BusinessCorporate FinanceThe corridors of power…

The corridors of power...

You have to hand it to Old Mutual, the South African insurer that has joined the growing list of SA firms doling out chunks of their shares to black economic empowerment groups.

Unlike other blue-chip names, which tend to offload shares in a block to a single consortium, Old Mutual has been at pains to spread the wealth.

Beneficiaries include employees, suppliers and trade unions. ‘We weren’t just here to tick boxes,’ said Jim Sutcliffe, Old Mutual’s chief executive.

Old Mutual’s initiative will have been watched with interest from within the hallowed halls of Moorgate Place. Eric Anstee, the ICAEW chief executive, was formerly FD at Old Mutual and was talked about as a future frontman.

Anstee parted company with the insurer in 2001, blaming a gruelling travel schedule that saw him commuting each week between London, Johannesburg and New York. He did 48 long-haul flights in a year.

South African business has been dominated by whites for years, and redressing the balance was never going to be easy. It was perhaps inevitable that measures to even things out would make millionaires out of a handful of black entrepreneurs, rather than benefiting wider South African society.

Chief beneficiaries include Cyril Ramaphosa, the former trade unionist and ANC stalwart, who has a share in several empowerment initiatives. Another is Tokyo Sexwale, former premier of Gauteng province.

Sectors including mining and financial services have 10 years in which to lift the share of black ownership to around 25%. As with affirmative action, in which black managers are shunted into managerial positions, rushing can do more harm than good.

Jon Ashworth is business features editor at The Times

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