Crony Capitalism 2.0 and the Wretched of South Africa

Do Pretoria and Johannesburg deserve the fate of Sodom and Gomorrah, cities along the ancient Jordan River which were, according to The Book of Genesis, consumed by fire and brimstone as punishment for sinful hedonism?


Etymologically, Sodom – today just a salt pan at the Dead Sea – comes from ‘fortified’ and Gomorrah meant ‘deep’ with ‘copious water.’ So the names match nicely, given the respective catastrophes besetting Pretoria’s police – national commissioners Jackie Selebi and Bheki Cele implicated in corruption with a potential third, Richard Mdluli, nearly there – and Joburg’s goldmines: Acid Mine Drainage; a corrupt Paris firm’s 2001-06 water commercialization (causing a decade’s worth of Soweto community protests); and at the city’s main post-apartheid water source in Lesotho’s dams, notorious eco-destructive graft.

Sodom and Gomorrah initially existed in an Eden-type setting on the Jordan River (this, of course, a couple of millennia before Israel occupied the West Bank, stealing all the good land and water). Before sin became pervasive, the Jordan Valley was politically comparable to at least the image of a contemporary Rainbow Nation, one born in 1994 of heroic struggle after a national liberation movement overcame apartheid crimes against humanity, led by Saint Nelson Mandela.

Eighteen years later, with the scale of state-related corruption reaching R25 billion per year, according to the Special Investigating Unit, and private-sector corruption at least twice that according to Transparency-South Africa, God’s wrath against the rulers of Pretoria and Johannesburg appears overdue.

Good riddance, Brett Kebble

Why, then, are the relatively minor machinations of the late Brett Kebble during the late 1990s and early 2000s of such enduring interest? (He ripped off maybe a billion and a half rand in his decade of CEO chaos.)

Historians may well decide that Kebble’s career represented a kind of diamond-encrusted-gold-ringed finger rudely pulled from a cracking Mbeki-era dyke – already shaking at the foundations after the Mandela-era Arms Deal – thus swamping the heart and soul of the African National Congress (ANC) leadership with financial malfeasance and political rot.

Kebble was, after all, extremely good at his game, up to the point the inverted pyramid crashed in mid-2005. More brazenly than any other previously-and-still-empowered South African, he utterly scammed the new political elite, investors and the cultural crowd with his patriotic-white-friend-of-black-empowerment-and-the-arts hustle. That’s why a critique on the political terrain that Allan Kolski Horwitz chooses in the parody play Comrade Babble, does so much collateral damage to South Africa’s multiple opportunists.


Though the wreckage Kebble left was extensive, he was killed at the remarkably young age of 41, and is remembered amongst financier peers mainly for having run into the ground the once-proud mining houses JCI, Western Areas and Randgold. Summing up his contribution to South African entrepreneurship, veteran business editor Jim Jones recalls,

Kebble’s modus operandi was the same as that of many fraudsters. He quietly transferred and sold shares in London-listed Randgold & Resources (R&R) to pay pressing creditors, but concealed those transfers so as to fool creditors and shareholders of JCI and R&E into believing their claims against the public companies were backed by R&R shares worth R1.2 billion. And he quietly sold a significant part of JCI’s shareholding in gold company Western Areas for another few hundred million rands. Then there were shares, worth hundreds of millions, in uranium hopeful Afrikander Lease, in Harmony and Anglo Platinum, which have disappeared without trace.

The most detailed autopsy of the scamming was by Barry Sergeant, whose book Brett Kebble: The Inside Story, reveals how much was stripped through unsound financial engineering:

the uneasy truth of the overall matter is that, under Kebble, JCI itself was a gigantic slush fund. A thorough forensic examination and analysis of the JCI group accounts from 1997, including deconsolidation and reconstruction of the accounts, revealed that JCI had posted total losses of R792 million from 1997 to 2004. This is simply staggering, given that at no time during this entire period did JCI have any form of normalised income…

Sweltering under his own flawed delusions, Kebble was forced to fritter about, blowing his off-key clarion, moving from one rats-and-mice deal to the next, concocting one irregular transaction after another. The virtuoso moved into a jejune phase of his business career, seemingly determined to prove that when measured as a conventional businessman, he was a complete and utter disaster.

But he got away with it for way too long, thanks to the lack of regulator oversight, as well as the blindness of South Africa’s business journalists, with the exception of noseweek’s Martin Welz and The Citizen’s Paul Kirk, both of whom made it to Kebble’s ‘hit list’.

Because of slack bureaucrats and newspapers, not much was evident to the outside world until mid-2003. Though his firms were in negative equity in 1999 and personally he was technically insolvent as early as 2001, Kebble’s disasters multiplied mostly under cover. Finally in August 2005, the deathly-ill mining houses were stripped from his control by his leading creditor, Investec, and his main outside investor, the R220 billion Allen Gray fund which owned around a fifth of the three Kebble-controlled firms. (Other Randgold shareholders in turn sued Investec for continuing Kebble’s Ponzi scheming long, after his firms should have been eased out of management’s hands.)

A few weeks later came the near-fatal shooting of Allen Gray investigator Stephen Mildenhall, so ordered by Kebble because of his critical audit of JCI and Randgold books.

Then on 28 September 2005, Kebble suffered what the National Prosecuting Authority termed an ‘assisted suicide’, shocking South Africa. Why did he go in this convoluted manner? The man who hired the shooters, Clinton Nassif, “was looking for means of killing Kebble in a way that would not look like a suicide, so that the insurance could still pay out and look after his family,” Nassif’s main assistant testified in court, confirming Kebble’s scamming orientation right to the very end.

Indemnity from prosecution was given to the three killers, but it was the underworld crime boss Glenn Agliotti – a dear friend of then Police Commissioner Jackie Selebi (‘finish en klaar’) – who confessed to have been the main suicide assister. He nevertheless won acquittal from Judge Frans Kgomo, and the whole episode of prosecuting Kebble’s death still reflects incredibly badly on South African politics, policing and justice.

Kgomo referred to Mario Puzo’s mafia novel The Godfather: “The trickery and shenanigans practised … as demonstrated in that book was demonstrated by this family, the Kebbles.” In his judgment, Kgomo continued, “‘The Don’ was Brett Kebble, the ‘consiglieri’ was John Stratton, the ‘caporegime’ was the accused, the ‘lower caporegime’ was Clinton Nassif and the ‘button men’ were [self-confessed hitmen] Mikey Schultz and bouncers Nigel McGurk and Faizel Smith.”

But police and prosecutorial incompetence – or worse, conspiracy to sabotage the case – left Kebble’s murder, by seven bullets at near point-blank range in his top-of-the-range Mercedes late one spring night in suburban Johannesburg, shrouded in dust.

To add to the confusion, even after Kebble’s financial fall and disreputable death, a horde of politicians and businessmen proudly considered themselves as friends. Consider this partial list of high-profile attendees of Kebble’s October 2005 Cape Town funeral: Essop Pahad, David Gleason, Brigitte Radebe, Saki Macozoma, Peter Gray, Mafika Mkwanazi, Tokyo Sexwale, Tony Yengeni, Ebrahim Rasool, Mo Shaik, Pam Golding, Nomaindia Mfeketo, Limpho Hani, Mbulelo Goniwe, Baleka Mbete and Dali Tambo.

The pallbearers were ANC youth leaders Lunga Ncwana, Songezo Mjongile, Andile Nkuhlu and Sharif Pandor.

But Kebble’s damage at a systemic level is far more impressive, especially given the loose morals of the man who pulled off what was perhaps South Africa’s worst-ever corporate mauling, on the watch of managers from major financial institutions like Allen Gray, who watched it happen in slow motion, again and again, between 1997 and 2005.

As an aside, it always makes me chuckle to read, repeatedly, how South Africa’s financial system is judged one of the world’s most healthy and well managed – ranking fourth in the World Economic Forum’s most recent Global Competitiveness Report – while thinking of how the major banks and investment houses sunk pension and insurance funds down Kebble’s black hole of corruption.

Charming Kebble’s financial scamming

Seducing politicos and investors alike, the Kebble charisma, drilled in early at St Andrews boarding school and then the University of Cape Town Law School, was apparently mesmerizing. As Chris Barron explained in the Sunday Times shortly before Kebble’s murder

He’s extremely urbane: impeccably dressed and groomed, a polished talker with an accent to match. He plays the great entertainer well. He has a good line in jokes to suit every occasion (even down to a private secretary called Meininghaus), and is clearly a man of culture. He quotes Shakespeare, is a nimble pianist and pays serious money for serious art. Then, of course, he’s clever. His brain operates on a higher level. He can interpret a balance sheet at a glance, make lightning fast mental calculations, spot the gap and visualise the shortest way through it.

Kebble came of age in a time, before the 2002-08 world commodities boom and during the initial debt-loaded-dealing era of black empowerment, when any smart mining house was considering disinvestment (not least for huge forthcoming environmental liabilities including Acid Mine Drainage) and when any huckster could move in. As Barron recalls,

Analysts and journalists were swept along as much by his polished persona as by a gung-ho, devil-may-care attitude that made the local mining world as exciting as during the heady days of Barney Barnato. If they hadn’t been so busy laughing at his jokes, admiring his fancy fingerwork on the ivories and his ability to quote Shakespeare, they might have been more sceptical and noticed vaguely disturbing signs.

As Barron continues, the SA financial industry stood exposed as inexperienced rubes:

From the start he was a heavy share trader, trading up to a million Rand Leases shares a day. It was a tendency that should have sounded a warning. The way he took over Randgold and others was impressive, but it was essentially pushing numbers round a board, not building solid shareholder value. There was no cash in sight. He was simply using one company to take over another by transferring shares. Admittedly value was being added for shareholders along the way, but how much in relation to the value being added to Kebble family interests was a question that the sheer complexity of the structure Kebble was creating made almost impossible to answer.

The first disaster, remarks Barron, did not trip up Kebble for more than a few weeks:

SA investors barred from foreign stocks saw Kebble’s West African mines as the next best thing to Bre-X, and that virtually every local analyst thought Kebble could do no wrong pushed Randgold shares from R4 to R41.50 in 1997. Share options worth millions were granted to the Randgold directors before the Bre-X bubble burst and Randgold shares plummeted to R2.

Kebble responded to failure by raising the stakes:

Years of uncritical adulation had fed Kebble’s always incipient arrogance to the point where it had become uncontrollable. In terms of the mining business he was still an upstart, but he intimidated those with far more experience who disagreed with him. He phoned fund managers and demand to know why they were selling Randgold or related shares.

As if to underline the naivety of the Johannesburg Stock Exchange crew, says Barron,

Rather than accuse Kebble of gross unprofessionalism, analysts still somewhat starry-eyed over his virtuoso personality tut-tutted that this was merely a case of over-enthusiasm, of wanting to move too quickly because to Kebble “slow is boring”… [T]here then came Kebble’s cavalier use of money owing to shareholders of Randfontein, a company in which he had a minority stake, to add cashflow to a Kebble family mine, Western Areas. Still excuses were found for his behaviour, still directors and advisers gave him the benefit of the doubt.

Barry Sargeant picks up the story:

JCI’s auditors throughout the relevant period, Charles Orbach & Company, could well argue that the accounts of JCI and its subsidiaries complied with all the technical rules that auditors are expected to apply, but there can be no question that the economic substance of JCI’s accounts was unmitigated trash. Had they been presented on a see-through basis, as in the various appendixes to this book, JCI would have been stampeded by entire kennels of fiduciary watchdogs, including the SA Institute of Chartered Accountants, the Public Accountants’ and Auditors’ Board, the JSE (which, ironically, has a special committee to monitor accounts), the Financial Services Board and the full gamut of law enforcement agencies. The overweening naivety of these various oversight entities will remain both unthinkable and unpalatable.

One reason he got away with it for so long was that Kebble had an awe-inspiring capacity to not only drop names of political heavyweights, but to deposit small fortunes into their bank accounts.

Playing politics with poison

In 2010, thanks to yet another leaked police tape, much more was finally understood regarding Kebble’s strategic maneuvres. He located himself directly within the personality divide between the Mbeki and Zuma camps, a fissure that imploded the ANC during ‘eight days in September 2008’, as Frank Chikane’s book has it. The palace coup was justified by Zuma’s men, on grounds he was being unfairly abused by Mbeki’s organs of the state.

Kebble’s so-called ‘voice from the grave’ tape, recorded in the office of crime intelligence commander Mulangi Mphego at police headquarters in Pretoria in 2003, allowed Mail&Guardian journalists Jackie Mapiloko and Sam Sole to trace some links directly to the president of Interpol, SA Police Commissioner Selebi, who was later imprisoned for corruption charges:

In the meeting, Kebble repeats and fleshes out claims he had already made in private – that he was a victim of an abuse of office by former director of public prosecutions Bulelani Ngcuka and his Scorpions investigators… It is clear from the tape that [Kebble right-hand man John] Stratton was in regular contact with Mphego – whom he calls “Mphegs” – and was providing him with information from Kebble’s own private intelligence network. In the meeting Kebble links Ngcuka to the same group of alleged power-brokers who were to emerge in the hoax email allegations and in the so-called Zuma tapes that scotched the Zuma prosecution. They include businessmen Saki Macozoma and Mzi Khumalo and Ngcuka’s wife, Phumzile Mlambo-Ngcuka…

In the meeting Kebble makes it clear that he believes Ngcuka’s investigation of cases against him and his father – over two separate cases of alleged corporate fraud – were legally unfounded and politically motivated. Kebble, who emerges from the two-hour meeting as an astute and polished communicator, tells Mphego and Lalla:

“I knew from a fairly early stage – because he came to tell me – that Mzi [Khumalo] had a close relationship with Ngcuka. He came and said, ‘You know these claims you’ve got against me [Kebble’s company JCI was seeking to enforce a R30-million debt against Khumalo] … I know Bulelani very well and maybe if we can settle this thing he won’t be so hard on you …’ I then started to look very closely at who was around Ngcuka and found these guys had a pattern of operating. They would get together regularly – Mzi, Saki, Moss Ngoasheng [former president Thabo Mbeki’s former economic adviser] … and Bulelani and friends – get together and drink heavily every Friday night … and hatch their plots… The reason for this attack [on me] is that Bulelani’s office is being abused. The office is used not in pursuit of justice; it was used to settle scores, commercially and politically.”

As Mapiloko and Sole continue, Kebble took his war with the Mbeki cronies very seriously:

Kebble told the spy chiefs that he was about to go public with his allegations and added that he was “very grateful for the guidance and help you have given us”… Of significance is that the meeting took place about a month after Mphego had also secretly filmed an interview with Glenn Agliotti, in which the policeman confronted Agliotti about claims that he was using money from the Kebbles to pay off Selebi. In that interview Agliotti said he had used Selebi’s name to get money out of Kebble, but Mphego makes no mention of this in his interview with Kebble and Stratton. Instead, he approached Agliotti’s role obliquely, hinting that some of Kebble’s associations might be undermining his credibility… Kebble said: “We’ve never paid any money to anybody for any favours … I put money in to fund the ANC lavishly, I fund the ANC Youth League lavishly.”