Sunday, November 24, 2013

Thula Thuli, thula?

A letter the nation should be writing to the Public Protector.

Our Dearest Thuli Madonsela,

We hope we are forgiven for using the plural in the salutation and the impudence to address you in an open column. But we simply cannot imagine there being more than a handful of people who do not share deep admiration and gratitude for your courage.

We heard on the radio this week, some analyst predicting that your latest spat with the powers that be will be your last. In taking on number one, he implied, you were inviting as much of number two as you could have found at Cape Town airport and the city’s official buildings not so long ago. This was before your soothing reassurances at a media briefing this week and yes, we know! Yet another analyst with some provocative outburst to capture attention in the hope that he will not be overlooked when next some junior reporter is using his “dial-a-quote.”

Decades ago “analysts” were restricted either to those chemistry fellows with thick lensed spectacles hidden in basement laboratories, or were sectoral specialists in broking firms. Now you find them in economics, politics, law, international relations and many more; as if every fibre of our society needs half-baked analysing based on equally half-baked research of some highly suspect data. Whereas what this country really needs are more psychology analysts to identify, analyse and treat the growing number of psychopaths and sociopaths that are consistently in our faces, homes and wallets.

But even if we take that analyst’s prognosis with a pinch of salt, it was enough to jolt most of us out of pre-conscious morning slumber. Could the tilting of your sharp legal lance, albeit some may say in an overly polite and wary manner, at the highest in the land turn out to be Quixotic and the prelude to your swan song? And will this not be the final leap into autocracy and authoritarian rule?

And then you have those who feel you were too contrite. Okay, it was only one reader that received some prominence for this view in a letter to Times Live. Can anyone really know what that inner spark is that heroes like you have?

In the mist of all the clamouring chirps, the bouquets and the brickbats, the encouragements and the discouragements, the friends and the foes that surround you, is a human being that at times must experience the task as being very lonely and onerous.

It may help to realise that just as solidly behind you is that clich├ęd silent majority. Many may not even know of you and some only vaguely so. Whenever public servant misbehaviour is discussed, someone is bound to mention that “Thula Lady”, blissfully unaware of the ironic confusion of your name with that serene and nostalgic Zulu lullaby that silences infants.

It may be ironic, but not totally inappropriate. Often when we see your mild-mannered and soft spoken discourses in broadcast interviews, we are reminded of that memorable event many years ago; when Archbishop Desmond Tutu embraced and covered with his cloak a young man fleeing from burning tyres born by a frenzied mob. As a lawyer using law to stop the lawless, (albeit with a velvet glove) there is little difference between what you are doing and the bishop’s robe, or the reassuring lullaby.

What is perplexing is that in your on-going war against corruption and acquisitive terrorism, you had to be drawn into the whole Nkandla affair. The spending of about a R¼-billion rand on a presidential palace, homestead, compound, fortress, laager, kraal, or whatever palatable “security” spin one wants to use in the midst of abject poverty, chronically empty bellies, poor schools, and poorly resourced health facilities is so self-serving, ostentatious, outrageous, hypocritical, bizarrely ironic and so patently unfair that it surely must gather a momentum of its own, a civil protest on its own, and an inflammatory spark far greater than e-tolls or labour brokers – unless our priorities are distressingly warped.

Hypocrisy is a king with no clothes. There must come a time when even the child sees that.

At the very least, may this not divert your and your team’s efforts from the much bigger task of building an anti-corruption and anti-misappropriation wall out of the many bricks of lesser known but equally detestable misbehaviours. Those that make up the estimated R30bn loss to the public annually; those that you recently described as having reached crisis levels; those that make Transparency International rank us 69th out of 176 in global corruption perceptions, and those that go on unabated as evidenced in the latest Auditor General’s report. Despite President Zuma’s assurances, the corruption glass should never be only half empty.

At the same time and giving credit where credit is due, the constitution, the existence of your office and others, and the undeniable reality that exposure of corruption increases public perceptions of its pervasiveness do give some solace.

Even amongst us the grateful, there may be a few sceptics who will question your deeper motives. Let that not concern you. You are our Joan of Arc. History will treat you kindly. Whatever transpires, and whatever your future holds, your task is far from done, dear Thuli.

May you continue to sing your reassuring lullaby for years to come.

Monday, November 11, 2013

Under the dome.

When the small blame the big for their smallness.

Followers of TV series will no doubt recognize the title. It alludes to that Stephen King sci-fi series in which a small American town is enveloped in an invisible dome that some alien force created to protect a mysterious butterfly cocoon.

The dome was impervious to any onslaught, including nuclear devices, and created the setting for producers to fall back on the old themes of good versus evil, black hat against a white hat, and villain against hero in portraying the behaviour of the town’s residents. And of course, in true “who shot J.R.?” style, the series exasperatingly ended with the hero at the point of being lynched when the dome came down.

Being a sucker for a good metaphor, my attention was fully captured by an anonymous e-mail from “Swellendammer”, a local with an axe to grind against the Sentraal Suid Co-operative, commonly called S.S.K. He likened the doings of this agricultural co-op and dominant force in the Overberg district to that of the enforcers of the dome, stopping short of accusing the organisation’s leaders of being the big black hatted villains lynching the small business heroes.

He asserts that the size and power of SSK and the number of its tentacles that stretch into every activity in South Africa’s third oldest town and beyond is an unfair obstacle in ensuring the livelihood of many other small and struggling businesses. Those tentacles reach into retail of produce, hard and soft goods; credit provision, hardware, arms, clothing, property, liquor, motor sales and repairs and many more. The co-op is the major shareholder of the town’s largest shopping mall.

All of the above is in addition to the co-op’s and its subsidiaries’ core businesses of supplying products and services to farmers, oil extraction, refinement and marketing; and animal feed production. On top of that SSK has just absorbed the interests of Mosselbay’s Tuinroete Agri Ltd (TRA) which increases the co-op’s presence from Robertson in the West to Plettenberg Bay in the East, and will boost the group’s annual turnover to about R2bn with the co-op itself contributing at least half of that.

Not willing to let go of a good metaphor and with the merger hot off the press, I decided to explore the David versus Goliath theme and forwarded Swellendammer’s mail to SSK. Within an hour I received a reply from its Finance and Administration GM, Villiers van Veen suggesting a personal meeting.

The first thing that struck me was the modest co-operative head-office, housed in an old two story building that somehow belied the co-op’s R800-m assets, and contrasted sharply with those majestic foyers that hallmark the Sandton premises of financial institutions that I used to frequent regularly. Van Veen himself is equally incongruous. He is a refugee from those very same august Sandton premises, where he used to be an investment risk specialist and asset manager. He took flight, he says, from a seemingly meaningless life to become involved in his first passion, agriculture. In his current position he has joined a group that can be described as visionary co-operative trail blazers.

A one-hour appointment became two hours of animated discussion and I left convinced that SSK represents much more than a co-operative or a different way of doing business. Within this, one of the oldest (founded in 1931) and biggest agricultural co-operatives in the country, lies a business model that is fresh yet very old, that is unique but the same and that is definitive proof that the oldest economic principle known to man – that of adding value to other’s lives – is the ultimate foundation of what all transaction should be about. It is the only valid source of tangible wealth creation.

The potential of co-ops as an alternative to private and public companies in creating sustainable wealth and employment has long been known and it’s a subject I will have to return to in a future article in the broader context of agriculture, labour and others. To determine what has made SSK successful where many others have either failed or converted to limited, profit driven companies, one has to reveal the human story against the metrics. The only way to do this is to examine its Contribution Account extrapolated from the Value-added statement in its latest annual report.

What is clear from the outset is that no-where in essence does the co-op transgress sound business principles of efficient use of capital, maximum productivity and competitiveness against some very big actors, including discount retailers and other agricultural suppliers . On some of the social dictates such as CSI and BEE it is ahead of its equity based peers. Its operational model is a mix of trading, processing and manufacturing and of every R100 of supplies it uses from others, it adds R14 value. This may appear small, but it hides the exceedingly important feature of the enabling and empowering relationship with those suppliers, a large part of who are local, albeit incestuous in some instances.

More than half of wealth created goes to employees and 7% in cash to its owners. This is part of bonuses based on a member-ownership structure in which all of its nearly 1000 members have the same number of “shares”, big or small, old or recent as long as they can prove being part of the agricultural value-chain. These bonuses are calculated on members’ dealings with the co-op itself and only 20% is paid in cash and the rest ploughed back into the co-op. This accounts in part for the large 38% allocation to savings and in turn its vigorous local capital expenditure in agricultural infra-structure which also explains the relatively low tax share of wealth of 2%.

This is a fairly marked deviation from conventional corporate capital behaviour where they sit on billions of reserves and seek short term returns in non-core speculative investments. Farmers baulk at such trifling things!

Apart from access to Landbank capital, for which SSK has to jump through onerous hoops, and which is used to fund farming ventures of its members, SSK has proved that a co-op needs no special treatment – not from government, society, consumers or business. It does have its complexities and intricacies and hurdles in its founding have been huge compared with a normal company. Van Veen relates with a touch of emotion and pride that these were overcome with sacrifice, patience, prudence and perseverance – the antipathy of the accepted behaviour of most companies today.

But its real success lies in a very, very simple principle: its owners are also mostly its customers and servers are served. It encourages above all else full appreciation that its existence is dependent upon the value it adds to others.

So in answer to Swellendammer, I could find no evidence that SSK represents a malevolent monopolistic dome. Indeed the opposite: without it this region would be very much the poorer. SSK’s growth and size is less of a threat to the community than it is to itself. In growth and takeovers of companies it is perhaps treading unchartered waters for a co-operative. Large assets and huge turnovers become a potential breeding ground for greed and predatory behaviour, the nemesis for an institution that relies heavily on the patience and goodwill of its participants. It becomes increasingly difficult to resist the temptation of changing to a limited company and converting its members’ interests into tradable equity.

We all have a special empathy for small business, the small supplier and the mom-and-pop ventures. But another of Boetcker’s “cannots” says: “You cannot strengthen the weak by weakening the strong.”