ON THE MONEY
STUART THEOBALD: Unavoidable truth is that empowerment stakes carry risk
Much of the pain could have been avoided had BEE been done through portfolios from the start
The failure of the Sasol Inzalo black economic empowerment (BEE) deal to deliver value for most of its beneficiaries raises deep questions about such schemes. In 2008, Inzalo shareholders paid a minimum of R457.50. Their investment was combined with funding to purchase Sasol preference shares that were meant to convert to ordinary shares in 10 years. When the scheme officially winds up in 2018, the funding costs are going to be in excess of the value of the Sasol shares the scheme will hold. That is mostly the fault of the poor performance of the oil price. At present, the deficit is about R1.4bn. As a result, Inzalo shareholders have lost their money. This is not the only scheme to have failed. Perhaps the worst case was the two schemes of African Bank, Hlumisa and Eyomhlaba, which collapsed when the bank went into curatorship. Those shareholders had contributed cash of at least R300 each.In the Sasol and African Bank schemes, shareholders ranged from the very poor to the very well...
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