Posted on Wednesday, 26 September 2012 18:49

The unacceptable face of capitalism

Patrick Smith

It was Britain's Prime Minister Edward Heath who coined the phrase "the unacceptable face of capitalism" – to refer to the activities of Lonrho, predecessor to Lonmin, the mining company operating at Marikana, South Africa, where police massacred 34 workers on 16 August.

Such blame shifting is nothing new. Lonmin's mismanagement and lethal brinkmanship alone – whatever the faults of the divided trade unions and the government – justify repeating Heath's critique. Almost 40 years later, much more corporate malfeasance is now formally criminal, not just "unacceptable".

Like BP chief executive Tony Hayward, who said he would "like his life back" after BP leaked 5m barrels of oil into the Gulf of Mexico in 2010, the directors of Lonmin seemed tone deaf in the aftermath of the massacre. They looked more concerned about a plummeting share price than workers' conditions, as they insisted they would end the strike whatever it took.

In 1973, Heath accused Lonrho, and specifically its chief executive Tiny Rowland, of corruption and breaking British sanctions on the racist Rhodesian Front regime of Ian Smith. Heath also targeted the Lonrho chairman Edward du Cann, a political rival. It was not for another 20 years that Rowland had to break up Lonrho and new investors moved in.

But Rowland got his revenge on Heath. With humour and blood lust he exposed the other British companies breaking sanctions. For good measure, he sent details to his friends in Nigeria of how BP was circumventing what should have been a crippling oil embargo. Within weeks, Nigeria nationalised BP without compensation. The last laugh went to Rowland and the new owners of BP's assets.

Lonmin's directors seemed tone deaf after the massacre, and looked more concerned about share prices than workers' conditions

There are no laughs to be had at the plight of Marikana. There is just the mild irony that Lonmin is listed by the Johannesburg Stock Exchange and the UK's Financial Times as a socially responsible investment. Lonmin non-executive director and former mineworkers' union leader Cyril Ramaphosa was right when he conceded that both the business and political elites have to be held responsible.

His fellow former unionist, Jay Naidoo, is more to the point when he says: "Lonmin appears to have been oblivious to the conditions that its workers lived under. It is a reminder to corporate leaders that social stability must be part of the business agenda. It cannot be written off as a responsibility of political leaders."

Indeed, many in South Africa point to the failure of companies to take seriously a corporate truth and reconciliation process, despite benefiting from hyper-profits under apartheid. Neither did those companies heed the wisdom of those advising them to launch a massive programme of investment in education and training for the millions of South Africans deprived of those basic rights under apartheid.

Not only would such a programme have been morally right, but it would have been economically and socially progressive: to provide South Africans with the skills they need to develop the economy and improve the running of state institutions.

That failure also points to the unwillingness of the ANC government to confront the conglomerates at the centre of the national economy. Instead, it allowed several of the country's biggest corporate tax payers to shift their primary financial base to London, without incurring any penalties of the sort that most Asian and South American governments would have imposed.

Belatedly, the ANC government promises to get tough. It argues that social discontent is far more of a threat to the economy than high-pitched debates about mine nationalisation. Mines minister Susan Shabangu now says government will enforce by law the provisions of the mining charter that asks companies to improve workers' living conditions and provide education, training and greater mine safety.

If Shabangu's initiative is just the start of a campaign to ensure that a substantial share of the profits from South Africa's largest companies are directed into working conditions as well as education and training, then it may be that the government is taking Marikana seriously. If not, then South Africans will have to brace themselves for much more turmoil in their mines and factories●

Patrick Smith

Patrick Smith

Patrick Smith is Editor-in-Chief of The Africa Report. He has edited the political and economic insider newsletter Africa Confidential since 1992 and was associate producer on a documentary about the 2004 coup attempt in Equatorial Guinea commissioned by Britain's Channel 4 television.


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