CompCom collusion investigation avoids implications of cartel

LAST week the Competition Commission announced that it was investigating 28 media companies, including Media24 for collusion on advertising pricing, and that Caxton and Independent Media had already pleaded guilty and/or had paid fines. The investigation avoids the troubling impact of cartel behaviour already demonstrated and reported here and here.

While some may accuse the CompCom of casting its net too wide, it is most certainly picking low-lying fruit and scratching the surface. One can only hope that its next port of call  is to investigate the over-concentration and cross-ownership which is stifling journalists and readers alike.

Cartels and monopolies are not simply bad for business and competition but create the situation where news itself is overly centralised and where public opinion is subject to newsroom censorship. The result is bad for democracy and the outcome, the manufacture and manipulation of public opinion, unacceptable in a constitutional state.

The Rupert, Moolman, Stofberg, Bekker Media Cartel

THE IMPACT of a media cartel on a case adjudicated in the Labour Court of South Africa in 2010, by a director of the Resolve Group, partly owned by Remgro subsidiary Kagiso in a dispute in which Naspers subsidiary, Media24 were the respondents, was bound to present challenges. The least of which is the many deals which were being brokered between these entities during the course of proceedings.

The cartel includes Kagiso, Caxton, Remgro, Perskor and Naspers.

In order to appreciate how this was possible, one must first relate a bit of apartheid history.

In 1970 two pro-apartheid competitive Sunday newspapers, The Image (in Naspers ‘s possession) and Dawn (in Perskor’s possession), merged as Report to end the bitter struggle between the newspapers.

The combined paper’s first issue on 29 November 1970 appeared.

Thus Perskor, a media company started by HF Verwoerd, was gradually absorbed by Naspers.

The constant merging and spinoff of new entities, whilst maintaining shareholder control over the units, was to become a dominant theme of Naspers and its media cartel partners, who in turn sort to maintain Afrikaner privilege, in particular the theological basis for race classification and separate development.

Caxton, a major newsprint distributor and printer was no different. Its merger with Perskor, during July 1998, occurred shortly after acquiring CTP (Cape and Transvaal Printers) in 1995. This did not stop units and subsidiaries of these holding companies, from suing each other.

The competition commission recently heard evidence regarding issues to do with the collapse of Gold-Net News aka Gold Fields Reporter, a community newspaper in competition with Media24 “fighting brands”, in a case involving abuse of a dominant position in the industry.

The Competition Tribunal also granted Caxton and CTP Publishers and Printers Limited permission to participate in the hearing of a merger between Media 24 (Pty) Ltd, Paarl Media Holdings (Pty) Ltd and Paarl Coldset (Pty) Ltd. In the merger Media 24 intended to “purchase a 5% share in Paarl Media Holdings as well as a 12,63% share in Paarl Coldset.” The resulting entity has now been listed on the JSE as Novus.

Annexure G updated
click to enlarge graphic

Rupert’s “Bidco” stake

The sanctions-busting Rembrandt Group comprises Remgro, Richemont and Venfin, and includes a variety of equity investment vehicles such as Reinet Investments.

“Bidco” in turn, comprises RMB Investments, Remgro and Caxton directors Terry Moolman and Noel Coburn. It was involved in the recent buyout of ElementONE, a major Caxton shareholder.

Johann Rupert via Independent Online, said Remgro had an effective shareholding of less than 7 percent in Caxton. “These are shares that we acquired about 20 years ago when there was a huge fight between Naspers and Perskor.”1

Remgro has long held a 1,7% stake in Caxton, a legacy of the old Perskor Group.2

Caxton subsequently acquired Perskor and vice versa.

The resulting Remgro stake in the cartel which includes Kagiso, Caxton, Perskor, and Naspers, represents a serious concentration of media assets amongst a few Afrikaner businessmen.

The impact of the cartel on proceedings before the Labour Court of South Africa would result in calls for the removal of the labour broker and legal professional responsible for drafting a decision memorialising and reiterating the ‘apartheid heresy’ from a top post at the ivy league University of Cape Town, in impeachment and disbarring proceedings that include removal of M H Cheadle from the institution’s Senate.

Deals made during court proceedings, included the merger of financial units associated with Kagiso and Sanlam, a major shareholder in Naspers.

A long association

The late Anton Rupert’s association with Naspers began in the 1940s with the establishment of Tegniek (Technology), the Afrikaans business magazine started by the Rembrandt Group which would later become Finansies & Tegniek (with an English counterpart Finance Week) in the Naspers stable.  Mutual projects at the behest of the apartheid regime, orchestrated by Anton Rupert,  included the Urban Foundation, set up to exploit the black townships and bantustans, and involving “prominent Afrikaners” Andreas Wassenaar (Sanlam), Wim de Villiers (Gencor), David de Villiers (Nationale Pers), and Jan van der Horst (Old Mutual) as well as Rupert’s own Rembrandt Group.

Today, the Rupert dynasty has an effective interest in Naspers via Momentum and Sanlam, including a variety of connection companies.

The Rupert-Sanlam connection began with the white supremacist Afrikanerbond and its “volkscapitalisme” emerging with the pivotal 1953 deal which saw Rembrandt’s acquisition of tobacco company Rothmans International, followed by successive deals (South African Breweries, Distell and Gencor), in which white Afrikaner economic interests were shared out amongst a select few. A bailout of Volkskas and Sanlam by Rothmans in the 1980s would put the Ruperts in the proverbial pound seat.

Sanlam-Rembrandt partnerships in mining giant Federale Mynbow would follow with Sanlam retaining shares in Rembrandt and vice versa, the “mutual cooperation that will be created by this new and powerful partnership”.

“The controlling interest in Gencor was held by Federale Mynbou, in which Sanlam and Rembrandt between them held a 72% stake. As a result, Sanlam became one of the largest conglomerates in the country after Anglo American and Old Mutual.” 3 The often tempestuous relationship between Rembrandt and Sanlam is illustrated in several chapters of Anton Rupert’s biography, written by Naspers editor Ebbe Dommisse and published by Naspers imprint, Tafelberg.

Rembrandt would go on to buy out Sanlam’s stake in Volkskas, in the process orchestrating a variety of mergers and spin-off companies.

The Rupert, Bekker, Stofberg relationship

The Rupert, Bekker, Stofberg relationship began in the early 1990s when Johann Rupert selected pay-TV as the third leg for the family’s growing offshore business, Richemont. 4

Cobus Stofberg is a major Naspers shareholder, a non-executive Naspers director, and a senior executive at MIH Holdings Limited, a Naspers subsidiary.

The pivotal 1994 election year would see the creation of a 50-50 Rupert-Bekker holding company, NetHold, which held the multichoice assets which would later become MIH. Rupert’s Remgro stake however was subsequently spun-off into Canal+ in a complex equity deal which effectively removed Remgro control over the entity. Remgro, currently holds 31.2% of Sabido, the media division of black-owned conglomerate HCI, (eTV) amongst other media assets which include radio stations such as Heart 104.9 FM.

Another current Remgro-Naspers connecting company is Dark Fibre Africa. A Bloomberg search reveals that Rudi Jansen of Naspers Limited has “Board Affiliations on Dark Fibre Africa (RF) (Pty) Ltd”. Dark Fibre Africa is held via a complex series of nested companies, and ultimately owned by Venfin, a Remgro subsidiary.

Anton Rupert’s 2005 biography contains a diagram of the share structure of Rembrandt, showing SAIL as a Venfin subsidiary. The SAIL website claims the group is “privately-owned” but is involved in DSTV sportscasting, including Vodacom SuperRugby and DSTV delicious. Rupert’s Venfin at the time had a 15% stake in Vodacom.

Not only is Remgro invested in SABIDO which owns eTV, it is a crucial part of the MIH Multichoice bouquet and resulting Media Cartel. The latest scandal involving Multichoice’s dominance in this sector is bound to ring alarm bells.

The Sanlam Connection

The Suid-Afrikaanse Nasionale Lewens Assuransie Maatskappij Beperk (South African National Life Assurance Company Limited) otherwise known as Sanlam, is perhaps the most difficult entity to deal with. As an insurance giant, it is anything but transparent. It is only in recent years that the Naspers-Sanlam connection has come under scrutiny.

A history of the company here and here shows that In December 1917 a small group of Afrikaners including Willie Hofmeyr (a prominent Afrikaner leader and first chairman of the Board of Directors of the then newly established Afrikaans newspaper De Burger owned by Nasionale Pers, and since 1918, Managing Director of Nasionale Pers), started the enterprise.

In reality two separate entities emerged from the one holding company, Sanlam and Santam. The one focusing on short term insurance, the other on long term insurance.

In 1935 Sanlam bought the shares of the life assurance company African Homes Trust, which would later become Metropolitan Life, from Santam. In effect two companies owned by the single holding company would begin selling units back and forth in a familiar pattern which would repeat itself many times. The Metropolitan deal would later play itself out during proceedings in 2010, as the cartel cemented its control over units that had been opened up to limited black economic empowerment, and giving a semblance of transformation, and yet Naspers itself, opposed the outcome of the Truth Commission and thus resisted the negotiated settlement and transitional justice framework.

Afrikaner business intrigue thus really beings in 1940, when Federale Volksbeleggings (FVB) was registered by Sanlam, “giving policy owners a stake in a large number of commercial and industrial companies and providing them with the opportunity to contribute” towards white broad-based development, to their mutual benefit. The foundation of FVB would eventually lead to the foundation of Afrikaner industrial and mining giant Gencor in the 1950s and the ensuing competition for control of South Africa’s industrial sector by the Rupert dynasty, and its takeover of Volkskas which in turn created Amalgamated Banks of South Africa (ABSA) and lead to the creation of Rand Merchant Bank (RMB), owned by Remgro.

A variety of co-option schemes and plans to include key black industrialists have further implicated the cartel in a ruse to simply whitewash past associations with the apartheid regime. Patrice Motsepe for instance, owns a substantial stake in Sanlam’s Ubuntu-Botha BEE Scheme. One can’t help but thinking the result is a black PW Botha of BEE.

RMB own 100% of Momentum, which in turn is part of a new entity called Momentum Metropolitan Investments (MMI), the result joins both sides of the cartel in an interesting financial merger.

The Resolve’ Group’s “total workforce solution” and corrupt relationship at the time, to the above entities is covered here and here.

SEE: Apartheid Inc. The Story of Naspers, Media24, and Channel Life.

1Retrieved 11 April 2015

2Retrieved 11 April 2015

3 Page 261, Anton Rupert, A biography, Ebbe Dommisse, Willie Esterhuyse, Tafelberg, 2005
4 Retrieved: 9 April 2015

Apartheid Inc, the story of Naspers, Media24 and Channel Life

A NEW global multimedia megacorporation is determining the future of communications on Planet Earth. From cradle to grave, chances are your life is already affected and controlled by Channel Life.

If you attend Damelin College or City Varsity, buy tickets via Computicket or access broadband with MWeb, your life has been inextricably altered by Channel Life.

Whether you surf Facebook, play with Mixit (until recently 100% owned by Naspers) , read ZigZag or Saltwater Girl or any one of 60 magazine titles, or watch the plethora of Multichoice Television programmes on DSTV via a vast array of platforms owned ultimately by insurance giant Sanlam you may knowingly or unknowingly be a part of the Channel Life experience.

If Channel Life did not exist, then someone would have had a good cause to create the term to express the way humanity is increasingly becoming interconnected through communications technology. Problem though, Channel Life does exist and it describes a lot more than a shareholder stake in a complex holding structure behind today’s networked mega-corporation.

The Historical Problem: The Rise of Apartheid Media

It was not always this way. South Africa until fairly recently was a rather insular and isolated country. As a British Colony and Union prior to Independence, its press was predominately Liberal and English and except for one or two newspapers from the Transvaal, local publishing was for the most part unexceptional.

On May 12, 1915 a small company by the name of Naspers was incorporated under the laws of the then Union of South Africa as a public limited liability company. Naspers, short for Nationale Pers or National Press, reflected the dominant concerns behind Afrikaner Nationalism which had endured defeat during the Anglo-Boer war, a war which is now known as the South African War.

Along with the rise of the Apartheid state, Naspers rapidly became associated with political factions agitating for independence from Britain, and a Republic divided along strict racial lines where segregation into distinct race groups would be enforced by laws rather than mere societal norms and where the reigns of power would be in the hands of a secret society which acted independently of the ruling party.

In 1914 the republican militarist, J.B.M. Hertzog had formed the National Party. The following year Naspers was formed by Hertzog along with a daily newspaper, De Burger, later known as Die Burger. A vainglorious and zealous theologian by the name of D F Malan was persuaded to become editor. Malan accepted the post only after relinquishing his position as a minister in the conservative Dutch Reformed Church.

A Cape branch of Hertzog’s National Party had been formed the same year and Malan, leveraging his position as editor and with the backing of the Afrikaans media was not surprisingly, elected as its provincial leader. Despite the objections of a small minority within the Afrikaner establishment who believed “the dominee” unfit to lead, Malan was elected to Parliament three years later in 1918, the same year a secret society known as the Afrikaner Broederbond, was formed, ostensibly to protect Afrikaner interests.

Thus with the full support of the corporation, and the Broederbond, the National Party was catapulted into power in 1924, for a brief moment under the leadership of Hertzog, where Malan, still editor, and the Silvio Berlusconi of his day, was given the post of Minister of the Interior, Education and Public Health, a position which he held until 1933.

In the South Africa of the 1930s white consensus politics prevailed, the United Party was thus formed out of the merger between Hertzog’s National Party and the rival South African Party of Jan Smuts. According to historians Malan strongly opposed the merger however, and he and 19 other MPs defected to form the Gesuiwerde Nationale Party or ‘Purified National Party”, which Malan led for the next fourteen years as part of the all-white opposition.

Malan was not surprisingly vehemently opposed to South Africa’s participation in World War II, and openly sympathised with Nazism and Hitler’s brownshirts. Since the allies and the British were immensely unpopular amongst the Afrikaner, it stood to reason that much would be gained from beating the drum of fascism and Afrikaner nationalism.

This directly led to a split in the ruling party and dramatically increased Malan’s popularity amongst disgruntled whites with the result that he was able to defeat Smuts and the United Party in the election of 1948 in what must surely rate as one of the worst moments in South African history.

Without the racist machinations of D. F. Malan who wished to remove those known, as “coloureds” (in the peculiar parlance of South Africa’s race system) from the voters roll while relegating “black” South Africans to the status of foreigners, and bolstered by the enthusiastic support of the Naspers corporation, the foundation stone for apartheid would never have been laid.

More likely, as with so many British colonies and protectorates that achieved democratic independence after World War Two, African nationalism would have simply taken its natural course. The white minority would have been forced to accept the “Winds of Change” which were blowing over the continent.

Instead what occurred was a travesty of justice as a country which had committed soldiers in the cause of freedom, now committed itself to actively enslaving its own countrymen.

The outcome of D F Malan’s Naspers-backed tinkering with the political system resulted in what we now know as a crime against humanity – the institutionalisation of racial segregation in the form of apartheid, along with job reservation for whites, which under the regime of Malan and subsequent National Party leaders was given the full force of law.

Although parallels existed in the experience of segregation in the USA – the Southern States had literally fought a civil war to defend slavery and class privilege and lost — the civil rights movement on the continent had consigned segregation on the basis of race and skin-colour to the rubbish heap. Instead while Martin Luther King was giving his famous “I have a dream” speech, and America was turning its back on segregation, South Africa was embracing a system of grand apartheid which denied blacks full citizenship and consigned objectors to what were known as bantustans, under the evil doctoring of another broederbonder with media ties by the name of Hendrik Verwoerd.