Economics review


The National Empowerment Fund requires urgent recapitalisation. The cause is said to be “impairments” (you just gotto love accountants) and write-offs. Its CEO earned R5.7m last year. ’Nuff said.


Two lenders to our SOE’s have called it quits. One reports that it has “gone underweight” in Eskom bonds. “ ..we want to send a message that we can’t provide finance unless the governance and decision-making of the SOEs improves and becomes more transparent.” Analysts darkly predict a slump by the Rand of 30% against the US $. Rand-denominated government bonds lost 2.9% this month in $ terms (Those who hold that a weaker Rand will stimulate exports must be ecstatic). SAA is attempting to “consolidate” it’s debt by calling for a loan tender of R16bn. Yet, at the same time the DA has called for SAA to be subjected to business rescue. This has really put the cat amongst the pigeons.

 There are those who have lauded the withdrawal of finance from South Africa on the assumption that such an action would spur us to rethink our economic policies. What was not foreseen is that the Bris Bank would come to our rescue: essentially the Chinese lending to us. It will be interesting to see what transpires. What is happening now is exactly what S&P said, namely that it would lower South African ratings if it believed that institutions became weaker owing to political interference.


Business review


In two weeks Business Day and Financial Mail will hold a financial investment Summit in which they will deal with the active versus passive fund managers debate. Possibly worth looking into. Factually, this debate can probably never be put to bed. If, objectively, one consistently work to outperform the other, we would not be having this debate.


Eskom is owed R27bn by municipalities for electricity. One wonders what the costs of electricity would be if our 3rd tier government would pay its debt in time?


It had to come (this is specially for Robin): Harley-Davidson is accused of selling devices (super tuners…ona Harley. Really?) that increase air pollution emanating from its bikes. Strangely, nothing is said about noise. The company will pay a penalty and devote $3m to replace conventional wood stoves with cleaner-burning stoves in local communities. Shades of SA?

In the same vein, Mitsubishi has been ordered by the Japanese Transport Ministry to stop domestic sales of eight models, after it was found that the in vehicle maker overstated the fuel economy of those models.


The Independent Regulatory Board for Auditors will withdraw as BEE verification agency from the end of December. This Board allowed auditors to issue BEE certificates to their clients. This will impact on those who need such certificates, as that organisation allowed out-of-period top-ups and so on, which Sanas does not.


The luck of the Oirish: the European Commission has gifted Ireland with approximately 5% of its GDP in one go by taxing Apple with €13bn in favour of Ireland, after ruling that Ireland had given Apple illegal tax benefits. Ireland desperately does not want the money as it may lose Apple as a local employer. Now, if this were South Africa!


Hybrid rice varieties in sub-Saharan Africa are yielding up to four times more than other improved varieties. This week I saw a statistic that only 1% of Americans are still on farms – yet they feed the whole country and export food also. Overproduction frees others to do other jobs.


Property review


Menlyn Park is becoming the largest shopping centre in Africa. Larger even than the Mall of Africa.


House prices in Cape Town have arisen at 12% whilst such prices, in the rest of South Africa, have risen between 4 and 6%.


Respublica, a subsidiary of Redefine, is set to launch a 2200-bed housing development in Hatfield Square. That company currently holds 5500 beds across six other sites. Three further sites are under development.


Ongoing property development in Johannesburg is dampening the residential property market as supply begins to exceed demand.


Practice review


Vintage Zuma: the Prez has appealed to the SCA to hear him on the High Court’s decision that the charges of corruption etc against him should not have been dropped. His attorney alleges that the evidence demonstrates a clear and serious breach of law as well as a violation of prefectorial (prosecutorial?) policy.


I had commented on Judge Motata last week: this worthy has now been on special leave since 2007. Clearly personal justice outweighs shame. Are judges are not accountable also?


The following link will take you to a website showing the rationalisation of magisterial districts:



Cases and such


Interference by third in a contractual relationship


If one persuades another to breach a contract with an innocent party, the innocent party has a delictual claim for damages against the persuading party for its damages. In this case ShopRite and Game leased premises in a shopping centre. ShopRite had the exclusive use to operate a supermarket in that centre. ShopRite contended that Game had effectively become a supermarket by selling items which included fresh fruit, vegetables and pre-packaged meat. ShopRite alleged that Game had persuaded the landlord to breach ShopRite’s contract by allowing Game to trade in contravention of the contract that ShopRite had with the landlord.

Whether such contracts are unconstitutional will be decided upon very soon by the Concourt.

ShopRite versus Masstores [2016] JOL 36404 (ECG)


Sections 163 and 75 of the Companies Act


Section 163 deals with relief from oppressive or prejudicial conduct or abuse of juristic personality. Section 75 deals with the disclosure of a director’s personal financial interests in a company. I hold an article in which the writer discusses the effect of the non-disclosure of such interests. Interestingly, it also deals with the enforcement of arbitration clauses which are ensconced in shareholder’s agreements. Ask me for a copy.



Do trust assets form part of the joint estate of parties married in community of property?


The above is a contentious issue. I hold an article in which an SCA case on the subject was discussed. Ask me for a copy.




We must all suffer one of two things: the pain of discipline or the pain of regret or disappointment. Jim Rohn




Dextrous or sinister: the Pez will be chairing the review committee on SOEs.


This has been a wonderful week in the news. Scandal abounds. The latest is a comparison of burkini wearers with the iconic flag bearing, bare-breasted Marianne leading the French revolutionaries, as depicted by Delacroix. Marianne wears a Phrygian cap, which is now compared to a headscarf. If you knew that, or can pronounce the word, you are indeed educated.


Prasa is reported to have paid R600k per toilet seat in a tender to supply these from a Spanish manufacturer. At the same time comes a report that R13bn in irregular contacts, under its former CEO, was entered into. Such bizarre allegations abound. I have yet to see any prosecution or action taken against those responsible. In fact, our Transport Minister seems desperate to halt an investigation into corruption at that agency. We could call it #Toiletgate! (I’m tempted to go worse)


Noisy condoms? MPs heard that our scientists have now produced silent condoms (presumably the old ones are rustled). One does not know whether to cheer or deride (no pun intended).


You will be pleased to know that, despite our 18500 murders per year, we are still safer than ten years ago. That only 50 a day. At least we beat Brazil with our 29 murders per 100,000 whereas Brazil only has 25 per 100,000 of its population.


Over the centuries, the age of our earth has been extended backwards continually. The most exact calculations were done by those used the Bible as foundation. Thereafter followed calculations by scientists based on bones found, the deterioration of carbon and the like. Australian scientists have now found fossils (stromatolites) which date back 3.7 billion years. It is now been proved that life on earth emerged approximately 4.5 billion years ago.


“Strategic destruction”: as opposed to a random, barbaric destruction; this is said by a student to be part of the planning to bring the UKZN to the party on free education. It is a fact that authorities only sit up and take notice when complainants start breaking things. We clearly have a generational/social disconnect on hand. Calling such behaviour (splutteringly) “unacceptable”, simply does not cut it.

An interesting aside on education, is a note written by Hartford that an undergraduate degree is like a peacock’s tail: costly and useless in its own right, but a necessary investment, in that it signals who is smart and diligent and who is not. If one simply paid higher wages to those smarter than others we would not have to bother acquiring a degree.


Internal dissension: like Donald Trump, our president no longer commands a party unified behind him. The ongoing disruptions surrounding Treasury’s “attacks” on Denel, Prasa, SAA, and Eskom has seen our currency go into a tailspin; again. These machinations cost money. The R2.35bn that the Treasury was trying to raise could only be brought in by raising the yield, meaning that the State will pay more for the debt that than it would otherwise have had to; this alone will mean an extra cost to the State ofR11.75m per year. In fact, SA needs to borrow R139bn in 2016 while, SOEs need to borrow another R73bn.   The drop in the Rand will drive up fuel prices and make it difficult for SOE’s to borrow money, resulting in higher costs for electricity, roads and the like. If our country is downgraded, it will curtail investment in South Africa by others. It is estimated that the Hawks’s dalliance has cost us R1bn already.

An interesting take on these Zumanations is that the investigations, pursued by the Hawks, are in fact a road to nowhere. Non-compliance with legislation does not necessarily render such conduct a crime. It is said that the breaches that Gordhan may be guilty of are just such i.e., whilst prohibited, there is no criminalisation of such conduct. The conclusion that was reached, is that there is no evidence that the Hawks are, in good faith, investigating crimes that the Minister may have committed. This makes the alternative i.e. that this is a witchhunt, all the more compelling.


Lighten up: On the lucky Oirish


What's the difference between an Irish wedding and an Irish wake? One less drunk.


Paddy and Mick are walking down the road and Paddy's got a bag of doughnuts in his hand.

Paddy says to Mick, "If you can guess how many doughnuts are in my bag, you can have them both"


Gallagher opened the morning newspaper and was dumbfounded to read in the obituary column that he had died. He quickly phoned his best friend Finney.

"Did you see the paper?" asked Gallagher. "They say I died!!"

"Yes, I saw it!" replied Finney. "Where are ye callin' from?"


"Is that the Ballycashel Echo?" asks Mick.

"How much would it be to put an ad in your paper?"

"Five pounds an inch," a woman replies. "Why? What are you selling?"

"A ten-foot ladder," said Mick before slamming the phone down.


'What's wrong with Murphy?' asked Father Green. 'I don't know, Father. Yesterday he swallowed a spoon and he hasn't stirred since,' said Mrs Murphy.


So, where does one invest?