When we at the Institute of Race Relations (IRR) launched our corporate pressure campaign in February against the destruction of property rights through expropriation without compensation (EWC), we were hoping to get a cat out of a bag. We were not expecting three cats to follow the first in quick succession.
The first cat emerged rather slowly, almost cautiously, with the IRR receiving tepid responses from banks about their inauspicious silence on the risks arising from the threat to their clients’ property rights. The second cat emerged from the bag on 12 February with the publication of a column in Business Day by Cas Coovadia, managing director of the Banking Association of South Africa (BASA). The third cat left the bag on 18 February when Coovadia appeared on Kyknet Verslag. When Cyril Ramaphosa and Tito Mboweni endorsed the grabbing of pensions, the fourth cat shot, meowing, from the bag. Let’s take a look at these cats.
In writing open letters to prominent members of corporate South Africa, the IRR asked (and continues to ask) important if awkward questions – that, after all, is a vital part of the job of a think tank. We first wrote to banks, of whom we asked a simple question: would they expect their clients to pay off a bond on expropriated property? This question is what you might call a R1.8 trillion question, for that, according to BASA’s Cas Coovadia, is the size of the banks’ exposure to a nullification of the value of land through EWC.
A pattern, soon to be replicated when other members of corporate South Africa hid behind commercial aggregates of convenience, quickly emerged from the responses we received from targeted banks: we, the banks, think land reform is important; we won’t say anything about the security of property rights; we won’t state our opposition to the destruction of property rights; we won’t be standing up for the property rights of our clients; we didn’t make submissions to Parliament in opposition to EWC when we could have done so; we will be expecting our clients to pay for the privilege of losing property through EWC; and, if you want to ask any further difficult questions, we would rather not answer – speak to BASA instead. Referring us to BASA directed our attention to the next bolting feline.
In his Business Day column of 12 February, Coovadia goes through a number of concerns by the Banking Association. He rightly mentions the financial problems which can occur if a bondholder’s land is expropriated without compensation – or with compensation that is below market value. Such a situation would be disastrous for South Africa’s financial service providers. Coovadia rightly sets out the importance of judicial oversight – which the ANC has now jettisoned – and the negative effects which the mere discussion of EWC is having. Coovadia writes,
“A lack of clear and decisive political leadership is undermining assurances by President Cyril Ramaphosa that expropriation without compensation will be done in such a way as not to harm economic growth and food security. We recommend that an independent impact assessment be done to ensure this is in fact the case.”
Given this strong statement, Coovadia inexplicably goes back to appeasement in the final part of the article, when he states,
“we are serious about Ramaphosa’s undertaking that this will be achieved without damaging our prospects for economic growth, our food security, and within the confines of the law.”
One can’t help but be dumbfounded by this. Coovadia lists a number of very serious issues which BASA has with EWC, but ends by saying that he is “serious” that EWC will be achieved without any of these aforementioned problems. What is this even supposed to mean?
Besides, the justifications used by Coovadia are equally hypocritical. BASA says that the current patterns of ownership “have their origins in apartheid and colonialism”. If this is all about redress for colonialism and apartheid, why should the banks’ clients bear this burden? Banks as institutions are far older than most of their clients and, to an even greater extent than any client, owe their prominence, success and the functioning of the financial system to the legacies of colonialism and apartheid. And yet they are the ones demanding the difference between market values and “just and equitable compensation” partly because of historical land issues. This suggests a nauseating self-righteous eagerness to throw their clients under the bus to save their own skins. Banks should be standing with their clients against EWC rather than trying to justify it as a means of appeasing the government.
From the start, South African banks have just been unwilling to say that they oppose expropriation without compensation. This is not about rural land being taken from Oom Piet se Ou Vrystaat Boerdery, as the ANC would have you believe. This is about the destruction of property rights and the stripping of citizens’ fundamental human rights. Just ask David Rakgase, or read the proposed legislative instruments to bring about EWC. Why does the proposed bill state that property which is expropriated shall not be given to new owners in the form of title deeds? Were EWC about redress, this would be the obvious path to follow. The fact that this is not the path to be followed is telling.
Coovadia demonstrates that he clearly understands EWC’s negative economic consequences. That he cannot simply state opposition to it in clear, unambiguous terms is a red flag with government appeasement stamped on it. Bank clients need to demand that the banks will be on their side against the leviathan of the state rather than trying to cover all their bases before a looming economic crisis.
“Where land is being expropriated, government needs to guarantee the repayment to the banks, okay?”
I’ve listened to Cas Coovadia saying this tens of times – each time making sure that I didn’t mishear him. That is exactly what Coovadia says; where bank clients lose their property to the state via a policy the banks cannot bring themselves to oppose, the banks are simply demanding compensation from the state. It really is ironic: almost every single bank the IRR has contacted on this issue has referred us to BASA – and here we hear BASA speaking. Perhaps the banks thought the corporate safety in numbers offered through BASA would provide some cover, or that we might leave them to sell out South Africans by homing in on BASA instead. I cannot imagine that what they had in mind was BASA coming out so openly and making it clear that banks, far from lifting a finger to protect their clients’ interests, would demand the protection of their own interests from the state – at taxpayers’ expense. The hypocrisy is astounding. At best, the banks should be considered appeasers – at worst, they should be considered sell-outs of the basic rights of South Africans.
Speaking of taxpayers’ money – who’d have thought that Cyril Ramaphosa and Tito Mboweni would look at VBS and see not a disastrous theft of the pensions of South Africans, but a plan by which to loot funds to bail out the ideological failures of the National Democratic Revolution, nurtured by the same statist instincts that impelled the National Party’s social engineering? Yet, here we are: the President and the Minister of Finance openly approving the government’s intention to expropriate without compensation the savings of ordinary citizens.
While the issue of land offers the historically loaded and politically useful premise of the injustice of black South Africans losing land to an oppressive government (the present government all the while blithely ignoring its own reheating of the vilest ideas of previous racist regimes), the pension grab now endorsed by the supposedly right-minded champions corporate South Africa opened their wallets for on their passage to the Union Buildings enjoys no such historical defence. Yet bittereinder Ramaphoriacs like Adriaan Basson have fallen in line to meekly nod their assent at yet another racial nationalist government willing to sell out the people of South Africa in the pursuit of an ideological project that is doomed to fail.
In a brilliantly damning piece in the Beeld of 9 March, economist Mike Schussler lays out the dangerous idiocy of the ANC’s pension grab. While the sheer numbers are terrifying (especially Schussler’s point that pension funds are already invested in state bonds to the tune of R2 100 billion and that a further R800 billion would be confiscating the fragile eggs of an entire generation to put into a fraying basket), the reality of the VBS-as-pioneering-idea judgment really hits home in Schussler’s pointing out that two thirds of South Africa’s pension pot is, in fact, the pensions and savings of black South Africans. A politically inconvenient point, and one that underlines why our four feral cats are born of the same economically disastrous ‘EWC’ litter.
Yet, even as they scatter the pigeons of the markets, rattling South Africa’s barely-there economy and the financial stability of systems and households, corporate South Africa remains silent.
As the IRR pressed home its campaign by paying personal visits to one sleek, architecturally edgy corporate head office after the next – handing over letter after letter, seeing official after official, making appointment after appointment – it was hard to resist the temptation of thinking of these plush suites as being in another country.
As the policy madness of the ANC escalates, the silence of the corporates is deafening.
But the cats are out of the bag.
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