Just as the momentum for the big deal was building, and he had delivered the final constitution, Cyril Ramaphosa announced that he was leaving politics to chart a way forward for black empowerment.
The way he told it to me, he felt naturally drawn to a role in business: “By and large we had just postponed our attention as the ANC on the economy, on the economic empowerment project and I felt that I would like to play a role in this.
“ I think in part, it was my own entrepreneurial spirit which I had had even before I had entered politics, years ago, which was surging to the fore.”
He approached Nelson Mandela and the ANC with his plan and was granted permission.
I asked him if it wasn’t true that he was the victim of Machiavellian manoeuvring within the ANC that had shunted him out of politics
“Not entirely true, not entirely true. Going into business was my choice. It was my choice. The one thing which I can say was that, soon after the constitution-making process, I wanted to revert back into the party and what piqued me was the continuous stories that now I was reverting back into the party to begin building my profile – building myself to have a go at challenging Thabo Mbeki.”
That, said Ramaphosa, was far from his mind: “I had accepted that Thabo Mbeki was my leader, and, as a disciplined cadre of the ANC I did not want to even be part of that.
“My view was that he had to execute the task he had been given by the party, finish that, and I was never one who wanted to undermine the leaders of the ANC who had a clear mandate and had been clearly elected by the organisation. With that type of story and view being spread around, it became a lot easier to then say: why don’t I go to another frontier? The business frontier.”
Ramaphosa sat down with Mandela and discussed his plan. Then he discussed it with Mbeki.
“They both said: Ja, why don’t we get you to go and pay attention to this?”
Then it was discussed by the ANC national executive committee (NEC). “So, I never felt that there was some Machiavellian plot or move on me. No. It was by choice.”
Mandela made the announcement to a surprised nation. Most had expected Ramaphosa to take a senior role in government. It was, said Ramaphosa, in the language of the ANC, “deployment”.
He said he had not planned to get involved in deal-making when he envisaged a role in business: “The way it worked was that as soon as I got out of politics, my own original conception about going into business was much more sort of to build an NGO that was going to empower black people with a lot of training, capacity-building, enabling them to be able to operate effectively at the business level. And where we can open up opportunities for them and give them the tools which they would need to get going in business. That was my original thinking.”
[Nthato] Motlana, recognising the usefulness of an ANC heavyweight in his quest to secure an empowerment stake, came calling at just the right time. “I was then corralled into playing a leading role in a consortium that was bidding for Johnnic,” said Ramaphosa.
Ramaphosa joined Nail’s consortium, which wanted to buy the Johnnic assets.
These were heady days, and the consortium had no less than 73 participants at the outset. The Johnnic assets were part of the giant Anglo American Corporation, which dominated the Johannesburg Stock Exchange – and, indeed, the South African economy, with interests in mining, newspapers, breweries and food, among other sectors.
The move on Johnnic mean that Ramaphosa would once more encounter Harry Oppenheimer, the man he had berated 10 years earlier, at the first anniversary celebrations of the Weekly Mail, when he was a trade unionist. This time they would talk business.
“I remember clearly going to see Mr Oppenheimer and saying: ‘Mr Oppenheimer, we are a group of 73 entities, we would like through this economic empowerment process to empower our black people to get into – to play a key role in – the economy’,” Ramaphosa recalled.
But he was to encounter his first major disappointment.
You had to wonder if Oppenheimer had remembered how Ramaphosa had humiliated him at their previous meeting. Coming as he did from the mineworkers’ union, Ramaphosa had his eyes on Anglo’s substantial mining assets, especially those in platinum, which were beginning their dramatic, decades-long bull run. Ramaphosa recalled the conversation:
“I remember him saying: ‘Yes, we are going to be selling our assets in Johnnic, but we are not going to sell our crown jewels.’
“And I said: ‘What are those crown jewels?’
“And he said: ‘There is just no way, no way, we can give away or sell our platinum interests.’ And that was where the growth was.”
Instead of mining assets, the consortium was offered what Ramaphosa describes as “medium-performing assets – the newspapers and the industrial sector, including Premier Foods and South African Breweries. And that was like the rump of what was being sold. But even that needed restructuring. Restructuring to a point where all you would finally end up with would be the newspapers and a bit of a stake in Times Media, which had a stake indirectly in MTN, which was still a young and growing asset.”
As the negotiations wore on, the number of entities in the consortium who could raise the money dropped from 73 to 23 – further evidence of the scarcity of capital and lack of black leverage.
It was, to use Ramaphosa’s description, “a putative type of empowerment in the sense that you were buying a stake in a company and relying on share performance and if the share did not perform you would walk away with nothing”.
As it turned out, the 23 entities would eventually walk away with very little because the shares did not perform: “It was never real empowerment. All it really turned out to be was an opportunity to sit at the table and to vote and you never really owned the equity because the equity in the end relied on whether the share appreciated sufficiently so you could share in the upside.”
The largest beneficiaries, according to Ramaphosa, were the banks: “Those who financed the deal remained the true owners of the shares. The banks were empowered, the advisers were empowered, the merchant bankers, the lawyers and the accountants were all empowered and the very people who were meant to be empowered were not empowered and they ended up walking away with zero.”
Ramaphosa: The Man Who Would Be King (Jonathan Ball Publishers) is available at good bookstores nationwide