Dog walking this week brought on the unusual sighting of a young man practising his Tai-Chi form in our local neighbourhood park.
Impressive control aside, what struck me most were the reactions of those passing by, from double takes to giggles and sniggering.
It got me thinking about success, which usually takes place when a brave person steps outside their own or society’s conformity circle – Elon Musk springs to mind as electric cars never used to be so fashionable.
Those inside the circle may belittle those that step out, but without taking the leap many modern marvels or inventions may not have seen the light of day.
By Alastair Reed
(Bloomberg) – Eskom Holdings SOC Ltd. said Phakamani Hadebe will step down as chief executive officer of the heavily indebted South African state power utility at the end of July, deepening a crisis that Goldman Sachs has described as the biggest threat to the country’s economy.
Hadebe is leaving due to health reasons, the Johannesburg-based company said in a statement published on Twitter. “It is no secret that this role comes with unimaginable demands which have unfortunately had a negative impact on my health,” Hadebe said in the statement.
Eskom is groaning under almost R500bn ($34.7bn) of bond and loan debt, according to data compiled by Bloomberg, and isn’t selling enough electricity to cover its operating and borrowing costs.
President Cyril Ramaphosa insists that Eskom is “too big to fail” and the government has already given the company a three-year R69bn bailout. With the nation’s finances stretched to the limit, the Treasury has limited scope to continue bailing the company out.
Sometimes flaunting a nearly seven-fold-inflated deal in front of an astonished shareholder can shock them into silence, or at least entice them into avarice. Not here however. A Gupta-linked pop-up intermediary company hugely inflated the price of translocating a locomotive-manufacturing plant from Gauteng to Durban after it was nailed down by a group of minority partners, one of whom this week spilt the beans to the Zondo State Capture Commission. Gupta kingpin Salim Essa and the private company linked to former Transnet Board member Stan Shane, then ignored all queries from the minority partners. Deeply alarmed, the bit-players then reported it to the Hawks in terms of the Prevention and Combating of Corrupt Activities Act. The transaction was part of the controversial contract to pay China North Rail, close to R700m to supply 232 diesel locomotives, and for moving a yet-to-be operational plant to Durban. The Zondo Commission witness, one Roberto Gonsalves, said the R67m payment for pulling off what an entire consortium, packed with expertise, seemingly couldn’t do for R9.7m, would have been nice, “but we could see absolutely no justification for it.” Story courtesy of the Daily Maverick. – Chris BatemanHow to go from a price tag of R9.7m to R700m, Transnet-style
By Jessica Bezuidenhout
A Gupta-linked middleman company slipped into a Transnet deal and spiked the price of relocating a locomotive-manufacturing venue from Gauteng to Durban from a mere R9.7m to about R700m.
Business Expansion Structured Products, in short, BEX, a company then having barely traded, and which had seemingly hijacked the credentials of a different company, scored roughly 10% for its troubles.
This July 2018 article by amaBhungane is the blueprint against which South African businessman Roberto Gonsalves testified at the State Capture Commission on Thursday.
The Amabhungane investigation puts Gupta kingpin Salim Essa and a private company linked to former Transnet Board member Stan Shane at the genesis of BEX.
So disturbed was Gonsalves and a group of fellow South African minority partners in the locomotive deal, they went up against their international partners, China North Rail (CNR), formally brought the matter to the attention of former Transnet executives Anoj Singh and Siyabonga Gama and reported it to the Hawks in terms of the Prevention and Combating of Corrupt Activities Act.
The Commission heard that unbeknown to Gonsalves, Gama and Singh had already signed off on the claim by the time they were granted an audience to raise concerns – but neglected to mention this.
There was absolutely no justification for Transnet to agree to pay China North Rail SA (CNR SA), contracted to supply 232 diesel locomotives, close to R700m for moving a yet-to-be operational plant to Durban, said Gonsalves. The deal was part of the equally tainted 1,064 deal.
The exorbitant spike in price first came to the local group’s attention after it was asked to sign off on the appointment of BEX at the request of its Chinese partners.
When the price for the locomotives was being developed, it was on the basis that CNR SA would be manufacturing in Gauteng.
But CNR knew it would actually be manufacturing in Durban because Transnet had asked the company to produce figures for the impact on costs of a relocation shortly before the deal was signed.
While the consortium also preferred to manufacture in Gauteng, it appears the plan was to split manufacturing between the two cities across four groups contracted at the last minute to supply Transnet with 1,064 locomotives.
CNR and a second original equipment manufacturer, General Electric, were then asked to shift to Durban – and CNR had no facilities up and running so there was physically nothing to move, Gonsalves said.
The consortium crunched the numbers and came up with a figure of R9.7m to cover the relocation.
“We calculated the extra costs and the total was R9.7m for the full batch of locomotives,” he said.
The costs related to measurable financial implications and covered costs including transportation, flights, accommodation and had factored in savings from importing equipment directly to the Durban port instead of having it moved to Gauteng thereafter.
But on April 23 2015 China North Rail signed a contract with BEX to act as an intermediary to negotiate a claim for the cost of the relocation from Transnet.
“The company was not known to us at all and had not played any role when we submitted the R9.7m figure to Transnet,” Gonsalves said.
The consortium had also never had dealings with BEX until then.
Gonsalves said he had received an email, containing a draft agreement for BEX, from CNR SA with a resolution dated 8 April 2015 that required minority directors to sign off on the appointment of BEX as an agent to negotiate the relocation claim.
Gonsalves and the other local partners disagreed, seemingly vehemently, and refused to do it.
“There was already a relocation fee of R9.7m. In our minds we had already been reimbursed for the relocation and did not see any basis for any claim from Transnet for a relocation,” he said.
Although they refused to sign, China North Rail’s representatives went ahead because they controlled the board of the local joint venture company.
This gave CNR SA access to a payment of 50% of the claim within two weeks of Transnet signing off and the balance payable in 13 equal instalments thereafter.
Gonsalves said the local partners asked questions, seemingly repeatedly, and never quite got a straight answer.
“Despite our objections, they controlled the board and went ahead,” Gonsalves said.
The initial cost of R9.7m shot up, once BEX arrived on the scene, first to R287m, and then finally to R719m, though CNR offered Transnet a discount in the end.
“We didn’t know where the figures came from,” said Gonsalves.
Gonsalves says the matter was previously reported to the Hawks in 2017. "Nothing of significance came out of the involvement of the Hawks," he says. #StateCaptureInquiry
— State Capture Commission (@StateCaptureCom) May 24, 2019
He testified about a document signed by Gama in July 2015 in which Transnet confirmed acceptance of the claim with 50% payable within two weeks thereof. Gama allegedly failed to mention this when Gonsalves and a colleague met him and Singh about a year later, in August 2016.
“Why did Transnet not have us do the calculations, instead of going for a company with no trading history?” Gonsalves said.
“We are shareholders, (that payment) would have been nice, but we could not see any justification for it.”
BEX was paid R67m for pulling off what an entire consortium, packed with expertise, seemingly couldn’t do.
But while Gonsalves and his local partners were in the dark about who BEX was, he said China North Rail’s team in SA was not too bothered by the question.
“I sense they were aware of who they were dealing with.”
Gonsalves told the commission the relocation of the venue from Gauteng to Durban may well have been motivated by capacity concerns.
But then, Transnet should have provided reasons and, importantly, what in the original contract of more than 500 pages made provision for this staggering surge in the cost of relocation.
The commission resumes on Friday when Gonsalves is scheduled to conclude his testimony. DM
Airbnb is being fired at from all angles as it gets ready for a stock market listing. It is blamed for distorting housing markets, taking rental stock away and leaving a shortage of affordable housing. Can Airbnb be blamed for a situation in which it is ever-harder for people to get a foot on the home-ownership ladder or move out of home? In Scotland, for example, Airbnb lets have mushroomed. This is not because individuals are necessarily excited about running small holiday businesses, though some probably are, but because it’s a safer bet than having a long-term tenant in a property. Bricks-and-mortar, in turn, has become a popular investment option in countries where interest rates are so low, it’s not worth keeping your money in a bank or interest-bearing savings vehicle. Property laws, meanwhile, largely favour the tenant these days, which means it’s virtually impossible to evict someone or push up the rent to what the landlord believes is a market-related level. Holiday rentals are less risky, because the people who take the keys for a furnished let are unlikely to become squatters. Airbnb rates and stock have also put pressure on hotels and bed and breakfasts, which would also like to see it reined in. Airbnb isn’t doing itself any favours, however, as it turns its back on anti-Airbnb activists like Murray Cox. – Jackie CameronMeet Murray Cox, the activist trying to take down Airbnb
By Olivia Carville
(Bloomberg) – Murray Cox chuckled when he was invited to a meeting with Airbnb representatives in downtown Manhattan in February.
For four years Cox has been publishing reports that cast Airbnb as a big-city housing-villain, but the company had never reached out to him before. A rendezvous was set for a WeWork meeting room on Broadway, across the street from Airbnb Inc.’s offices in New York. Was the location suitable to Cox, Airbnb wanted to know? Well yes, Cox thought, or he could just walk downstairs since he works in the same building as Airbnb, close enough to connect to their Wi-Fi. By day, Cox spends his time on the 27th floor of a corporate skyscraper as a vice president for a tech startup, surreptitiously riding the elevator with Airbnb employees who occupy space on the 26th floor. By night, the 46-year-old often sits on his couch in Brooklyn scraping Airbnb’s website, delivering curated statistics to cities around the world that are seeking to rein in the ever-expanding home-sharing giant.
Cox has turned Airbnb’s own data against it by highlighting thousands of illegal listings on the platform that he says distort the housing market. To Cox, Airbnb is “an obnoxious multibillion-dollar corporation that thinks they are changing the world when in fact they are having negative impacts on it.” And for just as long, Airbnb has vilified Cox, publicly undermining his work while accusing him of being in the pocket of the hotel industry. An Australian spokesman for Airbnb called his website “garbage.”
But as Airbnb, privately valued at $31bn, readies itself for a public stock listing next year, its exigencies are shifting. The San Francisco-based company needs to make peace in New York, its biggest domestic market, where it’s locked in a fight over regulation. To do so, it must broker a ceasefire with Cox, whose data hardens the city’s stance.
Airbnb spokeswoman Liz DeBold Fusco reached out to Cox earlier this year after some public sparring on Twitter and invited him to “have a real conversation about the path forward for home sharing” in New York.
After half a decade of rebuttals mostly by press release, Cox was taken aback by the sudden prospect of a face-to-face meeting. Sitting in the apartment he shares with his dog Finch, Cox read and re-read the message, wondering if it was some kind of trick.
The soft-spoken Australian native hardly seems to fit the bill of “Airbnb’s global public enemy No. 1,” as some media have labeled him.
“People describe me as a watchdog over Airbnb,” Cox says in an interview, dressed in a denim shirt and Nike sneakers, as he picks at a plate of vegetables and tofu at a Manhattan noodle shop. It’s a label he rejects. “I’m just a housing activist. I believe housing is a human right; not an economic tool or a commodity.”
Cox studied computer science at the University of Sydney and since graduating in the mid 1990s, has worked at small tech startups and dabbled in photojournalism. His activist streak was likely passed down by his older brother, an environmentalist who worked on campaigns to protect Australia’s wildlife.
NEW: Airbnb has agreed to give NYC investigators data on over 17,000 specific listings, PLUS data on every listing rented through its platform between January 2018 and February 18 2019 that could have potentially violated New York’s short-term rental lawshttps://t.co/kBr1AvdbTe
— paris martineau (@parismartineau) May 24, 2019
After some globe-trotting, Cox settled down in Brooklyn in 2008. That same year, Brian Chesky, Joe Gebbia and Nathan Blecharczyk launched Airbnb, inviting strangers into their apartment in San Francisco for short-term stays to help pay rent. Before long, Airbnb had grown into the world’s biggest home-sharing platform, with more than 6 million listings in 191 countries. As it expanded, Airbnb has faced increasing pushback from many cities that say its model squelches the housing supply, raises rents and pushes long-term residents out.Cox first started noticing this phenomenon in his own neighbourhood in the summer of 2014. At the time he was working with a youth group, teaching kids about gentrification, segregation and housing pressures. Cox’s initial understanding of Airbnb was that it was a way for people to rent out spare bedrooms, bringing in a little money on the side. But in looking over the data, he was surprised to learn that, in fact, hosts were renting out entire homes.
What began as a simple class project turned into an obsession that spawned the website Inside Airbnb. Cox now spends about 10 hours a week parsing statistics from listings in more than 100 cities and fielding half a dozen queries from academics and journalists around the world. Using publicly available information, Inside Airbnb gives a view into how many listings there are in a certain zip code, how many are entire private homes versus a room in a home, the price and the number of reviews each has received. It’s valuable information for cities that are trying to crack down on entire networks of managed Airbnb units or serial renters whose practice eliminates apartments that would be otherwise available for people looking for a place to live. A New York law from 2010 made it illegal to rent an entire apartment in a multi-unit building for less than 30 days without a tenant present. San Francisco, Barcelona and Paris are among about 30 cities that have requested Cox’s data and have imposed regulation and restrictions on Airbnb. Listings in San Francisco dropped by about half in 2015 after the city required Airbnb to automatically register hosts on its site. New York could suffer a similar fate.
Airbnb’s rebuttal is that Cox’s data lacks context. For example, not all of the listings on Airbnb are “active,’’ meaning that just because an apartment is listed, and included in Cox’s data, doesn’t mean it’s available. His site doesn’t take into account the fact that multiple listings might be advertising the same property. Airbnb also takes issue with Cox’s calculation of prices and how much income a host earns per month.Academics maintain that Inside Airbnb is the best source of publicly available data about the company. “The reality of the kind of activity that is occurring on Airbnb’s platform is at odds with the kind of image they would like to project,” says David Wachsmuth, a professor at McGill University’s School of Urban Planning. Whether or not one agrees with the conclusions of Cox’s data, “there are no grounds for disputing the fact that he’s creating a fair and accurate representation.”
Cox receives payments from some cities, including $200 a month from San Francisco, as well as the hotel trade association, and researchers. Maintaining the website costs him about $10,000 a year and the payments usually cover the bills, he says. In the past year, he has been flown to Barcelona, Australia, and Paris to speak at various home-sharing events about his findings.
But nowhere does Cox pose more of a threat for Airbnb than in New York. The city has some 50,000 listings and is one of the world’s top tourist destinations, attracting 65 million visitors last year. It’s also one of the most expensive cities in the country and has draconian housing laws as well as a powerful hotel lobby. The city is at loggerheads with Airbnb over a law that prevents anyone from renting out an apartment for fewer than 30 days unless the permanent tenant is present. Every month, Cox sends statistics to New York City’s Office of Special Enforcement with detail about what kinds of homes are being rented out. His data is the backbone of the city’s recent subpoena of 17,000 Airbnb listings it presumes are illegal.
“Housing issues are at the core of a lot of problems in this city,” Cox says. “I care about social justice. I care about racial and economic equality; Airbnb is impacting those things.”
For example, Cox found that across 72 predominantly black New York City neighbourhoods, Airbnb hosts are five times more likely to be white. His data has also shown that the majority of Airbnb listings are entire apartments rented out year round, suppressing available housing in New York by about 10% and raising rents by hundreds of dollars a year.
Cox sees his biggest coup as exposing Airbnb in 2016 for quietly wiping 1,000 illegal commercial listings off its platform in New York, allowing it to paint a rosier picture of its operations and misleading the public and city officials.
Airbnb’s outreach in February could be linked to the upcoming public offering, said Andrew Rasiej, chairman of the non-profit organisation New York Tech Alliance. “It’s reasonable to assume there’s a correlation between Airbnb wanting to meet with a vocal critic in New York and to appear as legal as possible before an IPO in order to calm investor’s fears,” he said. But Cox wasn’t calm when he walked into the meeting room on a cold day in February. “My adrenaline was up. I didn’t know what they were going to talk about and there’s always a chance they could try and sue me,” he said.
Cox was welcomed by DeBold Fusco and Andrew Kalloch, an Airbnb policy manager, who dialed in via phone from Portland, where he’s based. The pleasantries were short-lived, however, and the tension quickly grew thick as they argued over a proposal to legalise and regulate home sharing in New York. Neither side was willing to give an inch. But a few weeks ago, Airbnb agreed to ban listings of subsidised or rent-controlled housing in New York in an effort to appease activists like Cox. The move “reflects the fact that we are listening,” said DeBold Fusco, the Airbnb spokeswoman. Cox isn’t convinced. He reached out to her last month via Twitter to see if she wanted to catch up over coffee and discuss the proposal again. This time she didn’t respond.
With just two tournaments left in the 2018/19 World Sevens Series competition (London and Paris), the South African team has only a mathematical chance of defending their world title. The chances are slim-to-none and would require a complete implosion of form by the USA, Fiji and New Zealand, the three teams ahead of them in the standings. As the teams prepare for the penultimate tournament at Twickenham in London, South Africa are in 4th place, 9 points adrift of New Zealand and 24 behind the unlikely log leaders USA. But there is still something to play for. The top four sides qualify automatically for next year’s Olympic Games in Tokyo and while England trail South Africa in 5th place by 14 points, the Blitzboks will want to guarantee that 4th spot. Even a 3rd place finish would be satisfying for a team that went through a fair amount of rebuilding, blooding of new players, losing key players to injury at crucial times as well as dramatic comebacks (the wonderful win in Singapore) and record-breaking achievements (the fortitude and longevity of Branco du Preez) this season. The Blitzboks last won in London in 2011 beating Fiji in the final. Recently Twickenham hasn’t been a happy place. Last year the Blitzboks were losing finalists, they finished 5th in 2017, and lost to Scotland in the final in 2016. The Blitzboks will be wearing pink strapping around their wrists in the opening match against Japan to show support for SA Sevens Academy player Ronald Brown, who started chemotherapy for Hodgkin’s Lymphoma last week. – David O’Sullivan
Neil Powell has seen the best of times and the worst of times at Twickenham. In 2016, the Springbok Sevens coach watched as his team lost the final of the HSBC London Sevens after the final hooter, but a year later, they were crowned HSBC World Rugby Sevens Series champions for the very first time under his reign at the very same venue, despite finishing 5th at Twickenham.
This time around, Powell will arrive at the iconic stadium with positive anticipation, as history will again be made and his skills as a coach tested.
Branco du Preez will make history when he becomes South Africa’s most capped Blitzbok ever, taking to the field in his 70th tournament, while the tests will come in the form of Japan, Canada and Argentina, their Pool A opponents on Saturday.
For Powell, Du Preez’s effort deserves a special mention, while he also pointed to the experienced Blitzbok’s positive attitude as one of his strengths.
“Branco is one of the best examples of what the team stand for and what values we treasure,” said Powell.
“He will always put the team first and every time he gets knocked down, he gets up stronger and more determined. He is not only a world-class player, but someone who will always try to create a positive environment within the team and our surroundings.”
9 years, 69 tournaments and 350 matches later Branco du Preez still remembers his first try in a Blitzbok jersey like it was yesterday. His debut was in Wellington in 2010. This weekend he will become the most capped Springbok 7s player ever @CastleFreeSA @FNBSA @ASICS_ZA pic.twitter.com/t7JjNFJbyX
— Springbok Sevens (@Blitzboks) May 22, 2019
Such is the focus on the team that neither Powell nor Du Preez will have records on their mind as they lace up for the match against Japan in their opening match.
“Japan will be a very dangerous opponent,” Powell warned.
“They are in a race for survival as they need to do well here in order to stay in the World Series. So they have much to play for and we need to be ready for that. They will no doubt try and break our rhythm in those opening minutes and we need to be sharp to prevent that.”
Powell is unsure what to expect from the Canadians: “They have a new coach and it will be interesting to see how that change their mind set and approach. They are also not playing with any real pressure on them and that will make them a dangerous opponent.”
Argentina have beaten the Blitzboks this season, so Powell knows his team will not need strong motivational words to get them up for this match.
“Argentina have the ability to beat anyone and will play with very little pressure as they are not in contention to make the top four,” said Powell.
“Fact is, we will not look past that first match against Japan, as we want to start strong and lay a strong foundation.”
The Blitzboks come into the tournament with some momentum, having won the previous event in Singapore, but for Powell, the need to start fresh is important.
“We must start over, from scratch and make sure our processes are in place and that we stick to that. I am excited about the ability of the squad and is keen to see them play,” said Powell.
Springbok Sevens playmaker Stedman Gans agrees with his coach about their approach.
“Singapore is in the past,” said Gans.
“In fact, we had a nice break after that and could recharge the bodies and minds, so we will take on this tournament with clear heads.”
Gans said the team want to finish strong: “We really freshened up in the time off and all of us are raring to go. Twickenham is a wonderful stadium to play in and we want to make the most of this occasion.”The Springbok Sevens squad: Ryan Oosthuizen (15 tournaments, 72 matches, 80 points, 16 tries) Sako Makata (4 tournaments, 16 matches, 5 points, one try) Impi Visser (8 tournaments, 45 matches, 50 points, 10 tries) Kurt-Lee Arendse (3 tournaments, 12 matches, 25 points, 5 tries) Werner Kok (45 tournaments, 229 matches, 510 points, 102 tries) JC Pretorius (3 tournaments, 16 matches, 40 points, 8 tries) Branco du Preez (69 tournaments, 350 matches, 1253 points, 91 tries, 396 conversions, 1 penalty, 1 drop goal) Selvyn Davids (13 tournaments, 64 matches, 272 points, 29 tries, 62 conversions, 1 penalty) Justin Geduld (44 tournaments, 228 matches, 929 points, 99 tries, 214 conversions, 1 penalty) Stedman Gans (17 tournaments, 80 matches, 120 points, 24 tries) Siviwe Soyizwapi (captain; 26 tournaments, 134 matches, 415 points, 83 tries) Muller du Plessis (8 tournaments, 33 matches, 105 points, 21 tries) Philip Snyman (60 tournaments, 272 matches, 366 points, 67 tries, 14 conversions, 1 penalty) – travelling reserve Facts The Blitzboks won the HSBC London Sevens in 2005 and 2011. Branco du Preez will become the most capped Springbok Sevens player of all time, playing in his 70thtournament. Kyle Brown (69), Frankie Horne and Chris Dry (68) are next on the list. Du Preez is also set to extend his Blitzboks record for career conversions (396), the most by any South African player. The Blitzbok schedule on Saturday (SA times):
David Pilling writes in the Financial Times that while corruption and the state-owned enterprises are important, Cyril Ramaphosa needs to find a way in the next five years to make South Africa a fairer place.This article is exclusive to Biznews Premium. Members please login here. Not yet subscribed? Taste before you eat by signing up here for free 30 day trial (card details required).
China has slowly but surely eroded manufacturing industries, including in South Africa which once had a large clothing sector in Cape Town. Efficient production is not the only way China has managed to achieve global domination; its government has heavily subsidised this commercial activity to ensure that Chinese companies can undercut global competitors. Although trade unions and industry players have complained about this trend, which has wiped out jobs in many countries, political leaders have continued to cosy up to China on the grounds that it is a major force in global trade. Suddenly, there’s a major shift underway as President Donald Trump says “no more” to the world’s second-wealthiest country. South African Chartered Accountant Sinesipho Maninjwa cuts through the political smoke-and-mirrors to set out what’s happening and how companies that could be in your portfolio, like Apple, might be affected by the Huawei fiasco. – Jackie Cameron
By Sinesipho Maninjwa*Huawei – A victim of the China/USA Trade war Background
We live in a global village, in large part thanks to the rise of the internet. People have access to goods and services through a global network of companies. As with all good villages, there exists a council of elders to referee and provide guidelines for fair trade. The World Trade Organisation (WTO) is likened to a council of elders; providing global rules for international trade, and acting as referee and mediator to resolve trade quarrels between governments. Of course, there are other trade organisations usually amongst countries in the same region who have their own trade agreements e.g. North American Free Trade Agreement (NAFTA) between Canada, Mexico and the US or the Southern African Development Community Free Trade Agreement (SADC -FTA). Globally, China ranks as the world’s leading exporter and the second biggest importer, which puts them in a powerful position when it comes to trade negotiations. The US too has strong trading muscle as it ranks as the largest importer and second largest exporter.China – US trade
In 2018, the US exported $180bn worth of goods and services to China and imported $559bn in return. The United States ran a trade deficit of $379bn against China alone, which accounted for a massive 42.5% of America’s total trade deficit of $891bn last year. China’s increasing trade domination has long been the subject of Donald Trump’s public statements even before he was elected US president in 2016. It was of little surprise that when he got elected, soon afterwards in 2017 the US launched an investigation into Chinese trade policies.
Consequently, the US alleged that some Chinese companies pose a threat to national security. In April 2018, the US executed a trade ban of Chinese telco ZTE which buys parts from US companies. The US alleged ZTE violated sanctions on Iran and North Korea. However, the US Commerce department lifted the ban three months later which resurrected the company from certain death. President Trump later made statements on the deal to lift the ZTE ban as, “also reflective of the larger trade we are negotiating with China and my personal relationship with President Xi.”
In early May, a Chinese delegation visited the US to resume trade negotiations amid threats of tariff increases on Chinese goods by Trump. Unfortunately, no deal was concluded and in disagreement both countries enacted tariffs among goods traded between them.Why the utilisation of a tariff ?
In theory, tariffs imposed on Chinese goods make US-made products cheaper than imported ones which encourages US consumers to buy American. However, tariffs are seen more as a negotiation tactic in trade talks. Trump’s use of tariffs pre-trade negotiations proved futile and caused some reservations on the financial performance of US stocks impacted by the increase in input costs and loss of revenue. To soften the blow of the trade war on US farmers, a key electoral constituency, Trump signed a bailout package to tide them over.Huawei trade ban in the US
Huawei Technologies Co. Ltd. is a Chinese telecommunications equipment and consumer electronics manufacturer. The company was founded in 1987 by Ren Zhengfei, a former People’s Liberation Army officer. Initially focused on manufacturing phone switches, Huawei has since expanded its business to include building telecommunications networks and equipment, providing operational and consulting services to enterprises, and manufacturing communications devices for the consumer markets inside and outside of China. It now ranks a close second to the world’s largest smartphone brand Samsung. Huawei’s revenue totalled more than $90bn (€79bn) in 2018 and expected to grow in the double digits in 2019Why target Huawei?
The main issue is the US accusing Huawei of using their smart devices and telecoms network equipment to spy on the US. That the founder of Huawei is a former army general and as such has close ties to the Chinese government is an aggravating factor in the US’ accusations. Last year the daughter of Huawei’s founder and also its financial director, Meng Wanzhou, was arrested by Canadian authorities after the US government alleged that she was assisting Huawei dodge US sanctions on Iran. This rang similar in reason to what substantiated the ZTE ban in 2018. Congruently, weeks after failed trade talks with China the Commerce Department enacted a trade ban against Huawei. Trump signed an executive order giving the Commerce Department authority to blacklist foreign companies believed to threaten US national security. US companies will have to apply for a license with the Commerce Department to trade with companies on the list. Canada has indicated its relationship with the firm is under review as a key US ally. It is worth noting that this is the first time in modern history that a sovereign country has waged such an intense battle against a particular entity.The impact of the Huawei trade ban
US companies must halt their business with Huawei. The list of partner entities affected include Qualcomm, Intel and Broadcom who sell Huawei microchips and other specialised parts that go into its smartphones and telecoms equipment. Google too, whose Android software powers Huawei phones. Huawei spent $70bn on components and other supplies last year wherein $11bn went to US companies.
Read also: Battle lines on China tech are hardening
Google has issued a statement that it will not provide its propriety products/services on its Android operating system. Therefore, Huawei will no longer be receiving later versions of Android nor have access to the eco-system. Huawei will be only be able to utilise the open source version of Android however it will maintain current system and security updates on issued phones. Huawei has been developing its own proprietary operating system over the past few years in anticipation for this latest turn of events. Regarding the chips and specialised parts, the company announced their stockpiling since early this year and thus will have enough supply to fulfil sales orders for the year or alternatively until the trade war ends. There are also alternate suppliers in Europe, South Korea, Japan and among its own group subsidiaries who have the ability, however weaker in comparison to the US counterparts.Caught in the Fray Apple Technologies
Almost all Apple’s components are manufactured in China therefore their exposure is quite significant in these trade tensions. With the implementation of these tariffs, the third largest brand would see its costs increase. The company would then have to decide between absorbing the cost hike fully, partially or passing it onto consumers.Other Emerging Market counterparts
The US executive order can enlist any foreign company as a national threat. Thus, it would seem all companies from emerging markets are under threat, if President Trump deems them a threat. For example, the US has changed its stance on Turkey, and sought to increase tariffs against India recently. South Africa is already under pressure from a growth perspective, and the imposition of tariffs between either of our biggest trading partners would be quite damaging. The US has pressured its allies to follow suit on their trade position with China and against Huawei. In a Business Insider report, a spokesperson for the DTI allayed any concern the SA government would be taking punitive measures against China or Huawei.Will South African telcos follow suit?
Of the South African telecommunications entities, Vodacom is most likely to halt business with Huawei as a result of its parental entity in the United Kingdom, Vodafone. Again the US has pressured it allies to follow suit with the ban against Huawei to which Australia has conjoined already. From the UK side it’s unlikely as Huawei was appointed by the UK government for the roll out of its 5G Network, after having sought assurances regarding security risks. Huawei’s competitiveness in supplying 5G Network technology is believed to also have fuelled it being a target by US authorities to protect its US competitors. Federal Communications Commission (FCC) is set to approve the merger of T-Mobile and Sprint, who too promise 5G Network roll out capability. Curiously though, the US Justice department may block their merger over antitrust concerns that this may not be a positive development for consumers.Conclusion
Right now, there are no winners in this trade war, it’s a matter of who blinks first but with stalled negotiations it seems we’re a long way from anyone seeing eye to eye. For now, Samsung is set to keep their title as leader in the global village of smartphone brands.Sinesipho Maninjwa CA(SA)
Getting people to agree on Brexit, the most divisive issue in British politics in a generation was always going to be a hard task. It split the United Kingdom in two camps, for once not based on class, but whether they wanted to take instructions from the European Union. When David Cameron withdrew from the Prime Minister’s office after his failure to persuade the country to stay in the EU, the task fell on Theresa May. It was never going to be an easy one. On the other side of the negotiating table sat the EU, which struck a hard line right from the start wanting to make an example of the Brits to scare other European countries away from the idea that they would be better off outside the EU. But that is not what felled Theresa May. May failed miserably as she tried to please the Brexiteers in her party, even though she voted to remain in the EU and when they all deserted her and pro-Remainers also refused to support her, she had nobody else to back her up. Repeated attempts to get the deal that she eventually struck with the EU through the House of Commons failed. She failed to deliver Brexit, and in the end, she found herself without any support in her own party and her efforts to strike a deal with the opposition Labour Party also came to nought. Overwhelmed by the task that she was given, Theresa May had no other option but to resign. Two British Prime Ministers have in recent years been downed over Brexit, who will be next? – Linda van TilburgTearful Theresa May says she will quit as Tory Leader on June 7
By Tim Ross
(Bloomberg) – An emotional Theresa May announced she will quit as Britain’s prime minister after admitting she had failed to deliver the one task that defined her time in office – taking the country out of the European Union.
“I have done my best,” May said in a statement to cameras in the sunshine outside her Downing Street offices. “It is, and will always remain, a matter of deep regret to me that I have not been able to deliver Brexit.”
May said Britain now needs a new prime minister to take over and try to complete the task that has defeated her. She will stand down as Conservative Party leader on June 7, with a leadership contest formally beginning the following week.
There will be a crowded field for that election and the race for No.10 will be hard to predict. Party bosses hope to have a new leader in place by the end of July. The result will shape the direction of Brexit and all options – from leaving with no deal to canceling the divorce – are now back on the table.
May’s decision heralds the end of a turbulent, three-year premiership that’s been marked by increasingly bitter divisions within her party and across Britain over how to leave the European Union.
Theresa May is right to resign. She's now accepted what the country's known for months: she can't govern, and nor can her divided and disintegrating party.
Whoever becomes the new Tory leader must let the people decide our country’s future, through an immediate General Election.
— Jeremy Corbyn (@jeremycorbyn) May 24, 2019
The UK was due to withdraw from the EU on March 29. But May’s inability to get the divorce deal she negotiated in Brussels approved in Britain’s deadlocked Parliament has forced her to delay exit day until October.
“I have done everything I can to convince MPs to back that deal. Sadly, I have not been able to do so,” she said.
May delivered her speech in somber tones. As she reached the end, the emotion of the occasion clearly overwhelmed her.
“I will shortly leave the job that it has been the honour of my life to hold – the second female Prime Minister but certainly not the last,” she said, her voice cracking. “I do so with no ill-will, but with enormous and enduring gratitude to have had the opportunity to serve the country I love.”
A very dignified statement from @theresa_may. Thank you for your stoical service to our country and the Conservative Party. It is now time to follow her urgings: to come together and deliver Brexit.
— Boris Johnson (@BorisJohnson) May 24, 2019
May, an intensely private politician whose mechanical answers earned her the nickname “Maybot,” finally broke down as she turned from the cameras to walk back in through the door to No.10.
Attention now switches to the leadership contest ahead. The front-runner is pro-Brexit campaigner Boris Johnson, who favours a quick, sharp break from the EU. Britain has until October 31 to agree a deal with the 27 other member states. Otherwise the risk is the country will tumble out of the EU with no agreement in place to cushion the economic blow.
By Roxanne Henderson and Loni Prinsloo
(Bloomberg) – Old Mutual Ltd. suspended Chief Executive Officer Peter Moyo over a conflict of interest involving his investment firm NMT Capital.
The insurer’s board, chaired by former Finance Minister Trevor Manuel, disclosed his leave hours before the 174-year-old company’s annual meeting with shareholders in Johannesburg. Chief Operating Officer Iain Williamson will serve as acting CEO.
Oh boy! The JSE – never without a crisis to keep us gossiping. This week alone, Sasol, Massmart and today, Old Mutual -CEO Peter Moyo skopped out with immediate effect. Well, suspended! Same thing.
— David Shapiro (@davidshapiro61) May 24, 2019
The company said in a statement the dispute led to a “material breakdown in trust and confidence” but that it was “neither the result of performance or financial misconduct.” Moyo told Reuters there was “absolutely no wrongdoing on my part.”
“The question is, what does this mean for Moyo’s future and if he were to leave would that mean a change in strategy,” said Bradley Preston, chief investment officer at Mergence Investment Managers, which owns Old Mutual shares.Shares slide
Old Mutual fell as much as 6% at the start of trade, paring that loss to 2.4% to 21.17 rand by 1:20pm in Johannesburg. The company’s annual general meeting was scheduled to start at 2pm.
The 56-year-old Moyo has worked in the top tier of South Africa Plc for more than a decade and has led the insurer for a year following the breakup of the group and the sell down of a stake in Nedbank Group Ltd., where he serves as a director.
This isn’t the first time he’s figured in boardroom dramas. In 2016, while chairman at Vodacom Group Ltd., Moyo tried to buy a large stake in the mobile phone company through NMT, his investment vehicle, from Africa’s largest fund manager, Bloomberg previously reported. This deal was later scuppered.
A breakdown in trust is serious and irreversible in any organization.This suggests that Peter Moyo did not disclose his personal interests or he disputed their alleged conflict with Old Mutual. Either way his exit is a forgone conclusion.
— Maseru Makoae (@Maseru_m) May 24, 2019
He resigned as CEO of insurer Alexander Forbes Group Holdings Ltd. in 2007 after a disagreement with the board, and had been a board member of Transnet SOC Ltd., the state rail and ports company that’s at the centre of corruption claims.
Moyo, who trained as a chartered accountant at KPMG in Zimbabwe and then worked at Ernst & Young, joined Old Mutual in 1997 before moving to Alexander Forbes in 2005.
When Moyo was appointed CEO in 2017, Old Mutual set up a protocol regarding an earlier R291m ($20m) investment made by the company in Moyo’s NMT Capital.
“Unfortunately the board and Mr Moyo have disagreed materially on how the conflict of interest has been managed, resulting in a breakdown in the required mutual trust and confidence,” according to the company statement.
By Felix Njini
While Sibanye’s offer equates to R11.60 a share, Lonmin’s value at current metal prices is 45% higher, Leroy Mnguni, an analyst at SBG Securities, a unit of Standard Bank Group Ltd., said in a note to clients. If assets such as the platinum producer’s suspended K4 project, spare processing capacity and a concentrator are factored in, Lonmin is worth about R35 a share, he said.
“Given the compelling indications that the pending Sibanye offer grossly undervalues Lonmin, we see increased risk that more than 25% of the shareholders will vote against the offer,” Mnguni said.
While Lonmin Chief Executive Officer Ben Magara is still recommending the deal, saying his company would otherwise lack capital to invest, Mnguni said the miner could sell some assets to extend the life of its shafts. Many of those have lower costs than operations at rival producers, he said.
Sibanye needs the backing of 75% of Lonmin shareholders at a meeting in London on Tuesday. The takeover was originally touted as a lifeline as Lonmin haemorrhaged cash, but some investors are concerned by the drop in Sibanye’s stock since the all-share deal was announced in December 2017.
While Sibanye last month increased the share ratio it’s offering to Lonmin investors after metal prices rose, the value of the deal remains lower than when it was first announced. Getting the support of South Africa’s state-owned Public Investment Corp., which has 30% stake, could prove key.
Still, SBG Securities’ Mnguni said a shareholder overlap between the two companies, with 15 of the top 20 Lonmin investors also holding Sibanye stock, raises the chance of deal receiving backing.
“It could potentially be an indication that these shareholders are willing to receive Sibanye-Stillwater shares,” he said. “These investors are also positioned to benefit from the synergies that Sibanye would realise if their attempted acquisition of Lonmin is successful.”