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Flight of corporate profits poses biggest threat to South Africa’s economy

 

 

By Patrick Bond

 

June 23, 2016 -- Links International Journal of Socialist Renewal -- Last week the South African Reserve Bank Quarterly Bulletin confirmed that foreign corporations are milking the economy, drawing away profits far faster than they are reinvested or than local firms bring home offsetting profits from abroad. Can anything be done to stop the hemorrhaging?

 

First, the appalling numbers: South Africa’s ‘current account deficit’ fell to a dangerous -5% of GDP because the ‘balance of payments’ (mainly profit outflows) suffered rapid decay; the other component of the current account, the trade deficit – i.e., imports minus exports – is trivial in comparison. The net outflow of corporate dividends paid to owners of foreign capital reached R174 billion (US$11 billon) in the first quarter (measured on an annualised basis), 30% higher than the equivalent 2015 level. The quarter’s trade deficit was just R38 billion (US$2.5 billon). Hitting a 5% current account deficit is often a signal that speculative investors will start a currency run, as occurred even in strong East Asian exporters in 1998. Today only one other country (Colombia) among the 60 largest economies has a higher current account deficit.

 

 

Another destructive signal is foreign debt. Because repatriating profits must be done with hard currency (not rands), South Africa’s external debt has soared to about R2 trillion (39% of GDP, US$125 billion), from less than R100 billion (16% of GDP, US$25 billion) in 1994.

 

Who’s to blame?

 

The metabolism of destructive economics is quickening. Since the minerals commodity slump began in 2011, South Africa has been squeezed ever tighter, especially by transnational mining and smelting corporations. Anglo American and Glencore lost three quarters of their share value in 2015 alone, and Lonmin was down 99% in value from its 2011 peak to 2015 trough.

 

 

Desperate, such firms have been exporting profits ever more rapidly in comparison to overseas-generated profits that local corporations pay to local shareholders. (The ratio is about two to one.)

 

As a result, Moeletsi Mbeki once joked, “Big companies taking their capital out of South Africa are a bigger threat to economic freedom than [Economic Freedom Fighters leader] Julius Malema.”

 

Who let the capital out? African National Congress Secretary General Gwede Mantashe admittedlast year: “At the time when neoliberalism was on the ascendancy as an ideology, it became fashionable to allow companies to migrate and list in the stock exchanges of developed economies.”

 

Exchange control liberalization began in 1995 with the Financial Rand’s abolition. The process sped up thanks to permission granted in 1999-2000 by Finance Minister Trevor Manuel and Reserve Bank Governor Tito Mboweni, allowing the country’s largest firms to delist from the Johannesburg Stock Exchange and thus shift profit and dividend flows abroad. (Manuel and Mboweni received accolades from world financiers and are today employees of Rothschild’s and Goldman Sachs, respectively.)

 

Exchange controls were relaxed on dozens of occasions since 1994. The 2015 concessions by Finance Minister Nhlanhla Nene – now employed by Allen Gray Investments after the BRICS New Development Bank Johannesburg branch manager job fell through – allow the wealthy to take R10 million (US$650,000) offshore annually, a 2.5 times rise over prior years. A Moneyweb reporter explained, this “effectively ended [individual] controls for all but the most wealthy South Africans.”

 

Meanwhile, institutional investors – representing the savings, pension funds and insurance accounts of the mass of small investors – are compelled to keep 75% of their assets in local investments. By all accounts, such controls prevented the 2008 world crisis from melting South Africa’s finances. But the big institutions have avoided reinvestment in fixed capital; instead they keep the Johannesburg Stock Exchange and real estate at bubbly levels.

 

Local companies on ‘capital strike’

 

The corporate outflow is all the more frustrating because of a local capital strike. According to the Reserve Bank , corporate fixed investment is down nearly 7% in recent months, at a time when government investment is also down 12%. (This trend is not peculiar to South Africa, for according to the United Nations, in 2011, US$224 billion in foreign direct investments (FDI) were made in the extractive industries, and in 2015 just US$66 billion.)

 

The only major new South African fixed investment comes from parastatals: Eskom’s over-priced and ecologically destructive Medupi and Kusile coal-fired power plants. Even more destructive Transnet projects lie ahead: the export of 18 billion tonnes of coal through a new rail line and the 8-fold increase in the South Durban port-petrochemical capacity (the National Development Plan’s top two infrastructure priorities), together representing the over-breeding of gigantic white elephants in President Jacob Zuma’s home province.

 

Corporates claim to act rationally by leaving local profits as idle cash, given the Reserve Bank’s four interest rates hikes over the past year, disincentivising new investment. South Africa’s medium-term interest rates are now the fourth highest among the world’s major countries surveyed by The Economist. (Only governments in Brazil, Venezuela and Turkey pay a higher price for debt, and only companies in these countries plus Argentina, Ukraine, Egypt and Russia pay more when borrowing.)

 

 

Illicit financial flows

 

But even worse, some of the same firms removed an additional R330 billion offshore annually as ‘illicit financial flows’ through tax-dodging techniques from 2004-13, according to the Washington NGO Global Financial Integrity. These outflows exceed US$80 billion annually across the continent, reports Thabo Mbeki’s African Union commission, throwing into question the merits of FDI, given the scale of this looting.

 

Several spectacular local cases have been documented in recent years: misinvoicing by the biggest platinum companies, especially Lonmin with its Bermuda ‘marketing’ arm (and 9% ownership by Cyril Ramaphosa); De Beers with its R45 billion in misinvoicing over seven years; and MTN (under Chairman Ramaphosa) Mauritius profit diversions from several African countries.

 

Information from the Panama Papers recently revealed how Fidentia fraudster J. Arthur Brown and Foxwhelp’s Khulubuse Zuma (the president’s nephew) set up profit hideouts offshore, along with 1700 other South Africans. Last year, WikiLeaks whistle-blew R200 million in the Swiss HSBC accounts of Fana Hlongwane, the British Aerospace agent and arms-dealing advisor to then Defence Minister Joe Modise.

 

How common is such behavior? Local NGO Corruption Watch laments : “Two years ago PricewaterhouseCoopers revealed in their 2014 Global Economic Crime Survey that 69% of [SA] respondents indicating they had experienced some form of economic crime in the 24 months preceding the survey.”

 

In its 2016 Survey, PwC once again recorded a world-leading 69% corporate corruption rate for South Africa, compared to a global average for economic crime of 36%. According to the firm’s forensic services chief Louis Strydom, “We are faced with the stark reality that economic crime is at a pandemic level in South Africa.”

 

Notwithstanding a recent get-tough SA Revenue Service announcement following the Panama Papers’ jolt, the authorities’ inability to uncover such crime, prosecute and put criminals into jail is no secret. More than two thirds of PwC’s 232 South African respondents believe Pretoria lacks the regulatory will or capacity to halt Sandton criminals.

 

“The latest trend is disturbing,” observed Business Day’s Hilary Joffe. “Now that MTN has managed to have its fine [for failing to cut five million non-registered cellphone subscribers including Boko Haram lines] in Nigeria cut down from $5.5bn to $1.7bn, can we have our money back? The trouble with South African companies running into big trouble abroad is that their woes can easily spill over into our balance of payments.”

 

Solution

 

The only short-term solution is a radical tightening of exchange controls against corporations and wealthy individuals, much as John Maynard Keynes advised more than 80 years ago: “The whole management of the domestic economy depends upon being free to have the appropriate interest rate without reference to the rates prevailing in the rest of the world. Capital controls is a corollary to this.”

 

Although tightened exchange controls were also advocated by Malema’s Economic Freedom Fighters, the metalworkers union and obscure local academics for many years, a highly adverse balance of forces made the policy demand impossible to win in practice.

 

However, last week’s news of the extremely adverse balance of payments may force the issue before long, unless the corporates and ratings agencies continue wielding their destructive power over the supine South African state.

 

Patrick Bond is a professor of political economy at the University of the Witwatersrand School of Governance, Johannesburg. A version of this article first appeared at The Conversation.

 

Comments

Poverty amidst plenty: How Africans are robbed of mining wealth

Poverty amidst plenty: How Africans are robbed of benefits of mineral wealth

Kwesi W. Obeng
Jun 23, 2016
http://www.pambazuka.org/democracy-governance/poverty-amidst-plenty-how-...

Africa has not benefited substantially from its mineral wealth. It is, therefore, essential for resource-rich nations to tailor their economic policies to effectively harness and utilise mineral revenues to improve the productivity of non-mineral sectors to break out of the extractive enclave.

The remarkable extractives-driven economic growth of the last decade across Africa failed to trickle down. It was jobless, it benefitted foreign corporates and the local elite, and it widened the gap between the rich and the poor. If Africa is to avoid the failures of the MDGs era and successfully transition from its present state to that foreseen by Agenda 2030 then it must better harness the potential benefits of its vast mineral wealth. African countries must institute fiscal reforms that will ensure that they are better positioned to derive maximum benefit from the next commodity price super cycle; they must plug loopholes that continue to facilitate the bleeding of much needed development revenues via illicit flows; countries must align all relevant local frameworks to the African Mining Vision, thereby putting the needs of citizens at the centre of their natural resource management agenda; and, crucially, Africa must unite in a broad and strong push for long overdue global tax reforms.

Mineral and oil dependent African economies are in distress as they face severe fiscal and balance of payment deficits. These are tough times indeed. From minerals to oil and gas, commodity prices have collapsed in the last few years. The price of copper, for example, has dropped by 67 percent and oil by 51 percent since 2011.

Falling commodity prices, especially those of minerals and oil, yet again highlight the perils of commodity dependence and the dominant extractive model on the continent. About half of African economies are classified as “commodity dependent”. That is, these nations derive a substantial part of their incomes from minerals and/or hydrocarbons.

To prop up their revenues and compensate for falling prices, Congo DR for example increased copper production but the country still suffered revenue decline of about $360 million. Equatorial Guinea also raised its oil exports by 13 percent but revenues plunged by about the same percentage.

In anticipation of prices going up, some African nations reduced supply. Angola and Nigeria for example cut their oil supply and revenues fell by about $5 billion for Angola. For Nigeria, the revenue decline was much larger, $26 billion, prompting President Mohammed Buhari’s government to withdraw fuel subsidies early in May. The government’s withdrawal of subsidies has pushed up the price of fuel overnight occasioning civil unrest across Nigeria.

Liberia’s revenue fell by two-thirds after the post-conflict state cut iron ore production. Zambia has also seen its revenues plunge by 23 percent after cutting back on copper production.

The corporates are benefiting

The slump in mineral prices is not bad news for all. Consider the case of mining companies: after reaping windfall profits at the peak of the commodity price boom, the plunging value of the currencies of many African mineral-rich nations is helping mining companies to cut their costs further.

South Africa-based gold miner, Goldfields Limited, which has operations in South Africa, Ghana, Australia and Peru, said its cash costs declined 3.1 percent in the second quarter of 2015 from a year earlier to $1,059 an ounce.

A lost opportunity for development

The recent commodity price booms, 2002-2008 and 2010 -2014, essentially benefited mining and oil multinational companies (MNCs). African economies lost a golden opportunity. From Ghana to Zambia, attempts by various African nations to review their fiscal regimes and tax provisions in mining contracts to raise additional revenue to fund development were mostly unsuccessful.

The continent ranks first or second in global reserves of bauxite, chromite, cobalt, industrial diamond, manganese, phosphate rock, platinum-group metals, soda ash, vermiculite and zirconium. In 2010, Africa’s share of diamond, chromite, gold and uranium was 57 percent, 48 percent, 19 percent and 19 percent, respectively, according to the Economic Commission for Africa.

However, fiscal regimes and public agencies governing the extractive sector in many African countries are weak and porous, making it much more difficult for these economies to effectively tax the sector to fund broad based socio-economic development. In many cases, companies enjoy excessive tax incentives[1] and African nations forfeit large portions of revenue which would otherwise have gone to fund national development. [2]

At the height of the commodity super cycle, a number of mineral rich countries sought to review their fiscal regimes and mining contracts to ensure that their economies shared in the high profits. Many of these efforts, however, failed not least because African economies reacted too late or faced major push back from mining MNCs and their governments. [3] Secondly, many African nations were unprepared for the boom and when the price surge was underway many more were too slow or unwilling to undertake the necessary measures.

Corporates are robbing Africa

The problem of low revenues from the extractives sector is further exacerbated by the extensive use of unethical tax avoidance, transfer mispricing and anonymous company ownership schemes by MNCs to maximize their profits at the expense of millions who lack basic services such as healthcare and education on the continent.

The January 2015 report of the African Union High Level Panel on Illicit Financial Flows from Africa [4] shows that the continent loses a colossal $50 billion [5] through Illicit Financial Flows (IFFs) each year, essentially via these aggressive tax planning schemes by MNCs and powerful local elites. The extractive industry, which is a key part of the commercial sector on the continent, is the biggest perpetrator of the theft of Africa’s financial resources through IFFs, the Panel emphasised. [6]

A dream for more effective natural resource revenues management deferred?

It is precisely to address this weakness and more that after decades of responding to externally driven transparency agendas, African governments embraced the Africa Mining Vision (AMV) in 2009 as the continent’s overriding framework for mineral sector governance. The AMV’s ultimate strategic goal is to use Africa’s mineral resources to promote broad-based socio-economic development of the continent. [7] One of the pillars of the AMV is the Fiscal Regime and Revenue Management [8]. Yet, seven years after its adoption, studies show that implementation of the AMV is slow at best. In a number of cases, measures taken by African governments undermine the AMV erode their own countries’ revenue bases.

Yet, tax revenue is the most sustainable and predictable source of development finance. Without adequate domestic revenue to underpin their development, it is practically impossible for developing economies such as Africa’s to comprehensively and concretely meet the basic needs of their citizenry, let alone industrialise.

The strong case for diversification

Crucially, natural resources are finite. It is, therefore, essential for resource-rich African nations to tailor their economic policies to effectively harness and utilise these revenues to improve the productivity of non-mineral, oil and gas related sectors to break out of the extractive enclave.[9]

Indeed, evidence from multiple sources shows that nations that rely largely on their mineral resources, characterized by widely permissive regulatory regimes, lose much more revenue than nations which have developed sector-specific fiscal instruments to optimise revenues. Ironically, this lost revenue is even higher during price booms.

Tiered weaknesses

On the whole, the inability of African countries endowed with mineral resources to reap the full benefits of the sector is down to a number of reasons. At the national level, the lack of political will by African nations to strike a balance between national interests and company interests is hampering the beneficiation of mining to African economies. This has also fed into a fierce and unnecessary competition among African economies to attract Foreign Direct Investment (FDI). Attracting FDI is at the core of the dominant but dysfunctional extractives model which has reduced the African state to a taker of external initiatives and undermined nationally determined and driven agendas to maximize the benefits of the extractive sector to host countries. [10]

Secondly, in many countries, national agencies including revenue authorities are poorly equipped or lack the necessary capacity to adequately monitor and assess mining company records to ensure these companies pay their fair share of taxations.

At the global level, the financial architecture is heavily skewed against African countries especially those endowed with resources. As also noted by the AU High Level Panel on Illicit Financial Flows from Africa, mining MNCs are most culpable in shifting profits offshore to avoid paying appropriate taxes to African countries where they generate their wealth.

How the people of Malawi were robbed

A recent example from Malawi vividly highlights how the current international financial architecture and mining MNCs are bleeding African nations of investible capital through IFFs. Malawi lost $43 million in revenue over a six-year period from a single Australian mining company, Paladin, which owns a uranium mine in this impoverished southern African nation. The company used complex corporate structures to exploit loopholes in international tax rules after negotiating a huge tax break from the government. The company received tax incentives to the tune of $15.6 million. Paladin also used a subsidiary in Netherlands that has no staff to route the payments for management fees to Australia. [11] Thus through this aggressive scheme, the company succeeded in avoiding the payment of millions in tax contribution to the Republic of Malawi. [12] For a relatively poor country like Malawi, this is a significant loss of much needed resources.

Inadequate global response

It is against this backdrop that the G20 commissioned the Organisation for Economic Cooperation and Development (OECD) in 2013 to propose new rules to tackle tax cheating by MNCs under the Base Erosion and Profit Shifting (BEPS) project.

The BEPS outcome, G20 adopted in Antalya, Turkey last November, thus represents the first serious global effort to combat widespread corporate tax cheating and related weaknesses that have handed MNCs significant advantage at the expense of mineral dependent countries in Africa.

That notwithstanding, the BEPS outcome failed to tackle the central flaw that allows MNCs to exploit the international tax system particularly the way in which tax rules treat subsidiaries of MNCs as if they were merely loose collections of “independent entities” trading with each other in “arm’s length” transactions. This allows companies, most of which are incorporated in the global north but do business in the south, to trade with subsidiaries set up in tax havens and/or secrecy jurisdictions, where they often have no real economic activity, so as to shift profits from African economies.

The G20 mandate for the BEPS project was that international tax rules should be reformed to ensure that MNCs could be taxed “where economic activities take place and value is created”. This implied a new approach, to treat the corporate group of a MNCs as a single firm, and ensure that its tax base is attributed according to its real activities in each country. Yet, the BEPS outcome continued to emphasise the independent entity principle.

Overall, this means that the BEPS outcome is nothing short of an attempt to patch up the broken old system. The BEPS essentially failed to capture the voice and interests of the global south especially on issues around permanent establishment and the arm’s length principle as opposed to unitary tax regime. There is therefore a need for an alternative to BEPS, possibly a UN Tax Body or even an African Tax Body.

* Kwesi W. Obeng is Policy Lead, Tax and Extractives, Tax Justice Network-Africa (TJN-A).

Endnotes

[1] These incentives range from tax breaks to stability clauses which ensures that companies enjoy these incentives over many years unchanged

[2] Tax incentives often awarded to mining companies in Africa include VAT exemptions, tax holidays, company-specific reduced rates of royalties; accelerated depreciation for the mining infrastructure; lower percentage of governments share from Product Sharing Agreements (PSA)

[3] In many cases, these calls for review were tagged at attempts at “resource nationalism” or “nationalization”

[4] African leaders also adopted a “special declaration” at their 24th summit as an expression of their resolve to tackle the huge scale of illicit financial flows from the continent to address Africa’s under-development.

[5] In real terms, the US$50 billion lost annually to could fund the construction of 500 modern hospitals across Africa. This breaks down to about nine (9) hospitals in each of Africa’s 54 states in just one year. Availability of such health infrastructure could literally transform the quality of life of the average Africa.

[6] The AU High Level Panel on Illicit Financial Flows from Africa was chaired by the former South African President, Thabo Mbeki. The US$50 billion is equivalent to 5.5 of Africa’s GDP.

[7] As the product of African inter-governmental process, it signals a concern by African states to submit to a collectively self-defined regime, rather than externally determined frameworks. Hence, the AMV’s goal is to create a “transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development”. The AMV, thus, signals a paradigm shift in the role of minerals in African economies. The Vision and its Action Plan embody key reform demands that CSOs and various social constituencies had been making in respect of the mining regimes prevailing across Africa and the overall direction of national development strategies.

[8] The other clusters/work streams are: Geological and mineral information systems; building human and institutional systems; artisanal and small-scale mining; mineral sector governance; research and development; linkages, investment and diversification; environment and social issues; and mobilising mining and infrastructure development.

[9] Historically the extractive sector operates as an enclave with very minimal linkage to the broader economy

[10] 1992- World Bank Strategy for African Mining

[11] http://www.actionaid.org/2015/06/exposed-company-dodging-taxes-worlds-po...

[12] Put in perspective the lost revenue could have paid for the salaries of 8,500 doctors or 17,000 nurses of 39,000 teachers in one year. For a relatively poor country like Malawi this is a significant loss of vital resources.

Correct Prof Bond but but but ...

I believe the only way out of this impasse is: https://theconversation.com/why-south-africa-should-undo-mandelas-econom... - here Prof Bond is at his most polemical and rightly so!

My "REPLY" to his article when it first appeared in The Conversation, @ https://theconversation.com/flight-of-corporate-profits-poses-biggest-th... "in a hostile takeover bid" at the UCT campus and to my horror realised that it was a fait accompli as these DEALS had already been struck in 1985 onwards! Mandela was neutralised and the exiled ANC leadership was won over to neoliberalism, austerity and privatisation, as long as they could have a "taste of Power", a ward system of local elections without accountability!

Selim Gool

The key to understanding the trajectory of the South African economy is the phrase: “The metabolism of destructive economics is quickening" … (since) Exchange control liberalisation began in 1995 with the Financial Rand’s abolition. The process was sped up thanks to permission granted in 1999-2000 by (the then) Finance Minister Trevor Manuel and Reserve Bank Governor Tito Mboweni, allowing the country’s largest firms to delist from the Johannesburg Stock Exchange. This allowed them to shift profit and dividend flows abroad”.

I agree fully with this analysis of Professor Patrick Bond and recommend his earlier articles:

The Mandela Years in Power, @ http://www.counterpunch.org/2013/12/06/the-mandela-years-in-power/

Neoliberalism in South Africa: Dead in the Water, @ http://www.globalresearch.ca/neoliberalism-in-south-africa-dead-in-the-w...

The following (very selective) works represent some of the more useful guides to this process of incorporation of the ANC into the political discourse from 1985/6:

Patrick Bond: ELITE TRANSITION – From Apartheid to Neo-Liberalism in South Africa, Pluto Press, London, 2000.

Willie Esterhuyse: ENDGAME – Secret Talks and the End of Apartheid, Tafelberg, Cape Town, 2012.

Niël Barnard: Secret Revolution - Memories of a Spy Boss, Tafelberg, 2015. He was Mandela´s "handler"!

Hein Marais: South Africa: LIMITS TO CHANGE: The Political Economy of Transition, Zed Books, June 1998.

Hein Marais: SOUTH AFRICA PUSHED TO THE LIMIT: The political economy of Change, UCT Press/ Zed Books, 2011.

Alec Russel: AFTER MANDELA, The Battle For The Soul of Africa (2009, 2010), Windmill Books/Random House, London.

The crisis in the external ANC´s military wing, Umkhonto we Sizwe, erupted in the early 1980s in the camps in Angola – see especially the articles and books by Stephen Ellis and Paul Trewhela, below.

It was a Pro-Democracy Movement and lasted up till 1984, and ended in a blood-bath and the killing of many of these militants and their jailing in the infamous Quatro prison center: the first major article to break the wall of silence in the Solidarity Movements in the West was in Searchlight South Africa (eds. Baruch Hirson, P. Trewhela) No. 5:

“Inside Quatro”@ http://www.marxists.org/history/etol/revhist/supplem/hirson/quadro.html

Stephen Ellis: EXTERNAL MISSION: The ANC in Exile 1960-1990, Hurst and Company, London, 2012.

http://www.sahistory.org.za/archive/anc-exile-stephen-ellis

Paul Trewhela: INSIDE QUATRO: Uncovering the exile history of the ANC and SWAPO, Jacana Media, Johannesburg, 2009.

Mewzi Twala: INSIDE MK: Mwezi Twala – A Soldier´s Story, Jonnathan Ball, Johannesburg, 1994.

ANC in exile’s human rights record: The Cambridge Seminar, 18 February 2010 – ANC, SWAPO AND ZANU-PF HUMAN RIGHTS RECORD UNDER SCRUTINY AT CAMBRIDGE

Seminar at the 20th anniversary of Mandela’s release

On the eve of the 20th anniversary of Nelson Mandela’s release from prison, the Centre of Governance and Human Rights at Cambridge University hosted a roundtable discussion at King’s College on Wednesday 10 February with leading academics on Southern Africa.

Professors Stephen Ellis, Saul Dubow and Jocelyn Alexander – and with Paul Trewhela, the author of Inside Quatro: Uncovering the Exile History of the ANC and SWAPO (Jacana, 2009).

The seminar was chaired by the BBC World Service’s Africa Editor, Martin Plaut.

@ http://www.politicsweb.co.za/p…

Making a fraud of Mandela’s legacy, 12 December 2013

@ http://www.politicsweb.co.za/p… Detail

Paul Trewhela says there is an urgent for electoral reform to address our democratic deficit
@ http://www.politicsweb.co.za/p… Detail&pid=71619

Mandela’s Dream of Black Power Became a “Neoliberal Nightmare”, @ http://www.globalresearch.ca/m… are/5360825

John Pilger: From Apartheid to Neoliberalism in South Africa – Mandela’s Tarnished Legacy – (http://www.counterpunch.org/20…

Patrick Bond: Did He Jump or Was He Pushed? The Mandela Years in Power – @ http://www.counterpunch.org/2013/12/06/the-mandela-years-in-power/

Michael Roberts Blogg: Mandela’s economic legacy, @http://thenextrecession.wordpress.com…

On the upcoming local elections on August 3

To an "Outsider" like myself, it seems that the whole ediface of the results shoved through by the DIRTY DEALS negotiated by Mandela and the exiled ANC from 1985-1994, in Secret Talks and Secret Negotiations (see: John Pilger: John Pilger: From Apartheid to Neoliberalism in South Africa – Mandela’s Tarnished Legacy, @ http://www.counterpunch.org/2013/07/11/mandelas-tarnished-legacy/ ) are now crumbling under the weight of their own corruption scandals, re: Nkandlagate, the Massacres of the miners at Marikana in 2001 and the crisis at the national broadcaster, the SABC more recently when there were protests by staff against a apoınitee by President Zuma, a Mr Hlaudi Motsoeneng who runs the show as a "private fiefdom" - shades of the Pro-Democracy Movement of the MK troops in Angola from 1982-84 and who were then militarily "put down" by the Mbokobo Security apparatus,run by the newly released Jacob Zuma, then of the SACP Central Committee!

"The upcoming local government elections (on August 3) are probably the most important since 1994", former Democratic Alliance (DA) leader Tony Leon said on Wednesday. Correct! There has always been severe criticism of the unjust, undemocratic system of ward system local elections foisted upon an unsuspecting electorateby the ANC/SACP in its bid for total control and overseeing the "Transition to Demo-Crazy" (see: Paul Trewhela - @ http://www.politicsweb.co.za/politicsweb/page/en/news-and-analysis/the-q... @ http://www.politicsweb.co.za/opinion/the-route-to-kleptocracy, etc, who argued strongly for a reform of the present local ward system of representation ( "First past the post", inherited from the antiquated British Victorian Westminister liberal tradition which the Nationalist Party apparatchiks gave to the Stalinist ANC/SACP apparatchiks) for a better and much more representative democratic one!

On Election

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