandate to settle the questions and provide the Committee with a proper opportunity to evaluate the investment performance.

Did the GEPF, in terms of investment policy, prohibit the PIC from holding sub-grade financial investments?

He raised the issue of questionable direct loans. On page 98 of the GEPF’s Annual Report of 2015, there had been an amount of R11.8 billion in direct loans. If the PIC was responsible for investments, was the GEPF then responsible for the administration of these direct loans? According to the Annual Report, there appeared to have been a direct loan of R896.4 million to Independent News and Media South Africa, but he could not find this company on any record. Why had this loan amount increased by R104 million, and what did this considerable increase reveal about this company?  (my emphasis)

Mr Maynier said that the Committee needed to evaluate the GEPF’s performance against its mandate, but this was hard to achieve given that the Committee had never had sight of that mandate.

Mr Maynier referred to the PIC’s mandate as the ‘elephant in the room’. He asked whether investment decisions were politically motivated, as the PIC’s mandate did not flow from an investment mandate.

The minutes do not reflect an answering response to Maynier’s question by Dr Matjila and Mr Sithole and one has to ask the reason for this, given that it is a matter of significant public interest – most specifically to its 1.2 million active members and its 360 000 pension beneficiaries, their families and dependents.

On its website INMSA lists the following shareholders:

  • Sekunjalo Media Consortium – majority shareholder
  • The Government Employees Pension Fund (GEPF) managed through The Public Investment Corporation (PIC)
  • Interacom Investment Holding Limited – China International Television Corporation (CITVC ) and China-Africa Development Fund (CADFUND)

I know little about business and commerce but, under the circumstances, it seems fair to ask whether the Chinese investors have received any dividends in the past two and a half years?

As a reporter living in Cape Town, my sense is that the two newspapers headquartered in Newspaper House in the city’s CBD, the Cape Times and the Cape Argus, are haemorrhaging talent, corporate memory, institutional knowledge and expertise at an unsustainable rate.

Read also: Senkunjalo executive chairman Dr Iqbal Survé resigns, explains why

In the past few months alone Philip Weideman the chief sub editor on Weekend Argus, Melanie Gosling one of the country’s finest environmental reporters and Henri du Plessis, veteran news and motoring reporter have asked for and, to their financial detriment, been granted early retirement. Others are simply resigning and taking their talents elsewhere. On the political front Newspaper House has recently lost two experienced reporters. Cape Times political reporter Babalo Ndenze now files from parliament for the Sunday Times and one of the country’s most astute political analysts, Marianne Merten has left the Cape Argus and has joined Daily Maverick. One does not have to be clairvoyant to understand why this is happening.

Unsurprisingly, I am assured by insiders that these two flagship titles are not making a profit and, if they aren’t, what percentage of newspapers in the Sekunjalo stable are? Despite claims of significant investment by Sekunjalo, the circulation figures of the Cape Times – if one subtracts the significant number of giveaways – has been mired at around 30 000 a day since the 2013 takeover. This is half what the other Cape Town morning newspaper, Die Burger, sells and in a burgeoning city which is home to more than three million people that makes it effectively irrelevant to advertisers. Where, then, is the money going to come from to generate an adequate return for the civil service pensioners who depend on the PIC and the GEPF for their wellbeing and their quality of life in their twilight years when their medical costs will increase exponentially?

This is not a new concern. Back in 2013 Anton Harber wrote: “This is a high-risk, high-price investment in a declining industry – not the kind of thing one normally spends pensioners’ money on. We will be eager to hear from the GEPF how this fits in with their strict mandate.” He did not get an answer then just as David Maynier did not get an answer a fortnight ago and three years later.

More light will hopefully be shed on these matters in a weeks’ time when, on 9 May, the Labour Court in Cape Town will be asked to decide whether the former editor of the Cape Times, Alide Dasnois – whose front page tribute to Nelson Mandela on 6 December 2013 was heralded by Time magazine as one of the best in the world was – allegedly in breach of contract – wrongfully dismissed soon afterwards.

Dasnois will be represented by Cheadle Thompson & Haysom Inc.