The government’s attempt to renege on a settlement agreement with smaller shareholders represents bad faith that is not expected by investors under a ‘new dawn’President Cyril Ramaphosa is leading an investment drive to raise $100bn over five years for the SA economy. How do prospective financiers perceive SA political risk?
The full extent of the damage to the country has not yet been revealed. As Chris Bateman wrote in BizNews in March, “It’s far easier to estimate how much state capture cost SA in rands and cents ... putting a price on destroyed trust, lost reputation and missed opportunities is inestimable.” Global factors outside our control such as trade wars between major powers and conflict and negative sentiment around emerging markets, compound our problems. Nevertheless, our woes are mostly self-inflicted. Ramaphosa has promised a “new dawn” that will clean up government, restore accountability, implement sound economic policies and put in place sound governance that serves the interests of the people.
The share acquisitions took place after an undertaking by the government to complete the full privatisation of Acsa through an initial public offer. This implied that Acsa would be run commercially under an effective tariff regulatory regime. The minorities’ shares were acquired with funding from financial institutions , including retirement funds managed by these institutions.
A settlement agreement was reached between the parties on the “steps of the court”. This provided just redress to the minorities for the oppressive conduct and the agreement was made an order of the court on August 1 2017. Acsa was required to buy back the minorities’ shares at fair value, to be determined by an independent referee appointed with the consent of all parties.
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