Latest news with #R18-billion
Daily Maverick
02-07-2025
- Business
- Daily Maverick
Exclusive: Transnet State Capture Big Four face 32 charges of corruption, fraud and of being delinquent directors
The charge sheet details how contracts were inflated by at least R18-billion, revealing how and where bribes were paid. Fourteen years ago, there was no stopping the Transnet Big Four executives – CEO Brian Molefe, his CFO Anoj Singh, the head of freight rail Siyabonga Gama and chief engineer Thamsanqa Jiyane. As the Commission of Inquiry into State Capture heard, the four were all powerful mandarins of the state corporation. They did not defer to the board, nor Transnet's treasury, nor to its bid adjudication committees, as they rushed through a locomotive acquisition that would ultimately cost South Africa billions of rands in inflated costs and multiple times more in lost opportunities as rail went to the wall. Now the four face 32 charges contained in a charge sheet brought against them by the Independent Directorate Against Corruption (Idac) as it gets to grips with prosecuting the State Capture cases at the rail utility. The charge sheet reveals that the Idac has alleged fraud, corruption and violations of the Public Finance Management Act and the Companies Act against the four, with a trial set to begin in October. Arrested this week, all four are out on bail of R50,000 each and have surrendered their passports. All four pleaded poverty and said they could not afford the original bail request of R200,000 each when they appeared in the Palm Ridge Court on Monday, 30 June. Two, Molefe and Gama, are MPs in former President Jacob Zuma's MK party. The charges brought under a quartet of laws seek to prosecute them from four angles, including dereliction of corporate and constitutional duty (charges under the Public Finance Management Act and the Companies Act) as well as fraud and corruption under the Prevention and Combating of Corrupt Activities Act (Precca). Here are the numbers of charges each faces, comprising variations of contraventions of the four laws. Anoj Singh (13); Molefe (10); Gama (6); and Jiyane (3). The four are accused of acting in concert (using a common purpose prosecution) to defraud Transnet and are alleged to have benefited through bribes detailed in the charge sheet and also ventilated in hearings at the Commission of Inquiry into State Capture. It all started in 2011, two years after President Jacob Zuma took office, as State Capture extended its claws into the parastatals Eskom, Transnet and Denel. Also involved were their SA acolytes, the businessmen Salim Essa and Iqbal Meer (who chaired Transnet's acquisitions board committee), and the Gupta family that later installed Molefe as CEO and had Singh and Gama in their pockets, the State Capture inquiry heard. The criminal charges against the four traverse the same ground as the Commission, but it has taken time to formulate the package of charges each now faces. Rolling stock bonanza In 2011, Transnet decided to boost rail freight demand by re-kitting its rolling stock. Over the next four years, the four allegedly conspired to favour the Chinese Rail Corporation (CRC), which was then divided into the China South Rail and China North Rail divisions. Essa earned handsome commissions for putting together this deal, the commission heard. Molefe, for example, was found by the commission to have ensured that the company did not have to meet the BEE conditions required of other suppliers. The Transnet whistle-blower, Francis Callard, detailed to the State Capture commission how the Japanese supplier, Mitsui, was elbowed aside in a series of corporate manoeuvres, and he was often kept in the dark. In 2014, Molefe and Singh signed off on contracts without board or government approval, and soon the costs ballooned from an initial R38.6-billion to R54.5-billion. The charge sheet details how, in each tranche of the three-phase transaction, payments exceeded agreed costs by almost R20-billion. The charge sheet details these as follows: in the first 95 locomotive transactions, a payment of R3.4-billion overshot the approved contract value by R231-million. In the 100-locomotive transaction, a payment of R5.18-billion exceeded the approved value by R348-million. In the big-ticket purchase of 1,064 locomotives, Transnet suffered a prejudice (loss) of R18.7-billion. Transnet is also alleged to have lost an additional R368-million in a botched relocation of an assembly line to Durban. Transnet is being steadily repaired by a combination of a new executive team led by CEO Michelle Philips, the Operation Vula team in the Presidency, and the secondment of seasoned rail and logistics executives from business through the B4SA partnership. However, it remains hobbled because many of the trains at the centre of the State Capture case are not operational, resulting in rail volumes that are significantly lower than they should be to transport the freight company to its desired destination. Between 2012 and 2015, the four are alleged to have benefited from cash and benefits from the Gupta family, including trips to Dubai and cash payments from Saxonwold. The family's mansion complex (3, 5, and 7 Saxonwold Drive) is being auctioned through Park Village Auctions on 24 July. Molefe, Singh, and Gama were also arrested in August 2022 in connection with a R93-million payment to Trillian Capital (a Gupta company run by the flamboyant businessman Eric Wood) for one of the locomotive transactions. That case is scheduled to come to court in February 2026, while the proceedings against the Big Four have been postponed to October 2025. DM
Daily Maverick
23-06-2025
- Business
- Daily Maverick
Naspers' Fabricio Bloisi reports transformative growth as e-commerce profits soar to $443-million
With a billion dollar swing in cashflow, profits from its e-commerce portfolio, and a R900bn buyback powered by Tencent, Naspers has entered its next act. CEO Fabricio Bloisi says the party has only just begun. It's been 11 months since Fabricio Bloisi stepped into the corner office at Naspers and Prosus, the tech investment arm of the company. If their latest financial results are anything to go by, he picked a good time to join the party. In the company's latest financial results, a surge in e-commerce adjusted gross profits to $443-million (R8-billion) was reported. This translated into a 100% dividend hike, a $1-billion (R18-billion) swing into free cash flow territory, and yet another leg in the marathon buyback programme. If Bloisi is to be believed, 'we are just getting started'. Positive cash flow Two years ago, Naspers had negative cash flow, and was haemorrhaging billions across its portfolio. Today, its free cash flow is positive, and for the first time its e-commerce businesses are contributing more to the bottom line than the Tencent dividends that prop up the group's financials. With Tencent already having paid its $1.2-billion (R22-billion) dividend for this year, the pressure to lean on it as a crutch has eased. 'We certainly have the ambition to grow this (e-commerce contribution) substantially in the year ahead,' said Naspers CFO Nico Marais, addressing the media after the company's annual financial results were announced on Monday, 23 June 2025. The group is seeing scale and operating leverage kick in. iFood orders, which is their food delivery service in Brazil, hit 120 million in March alone, achieving 30% revenue growth. OLX, the online marketplace, saw a 5% increase in its gross profit margin and a 60% profit increase. PayU India, a payment and fintech business owned by Prosus, came close to breaking even in the second half of FY2025. 'Adjusted EBIT (gross profit) for our e-commerce businesses was $443-million,' said Marais. 'Most importantly, that growth is translating into improved profitability.' The AI flywheel According to Bloisi's vision, AI is a key driver of the company's gains. He sees AI as the connective tissue across Naspers' global portfolio. 'We talk about ecosystems, we talk about innovation, about AI, about how to have technology that is best in class in the world,' he said. AI was already streamlining the company's operations through smarter customer support, optimised logistics, and personal marketing, Marais said. 'Our grocery business is far more efficient,' he said. 'They've improved its unit economics substantially over the past year. OLX's top line grew by about 18% — that shows the operating leverage that we have within the business where AI and other efficiencies are helping.' Bloisi says they are pushing to lead in the tech ecosystems of Latin America, India, and Europe. 'I believe we should have much more investment in training, developing, and education related to AI… my expectation (is) that Prosus is going to lead this through Naspers.' Shareholders are finally seeing daylight While Naspers has never struggled with asset value on paper, the market has discounted its shares due to structural complexity and a negative perception in growth prospects. Its buyback programme, launched in 2022 and funded by Tencent share sales, was intended to address this yawning discount between share price and net asset value. 'Through the share buyback we have now returned more than $50-billion to our shareholders,' Marais reported. 'We have improved the underlying net asset value per share by more than 15% and reduced the number of shares in issue by more than a third.' The buyback programme will continue as a key component of the group's capital allocation strategy. How does this affect you? Naspers is doubling down on its e-commerce strongholds like Takealot and Mr D. Expect better deals and services. Naspers says it's investing in AI talent and training, which could open up opportunities in tech and digital operations in South Africa. If you hold Naspers of Prosus stock, rising dividends, buybacks, and stronger results could lift share prices. Leveraging global talent to support local operations keeps entrants like Amazon on their toes, which is good for customers. Buying, selling, and the next act This past financial year was one of buying and selling at scale for the group. It sold off $2.6-billion (R47-billion) in assets while simultaneously deploying $7-billion (R127-billion) in acquisitions, including the Despegar travel platform and a pending deal with Just Eat 'We are going to keep the companies we believe in and the companies that help our ecosystem. If there are companies that don't help our ecosystems, we are going to cash out, sell, realise the investment and use the investment to keep growing,' said Bloisi. For the year ahead, the group has $11-billion (R199-billion) ready for new investments, but the short-term focus remains on executing and integrating recent moves. 'My big focus now is to complete the Just Eat transaction and make sure we have exceptional operations if we deliver in Europe,' Bloisi said. 'After that, we are going to keep making aggressive moves to create a global leader.' And what of South Africa? While Prosus focused on growing in Latin America, India and Europe, Naspers was holding the fort at home. It was not interested in new African investments, for now, but was doubling down on South Africa's digital economy through its existing portfolios, Bloisi said. The company's stake in Takealot, Superbalist, Mr D Food, Property24 and Autotrader is targeting the pipeline of becoming local champions. 'We are already investing more (in Takealot) than Amazon,' says Bloisi, adding that they were leveraging their global group — people from Brazil, India, and Europe working directly with Takealot. 'Our objective is to win the competition against the new entrants. We are from South Africa and we are there to win.' Bloisi expects the market to catch up. 'My expectation is that (analysts) are going to read the new numbers and say: 'Oh my god, they are much better than we thought,' and update the numbers.' DM
Daily Maverick
16-06-2025
- Business
- Daily Maverick
Unemployment, poverty and inequality
Capitec's CEO argues that SA's jobless rate is as low as 10% and not 32,9% as stated by StatsSA — he's right, and the numbers are equally as wrong regarding poverty and inequality. Capitec CEO Gerrit Fourie argues SA's jobless rate is as low as 10% and not 32,9% as stated by Stats SA – is he right? Dineo Faku of the ST reports that many don't think so. Stats SA argues their quarterly labour force survey includes the self-employed. Peter Bruce warns that 'you ignore the gut of Fourie at your peril, with 24 million customers he knows a lot more that Stats SA does'. Clearly few have read the work of GG Alcock 'Kasinomics Revolution' who has made a career out of studying informal entrepreneurial endeavour across the townships of SA. His finding are that 'real' as opposed to 'official' unemployment does not exceed 12%. For 30 years our unemployment, poverty and inequality conventional wisdoms, trotted out by all and sundry, have remained the same: SA's unemployment is amongst the highest in the world 55% of South Africans live in poverty South Africa is the most unequal society in the world. There is no question that over the past 30 years many of the unemployment, poverty and inequality numbers have changed significantly. I am going to argue that Gerrit Fourie is more right than wrong and that the 'official stats' are more wrong than right. 1. Conventional Wisdom: SA has the highest unemployment in the world at 32,9% with youth unemployment at 45.5%: GG. Alcock, his book Kasinomics Revolution has comprehensively researched the size of the informal sector. Here are some numbers: Spaza shops account for R190-billion across 100,000 outlets. The fast food sector accounts for R90-billion across 50,000 outlets. The beauty sector accounts for R10-billion annually. The taxi sector accounts for R50-billion a year across 250,000 vehicles. The multi-sector is worth around R18-billion per year. Savings stokvels are worth R44-billion per year. The backroom rental sector in townships is worth R20-billion annually. The spaza shop rental economy is around R25-billion per year. And there are a multitude of other businesses in these sectors including: Kasi building, renovations, gates, burglar guards, chrome gutters etc. Services — plumbing, electricians, catering and event suppliers tent, toilet and chair hire. Alcohol — taverns and shebeens. Cultural — muti, livestock, sangoma, inyanga, unveilings, funeral. Financial — mashonisa, stokvel, masicwabisane. Youth unemployment at 45.5% Mamapudi Nkgadima of Africa Response Survey writes 'To solve South Africa's dismaying youth unemployment challenge we must end the pervasive narrative that South Africans, and particularly young unemployed South Africans, are reliant on the government. It's quite simply not true, as a recent African Response survey has revealed. Among the respondents who classified themselves as unemployed and looking for work, 41% are earning up to R15 000 a month through income-generating activities such as baking, building and hairdressing. What this shows is that many of our young people are resilient and inventive about making ends meet. We need to reinforce that and build their confidence so that that attitude catches on.' The EY Global Shadow Economy Report 2025 confirms ours is at 26% amongst the highest globally. Based on these numbers alone it would seem that the informal sector could be approaching R1 trillion (25% of GDP) per annum where +/- 8 million people are involved in income generating activities. Reality Check: If these numbers are representative real unemployment is somewhere between 10 and 15% Conventional Wisdom: 55% of South Africans live in poverty There are three categories of poverty (The Economist): Abject poverty: defined as 'a wretched life where people lack education, healthcare, proper clothing, hygiene, access to fresh water and shelter, and enough food for physical and mental health.' Moderate poverty: A measure of being poor, 'poor' being defined as between a lower-bound and upper-bound poverty line, Relative poverty: A measure of inequality, what the GINI co-efficient sets out to do. The World Bank ranks poverty on the basis of income. In South Africa (SA), the national poverty lines are measured as the minimum amount of money you need to afford basic necessities like food and other essentials. The poverty lines are categorised as follows: the food poverty line (FPL) is R796 per month, the lower-bound poverty line (LBPL) is R1,109 per month (R4,436 for a family of four) and the upper-bound poverty line (UBPL) is R1,634 per month (R6,536 for a family of four). In 2024, it was estimated that 13.2 million people in South Africa lived in extreme poverty, according to Statista. Additionally, approximately 55% of the South African population, or 30.3 million people, lived below the national upper-bound poverty line. But these numbers do not include government transfers, subsidies and the like — see below (using 2023 figures). If you were to estimate the monetary value of the distributed 'income and consumption' of the above for a family of two parents/or guardians, one pensioner, and two children it would be as follows: Child grant at R530 x2= R1,060 Pensioner foster care x 1 = R1,,180 Old age pension x 1= R2,080 Free schooling x 2 = R1,200* Free food at school x 2 = R1,000* Subsidised school transport x 2 = R400 Subsidised water = R300* Subsidised electricity = R300* Subsidised housing = R1,200* Total = R8,720 per month per household, before any earned income is added! * Here are my estimates of the monetary value of these benefits/subsidies as consumption. Therefore, to claim that 55% of South Africans live below the upper-bound poverty line and that 22% live in extreme poverty cannot be defended in terms of the numbers above. Reality check: If the above numbers were included in the calculation of poverty, would it change the 'stats'? I would submit that 10% of our population would be defined as living in abject poverty (Economist) with 35% living in moderate poverty (poor). Conventional wisdom: South Africa is the most unequal society in the world. The GINI co-efficient, the measure of inequality, is defined as 'measuring the extent to which the distribution of income or consumption among individuals or households within an economy deviates from a perfectly equal distribution. A Gini index of 0 represents perfect equality, while an index of 1 implies perfect inequality'. Our score, which hasn't changed over 30 years, is between .61 and .65 and states that our income inequality is among the 'worst in the world'. Definitions Would it be fair to argue that the distribution of 'income or consumption' includes all the income a household receives no matter the source, both earned and unearned; and that consumption is of all that is used by the household, whether as a result of government transfers and free services, or personal choice. SA over the past 30 years According to the 2024 South Africa Survey published by the Institute of Race Relations, expenditure on social services has risen from R63-billion (1995) to R1.27-trillion (2023), a 1,900% increase in nominal terms (at 5% inflation over 30 years R63-billion would have risen to R272-billion — a 330% increase). The number of formal houses has trebled in the last 30 years, 60% of which are owned. So do the sums! 8 million people working in the informal sector with 41% of unemployed youth hustling at R15 000 per month. Government transfers have increased from 2,046702 recipients in 1996 to 18,829716 in 2023. Child support grants increased from 0 in 1995 to 13,147937 in 2023. There are 15 372 000 formal housing structures, 90% of which have access to electricity and water (with four people to each household that would account for 61488 000 citizens with permanent shelter. A family of two kids, two guardians and a Gogo would access approximately R8,000 in government transfers. CONCLUSION So the question is, why are reputable organisations, think-thanks, research houses, political parties, NGO charities, labour unions and Stats SA constantly reminding us that we are the most unequal society in the world, that poverty remains stubbornly high at 55%, and that unemployment is on the rise at 32.9%? Is it a government agenda, aimed at justifying BBBEE, Equity legislation, grants and a welfare state – all in the pursuit of justifying the National Democratic Revolution? Is it a think-tank agenda, aimed at proving that 30 years of ANC rule has delivered nothing? Is it an NGO agenda, sticking to the 'old' numbers to justify their 'current' needs? Is it a labour union agenda, using apartheid legacy 'numbers' to defend non-CPI related wage demands? Is it a Stats SA agenda aimed at justifying the spend on government transfers and grants? I'm not for one minute suggesting that unemployment, poverty and inequality are not fundamental challenges bedeviling transformation and hampering redress in South Africa. But I am suggesting, as does Gerrit Fourie, that the numbers reflect our changing reality and that there has been positive upward movement which the official stats do not represent. We need more people like CEO Gerrit Fourie, author GG Alcock, researcher JP Landman, think-tank The Institute of Race Relations who are doing the research, digging up the facts, calling out the numbers to shout louder and change our current conventional wisdom madness. DM
