Johann Rupert: Why SA is on the verge of an IMF bailout

Johann Rupert, the chair of Remgro and Richemont who has always been vocal about his loyalty to SA (his private plane bears the national springbok symbol), has started to doubt the country’s future.

His children live in England — he thinks it’s better that way. “When they are here [in SA] we don’t sleep. When they were here, they couldn’t go out in public without being insulted. It affected my family,” he says.

It’s a surprising and depressing sentiment from a man who heads two companies in the JSE top 40, with luxury goods group Richemont sixth, and industrial operator Remgro, which has stakes in Mediclinic and FirstRand among others, at 25th.

The self-styled Afro-optimist doesn’t believe he’ll stay in the country if things don’t change drastically. “I’ve told some in government and the ANC in private as much: if Sars ever again tries to sabotage me ... I have been by far the highest individual taxpayer in this country for the past 20 years. Our family companies are the biggest payers of dividends from outside into the country, more than what the rest of the JSE does combined,” he says.

Rupert says that he’s never taken money out of the country either. “I promised Gerhard de Kock [a past governor of the SA Reserve Bank] that if he allowed me to build Richemont overseas, I wouldn’t take money out,” he says.

Both Remgro and Richemont grew from the tobacco empire first started by his father, Anton Rupert, in 1948 under the name Rembrandt. In the 1970s the Ruperts began diversifying, and played a formative role in creating many blue-chip SA enterprises — such as FirstRand, Vodacom and Distell. In 1988, Richemont was born.

While Remgro has had a tougher time of late (its share price went down 20% over the past five years), the stock of Richemont, as the world’s second-largest luxury goods company with brands such as Cartier and Montblanc, has soared 570% over the past decade.

Still, Rupert is angry about being cast, in some circles, as the face of white monopoly capital, and says that former president Thabo Mbeki understood his family businesses.

Mbeki, Rupert says, explained that the government (thanks to investments by the Public Investment Corp) owned twice as much stock in Rupert businesses as the family itself. And Rupert also points out that he’s given away his salary since 2005. (With his estimated personal wealth of $5.9bn, he can surely afford it.)

“At the age of 69 I’m therefore working for the state and third parties ... and I’m going to stop, I’ve had it up to here. I am not going to be taxed three times for the same earnings. I pay tax overseas, I pay tax here, and they [Sars] want to argue over rubbish while, in actual fact, they owe me money,” he says.

Rupert believes his phone has been tapped for years because his enemies are convinced he controls the currency. He doesn’t, he says. But if he wanted to, he could cause some damage.

“I have been protecting the currency, not weakening it. Investors from the US call me and ask whether they should short the rand, and I always say no. I don’t control the currency, but if I did decide to encourage people to short the rand, it would have an impact.”

He had hoped that the ANC leadership elected in December 2017, headed by Cyril Ramaphosa, would be an improvement. But he has lost faith in the party.

Rupert now believes the country has already reached a point of no return — and that the proximity of Deputy President David Mabuza to the top job is too close for comfort.

He is dismayed at what has become of the country over the past decade. Rupert has long been close to power: he was a friend of FW de Klerk, had a close relationship with Nelson Mandela, whom he revered as a father figure, and often spoke with Mbeki too.

But Rupert never spoke to Jacob Zuma, and he has had no contact with Ramaphosa since he became ANC president and head of state. Nor does there seem to be any inclination in the Ramaphosa government to involve Rupert in discussions about business or the economy.

Nor, apparently, to leverage his global network in favour of economic development. Rupert is persona non grata, it seems. “I’d like to have contact with Ramaphosa, but I’m not going to force myself on him,” he says.

[Being forced into an IMF bailout] could lead to a “bloody fiasco”, he says. “I don’t know how many companies will be able to manage interest rates of 25%, 30% — but what’s the alternative? I’ve asked Remgro and Rand Merchant Bank to come up with disaster scenarios. Every company should do it.”

Not everyone agrees. Apparently Paul Harris, one of the three founders of FirstRand, who remains a director of RMB, says the IMF scenario would be a black swan event. Rupert doesn’t think so: “I told him: ‘No it’s not: it’s a serious possibility’," he says.

Rupert’s damning verdict on the country’s leadership is more surprising, given that he had a close personal bond with Ramaphosa in the 1990s. But he’s disappointed with Ramaphosa’s leadership right now — and the regular instances of violence that break out because of service delivery frustrations is evidence of that.

“Ramaphosa is going to have to take the bit between his teeth. I think he should do something similar to the fireside chats Reagan had ... where he calmly explains to the country what he is going to do,” he says.

Were Rupert to pull back from SA, however, it would be felt in many ways. Besides his own philanthropic initiatives, Rupert invests heavily in his father’s hometown of Graaff-Reinet, where he has refurbished almost all of the historical old buildings in town. He funds a hospitality academy that annually trains hundreds of young people from disadvantaged backgrounds for a career in tourism, supports local schools with the upgrading of infrastructure and provides daily meals to hundreds.

He also supports the Free Market Foundation, with which he has partnered to secure title deeds for people without property in Stellenbosch and Graaff-Reinet. And he provided the impetus and capital to start non-profit organisation Freedom Under Law.

“I told my wife at one stage that I’m done with collecting art, I’m going to give all my money away. I’m richer than I ever thought I would be and I take pleasure in giving it away while I’m still living,” he says.

In Stellenbosch, Rupert is often spoken of in hushed but reverential tones, with his fiery temper and domineering personality universally acknowledged as characteristics of the so-called don of the Winelands Mafia. Whether he wants to acknowledge it or not, Rupert is the personification of Stellenbosch: affluent, elitist and influential. That is the way he is seen not only by his political and ideological opponents, but also by many well-disposed residents.

But Rupert says he will never again put his head above the parapet in public, as he has done in recent decades. He rarely grants interviews and almost never agrees to receive awards, making a notable exception in September 2018, when he agreed to an award presented to him in New York in recognition of his business and philanthropic work.

In that case, he was nominated by former US secretary of state Henry Kissinger, who argued Rupert “always stood up for what was right, from the 1980s up until today”.

Rupert says the past few years have been like the drip, drip, drip of Chinese water torture, what with accusations of him, as a “rich bastard”, being pivotal to white monopoly capital.

“The French gave me the Légion d’honneur; I’ve created job opportunities; I pay my taxes; I give away money. You’d think people would say ‘thank you’, not ‘eff-you’. I’m sick and tired, and Afrikaners aren’t any better than Bell Pottinger, mind you. My heart is here, but my body will be overseas. I don’t want to hear day and night about what we, the Rupert family, allegedly did wrong. That’s the main reason [for wanting to leave]," he says.

Perhaps more distressingly to the average South African, Rupert describes the country’s debt position as untenable, and says the cross-guarantees which keep most state-owned enterprises afloat could be disastrous.

“I think we’ll be at the IMF in a year’s time. [The governing party] don’t know what’s awaiting [it]. We’ll either have an Arab Spring-type event, or Ramaphosa must restructure everything. And he cannot do it. The IMF will, however, force you to restructure, and if you think about it, isn’t that the best thing that could happen to the country? Halve the public service, clean up the state-owned enterprises,” he says.

As a friend Rupert is known to be loyal, but not blind to associates’ faults, and honest to the point of being brutal. He is unafraid to speak his mind — sometimes to his own detriment — and gets frustrated when others don’t conform to his views.

He readily shares intelligence and information, but can be prickly if the outcome is not closely aligned to his own desires and objectives — or if his interlocutors disagree with him.

The Rupert family ethos and culture permeate Remgro, and its principals remain aware of the chair’s demands and involvement. There is a reluctance to defy or challenge Rupert, and a deference to his way and convictions. When the disastrous Power 98.7 interview concluded, his staff were reluctant to tell him how badly it had been received, and Remgro people in Stellenbosch will never say anything that could be construed as remotely critical of the chair of the board.

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