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Type Business Hearings
Starting Date 12 November 1997
Names JOHAN RUPERT
CHAIRPERSON: Mr Johan Rupert, good morning and welcome are you the sole representative for the Rembrandt Group today? Mr Rupert, you've come to a speak to a very personal submission by your father on the company that he has a very large interest in and the history of that company. Thank you for coming all the way from Cape Town, can you please stand to take the oath. Dr Boraine.
CHAIRPERSON: I'm sure you've heard me through the morning, talking about discipline and time, in the business world that's what you live with. I'm going to give you twenty minutes to talk to the submission and another twenty minutes for questions.
Chairperson, ladies and gentlemen, thank you for the invitation that you've given us to make a submission. In the past, the previous government did not take much notice of our views or criticisms. Up to listening to some of the submissions yesterday and this morning, especially yesterday, we're going to make a slightly different presentation. However I felt, that there was clearly such, still such a sad lack of communication that perhaps we needed to speak from the heart a little bit and so I wrote this last night and therefore this is a summary and speaking to the submission.
I think we must start with the role of private sector in society. Now that will always be a heated debate and I do not think twenty minutes or twenty hours or twenty days will suffice. But this role of the private sector, is even more pertinent if business is perceived to be operating in an unjust society as we've clearly been doing during the period under review, and before. Now a public company like ours has a great number of stakeholders. We have shareholders, we have employees, colleagues. We have suppliers, clients and the communities or the society that we operate in. Finally you've got a most unwanted partner, the tax man, which represents the government, that takes forty percent of whatever your economic activity can positively contribute but does not share in the downside. Now, assuming that we operated in normal society, how would we have been judged by our stakeholders? Our suppliers and clients have always been treated fairly and I've every reason to believe that we've lived up to their expectations. We believe that we've treated our employees loyally and fairly, we certainly did not do enough affirmative action. It is difficult if you are in a company where the staff turnover is far less than two percent and especially if you're under attack and your numbers are constantly diminishing. What do you do? Do you appoint somebody above somebody that's had twenty years service or not? I fully admit that we've not done enough.
We believe that we've spent enough time and money on training. The fact that we could, during a problematic period in one of our Berlin factories, take thirty South Africans, that roughly represented by coincidence the racial balance of our country and that we could increase the productivity in the German plant in six weeks by over ten percent, I think speaks highly of the level of training and the commitment that we've had to that. Our current minimum salary package, in the Rembrandt Group is over R3 600 a month, and that is for a cleaner in the factory.
Our shareholders have also done well but I don't think you're interested in that. Over the years they've enjoyed superior returns on their investments. Now we've tried to be good corporate citizens wherever we work in the world. We've tried to put something back into society in South Africa. We've felt that we should be judged finally by what you put back into society and not what you take out.
We've initiated and funded projects throughout the country. The taxman, has also benefited greatly. Over the last seven years, we've contributed well over ten billion rand to the fiscus. Furthermore, the original one point five million that my predecessors invested abroad in 1955, yielded a nett inflow of billions of rands back into this country. We are a South African company. The shares are held in South Africa. We are not some multi-national, yes, we have subsidiaries and we have companies abroad, but the shares are held by South Africans, by pension funds, by life offices. This was not achieved by any exports of South African raw materials or finished goods. In other words, we did not build this company abroad, off the "blacks sweat of black workers", unionized workers and hostels. This money went abroad, people went abroad and worked very hard. The value of this investment, held by South African residents is today in excess of twenty five billion rand. By the way, for many years this exceeded the countries' gold and foreign exchange reserves.
Now, I'm immensely proud of those achievements. It shows what could be achieved by a few people, from the southern tip of Africa who believed in miracles and set out to make them happen. However, for over forty years in South Africa, we've operated in an unjust society. I think the first question we must ask, is, did the private sector benefit from this unjust and inhumane system of social engineering? And I think that's a (unclear) point. I'm not going to debate it, I think that's a debate that can be held over weeks. Certainly, if that had to be the case, it is very interesting that we had the total unique situation where, business in South Africa was to the left of government. Now, maybe not far enough to the left, certainly retrospectively it wasn't too far. But I cannot recall of a single government abroad, in every bit of economic and political history that I've read, that had to contend with businessmen that actually criticized them from the left.
Now, within the private sector, whites were absolutely advantaged at the cost of blacks. I must say I first came across this when I came to live in Johannesburg in the early eighties and I found; and I started right here in the Carlton centre a small little joint venture with a black friend, which was a black hairdressing salon that later grew into a hair care business. Firstly the Group Areas Act prohibited us, but in the end because of the partnership had a problem, they couldn't take us to court. The interesting phenomena that happened was the number of black friends that came with superb business ideas that had no access to capital. Now you must remember coming from the Cape, and then living in New York, I didn't appreciate the problems one had. One had a feeling and one knew, the day to day problems, one did not appreciate. People had great ideas, they had the talent, the skills, they wanted to work. But they were denied access to capital.
They weren't allowed the most basic, which is private land ownership, home ownership. How do you build capital, sir, without having a immovable asset in an area where people will lend against and what caused me and later on the group to start the SBDC. I don't agree with everything that Professor Terblanche says, but the fact that whites have been advantaged, within in the private sector, sector at the, is undeniable. And in specific cases certain companies and individuals certainly did benefit. Now I think the question that I'd like to address is, did our company benefit from apartheid?
I'll try to give you a brief overview of Rembrandt's role during these troubled times. Rembrandt was founded by Afrikaners and with Afrikaner support. Quite frankly, nobody else would invest. So, it basically was the wine farmers in the western cape that had the only assets. Now over the life of the company we've had only two Chief Executive Officers, and its well known, and I will address some of the statements made in the recent past that both my father and I have been and were outspoken opponents of apartheid. We viewed the system as an immoral oppressive attempt at social engineering. Now with the advent of apartheid, I wasn't born yet, but, especially the Afrikaner had a couple of simple choices. One either agreed, or you immigrated or you tried to oppose the system from the inside. Now my forefather arrived here in 1662. And my family and I have always considered ourselves South Africans and proudly so. So, we chose the latter option to stay and to oppose the system from the inside, using what NP Van Wyk Louw described as 'lojale verset'. Now it's, I do not know Wynand how you translate that. Loyal resistance I would say. All my adult life I pleaded for full majority rule, not a limited franchise and I'm on record as doing so. Now what happened to Afrikaners who disagreed with the systems, system? What did we have to face?
Now I'm afraid not unlike certain signs today, after being voted in power, for quite a long time, the Nationalist Party viewed themselves as the permanent government and then the critical distinction between government and state disappeared. Therefore any attacks on the Nationalist Party's racial policies, became viewed as attacks on the state. Helped by some newspapers, the SABC and other influential opinion forming bodies, any opponents of racial discrimination were therefore quickly vilified as unpatriotic liberals and of all things Mr Kronen will laugh, communists. I've been called a communist more often probably than you. For those in the room who do not believe the ferocity the attacks on our family, I have files and files full of newspaper clippings that I'd be glad to show you if you contact me in Stellenbosch. On the outside, on the other hand, we were attacked racist fascists. Now during these attacks, despite these attacks, we remained what is now called, a profile of patriotic bourgeoisie, practicing 'lojale verset'. We tried to build progress through partnership.
Now the most remarkable thing is, that the same people, the same executives, working for Rembrandt, doing the very same things, generated a return on investment outside South Africa of some fifty percent higher than inside our own country. And furthermore, to the best of my knowledge, we've only once dealt with the South African government or state and I did it against my father's wishes. That was with the establishment of the cellular telephony in South Africa a couple of years ago. I believed that it was a fully transparent process and Mrs Marcell Golding and Johnny Copeland can attest to, that led to Rembrandt helping their unions pension funds to make hundreds of millions of rands through an (unclear) deal.
Now we did not export raw materials or finished products out of South Africa, we've not been accused of benefiting or of doing any specific deal with the state or government. And at three thousand six hundred rand a month that we pay our floor sweepers in our Rembrandt factories, that's more than maths teachers in high schools.
To summarize, we believe that we've had no sweetheart deals, no sweat shop labour in the Rembrandt group, no regular (unclear) protection and yet substantially higher returns on investments outside the country than inside. In the same investments fields by the same management. Admitting that we had not done enough, I fully admit that I still fail to understand those who say we benefited from apartheid. The sad contrary is true. Had the founders of the company emigrated, they would have had far superior returns on their investment. South Africa however, would have lost jobs, taxes and foreign exchange.
The two point eight billion that South Africa earns, out of Ridgemond wouldn't have materialized. However, these broad types of statements are still being made without getting specific. We heard it yesterday. I'm sorry to get personal but another example of false accusations is the statements made by various people that Doctor Rupert said, quote
I think you'll agree that there's a vast difference in using that to try and prove your statements. Now, McCarthyism has entered the English language as a captual word, used to denigrate those who allegedly make fraudulent accusations against others. It's ironical that this term can now be used to aptly describe statements made recently.
In a country with massive unemployment problems, with large deficits before borrowings and nagging foreign exchange reserves, I would like to say, that we've done our best for the country, economically. And finally, it was right here in Johannesburg that a very prominent member of the previous government said the following to me in front of one of South Africa's most imminent and powerful businessmen,
Now despite all of the above, did we do enough to fight apartheid? Did we do enough as the BMF have correctly said to advance black management? No. At the time we certainly thought we did. In retrospect, one could never have done enough. I was fortunate enough to have met the late Steve Biko in the early 1970's when he was the head of SASU. As an Afrikaner, the immorality, of his and other murders, will forever live with me as a permanent reminder, of the cruelty of man to man, has perpetrated during the evil years of apartheid. And I hope and pray that our fellow citizens will forgive us. Thank you.
DR BORAINE: I thank you very much Mr Rupert. Your father is probably one of the most quoted persons in South Africa, because he is so quotable. I have so many in front of me here and I met him recently, for the first time, and he told me that he had written a submission and asked me ten spite its length, to make sure that I read every word. I have done so. But coming here today, there just a couple of quotes that I want to mention because I think they impact very much on where we were and where we need to be. He said this for example, and you of course are familiar with all of these,
"We are all Africans whatever shade of color or belief or conviction and our future depends on mutual loyalty and respect."
Now if that was said in the last few years, one would understand that that was generally being said more and more. He said that in 1978. He also said about the people in Lesotho, if they don't eat, we won't sleep. In other words his concerns for peoples social and economic welfare are well known. But what I must just admit took me by surprise, was a letter which your father wrote to a Mr Pierrie (?) Botha. I hope that one day it will become read by everybody in this country, because you see, there is a suspicion, understandably, I think that you'll agree, that 'big business' to coin a phrase, is extraordinary adept at public relations. It's part of its job. But when you quote from a private letter, which is not private, because it's been given to us, where he says this to Mr PW Botha, and he develops the point,
"I believe that the belief that apartheid guarantees the interest of the white man's survival is a myth. As a matter of fact, it threatens his very survival. But this even more, for all these reasons I'm appealing to you personally, reaffirm your rejection of apartheid. It is crucifying us, it is destroying our language, it is degrading a once heroic nation to be the lepers of the world. Remove the burden of the course, a curse of a transgression against mankind from the backs or our children and their children."
That is a remarkable statement addressed to Mr PW Botha, the tragedy is, that like so many other appeals it wasn't heard as effectively as it should have been. I'm very glad that you have offered this correction to the quote because it is not only in various public meetings, but in a book called 'The struggle for South Africa' by Davies, Amara and Dhlamini, not this Dhlamini. They actually misquote that and obviously this has risen to a lot of debate. What they also go on to say, and this you may care to respond to or you may not, and this I suppose is the whole question of loyal resistance, they claim that during the 1950's, Rembrandt retained and I'm quoting,
"It's very close links with Afrikaner nationalism through heavy financial contributions, to the Nationalist Party".
Now, I think that's the dilemma which all of us have when we're looking at the period between 1960 to 1994 about resolutions and statements and actions. And I wonder if you'd care to develop a little more in light of this statement and quotation, Rembrandt's, your father's, your own view towards apartheid, the National Party and the role of business.
MR RUPERT: Thank you, Dr Boraine. When I joined the company, I started by going through all the records, right into the starting years to get a better understanding. I certainly didn't find any contributions to the Nationalist Party. There might have been some, but I can guarantee you, they had no money to give. The company was not in the position to give money to anybody. And why they would have wanted to, sorry, give money, I'm not sure, because I think the first break that my father had, was at the 'Tweede Volks Kongres' where, I think there's speech of Dutch, but I think it happened during the Tomlinson era; and I certainly remember growing up as a five, six year old, knowing that we were not 'with' the Nationalist Party in that sense. And I think my fathers well publicized, how can I describe it, mutual animosity to the late Dr Verwoerd, would have predicated against any support. There was a basic difference of philosophy. Where I regained the respect of, or how should I say, They regained my respect was when, and I'm sorry that in many of our beliefs, he was not treated properly when FW De Klerk did the bold move to unban the ANC and to hand over power and to free the country, knowing full well that he was going to be vilified by some people. It takes a brave person to knowingly give away power and know that you will be vilified by your own people. But in the interim period, I can assure you, we did not have close relationships with them and I think the public record speaks for itself, if you look at their mouthpieces, in the, both the SA Radio Corporation originally and later on some of the newspapers that were closely aligned to them; it will, I think the record will bear me out.
DR BORAINE: Thank you, I have only one last question and that is, we've put a question to everybody who's appeared before this panel both during these hearings and many others and that is the whole relationship of total strategy, which as we all know through joint management centers, went far further than into merely political and security army and police, but involved business as well to quite a large degree and other organizations as well. Hardly any area was untouched. What was your own view and relationship, if any, and that of your father and that of the company. Was their general support for the total strategy of the government or was there misgivings or opposition, how did you view that?
MR RUPERT: I was in the navy and did an officers course after that, maybe in sixty eight and it soon became apparent to me that my views were not exactly theirs when I wasn't invited back to any further officers courses in the early seventies. Now, quite frankly that suited me fine because it happened to be in the June holidays, but, the tragedy of the whole total onslaught, was that was based upon the denial of facts. And we had so many discussions and what we thought persuasive arguments against it. We certainly did not participate in it and a lot of the things, and I must say this on behalf of many other South Africans, very many South Africans, even Nationalist Party supporters. The evidence and the facts that have come out in the TRC have shocked and astonished people. And it was not that people didn't want to know people genuinely didn't know a lot of things. But, I think, it's led to an even bigger moral dilemma. But we certainly did not participate, I believe that it was in the end, not only an immoral situation that was being backed up, but it was a totally foolish, wasteful application of scarce resources. I mean in 1970 / 71, and I'm indebted to the late Ronnie Bethlehem, I read it recently, the squandering of our reserves, we had thirty four million ounces of gold, in reserves at twenty-five dollars an ounce, in the early seventies. We squandered the capital of the country. We indebted our children and if we take the decade of the eighties, over three and a half million potential job applicants. I think a hundred and eighty six thousand jobs were created in the formal sector, of which by the way, more than a hundred percent were a mistake, and there was a nett loss in the private sector. So, I'm glad that, and I'm not sure that, or everybody in the room will disagree that, that I'm glad that we got rid of two immoral attempts at social engineering in the last ten, fifteen years. The one was communism and the other one was apartheid.
MR DHLAMINI: Thank you. Mine is, goes back to what the archbishop said yesterday when he opened the session. Amongst other things, he made an appeal for for contribution towards the President's Fund from which reparations are going to be implemented. I noticed amongst the people who, who testified yesterday, nobody ever responded to that. I wasn't sure whether perhaps people thought if I said that I've got something to contribute, I'll be admitting guilt and in this case, I would like to say definitely no. The main aim is to show solidarity and support with the people who suffered. It's not going to be enough, it's not going to bring back their beloved ones, it's not going to be even enough to rebuild a house that was destroyed. But I think it goes a long way towards reconciliation, to say look,
I decided to test this one with you, as to what would be the attitude of the business community, towards contribution to the Reparations Fund? I know that you cannot speak on behalf of everybody, but at the same time I think you can help us with some of the things that perhaps we need to know."
MR RUPERT: When my father started the company, it couldn't afford to pay him, so he had a two and a half- percent management fee. When it stated making money, and that was before I had any say in it, he waived that, but with the provisor that those funds could be used for the benefit of society. We've always supported the causes that have been brought to us and certainly, we'll look at this.
Mr Rupert, I will speak in your first language, I trust this is your first language since we are now speaking of the past. You can't speak on behalf of your father, but it is certainly interesting, it was interesting that he said, at the second economic peoples congress or Volks Kongress, to which you have referred, I would like to know, should this not have reference to the ideas of apartheid, that then developed? I can understand that he may well not have supported the national party as such but I want to refer to the ideas that were developing during those years, and this is what he said,
"and ourselves, it is necessary, that we should take the responsibility of our rule, or mastership and the followership of theirs, but this must be a position of being a master, based on achievement, (unclear) with regard to the problem of existence. We simply as a people, as a Volk, have to survive. We have been blessed with the means to do so, we must use these means and we must help one another".
MR RUPERT: I'll help by not having a translation. It clearly does not. But, and I wasn't around then, but obviously one questioned your parents in great detail and I asked them, how is it possible that the Afrikaners could possibly start a thing like this and their answer was, initially, based on fear, they felt that separate, but equal could work. Now, it soon became apparent that it was not going to be equal, if one minority group had all the assets. Therefore it was going to be separate, but unequal. And then it became not only immoral, but practically not implementable. Now I'm not sure at what stage, this became clear, but initially, I don't believe everybody that started. I think people actually believed that they could have this fallacy of separate but equal. And I'm sure if they'd asked for the Volkstaat then, they would have been given it. The problem is they put the rest of the people in the Volkstaat.
MR ALLY: Mr Rupert, let me just (unclear) my question by saying that I was present at a speech that your father made when I was at University of Pretoria. I think it was taken up in that booklet, I can't remember the title, and that had an influence on my thinking. I think the only, or the first time I had any encounter with you really, was after I left the National Party, which speaks with
DR BORAINE: Which speaks somewhat as corroboration to your position. But my question goes further than that and this relates to this question of benefiting, of patronage, of favoritism, which you've been denying. But at the same time, my impression of you and also through your submission and your fathers' is probably best described with loyal resistance, knowing where your roots are, still identifying with a kind of broader, call it an Afrikaner nation, something which cannot really be described, but you still have a feel for that and the loyalty still to that.
Now my question goes both to understand the past and to look at the future. Question is, is it possible, to not have a kind of favoritism in a situation where, where you wield power? Is it possible for the government, for any government not to favor what they perceive to be closer than them, than what is not? It's not really a problem at the moment, because were agreed on the need for affirmative action policies, for empowerment policies, whatever you want to call it, training and this will remain a subject of debate. But the question is, will it end when it is not necessary anymore? My question is more fundamental than simply one of a moral positioning?
MR RUPERT: I'm afraid that patronage and the interaction and begging for favoritism exists all over the world even in modern democracies, like the United States, where you have 'rent a beds' in the White House, so I agree, the question is how to contain it. I think the real, you're right, the broad Afrikaner, people that speak Afrikaans, yes, absolutely, still identify. The, how can it be stopped transparency? If things are transparent, then the population can decide whether its warranted favoritism or not. We, I believe that there's a fear amongst whites today, that because of what they see and believe was done in the past, the same will be done to them. And that is a fear. There's a fear of reverse apartheid coming. Now, it will have to be addressed, because the replacement of financial capital, that was referred to by the BMF and that I agree with. That is more easily done, the replacement of intellectual capital, when people actually leave with their brains is far harder to replace. So I think, to get back, patronage will exist if there is total transparency, then the voters can decide whether they'll tolerate it or not.
CHAIRPERSON: Thank you Mr Rupert, we'll hope you'll stay for the rest of the day and have tea with us. I think this is an appropriate time to have, break for tea. Can I ask people to come back at a quarter past eleven please? Thank you.
The first is that I've learned from history that people and particularly politicians do not learn from history. What has happened in South Africa in the past decades is a repetition of what had happened in Rome about 2000 years ago; the Trojan horse saga in ancient Greece and other civilisations.
That is perhaps the reason why politics is described as a conflict of interest, masquerading as a contest of principles. One of the most severe tests of any established society is its capacity to adapt itself to the changing pattern of sort in the modern world.
Thirdly, Mr Chairman, people excluded and oppressed by law and policy have no hope, but come power. If laws are the enemies of people, they will be the enemy of laws and those who have much to hope and nothing to lose will always be dangerous.
People who are put down against their will, will stand up. I hope that freedom will prevail and that there will never again be a concerted effort to put a certain group of people down by any measure of means, because they can only lead to conflict.
Finally, my fourth premise is that a society without the desire and willingness to change, have no means to survive and without that desire and willingness runs the risk of losing even that which they so religiously would like to preserve.
The first trade union was established in 1881. It was a White only union and from then on unions developed very rapidly in a number of variety of industries and played an active role in politics and economic and social life of the country.
I'm not going to repeat all the commissions, the Chapman Commission and all the commissions thereafter, Mr Chairman, I want to go on by saying; summing up that all these reports, if one had studied them ...(tape ends)
... levels and European workers. The first Black trade union followed after the third World War. It's in doubt whether it was 1917 or 1919. Some of the sources put 1919 and some put 1917 as the year, but they started off, because they could not be members of White only trade unions and could therefore not negotiate in a formal collective bargaining system. They were therefore not active role players in the 1922 revolution.
What we called the Rand Revolution and as a result of the strikes in 1922 the Smuts Government fell in 1924 and was succeeded by the Hertzog Government and the new Government immediately promulgated the first Industrial Conciliation Act, no. 11 of 1924.
Now, this exclusion was achieved by defining employee as anyone working for an employer except those who had to carry passes in terms of the various pass laws in the various provinces. Blacks had to have passes at that time. Blacks were also excluded from the apprenticeship training in the designated trades.
Now, the influx where approximately 300 000 poor Whites into the urban areas at the beginning of the 1930's, led to the appointment of the Van Reenen Commission. That commission repaired a small mistake in the 1924 Act by including, because there was doubt as the whether Black women in the Free State had to have passes or not, and therefore they qualified as in definition of an employee in terms of the 1924 Act and the Van Reenen Commission rectified that and said no, all Blacks out of the system.
That Act, of course the second Act, was the Industrial Conciliation Act number 36 of 1937. From then on it was clear that all Black employees were to be excluded from the definition of employee in the terms of the Act.
Now, when the National Party came to power and the Botha Commission was appointed almost immediately, the commission's support led to the promulgation of the third industrial conciliation act, number 28 of 1956. The report is a comprehensive document and cannot be dealt with here in any detail.
The Act was based on a report which contained in essence provisions with the following principles. The clear exclusion of Black workers from the definition of employee and therefore also from the industrial council system.
Job reservation, in terms of which certain categories of jobs could be reserved for certain race groups and the existing Coloured and Indian Unions, because we at that time we had what we called semi-integrated unions consisting of Whites, Brown people and Indians.
Now, being excluded from the definition of employees, no further mention is made of Blacks in that act. A different system for Black labour relations was created in a Black labour settlement of disputes in the settlement of disputes act, number 48 of 1953.
Now, this Act provided later on for the committee system, the works and the liaison committee, and these committees had no official bargaining power. So where as these Black workers were sort of levelled down to the shop floor level, they could not participate in the macro level. Therefore the Black workers had no say in the terms and conditions and the wages. Black employers ironically enough were not excluded from the definition of employer in the 1956 act. Presumably there were very few, if any, Black employers of real labour relations significance at the time.
The apprenticeship act, number 37 of 1944, was colour blind. However, each designated trade had its own apprenticeship committee on which trade unions, White only trade unions and each particular trade were represented by the trade union.
The result was that very few of any Black apprentices could be (indistinct) in any of the designated trades for training as an artisan. As the time passed, Mr Chairman, during the late 50's and the 60's different laws were dealt which dealt with labour were amended to meet the needs of the time, political and otherwise. Strikes occurred and labour unrest flared up in which Black workers and other sympathetic organisations played a role.
Black trade union per se were never banned in this country as in the case where South Africa accept they got involved in politics as the case of South African congress of trade unions which was a labour arm of the ANC. Then they were banned.
The middle to the late 70's were characterised by the following scenarios in the field of labour relations in South Africa. I'm not going to deal with the different codes of conduct. There was some codes like the USA Sullivan code, the European corporation code, controlled by the EC code of conduct, the commission on trans-national corporations united nations, the tripartite declaration of principles concerning multi-national corporations and a host of other codes which emanated from individual countries.
Each had its objective to alleviate the position of Black workers in South Africa. In addition a number of codes from local non-governmental agencies also existed. Now, as far as the Industrial Conciliation Act was concerned and that was the back bone, I'm coming to that later on, that particular excluded the following.
This Act eventually became the Black Labour Relations Regulation Act and then also persons in respect of their employment in farming operations or domestic services, offices of parliament town clerks, colleges, schools and other educational institutions and the defence force were all excluded from this particular act.
Now, the system of labour relations in South Africa of that time could be described as diverse, multi-tuitional and fragmented. The Industrial Conciliation Act of '56, the back bone of labour relations in this country in essence applied to every undertaking trade or industry or occupation in the private sector only.
I have this letter in my possession as part of my collection of letters. I also have a letter from the president when he was in the prison which I really treasure and this letter which I have was written by our department of labour to our ambassador in London, high commissioner at time in March 1964 to tell him to tell the ILO that we must get out of the ILO.
So, and we also left the international employers organisation in the late 70's. So, Mr Chairman, you can see we had a system at the time which was discriminatory. It was a system which was very diverse and we were very isolated.
Now, I'm not going into the reasons for the Commission for the appointment of the commission, the now so-called Wiehahn commission. It's a very wide subject, but it was a golden opportunity, Mr Chairman, very belated I must say to bring fundamental changes in the philosophy, idealogy, politics, law, practices and custom of labour in South Africa.
The commission worked under extreme pressure from all sides; from liberal groups, right-wing organisations was - at that time we had a leak on the commission and people outside knew exactly what we discussed on the commission during the day.
The recommendations, however, can be dealt with according to the following structure. The first that we discussed and we discovered; that it's the fundamental right of every person in a country to work. The right to work.
Every person has the full right to sell his mental and muscular energy in the service of an employer for a remuneration. The system of influx control at the time, job reservation, the quota system and other similar measures applied in South Africa, infringed this right of Black people and to a lesser extend of other non-Whites. The commission recommended their removal.
The second was the right to associate every employer and employee in the entire economy, public and private sector had the right to form and join employers, organisations and trade unions of their choice.
The third one was the right to bargain collectively. Every employer or employers' organisation and trade union have the right to negotiate collectively in a forum at the industrial council on the contents of the relationship between them.
The third - the fourth one is the right to withhold labour and the opportunity to work. Every employer and every trade union, if in conflict with each other and in the case of a failure to settle their dispute, according to the recognised procedures, have the right to lock out or to strike as it means applying pressure to the other side.
Number five, the right to protection. Every employer and every employee have the right to be protected against victimisation, discrimination, unfair labour practises and risks and dangers inherent in the work situation and finally old day cares and concerns.
Then, finally, the right to development. I want to deal with this very briefly as a recommendation to the Commission. Every employer and employee have the right to be an educated and trained for and in the labour market. The commission recommended this right be fully recognised and implemented in economy and that all barriers of whatever kind be removed.
Furthermore, that South Africa should seek maximum co-operation also with other international labour organisations and should subscribe to all declarations that propagate to support above mentioned labour rights.
Now, Mr Chairman, those were the six fundamental rights which formed the back bone of our commissions' recommendations. On a personal note, Mr Chairman, I'm must conclude that it was a very difficult, but most exciting, interesting and effervescent time of my life.
I was popular with many, here and abroad, but also fiercely hated by others. The formula for success of course in life is difficult to find, but the sure formula for failure is to try to please everybody.
Those were challenging times and I maintain that if the labour scene was the right place to detonate the implosion of Apartheid, because the work place was the really the place where we were integrated and that's where we rub shoulders with our fellow South Africans for eight hours per day and that time we predicted that the commissions' report was the right mechanism to do it.
It's recommendations were revolutionary and far reaching at the time. It set the cat among the pigeons in the political field, initiating inter-alia the formation of the Conservative Party and others.
The fundamental principles annunciated by the commission will remain and endured forever, though there will be changes as we have it now under the new Government, but their timelessness as I believe will always ensure their survival as long as we continue to have a democratic system of Government in South Africa.
We've been isolated for so long. We left the ILO as I've said n 1964 and the IOE in the late 70's and I believe that the Southern sub-equatorial international labour organisation in which South Africa can take the lead, will do a lot to alleviate the problem of people coming across our borders looking for work here. That is my first recommendation.
The second is, Mr Chairman, I believe there should be a national stand from trade unions' side and we do need a confederation of trade unions. Although COSATU's name COSATU is confederation, but the true confederation consists of confederations and there should be a unity among the trade unions to express themselves on policy matters, as relating to whatever sphere of life they find themselves in everyday.
Finally, linked with those two, I believe, Mr Chairman, we have tremendously backlog in training people. Trained people, all trained people are potential employers. We have an over supply of workers in the country and a shortage of employers.
I believe what we should do; we should concentrate as much as possible on training and development of our people, because then we will restore the balance between this over supply and under supply between the two poles.
I believe we do need a common strategy in which we can consider and apply a development plan for the future in which our people will find, not so much job is very important; the job market's importance, Chairman, but I call it an income market so that everybody can survive and sustain a decent level of living in this country.
QUESTION: Thank you, Professor. Can I first refer to your philosophical opening statement that the inability to learn from history. In order to avoid the situation where human rights have been violated in the field of labour, what would be your recommendations?
PROF WIEHAHN: Well, Mr Chairman, if one goes back in history and I think one can only read in the future if one pages in the past. That's very important, although there is also another saying which says we cannot fill the future by extending the past.
I believe that we must learn from history the mistakes we've made and we must try to avoid them in future. So, I -that's why I say that I've learned from history, but people don't learn from history and I suppose that's why politics is described as the arts of the possible.
They're busy with carpe diem, busy with today, but politicians - but I believe that we should never in future again have so many provisions in the laws that relate to labour. I think we need a few laws. I think we've had far too many laws in the past.
I've made a study of the laws passed by Parliament. I've taken the statistics out of the years in the a decade from 1930 to 1940. On an average of 33 laws per annum went through Parliament. In the decade thereafter, '40 to 1950 this number jumped up to 47. In the decade from 1950 to 1960 it jumped over 77 laws or 77 laws went through Parliament per annum and in the previous decade we've had more than 125 laws through Parliament every year.
We became a nation of law makers and I believe that laws should be the slaves of people and not vice versa and therefore I believe one of the lessons is that we should not go to the law so quickly if we have a problem to solve.
We should, number one, sit down and look at the five methods of settling a dispute, namely, first, negotiation. Secondly, then mediation. Thirdly, arbitration. Fourthly, we should then have an enquiry and fifthly, number five, we should have a adjudication.
If we don't stick to those principles, we're going to repeat the mistakes of the past. So, negotiation remains the most important. People don't go to war because of their harmony, they go to war because they differ and that's where I believe negotiation is so important.
SPEAKER UNKNOWN: Thank you. My next question I would be interested; you've mentioned that you experienced some resistance from various quarters. I'll be interested to know how much resistance came from the business community?
PROF WIEHAHN: Mr Chairman, no, I must say at that point the vast majority of the business people that gave evidence to the commission, were in favour of changes. They didn't know at the time how far we would go.
I think it was unknown to them, but I believe that I would put it this way; all were in agreement that the status quo couldn't go on. We had to change. They didn't know how far we would go and I don't think - I don't think that they expected we would go so far to clean the slates completely.
That is why I think many many businesses were caught on the wrong foot by recommendations, because you must realise that most of the recommendations really came - had their effect right on the shop floor, in the work place. I think the vast majority of employers were not prepared for the impact of our recommendations.
SPEAKER UNKNOWN: My last question. From your experience and particularly when you were putting together the work of the commission; how much of complexity was there by the business community. I know it's always more comfortable to use law, to use similar structures as an excuse for not doing the things that we should be doing.
I would say the finer details of the law. It was more customer practice that prevailed at the time and that's why I've made my submission goes back right to the beginning of the previous century. You realise it was a way of living. The Blacks were under and the Whites were above and that was more or less what determined. Also the work place situation between managers and workers. So, to answer your question, I think it was the small customer practice that determined and that is why the codes came in, because I think this study made by the trans-national co-operations as well as the embassies in South Africa, revealed that many things could be done in practice, but I think many of the employers hid behind the provisions of the law which did not really stop them from doing it.
I want to follow on a little bit. On page 11, understandably you don't go into the reasons for the appointment of your commissions, but I want to suggest to you that in the '60's and early '70's there was a considerably resistance from many people in business to trade unions.
I - of course business doesn't like trade unions at any time and anywhere in the world. I suppose the reverse is as true, but never the less, I think the point you make about hiding behind the law, I don't think there was a huge movement from business to say we've got to include Blacks within the definition of employee.
Now, what I'm suggesting to you that what brought about that change was the 1973 strikes in Durban and which took place in many other places on an unprecedented scale. In other words business is determined by self interest.
I'm not saying that as a criticism. I am saying that it's a fact of life. So, if my memory serves me, from about that period of time, there was a more concerted effort amongst some people in business to say we've got to regularise this thing. We can't have this chaotic situation. People should have rights. They should (indistinct).
PROF WIEHAHN: No, I think you're right. I think it's a cumulative effect of many factors that played a role at that time, Mr Chairman. You must realise as I put in the beginning of my presentation, written presentation, that if one studies the cycle or the wave of decolonisation which started with the independence of Ghana and I think that the whole wave against racism which ended in the Second World War; as I've said here South Africa continued - from then on South Africa became anti-cyclical.
We continued with racism, but in any cycle, in any wave, sociological wave, you'll find pressure building up. This became very evident with the 1973 flame strikes in Durban which spread to other parts of the country together with political movements in the UDF and all the other movements.
So it was a cumulative effect of pressures building up at the time and there were also requests from the organised labour and business to ask for a new commission - to ask into the commission of enquiry. It was just at that time that I was advisor and I share the (indistinct) as submitted to you.
MR VAN WYK: ... read this document while I was president and I've been mandated to speak on behalf of the AHI. On my left is Mr Jacob de Villiers, the executive officer and Mr Johan Myburgh, the present president and Dr Amanda Hamilton, our chairperson of the communications.
South Africans have to come to grips with that past if we are to build a future. The AHI's submission is therefore an effort to assist in the process of understanding and healing. It is also an effort to contribute to the TRC's quest to ensure that the mistakes of the past are not repeated.
We can continue with paragraph three which looks at the historical development of the AHI. This firstly covers the period 1942 to 1959. Afrikaners amongst others were impoverished by the Anglo-Boer War and the depression of the '30's which led to massive migration to urban areas.
The poor White question fed on itself in a manner of speaking. The economic depravation exaggerated the serious social and educational disruptions. Afrikaner leaders realised that self help was the only viable cause of action for Afrikaners, because of the inaccessibility of Government support services.
Then, if we can continue with paragraph three point two, 1960 to 1975. From that paragraph the following: After the Second World War as well as during the cold war which followed, Afrikaners along with many other communities developed a pronounce diversion to communism and the emerging consequences of (indistinct) of communism into Africa.
The exceptional economic growth in the '60's increased the Afrikaners consciousness of the business sector. At the time the AHI focused on economic issues from a market orientated point of view and on promoting the economic interests of its members.
However, the AHI also made pronouncements on the social policies of the time. It specifically endorsed separate development. Without in any distracting from the AHI's willingness to accept responsibility for such pronouncement, it must be noted that support for separate development at the time was part and parcel of the majority of the White communities' thinking.
The White Afrikaans Churches, newspapers, cultural organisations and the broader community subscribed to the notion that the separate development of South African population groups was seen as the best guarantee for overall justice and peace in the country. The AHI was part of that collective thinking.
Then I move forward to paragraph three point three which covers the period from 1976 to 1983. This period was characterised by a number of internal and external developments which reinforced one another in their impact on South Africa.
Firstly, they increased South Africa's isolation and dragged the country inexorably to its security orientated state of mind. The opposition to communism referred to before was supported by a wide spectrum of the society, manifested itself in the extensive security system that came to be.
During the 1976 Soweto uprising, the increasing internal tensions caused what happened. Becoming as it did, on top of the above developments, South Africa entered a prolonged cycle of repression and resistance.
This led to one of the greatest tragedies for South Africa. Activities that one side saw as legitimate resistance to Apartheid were encountered by the other side with actions that were considered a legitimate defense against the communist onslaught.
We are of the opinion that many of the horrors committed by both sides were a manifestation of this tragedy. Boycotts and sanctions had a devastating effect on many companies and industries. The fear of a communist revolution was fed in the heart and minds of many South Africans by atrocities that accompanied the struggle for independence in many countries and which were beginning to appear here and there in the form of necklacing and (indistinct).
This served to strengthen the resolve to avoid repetition in South Africa. During this time South Africa became an increasing closed society. This prompted an emphasis on self sufficiency and military preparedness which combined to give as greater inward industrialisation.
(indistinct) created significant industrial development in some instances and with it the illusion of prosperity. However this was not sustainable and in the long run it indeed inhibited growth development.
During the same period, the growing external and internal pressures on the country's economic, social and political instability brought about an expansion of its military capacity as well as extensive law enforcement and civil disturbance control systems.
The burden of releasing man power to the military, the hidden costs in developing non-sustainable industries and the opportunity cost of running a closed society, were in the end reconcilable with growth and development.
Consequently the contradictions between open society policies including economic policies and Apartheid on the other hand became more pronounced. At AHI conferences and discussions and at meetings with Government of the day, these contradictions were increasingly brought to the fore.
Restrictions on the free movement of labourers, job reservation, discrimination in the work place, barriers to entrepreneurs and the lack of economic viability of separate development, both in the homelands and in group areas, were pointed out as irreconcilable with growth and development.
Then we look at paragraph three point four which covers the period 1984 to 1994. The following; at the beginnings of the '80's the AHI experienced a change of heart which led to the amendment of the constitution of the AHI.
This amendment effectively drew a line through the previous exclusivity of membership and members of other language and population groups subsequently joined AHI. The AHI leadership during this period also helped payed the way for and contributed to the preparations for the eventual transocean.
Then if we look at paragraph four how the business benefit from Apartheid is the question that is dealt with. We are aware of deceptions that business, in particularly Afrikaans business community, benefitted from Apartheid.
In as much as individual businesses benefitted from Apartheid, the AHI structures were not used for this purpose and neither was it AHI policy to promote individual favouring. The AHI is not in possession of any information which is not already in the public domain on the behaviour of individual companies.
The policy of Apartheid has made South Africa much poorer than the country and its people could otherwise have been. Lost and unutilized human potential, wasted resources, people and capital that left the country, growth that did not occur and jobs that were not created; all these and many more examples prove that we are much poorer. Not even to speak of the effect on the moral values of our society of Apartheid. A poorer society simply means less business and fewer opportunities. The poorest - the business did not benefit from this. In fact, business would have created significantly more wealth, had Apartheid not been enforced assuming a peaceful transition.
It is clear from the above that the notion that Apartheid benefitted business in general, is a fallacy. What cannot be denied however, is that Apartheid disadvantaged Black business. Many Whites owned land and they accumulated capital by realising profits on the selling of this land. Until fairly recently Blacks were denied that opportunity and in this way one of the most important ways of building capital was denying them.
Even though the Lands Act in the period under review, in fact had the nett result of increasing the total are of land held by Blacks. The tribal system which was maintained as part of the policy of separate development, sterilised land as a source of wealth for the individual who is the main stay in market driven economy.
Restrictions on trading and commercial activities also prevented Blacks from establishing hand operating business when they saw opportunities to do so, latent entrepreneurship, potential skills and hidden talents. None of these assets in the Black community could be used.
The practice of job reservation denied the Black community access to skills and progress and thus prevented fair competition in the job market. It is also a fact that the mobilisation of the savings of the White (indistinct), produced remarkable results in terms of economic growth empowerment of the White Afrikaans speaking community.
Firstly, under five point one, we deal with support for separate development. As explained before the AHI supported separate development in the belief that it wouldn't bring about acceptable results for all in the country. This it didn't do. Separate development in the end meant social engineering with brutal human costs and enormous wastage of resources.
As a business organisation we should have appreciated much earlier that moral and economic realities, militate conclusively against even the loftiest interpretation of separate development. This failure was without doubt one of the worst mistakes the AHI made.
Then we look at the lack of critical evaluation of policies. Another major mistake that was committed and that was one of omissions. No moral and economic objections to Apartheid were lodged for many years. At the time there was sufficient appreciation for the hardship and suffering caused by the policy. Whether those hardships were shacks being demolished in the wet and cold of the Cape winter or of people being shot whilst protesting or the consequences of bombs which killed civilians in Church street in Pretoria as part of the struggle against Apartheid; all of which was seen on our TV screens, the AHI could not have escaped the impact of these policies.
Five point three deals with insensitivity into issues involving human rights, although there were frequent references at AHI conferences to the importance of good labour relations, training, proper wages and productivity.
This is also regrettable. There was support for the later developments under Prof Nic Wiehahn. A similar omission occurred in regard to discrimination against women. The AHI should have helped to remove the barriers for women much earlier.
For its part in these omissions and commissions, the AHI firstly accepts moral responsibility. Secondly, admits that fellow South Africans were gravely wronged by these actions or inactions. Thirdly, we wish to express our sincere regret for these failings and lastly we apologise to all of those affected as a consequence hereof.
We can turn to paragraph six; lessons learned from all of this. We learn to look critically at ourselves and at our history. It gave us the confidence not to hide behind our leaders, but to admit our mistakes and to move forward to build a country together with all our compatriots.
We realises that socio-economic development of the total population is vital, although we may differ at our detail strategy as methods South Africans need to agree on a common policy frame work for socio-economic development.
As set out for the policy of Apartheid was bases on a racial document and it had a negative impact on economic growth. Affirmative action and Black economic empowerment play a prominent part in many current policy initiatives.
DR BORAINE: To you and your delegation - and I must say at the very beginning that I regret very much that not everyone who cannot understand Afrikaans has had access to your presentation, because I think what you've stated towards the end of your presentation, is a word that needs to be heard by all in South Africa. I think it's a fact that you have so generously referred to the past, is the key to the future ...(tape ends) ... say right at the very beginning that I regret very much that not everyone who cannot understand Afrikaans has had access to your presentation, because I think what you have stated towards the end of your presentation is a word that needs to be heard by all in South Africa.
I think it's the fact that you've so generously referred to the past is the key to the future. I think you yourself recognised that we cannot be captive to the past; we need to be freed for the future.
The impression though that we have is that, that there were things like tender boards and whatever. So, there were probably limited opportunities for that type of thing to happen and I think that is why there should be structures to ensure that there are by enlarge level (indistinct), which is a requirement for free enterprise really to flourish.
We make the submission. We say Apartheid was bad for business and then I talk about the business sector as a whole, because the business sector is the business sector of South African society and Apartheid want - takes it that if you assume you had sound policies and you had a peaceful transition, then we would have created much more wealth.
We would have had much more development in this country than we have now. I think that that is the price that we're all poorer to that extend, but the difference between the way Black business and White businesses were treated; that is a fact we say it is - it cannot be debated. It is undeniable.
So let me conclude by asking one final question; something which you didn't refer to in your oral presentation, but which is in your written presentation and which has caused a great deal of excitement amongst the TRC people, particularly those who are involved directly with Reparation and Rehabilitation.
That of course was your reference in you written submission to the possibility of the so-called SASRIA funds, totalling about 9 billion rand being used in part towards Reparation and the reparation programme of the TRC.
Now, when we read that we immediately wanted to know more about that. We talked to the Minister of Finance about that as a possibility and having trying to take advice from a lot of people, because clearly this would be an enormous help.
I wonder if you've had time to think a little more about this? Where you see the possible down side or the up side or whether you still feel that this is fund that could be used in this way? Thank you.
We first of all said, well, this has to fit in with the macro-economic strategies. We cannot have this working against other strategies which might be against the interest of our country. So, one must try and slot it in there.
Secondly, that if you're going to have this; where is the money going to come from? The one possibility obviously would be donations flowing to the President's fund etcetera, but it's probably something that you're going to have a difficulty getting donations of the order of magnitude that will actually be adequate for that purpose.
Which then makes you ask where else do you have Government cuttings budget. Do we have less clinics being built? Do we have less schools, less teachers? It sort of seems that that would created more tensions in our society than it would resolve problems.
So that is something. You can't just cut budgets. Then you say, but now right, if we don't cut budgets, do we raise taxes? Do you raise VAT? You know, I think COSATU would be very very annoyed at that.
If you were to raise special income tax levy like we had after the last election, a lot of people would say, but you know, I'm the wrong guy. I supported sanctions or I sort of went out of the country and only came back after 1994.
Let's assume a chap has money in the bank. He's got his money in the bank. He gets interest. You can tax the money. You can say I want a percentage of that. You can say when he gets interest on that, that's income tax. I take a slice of your income and then after you've paid that you have something left; if you spend it, we have a value added tax.
If you save it and you put it back in the bank, well I take a part of the capital again. What we have is a capital tax, a wealth tax that is levied on these ordinations, but basically the main theme is (indistinct) and the basic rate is 25 percent.
So you're saying that at the end of your life time you actually have to pay something, but internationally wealth taxes are very complex. People avoid them, because capital that becomes mobile, especially if you relax exchange controls and all kinds of other things.
The second thing is that it is administrative. It is an administrative burden for an administration that has difficulty to collect the main taxes that we have in South Africa, being the consumption tax and the income tax.
Thirdly, it is a further burden on savings. It is a (indistinct) for people to save rather than consume and we as a country, we have a lack of savings. So there are many arguments. I think the main thing is it is too complex. It is going to send the wrong type of signal and we already have a tax.
If you say once in a life time they take 25 percent or they take half a percent a year; it's just slicing it in a different way, but it's the same tax base that you're really going for. Of course the incredible complexity with valuation, because all wealth enlisted shares. You have unlisted shares, you have intellectual property, you have a host of huge problems that goes with it.
I think it is an unproductive use of people's energy. I'd rather have the wealthy people using that time and energy being constructive and productive, rather than sort of looking at things of that nature.
So, I think that from that angle, taxation is not the way to look at it. Then we came to this idea, but what about SASRIA? SASRIA is hanging in a legal limbo. It was created in the Apartheid era, because there was no re-insurance available in the international markets to an acceptable extend.
So they said; let us create this new animal. We get all the premiums going into it and Government was the ultimate re-insurer. Government never paid a penny in terms of that, but Government received a penny for giving that service.
People paid their premiums. It's like a person insuring his house against fire. At the end of the year the house didn't burn down and he goes and say I want my premium back, you know. There was no contract that he could get - that the policy holder could get anything back.
Government also didn't have somebody to say if there's anything left it comes to me. It was in a section 21 company where it says that you could only use it for that purpose. And the purpose is to ensure against political risk, against political unrest.
That risk has diminished dramatically. One ask yourself the question how it - if you had a house; if my house burns down, they say this is perfect. We can pay for that, but now, let's use some of the money to make a fire break; to avoid the house burning.
If we could channel some of those funds in a way that reduces the risk of such damaged being caused in future in our society. Maybe that is so close to the purpose for which this fund was created that it is a logical extension.
So from a moral viewpoint, because Government (a) was the re-insurer without any compensation and (b) it enjoyed tax breaks for the first number of years of its existence. I think that society at large being the Government has a moral plague, at least to a portion of what is there.
The insurance industry and other people have put in various claims saying that it should be used to subsidise premiums of various natures, etcetera. I think that the strongest claim can be made for the type of activity that we're seeing coming from this Commission, looking at Reparations to put medicine on the wounds of the past.
But the focus one would like to see for the future, is to unlock the human potential of this country. To take the human capital, the human God-given talents of people and upgrade it so that they can become competitive in the international environment.
In other words, give them appropriate skills. Give them appropriate training so that they can be the employers or the employees, whatever, but in such a way that they really utilise those talents to the full.
I think that is where the focus should be and if one could, having sort of addressed the wounds of the past, focus on the future and give a visions and a hope for the future. There I believe it is very important and I think one can easily mobilise society at large to say let us take hands and do this thing.
Let us work with upliftment. I think that is where you'll get a lot of generosity and a lot of people not only in South Africa, but from outside South Africa to say I'd like to be associated with that. I'd like to build together for the future.
Well, the perception that I have is that when you look at the capital levels of the companies round about the '48'4 '49's and you compare it today, definitely there is - there's been a substantial growth.
I would agree that perhaps human resources, yes, definitely there was no benefit there and it is that we lamenting that we did not utilise the potential that we had, but on capital growth I find it difficult to accept it.
What - when the question that is put up if one looks at our members and their position, we say that we as an organisation did not use our structures to the extend that because people were close to Government and there could have been benefits and concessions given.
CHAIRPERSON: Mr Van Wyk, can I just help a little here? I think we've - I mean I agree with you when you say business as a whole, but when we talk Apartheid, we're talking about separate development. We're talking about racialism in its broadest and most raw sense as well.
When we talk about business benefitting, we're talking about White business benefitting. I think that's what we're trying to reconcile here in our understanding when - because not only yourself, but many other groupings have come here and said, you know, business did not benefit.
MR VAN WYK: Right, if I can reply to that, I think that if we as a - on those assumptions; if we had a peaceful transitions with appropriate economic policies, we're in a market orientated system, a balance between caring for the poor, but at the other end taking the discipline of the market.
Then I believe much more wealth would have been created. We would have had bigger companies than we have now. The fact that they grew from '48 to now, they would have grown even more. That is the one side, but relative if you just take in South Africa, the White business obviously was advantaged to Black business.
Black business was held back. They were given all kinds of constraints which kept them away from being fully competitive. I think that there's a huge lesson for us to be learned from that for the future; that what we need in this country to really proper and flourish is to unlock all the potential that is available.
MR HINDOE: I just have two brief questions. The first one is on the matter that's just been raised; the fact you used very openly and I think one is moved and cannot be helped but be filled with respect for the manner in which you openly acknowledged the fact that White business and White people in general benefitted from Apartheid and Black people in general were disadvantaged by Apartheid.
The next step that flows from that is what do your organisation in particular think must be done to address the harm that has been caused by what you are confessing. What is your attitude, for instance, to a policy of affirmative action in this country? That is my first question.
My second question is on a submission that was made to the Commission this morning by one person who has testified before us about the flight of capital out of this country in large quantities. Is your institute aware of this and what is your attitude to it?
MR VAN WYK: Your first question relates to affirmative action. We have actually dealt with it in our document and we feel that we should have a policy in regards to affirmative action that everybody in this country can relate to.
In other words you take as your premise, we must unlock all the potential we can. Wherever there's a hinderance; whatever structure there is for people to really grow and prosper, we must try and remove that so that they can all run, because at the end of the day we are being measured by international markets.
Our products, our services have to compete against products and services of other countries of other societies and there is a market (indistinct) which measures quality, measures on price and we have to compete with that.
So we must help everybody to be as competitive as they can be and then you see where the biggest backlogs are; where the biggest resource, the biggest pool of under or unutilized resources of human ability. We must focus on that to help people that they can really unlock their good - their God-given potential and use their brains.
You know, this is the old story they say with many of the old workers. They said, you've paid for a pair of hands and you get the brain for free. What do you do with it? You must utilise all the human potential we have in this country with the focus there where the biggest historical backlogs have developed.
The second question relates to the flight of capital. We have had stringent exchange controls in South Africa and people who were found acting in breach of it; there were all kinds of criminal cases against it.
We as an organisation have always supported the law. We say you must be law abiding and part of the lessons we have learned, we say that for us as a society to succeed we must ensure that we as a society remain with respect for the law.
We had a problem with the laws that were unjust and unfair and - but I think that it is generally accepted that there were many people who took funds out of the country. I think that is something you must rather ask the Reserve Bank. They would probably give you better statistics on things of that nature.
We as an organisation; that was never our policy. We always, for some years now, pleaded for the abolition or relaxation of exchange control, because we believed it would help us get a better growth rate in this country which would make us more competitive.
We have a partnership initiative for instance with NAFCOC and we have been meeting at our "Hoofbestuur"-level, provincial levels down to the "Sakekamer", the local branches of our organisations, because we believe that we must reach out everywhere and build bridges and get people to know one another and in that way a lot of potential will also get unlocked.
MR MALAN: Mr Van Wyk, you would have heard from the questions that the perception sort of persists that business generally and specifically Afrikaans business supported the Government in its policies, because of the benefits or favouritism or patronage that they would be receiving through such support.
In your submission, I think it's on page four, yes, you acknowledge the specifically - a specific endorsement of the policy, but halfway down the next paragraph you say that the AHI was part of that collective thinking.
In other words, would I be right to say that were there not a party at that stage of Apartheid, your members would have formed one, because that was their thinking. Is that what you're saying in terms of the collective thinking?
I want to make sure about this to find an explanation for what I perceive to be an organic getting together of a broad spectrum of - whether it's nationalism or Afrikanerisms or whatever. How - could you expand a little on that, please?
MR VAN WYK: Well, you're going back a long way and what I can say is that what I've seen in our records, etcetera, is that there was, especially in the '60's, very close interaction, but one must remember what is the nature of our organisation.
Its membership is voluntary. People join it, they get together, you have congresses, you have - proposals are made, the people talk around it, they agree or they disagree, they vote for it or they vote against it and that was the collective thinking.
These same people they were in other parts of society and that was - I cannot say that each and every of our members supported it, but that was decisions that the AHI as an organisation supported. There was - I went back and I found it.
As a matter of fact, when I joined the AHI I didn't always know all the things that happened there, but I can say that through a process of evolution one could see how the AHI changed from where it was then to where it is now, but it - I can't tell you that there would have been something else.
CHAIRPERSON: Lord Hughes and Mr Minty, welcome to both of you. Lord Hughes, you've come all the way from London, representing as I've said, the Anti-Apartheid Archives Committee because the Anti-Apartheid Movement, as we were told in several letters from your friends, does not exist any longer.
But you come as someone who was very much involved within that organisation and similarly I know Mr Minty now works in the Department of Foreign Affairs, but at that time was a General Secretary of the Anti-Apartheid Movement.
CHAIRPERSON: Mr Minty, I know you have a pressing commitment this afternoon. Now, I just want to know whether you want to go first or whether that would create difficulties in terms of your joined submission?
LORD HUGHES: I thank you very much, Chair. I appreciate the opportunity to have submitted written presentation from the Anti-Apartheid Archives Committee and the chance to give (indistinct) and indeed to ask questions.
Can I say, the Anti-Apartheid Movement always believed and understood that the liberation of the people of South Africa and the ending of the Apartheid system would be achieved by the liberation movements and the resistance of the people inside the country.
We believed the Apartheid system was evil and immoral in every aspect of life. We also took to view was that Apartheid was an economic one; that the exploitation, super-exploitation was integral with legal, in quotation marks, or institutionalised Apartheid.
We therefor believed that the South African business trade and commerce sustained the system. We also believed that international business trade and commerce played an important and significant role in sustaining Apartheid.
The Anti-Apartheid Movement sought in all its campaigns to influence government (indistinct) action and to try to make sure that there was less investment at least in South Africa, but I'm going to say that most business and government was hostile to that point of view.
First of all sanctions wouldn't work. They would have no effect on the Apartheid Government which was entrenched in its views and the external pressure would simply mean that the Government would act even oppressively.
Secondly, it was argued that sanctions would help the people most they intended to help, since any reduction in the size of economy in South Africa, would lead to lower living standards of the Black population and massive increase in unemployment.
There was some vigorous protagonist of the view that investment was actually beneficial to the ending of Apartheid. The most notable being Mrs Margaret Thatcher of the Conservative Prime Minister, who argued that the (indistinct) effect of the booming of South African economy would lead to the emergence of a Black middle class and that somehow the Apartheid regime would wither away.
The policy of separate, but equal development, were shown to be a sham and discredited. The propaganda that the South African population was docile and contend with the system and that internal opposition came from a (indistinct) contents stubbed up by foreign communist agitators, were shown to be untenable.
It is astonishing to be known that once negotiations commenced it reached a successful conclusion with the election. How many groups of politicians and those involved in trade and commerce, now say they were always in the (indistinct) and actively working against Apartheid. We reckon otherwise.
In our presentation paper, which I shall quickly summarise, because I know we're running in time; we deal with the Anti-Apartheid Movement. We deal with how British business profited from the Apartheid system. How they maintained low wages and how the Apartheid system was a system of forced labour and that the business exploited the South African Government and the South African Government exploited business.
We deal with the building of the military state and how British arms companies build up the Apartheid arms machine. How the oil embargo was seconded by five main oil companies who controlled 85 percent of the petroleum production in South Africa.
We deal with the developing of a nuclear capacity. You recall President De Klerk admitted that South Africa had a nuclear weapon's capacity. It's quite clear from the evidence we present the South Africa which had the second largest uranium resources in the world, was well suited the develop the nuclear capability, but in fact that it could not have done so without the technological transfer from multi-national co-operations.
LORD HUGHES: ... the national business gave to the Apartheid system was to bankroll it. So we point out in our submission how when South Africa was in very serious economic crisis, the Government had to turn to the international banks to support it.
Certainly after 1976 after the Soweto uprising there was a reluctance on foreign companies, international banks to lend, but after South Africa put into practice the IFM's deflationary prescription the lending began again. Led by the Swiss (indistinct) company, Credit Swiss, German Deutsche Bank, Dressner Bank, UF City Bank, Chase-Manhattan; I can go on with a whole list of people who lend millions and billions of money to the Apartheid regime.
Eventually the international banking companies believed that the Apartheid system was collapsing economically and they then refused to rule over debts. I think that it's quite clear, looking in retrospect, to see that the most serious charge which can be made against Western business involvement, was that the economic state created made it impossible for Governments, even Governments whose members was sincerely opposed to Apartheid, to take any real action against Apartheid.
The speed with which the Apartheid (indistinct) then crumbled forced the regime to come to the negotiating table, which I believe was the final proof if any were needed of the way in which international business sustained Apartheid.
In addition to the submission which we have let you have, I brought with me a fairly large number of the Suez documents which I'll be happy to leave you so that you can check your sources for yourself.
MR MINTY: Thank you, Chair. As a South African I would like to take this opportunity to say what a privilege and honour it was for me and for many others of over almost three decades to work with people like Lord Hughes all over the world and I think when this hearing is taking place today, a tribute has been paid to people here for making the remarkable testimony that we just heard in the earlier session.
Chair and friends, although a South African, I speak on the bases of my direct experience in exile in the period since June 1958 when we formed a boycott movement, renamed the Anti-Apartheid Movement immediately after the Sharpeville massacre in 1960 and in that capacity I served the movement until 1994.
Our movement was formed in direct response to the appeal by Chief Lituli, President General of the ANC, Allan Paton and many other Democratic leaders, who then in June '59 called for a boycott of Apartheid South Africa.
I want to emphasize that we campaigned for the isolation of the Apartheid system and not of South Africa or South Africans as such. It was a peaceful form of moral pressure, not in isolation from the struggle of the majority population, because the sanctions campaign was part of that liberation struggle taking place in South and Southern Africa at that time.
Although we campaigned effectively for the sports, cultural and other boycotts, our central objective was to exert decisive pressure through economic sanctions and as the Apartheid state began to be militarised in preparation for war against its own people, as well as against newly independent African states in the '60's, we also organised successful campaigns for an arms embargo.
We should remember that in 1960, '61 with the banning of the liberation movements, South Africa is in history the only country in the world that prepared for armed struggle long before that armed struggle took place and so began a massive one-sided arms race in Africa with terrible destructive consequences for the rest of Africa and the people of Southern Africa.
Within weeks of the establishment of our movement in London, corporate South Africa responded promptly by setting out the South African foundation in London to counteract our so-called false anti-apartheid information.
What was considered to be false information carried out by the Anti-Apartheid Movements, the hearings of the TRC have demonstrated that we were in fact very far from the truth and were by no means exaggerating.
There should be no mistake about the vital role of corporate South Africa in sustaining and nurturing the Apartheid system and remaining largely silent in the face of growing repression, intimidation and terror that took place over three decades.
This can be considered as an important statement, but we must recognise the context in timing and note that it only refers to aspects of petty Apartheid or perhaps the quest to liberalise certain features of Apartheid in order to make the system more respectable and acceptable to the international community.
It had nothing whatsoever to do with dismantling the major Apartheid structure in favour of a one person one vote democracy. Indeed the closest that certain enlightened business sectors came to, was in supporting democracy or as to speak of power sharing in a qualified franchise, since they were primarily concerned with protecting the White minority power and privilege structure.
This was to be - there was of course to be no qualified franchise as it effected Whites. From the Sharpeville crisis of 1960 and virtually until the democratic transformation of our country, the business sector collaborated with the Apartheid regime, participated directly in developing and expanding its war-machine.
Apartheid South Africa was thus able to militarise a society, moving systematically from the police state of the '60's to the virtual garrison state of the 1970's and '80's until the very high price of this process plus the decisive role of the internal struggle and external pressure resulted in bringing to an end its error of exclusive power.
Apartheid reached a cul-de-sac. Throughout this process - period the corporate sector played a central role in the military and nuclear build up and engaged the elaborate smuggling and other operations to undermine the international arms embargo.
It secured and developed vital repressive and other technology and as evidence admitted to the TRC confirms, the private business sector was a contractual partner of the state for thousands of defence projects.
How then can corporate South Africa dare to claim that it did not act as an ally and sustainer over the Apartheid system. It is better to come clean to disclose its full role in supporting and defending the White power system and by making a decisive break with the past and that will start the process of national reconciliation which is so vital a pre-requisite for building a new nation that it can at last live in peace with itself and concentrate on the immense task of reconstruction and development.
It is a matter of great regret that the corporate sector and the captains of industry, could not even master the minimum of human compassion and social responsibility by protesting at the enormous crimes of Apartheid committed against the majority African population, both within the borders of South Africa and beyond.
They could also have provided humanitarian assistance and legal defense to those who were victimised by the Apartheid and machine and this too they were reluctant to provide, including for trials such as the massive treason trials.
Over the three decades, since the early '60's, we in the Anti-Apartheid Movement called for an end to torture and solitary confinement, to the end of banning and banishment, to ending detention without trial, to stop the mass removals of millions of people, for the release of political leaders, for an end to the (indistinct) labour system, for an end to the pass laws, for the repeal of the group ares act, for an end to the labour scandals that were taking place on the farms.
When the world called for these essentially humanitarian actions, there was always a deadly silence from the corporate sector. I'm not saying that some of them never took up the cause, but it is part of our tragic history that always there were very few and always they were very late.
What is the use of being so late, having missed so many opportunities and how often were these actions motivated more by the need to win respectability abroad and to avert further sanctions than real caring and genuine concern for the victims and the real concern to see that the wrongs were addressed.
Business leaders claim that they supported gradualism, you know move away from the political system rather than supporting rapid change and I have looked at the long sets of resolutions and discussions that they referred this Commission to. So at best they wanted a new Apartheid political structure and not a non-racial society.
The concept of non-Whites, negative non-human persons, was prevalent in the business sector as elsewhere and hence even in the final stages the corporate sector spoke of power sharing and qualified franchise, whereby we as non-Whites should have certain financial or property resources before we could be trusted with a vote.
This criteria was not to apply to Whites as I have said. So, gradually in their eyes we would be allowed to become a little more human, gradually, depending on our financial resources, but that too had to be tempered with a turning political stability.
So-called anti-apartheid resolutions of the corporate sector called for reforms taking place and said that these reforms of the Apartheid regime we should congratulate the Apartheid regime rather then criticize it.
They accompanied all those statements by demand that the Government should, even in that reformed process, maintain political stability and in one resolution I'm amazed to see even concern for health in certain sectors should reform danger health presumable of the White population.
So it was essentially concerned to protect the White power structure and keep control and power in the hands of White South Africans. It called for greater credit to be given to the regime for its efforts rather than it calls for sanctions should be increased.
South Africa, Chair and friends, we must remember was at that time over three decades to be terrorist regime number one, internally and globally in the eyes of the united nations and of global society.
So we were not just dealing with an abberation or an abnormal society. We were dealing with a system that was a crime against humanity and that in terms of protecting its power structure behaved, as I say, as terrorist regime number one in the global community.
The corporate sector, in conclusion, has disclosed very little about its collaboration and complicity. For example, with those who as contractors, these thousands of contractors that we are told about, will not one stand up and say today how they assisted South Africa's war machine at a critical point, how they provided the repressive capacity to monitor and to control the entire Black population, how they developed and secured technology which enabled South Africa to build nuclear weapons.
DR BORAINE: Thank you, Chairperson. I know we're fighting against time and you have been very eloquent in your presentations, but first there - we've heard from a number of people who've been before us and we are yet to hear a number more that feel that sanctions, including financial sanctions were counter-productive and I think you used the phrase yourself, hurt the very people it was supposed to help.
Now, in your own presentation, I think you come to the conclusions that certainly right towards the end it was the lack of loans which drove the Government out the negotiation table, apart from obviously the internal opposition which you have referred to.
I wonder if you could just say a couple of words about that and in particular the relationship of banks, international banks which you say had no fig leave behind which to hide and also the role of the major oil companies, those who you isolate.
LORD HUGHES: Okay. Let's deal with the oil embargo first. In 1973 the organisation of (indistinct) countries, called for a complete out of oil boycott and from then on South Africa depended on five oil majors; Shell, BP, Mobil, Caltex and (indistinct) to help break the bone.
These five companies controlled 85 percent of the petroleum products market. Indeed Shell has admitted that it was in 1974, Shell and BP's chairmen confirmed that the oil companies have intentionally set out to throw out the (indistinct) attempts to enforce the oil embargoes.
The (power failure) was struck at the (indistinct) aspects of those people, to put it mildly, were uneasy about the Apartheid system. Whatever the theory, there's no doubt that racial discrimination existed long before Apartheid was formally developed as an equal, but separate development system.
Everyone could see the massive unemployment which was there. It was clear that British business didn't think twice about using the police in terms of trying to call down strikes. There was several apart from the Durban ones and the one was at Elandsfontein and so on.
So, they used the system and as the repression got more and more it was quite clear that there was no wish to change the system and had the separate but equal development had any credibility or were there any real efforts at developing separate states, perhaps one could argue that investment would be justified.
I found it very difficult to understand why in a country the size of South Africa, populated by different people over centuries, and when the Bantu (indistinct) proposition came into being, not one single homeland had gold mines.
CHAIRPERSON: I'm sure you've heard me through the morning talk about discipline and time. In the business world that is what you live with. I'm going to give you 20 minutes to talk to the submissions and another 20 minutes for questions.
In the past the previous Government did not take much notice of our views or criticisms. Up to listening to some of the submissions yesterday and this morning, but especially yesterday, we're going to make a slightly different presentation.
However, I felt that there was clearly such - still such a sad lack of communication that perhaps we needed to speak from the heart a little bit and so I wrote this last night and therefore this is a summary in speaking to the submission.
I think we must start with the role of private sector in society. Now that will always be a heated debate and I do not think 20 minutes or 20 hours or 20 days will suffice, but this role of the private sector is even more pertinent if business is perceived to be operating in an unjust society as we've clearly been doing during the period under review and before.
Finally, you've a got a most unwanted partner, the tax man which represents the Government that takes 40 percent of whatever your economic activity can positively contribute, but does not share in the down side.
Now, assuming that we operated in normal society, how would we have been judged by our stake holders? Our suppliers and clients have always been treated fairly and every reason to believe that we've lived up to their expectations.
We believe that we've treated our employees loyally and fairly. We certainly did not do enough affirmative action. It is difficult if you are in a company where the staff turnover is far less than two percent and especially if you're under attack and your number constantly diminishing.
We believe that we have spent enough time and money on training. The fact that we could during a problematic period in one of our Berlin factories take 30 South Africans that roughly represented by coincidence the racial balance of our country and that we could increase the productivity in the German plant in six weeks by over ten percent, I think speaks highly of the level of training and the commitment that we've had to that.
Now, we've tried to be good corporate citizens wherever we operate in the world. We've tried to put something back into society in South Africa. We've felt that we should be judges finally by what you put back into society and not what you take out.
Furthermore, the original one point five million that my predecessors invested abroad in 1955 has yielded a nett inflow of billions of rands back into this country. We are a South African company, the shares are held in South Africa. We are not some multi-national.
This was not achieved by any exports of South African raw materials or finished goods. In other words, we did not build this company abroad of the quote unquote Black sweat of Black workers, unionised workers in hostels.
By the way, for many years this exceeded the country's golden foreign exchange reserves. I'm immensely proud of those achievements. It shows what could be achieved by a few people from the Southern tip of Africa who believed in miracles and set out to make them happen.
However, for over 40 years in South Africa, we've operated in an unjust society. I think the first question we must ask is, did the private sector benefit from this unjust and inhumane system of social engineering.
I think that's a (indistinct) point. I'm not going to debate it. I think that's a debate that can be held over weeks. Certainly if that had to be the case, it is very interesting that we had the totally unique situation where business in South Africa was still a left of Government.
Now, maybe not far enough to the left. Certainly, retrospectively, it wasn't too far, but I cannot recall of a single Government abroad in every bit of economic and political history that I've read; that I had to contend with businessmen that actually criticised them from the left.
Now, within the private sector Whites were absolutely advantaged at the cost of Blacks. I must say I first came across this when I came to live in Johannesburg in the early '80's and I found and I started right here in the Carlton Centre a small little joint venture with a Black friend which was a Black hairdressing salon that later along grew into a hair care business.
Firstly the group areas act prohibited to us, but they in the end, because of the partnership I had a problem they couldn't take us to court. But the interesting phenomena that happened is the number of Black friends that came with superb business ideas that had no access to capital.
You must remember coming from the Cape and then living in New York, I didn't appreciate the problems. One had a feeling and one knew, but the day to day problems one did not appreciate. People had great ideas, they had the talent, they had the skills, they wanted to work, but they were denied access to capital.
They weren't allowed the most basic which is private land ownership, home ownership. How do you build capital, Chair, without having any movable asset in an area which people will lend against? That caused me and later on the group to start the SPVC.
I don't agree with everything that Prof Terblanche says, but the fact that Whites have been advantaged within the private sector at the - is undeniable. In specific cases certain companies and individuals certainly did benefit.
Now, Rembrandt was founded by Afrikaners and with Afrikaner support. Quite frankly, nobody else would invest. So, it basically was the wine farmers in the Western Cape that had the only assets. Over the life of the company we've had only two chief executive officers. It's well known and I will address some of the statements made in the recent past that both my father and I have been and were outspoken opponents of Apartheid.
We viewed the system as an immoral and oppressive attempt at social engineering. Now, with the advent of Apartheid, I wasn't born yet, but especially the Afrikaner had a couple of simple choices. One either agreed, or you emigrated, or you tried to oppose the system from the inside.
Now, my for-father arrived here in 1662 and my family and I have always considered ourselves as Africans and proudly so. So, we chose the latter option; to stay and to oppose the system from the inside, using what N P van Wyk Louw described as "lojale verset".
Now, what happened to Afrikaners who disagreed with the systems - system? What did we have to face? I'm afraid, not unlike certain signs today, after being voted in power for quite a long time, the Nationalist Party viewed themselves as the permanent Government and then the critical distinction between Government and State disappeared.
Therefore any attacks on the Nationalist Party's racial policies became viewed as attacks on the state. Helped by some newspapers, the SABC and other influential opinion forming bodies, any opponents of racial discrimination were therefore quickly vilified as unpatriotic liberals and of all things, Mr Kronen will laugh, ...(tape ends)
MR RUPERT: ... of communist. I've been called a communist probably more often than you. Yes. For those in the room who do not believe the veracity of the attacks on our family, I have files and files full of newspaper clippings that I'll be glad to show you if you contact me in Stellenbosch.
On the outside, on the other hand, we were attacked as racist fascists. Now, during these attacks - despite these attacks, we remained what is now called a profile of patriotic bourgeoisie, practising "lojale verset."
We tried to build progress through partnership. Now, the most remarkable thing is that the same people, the same executives, working for Rembrandt doing the very same things, generated a return on investment outside South Africa of some 50 percent higher than inside our own country.
Furthermore, to the best of my knowledge, we've only once dealt with the South African Government or state and I did it against my father's wishes. That was when the establishment of the cellular telephony in South Africa a couple of years ago.
I believed that it was a fully transparent process and as Mrs Marcell Golding and Johnny Copeland can attest to, that led to Rembrandt helping their unions pension funds to make hundreds of millions of rands through an empowerment deal.
Now, we did not export raw materials or finished products out of South Africa, we've not been accused of benefitting or of doing any specific deal with the state or Government and that R3600,00 per month that we pay our floor sweepers in our Rembrandt factories; that's more than maths teachers in high schools.
To summarise, we believe that we've had no sweetheart deals, no sweat shot - shop labour in the Rembrandt group, no regular tri-protection and yet substantially higher returns on investment outside the country than inside in the same investment fields by the same management.
Admitting that we hadn't done enough, I fully admit that, I still fail to understand those who say that we've benefitted from Apartheid. The sad contrary is true. Had the founders of the company immigrated, they would have had far superior returns on their investment.
However these broad types of statements are still being made without getting specific. We heard it yesterday and I'm sorry to get personal, but another example of these accusations is the statements made by various people that Dr Rupert said quote "We have to find a solution that won't end up giving us one man one vote" unquote.
There was a little word left out. I have the transcript of the speech. The word that was left out was "once". What he said was "We have to find a solution that won't end up giving us one man one vote once."
Now, macarthiusm has entered the English language as a catch or word used to denigrate those who allegedly make fraudulent accusations against others. It's ironical that this term can now be used to aptly describe statements made recently.
In a country with massive unemployment problems, with large deficits before borrowing and nagging foreign exchange reserves, I would like to say that we've done our best for the country, economically.
At the time we certainly thought we did. In retrospect one could never have done enough. I was fortunate enough to have met the late Steve Biko in the early 1970's when he was the head of SASO. As an Afrikaner the immorality of his and other murders will forever live with me as a permanent reminder of the cruelty of man to man as perpetrated during the evil years of Apartheid and I hope and pray that our fellow citizens will forgive us. Thank you.
DR BORAINE: Thank you very much, Mr Rupert. Your father is probably one of the most quoted persons in South Africa, because he is so quotable. I have so many in front of me here and I met him recently for the first time and he told me that he had written a submission and asked me to despite its length make sure that I read every word.
"We are all Africans, whatever shade of colour or belief or conviction and our future depends on mutual loyalty and respect."
But what I must just admit took me by surprise was a letter which your father wrote to Mr P W Botha. I hope that one day it will become read by everybody in this country, because you see there is a suspicion, understandably, I think you'll agree, that big business took (indistinct) a phrase, is extraordinarily at debt at public relations. It's part of the job.
"I believe that the believe that Apartheid guarantees the interests of the White man's survival is a myth. As a matter of fact it threatens his very survival. But this even more. For all these reasons I'm appealing to you personally, re-affirm your rejection of Apartheid. It is crucifying us. It is destroying our language, it is degrading a once heroic nation to be the lepers of the world. Remove the burden of the curse of a transgression against mankind from the backs of our children and their children."
I'm very glad that you have offered this correction to a "fout", because it's not only in various public meetings, but in a book called THE STRUGGLE FOR SOUTH AFRICA by Davies Omara and Glamini (not this Glamini).
They actually misquote that and obviously this has risen to a lot of debate. What they also go on to say, and this you may care to respond to or you may not, and this I suppose is the whole question of loyal resistance; they claim that during the 1950's Rembrandt retained and I'm quoting "its very close links with Afrikaner Nationalism through heavy financial contributions to the Nationalist Party."
MR RUPERT: Thank you, Dr Boraine. When I joined the company I started by going through all the records right into the starting years to get a better understanding. I certainly didn't find any contributions to the Nationalist Party.
There might have been some, but I can guarantee you they had no money to give. The company was not in a position to give money to anybody. Why they would have wanted to give money, I'm not sure, because I think the first break that my father had was at the "Tweede Volkskongres" where, I think there's a speech attached, but I think it happened during the Tomlinson era.
I certainly remember growing up as a five, six year old knowing that we were not with the Nationalist Party in that sense and I think my father's wealth publicised, how can I describe it, mutual animosity with the late Dr Verwoerd, would have predicated against any support.
There was a basic difference of philosophy where I regained the respect of - where they regained my respect was when, and I'm sorry that in many of our beliefs he was not treated properly, when F W de Klerk did the bold move to unban the ANC and to hand over power and to free the country, knowing full well that he was going to be vilified by his own people.
It takes a brave person to knowingly give away power and know that you will be vilified by your own people, but in the interim period I can assure we did not have close relationships with them. I think the public records speak for itself if you look at their mouth pieces in the both the SA radio corporation originally and later on some of the newspapers that were closely aligned to them.
DR BORAINE: Thank you. I have only one last question and that is; we've put a question to everybody whose appeared before this panel, both during these hearings and many others and that is the whole relationship of total strategy which as we all know through joined management centres - went far further than into merely political and security, army and police, but involved business to quite a large degree and other organisations as well.
Hardly any area was untouched. What was your own view and relationship, if any and that of your father and that of the company; was their a general support for the total strategy of the Government or was there misgivings or opposition? How did you view that?
MR RUPERT: I was in the navy and did an officer's course after that in the navy in '68 and soon it became apparent to me that my views were not exactly theirs when I wasn't invited back to any further officer's courses in the early '70's.
Now, quite frankly that suited me fine, because it happened to be in the June holidays, but the tragedy of the whole total onslaught was that it was based upon the denial of facts and we had so many discussions and what we thought persuasive arguments against it.
We certainly did not participate in that and a lot of the things and I must say this on behalf of many other South Africans, very many South Africans, even Nationalist Party supporters, the evidence and the facts that have come out in the TRC have shocked and astonished people.
In 1970, '71 and I'm indebted to the late Ronnie Bethlehem, I read it recently, the squandering of our reserves; we had 34 million ounces of gold in reserves at 25 dollars an ounce in the early '70's.
We squandered the capital of the country. We indebted our children and if you take the decade of the '80's, over three and a half million potential job applicants, I think a 186 000 jobs were created in the formal sector of which by the way, more than a 100 percent were in the state and there was a nett loss in the private sector.
MR GLAMINI: Mine is - goes back to what the Arch Bishop said yesterday when he opened the session. Amongst other things he made an appeal for contribution towards the President fund from which reparations are going to be implemented.
I notice amongst the people who testified yesterday, nobody ever responded to that. I'm not sure what - perhaps people thought if I said that I've got something to contribute it would be admitting guilt and in which case I would like to say, definitely no.
The main aim is to show solidarity and support with the people who suffered. It's not going to be enough. It's not going to bring back their beloved ones. It's not going to be even enough to rebuild a house that was destroyed.
I decided to test this one with you as to what would be the attitude of the business community towards contribution to the Reparations Fund. I know that you cannot speak on behalf of everybody, but at the same time I think you can help us with some of the things that perhaps are - we need t know.
MR RUPERT: When my father started the company it couldn't afford to pay him, so he had a two and half percent management fee. When it started making money and this was before I had any say in it, he waved that, but with the provider that those funds could be used for the benefit of society.
You can't speak on behalf of your father, but it is certainly interesting - or it was certainly interesting that he said at the Second Economic People's Congress or "Volkskongres" to which you have referred; I would like to know should this not have reference to the ideas of Apartheid that then developed.
"For the existence of both the native, (that was the language of that time), and ourselves it is necessary that we should take the responsibility of our rule or mastership and the followership of theirs, but this must be a position of being a master bases on achievement." Furthermore
"There's a re-orientation with regard to the problem of existence. We simply as a people, as a volk, have to survive. We have been blessed with the means to do so. We must use these means and we must help one another."
MR RUPERT: I'll help by not having a translation. It clearly does not, but and I wasn't around then, but obviously one questioned your parents in great detail and I asked them how is it possible that the Afrikaners could possibly start a thing like this?
Their answer was that initially, based on fear, they felt that separate, but equal could work. That soon became apparent that it was not going to be equal if one minority group had all the assets. Therefore it was going to be separate, but unequal. Then it became not only immoral, but practically not implementable.
I'm sure if they had asked for the Volkstaat then, they would have been given it. The problem is, they put the rest of the people in the Volkstaat, so and it's very hard if that is read in the context of today's world, it certainly doesn't - "dit strook nie met soos ek hom ken nie".
MR MALAN: Mr Rupert, let me just preface my question by saying that I was present at a speech that your father made when I was at university at Pretoria. I think it was taken up in that booklet PROGRESS. I can't remember the title and that had an influence on my thinking.
MR MALAN: ... which speaks somewhat as corroboration to your position, but my question goes further than that and this relates to this question of benefitting, of patronage, of favouritism, which you've been denying.
But at the same time my impression of you and also through your submission and your father's, is this - probably best described with loyal resistance. Knowing where your roots are, still identifying with the kind of broader, call it an Afrikaner Nation, something which cannot really be described, but you still have a feel for that and the loyalty still to that.
It's not really a problem at the moment, because we agreed on the need for affirmative action policies, for empowerment policies or whatever you want to call it. Training and this will remain a subject of debate, but the question is will it end when it's not necessary any more?
MR RUPERT: I'm afraid that patronage and the interaction and begging for favouritism exists all over the world, even in modern democracies like the United States where you have rent a beds in the White House.
We - I believe that there's a fear amongst Whites today that because of what they see and believe that they've done in the past; the same will be done to them. That is a fear. There is a fear of reverse Apartheid coming.
The replacement of intellectual capital when people actually leave with their brains, is far harder to replace. So I think to get back, patronage will exist if there's total transparency. Then the voters can decide whether they'll tolerate it or not.
SPEAKER UNKNOWN: So my believe quite frankly is that the - as oppression grew it was clear that Apartheid was not going to change by itself, it would only change by external pressure. The banks began to realise that and it was only when South Africa was in economic crisis that the banks realised it was no longer going to be profitable and they pulled the plug.
You can never say this was the moment when things changed. This really doesn't work like that, but I do believe that the decision by the banks, particularly Chase Manhattan ...(inaudible) your loans; that everyone not necessarily simultaneously, the South African Government, local business and international business came to the conclusion change had to come about and the whole system eventually collapsed to where we are now.
SPEAKER UNKNOWN: If I may just add one point? I think that the nature of the power structure has to be taken into accounts. It was financial loans, sanctions and critically the crisis for the military.
The Apartheid structure in the region in South Africa was based on the military. The military having spend for something like eight years before 1990, 70 percent of its total budget on operational costs with the prospect of having a hot revolution, developing in Namibia and before that Zimbabwe.
The die was cast just before the Angolan - the last Angolan battle, because at that point the South African Government was being told very actively by the Western powers by '87, '88 '89 that you better pull back and end Namibia.
There we had a massive military presence with the country of only a population of one million. So in order to avoid that hot revolution spreading to South Africa, there was control change. It is president De Klerk himself who said on the eve of change that he change not because he wanted to, but because he had to in the sense that the pressures of finance and the announcement in February was on the eve a week before the United States Congress was going into a new package of sanctions.
So I want to also now question the political judgement of the business community that has submitted to the TRC that sanctions were a blunt weapon and never worked when in fact the rulers of South Africa and global opinion, including the collaborating countries of the West, conclude in the end that sanctions did work.
Finally, I think the most critical point which is (indistinct) from my statement at the beginning was that even if it hurts the African people, the African people passed for sanctions and they preferred this as another route.
I would like to ask corporate business too, why did they not protest when Arch Bishop Tutu in the late '80's appealed for the Danish people not to buy coal from South African and eventually he was vilified correctively and then his passport was withdrawn. They did not even demand (indistinct) with the rest of the world that his passport should be retained.
CHAIRPERSON: Thank you. There seems to be no other questions. Thank you very much to both of you. I'm glad we've managed to get finished before you go off to your meeting and Lord Hughes, I hope you'll join us for lunch.
MS BERNSTEIN: Well, thank you, Mr Chairman, I appreciate the opportunity to be here today. As somebody who has throughout my professional life worked to train Apartheid and to do a little bit to move the country away from the system of racial discrimination, I've worked in business funded training organisations all my life.
That's the base on which I will be talking today. The kind of work that I've been doing and the two projects that you mentioned. I'm hoping in talking about the international study that we have conducted on looking at business in new democratic societies and their role in economic development; that we can throw an international perspective into what has here the two. I think being a very narrowly focused look at business in South Africa without a wider perspective on business more generally.
So, the first topic I'll look at is business in society and the two conclusions coming out of the research which we conducted which I think do challenge a number of our ideas and assumptions that have been prevalent in our conversations in the hearings so far.
Let me start first by saying that listening to a lot of people here, on the one hand I wondered why Helen Suzman representative of the Progressive Party for 13 years from 1961 to 1974 and why the Progressive Party was always so short of money?
Let me start first by saying that often people like to talk about business as though it were a political party or as though it were a trade union. The fact of the matter is, I think has been very amply demonstrated in the last day and a half, if you look at the very different individuals that have come to represent very different companies before the TRC, you will see that business is actually a description of a category of activity.
Which makes it very difficult, because all want to generalise about, myself included, but that's the critical thing one has to bear in mind; that one's dealing with very individualistic, actually a highly competitive sector with each other and it is a rather cut throat business.
It's also very - it's a very sort of different kind of business from Government or anything else. These are people who generally get up in the morning and say I'm going to make a better product than you today and I'm going to put you out of business.
So when we start talking about business as a collectivity and what they might do other than running their businesses it gets very complicated and I think that is a very important issue that needs to underline how you think about business in South Africa.
Having said that, one moves to the next point, which I must say I do disagree with Prof Terblanche rather fundamentally. I think interest in the business sector differ a lot and those interests change over time.
That's not what Apartheid was about. Now, it doesn't necessarily mean you saw that interest, or that that interest overruled all your - let's call it views and fears and stereotypes and prejudices as a White South Africa, but that's one of the realities about interests.
So, I think too and we come to talk about business and corporations and their interests, we need to be much more specific and much clearer about what we're talking about and how those change over time.
The third point I want to make which is self evident, but sometimes seems to be ignored in discussions on business, is that at the end of the day and at the beginning companies are set out to make money. That's what they're about; first and foremost and these are not moral institutions. These are money making machines.
Certainly not perfect, but the best that we have. So, we have to bear that in mind that these institutions are there to make profit and that's their essence. Anything else is very much - comes after that.
The next point I want to raise is really an analogy. I want to throw another country into our discussions and perhaps into your thoughts. If you think about China; here is a country the South African Government, the democratic South African Government has very recently changes its recognition of Taiwan and it now recognises the people's republic of China, primarily because we want to increase South African business access and South Africa as country's access to that enormous market.
Now, from this fact, it seems to me to be absurd to say that Nelson Mandela's Government does not care about the human rights abberations that are taking place in a totalitarian society; that is China today.
Similarly it seems to me ridiculous to say that all the companies that are moving into China and investing there have suddenly been converted to the anti-human rights regime that prevails in what is after all a totalitarian state.
Companies, after all, are very adaptable and they will find the ways and the means to make money under almost any political regime. Now, this might be morally uncomfortable at times, but it is also one of the greatest strengths of this form of social activity.
This adaptability, flexibility and thus the durability of economic enterprise has actually resulted in one of democratic South Africa's greatest strengths today, because business was able to survive and proper under an authoritarian regime that continually interfered in market relations, South African today has a large energetic reasonably competitive business sector and there's absolutely no doubt that this puts South Africa at a considerable advantage compared to many other newly democratic societies.
MS BERNSTEIN: ... we might want to change those, but I think we have t acknowledge that its existence, its contribution to employment, taxation and many other areas of public life is one of South Africa's greatest strengths and this would not have been the case if business were not adaptable and able to survive under all sorts of political regimes.
Let me move on now to illustrate one of the most important findings that came out of our international study. Businesses often asked as I think has been the question on many people's lips over the last one and a half days; what are you doing as a business person so contribute to changing society?
I think this is a fair question, however, the context in which the question is asked, needs to be broader. What we have found is in doing business, in doing the normal activity of trying to make money in whatever way, companies have unexpected effects on the wider society.
The three areas of unintended consequence of business activity, I would just list them, are what we have called the thickening of civil society through businesses' need for independent institutions, the promotion of modernisation and access to opportunities for millions of individuals that accompanies the process of industrialisation and modernisation.
Thirdly, the unleashing of democratic and democratising pressures. So, in our view, business rather than being a pillar of the status quo which is often argued, is in fact a powerful and constant agent of social change.
Having said that and I think one can see from the last two day that business people are not, let's call it expert politicians. This is not what they're good at. They're good at making money, a different kind of skill.
One of our conclusions is that in many societies business has often failed to understand its changing relationship to the forces unleashed by and within democratising social order. Business has been slow to define their social and political interests and frequently defensive, reactive and (indistinct) in promoting them; that in many respects business is a corporate citizen is often less than effective.
The last conclusion coming out of out international work is one that seems to me very apt for South Africa, is that we need to also not forget business people might run big companies but they're also citizens of the country of which they're a part and so they operate with the fears the prejudices the stereotypes, racial, gender and whatever of that society.
So if most business people are White in South Africa they will believe what most White South Africans believed at that time and that's the reality of the country, otherwise we wouldn't have had Apartheid.
Now, within this wider context I would nonetheless argue, as I and others did in the 1980's, that business in South Africa could certainly do much more at that time, could have gone much further and could have much more impact in their opposition to Apartheid.
The role of business during the Apartheid era is complex and mixed one. In general I would say that like businesses elsewhere they accommodated themselves to the prevailing politics of racial discrimination for most of the period. It was only in the 1980's when the direct and immediate interest of many companies were affected that many business leaders started loudly and fairly systematically to speak out against the Government and in ways that directly countered the essence of Apartheid.
Throughout the earlier period business organisations would by and large indicate their opposition to Government policies as these effected the work place and economic issues and then get back to business.
Yet, I think it's important that this political reality is only part of the story. From the late 1970's business in South Africa funded and supported the remarkably large and diverse number of institutions and NGO's.
Small community groups, large educational projects, health, welfare and service organisations, research institutes and many others. The strength and diversity of South Africa's civil society, largely operating we might say in direct opposition to Apartheid in its ideas, is a product of three important forces.
It's important to note that at the time, the 1980's certainly and before, arguments were made within the business sector that corporations were going beyond their accountability in working for social trains and policy reform.
You will all remember there were many people who argued that the business of business is business. So the response of some major corporations in establishing the urban foundation and supporting it through a number of very tough battles with the Apartheid Government and funding many other less prominent initiatives, were I would argue as significant steps beyond traditional business activity and subject to criticism within the business sector.
I think it's worth noting that in our international and certainly in conversations with business people in America, Europe and the UK and Hongkong, people are amazed at what business in South Africa has actually done. So, for those of us who thought it was too little, too late, whatever, nonetheless they've gone far further, done far more beyond the factory gate than business in almost any other society that we know of.
In its 18 years of existence, the foundation which was a broad church of interests, individuals and ideas expanded its interpretations of its original mission well beyond the more conservative intentions of some of its business supporters.
I would argue that the foundation was to perform a remarkable and unique role in the 18 years of its existence. By the end of the 1980's this organisation were the country's leading development agency, demonstrating through practical projects innovative new ways of tackling the massive development challenges that would face a Government committed to really housing, educating and serving all the country's citizens.
In housing, for example, the foundation played a remarkable role. I won't go into the detail. All I will say is that there is absolutely no doubt that one of the reason Joe Slovo was able to commit the new Government, community organisations, bring in the private sector too, the kind of housing policy we have, which I think is the only road South Africa can following; was because of the work done by the Urban Foundation in the 1980's and I think that can be easily proven.
The campaign I want to talk about, most importantly, is the Urban Foundation's campaign and it was a campaign for the abolition of influx control in the early and then mid 1980's. Now, influx control is not just an incidental part of Apartheid. I would argue it is one of the central components of that system of racial discrimination.
So, using business funds and business support a major campaign was launched to first put influx control into an international perspective, to take the Government's arguments and the people who supported influx control very seriously and then to disprove every single one of them.
To involve as wide a coalition as possible of South African across the colour divider at that time, across the very tense situations at that time and within the business sector to make sure that all of them were committed to abolition of influx control and not its reform.
Finally, taking that to the Urban Foundation's Board in 1985 and getting endorsement for what was to be in effect a co-ordinated campaign to take on one of they key components of Apartheid and to take the Government on in that area.
I'm sure we'll come back to that. The victor in terms of influx control which was many millions of people's victories, not the Urban Foundation's alone, then led to a larger campaign to take on the Group Areas Act, the Land Act and segregated local Government amongst others.
I can see the Chairman is looking at me and that time is marching. I'm sure we'll come back to the Urban Foundation and I'll be happy to answer questions. Let me just say that it was an organisation that did something very different in South Africa. It didn't try and talk to the converted. It didn't talk to the people who were suffering from Apartheid's laws. It said if you're going to try and change something, we have to talk to the unconverted.
Let me conclude, Mr Chairman. I would argue, but it might seem otherwise sometimes; life is not a morality play. We don't have the goodies and the baddies easily identified and in fact there are very few people who give out everything for their beliefs and ideas.
Business in South Africa accommodated itself to the Apartheid system. In doing so it provided jobs for millions of people. It created infrastructure in the society. It unleashed democratising pressures, unintentionally, and sustained a base of economic activity that now provides a platform for economic growth in a democracy.
Like the vast majority of South Africans, business people could in my view, have done more. More to oppose the philosophy, assumptions, policies and ideas that sustained Apartheid. Nonetheless, they did make a significant contribution directly through their support of thousands of NGO's opposing Apartheid or providing services in poor communities and the support of important business people for the work of the Urban Foundation was a significant contribution to the fight against Apartheid laws and important work was done in pioneering new policy and project approaches to meet the country's enormous development need that the new democratic Government face today.
MR HINDOE: Thank you. Ann, what you have just highlights is very much true and these are visible efforts by the business sector, but my only concern is a point I might have personally misunderstood you; that now and again you kept on emphasising about the morality.
MS BERNSTEIN: Mr Chairman, I think - let me unpack the question. I'm saying that enterprises, companies, corporations are in business to make money and if they don't make money they go out of business and people lose their jobs and the Governments don't get taxes and so on.
So, that's the bottom line. Now, how you behave as business person will differ from company to company and what morals and what ethics and values you bring into your business dealings will differ from company to company.
I'm not absolving anybody from, if you like, individual moral responsibility for how they behave. The point I'm making is that business as a sector, as an activity is a money making activity and you might be a person who gives money to charity in your personal capacity, but as a business person you're ruthless and tough towards your competitors.
MS BERNSTEIN: Mr Chairman, business will adapt to the prevailing culture of the society in which they're operating. If I may give the TRC some advice; if you want to look for who the custodians are for human rights in a future South Africa, that has to be in the constitution and the new Government and ultimately it's in the voters of our society, because if the Government does things that they don't like it, the electorate has to kick them out.
Within that frame work, everybody will adapt and that's the way I think it's going to work. So, oddly enough business in China is going to be to the left of the Government as it was here in some respects, business desegregated more quickly than the rest of the society.
It doesn't mean they did it quickly enough or whatever, but so I don't think you look to business as a place to protect human rights. You look to business to make money and to get the country's economy going. That's their job. We have to look at the constitution and the Government and a broader system of civic education and ultimately elections to ensure human rights.
MR HINDOE: This is the last comment I promise. Thank you, Anne, for the - yes, for your recommendation about the enriching the constitution to make sure that it does make provision for the cause of human rights. I think it is a valid point.
Anne, if I were to be nasty and refer to your last comment, concluding remark where you were saying about all those beautiful things that the business sector did in spite of operating within the Apartheid system etcetera, etcetera.
As you were saying - at what cost and I got the impression that you didn't think about the cost and the casualties on the way. Yes, they did provide a lot of jobs, but definitely there were costs and there were casualties.
MS BERNSTEIN: Mr Chair, if I can respond to that? Business operated in Apartheid and I think Apartheid was a terrible system that did terrible things to millions of South Africans. I personally think that business should have seen its interests, its long term interests much sooner and done much more.
If you say to me and you ask the thousands of people who line up for jobs on the East Rand or anywhere else in South Africa, what would they have wanted business to do at the time, I don't think they wanted business to go out of business. That's the dilemma. That's the dilemma we had to wrestle with throughout the '80's.
How can you get business to do more to change Apartheid to get rid of it in its fundamental sense, but at the same time recognise that companies are in a tough market place and they have to survive and their reason for being is to make money.
DR BORAINE: You're not serious, obviously. Thank you, Chairperson. Thank you, Anne. I'm not sure that all the business people that I know of would agree with your remarkably cynical approach to business, but be that as may I don't think you also meant to say, but I think I ought to at least ask you for the record; that in the pursuit of making money you don't do that at all costs, you - I think quite a few business people that I know would object to child labour, would object to playing fast and loose with the safety and security of its workers.
Even though it means that they would make less profits if they abandoned all morality. No longer now as an individual giving to a charity, which I think the example you gave, but I'm talking about business principles. I cannot believe that there are that number of people in the business community who would go to the lengths that you have.
MS BERNSTEIN: Let me clarify my position and the two parts to it. As I said in response to an earlier question, I'm making the point that the bottom line is very important and that needs to be understood in thinking about what business can do and what it should have done.
I'm not saying that that means individual business therefore are free, or we should condone business to operate in any way whatsoever and I think you can make judgements about individual businesses and business corporations and the different ways in which they behaved.
That would follow on from the point I'm making that business is not a collectivity. We're talking about hundreds and thousands of individual business who're all very different and the few chief executives that have come up in the last day and a half show you that.
Let me challenge you on a second issue. You say that business is not a unified grouping. Surely that is a somewhat of an exaggeration. I mean most business people in this country form themselves into if you like, collectives. You've got the Chamber of Mines. You've got Asecom. I mean people deliberately go out of their way to find some unified course of action and employ lots of people to do just that.
So they're not just separate organisations. Secondly, they are not like ordinary South Africans with their fears and prejudices and hopes and beliefs. They have all those, but by virtue of their own power they have a greater responsibility. This is my view on this and I ask you for your comment.
So I think it's an oversimplification and it gets a lot of people off the hook by saying, well, you know after all said and done. I mean, how many times have we not heard people say we really wanted our chamber to do A or B or C, but we had to take people with us.
So you get a kind of lowest common denominator. So business very often in protecting itself in taking a stand or not taking a stand, unifies itself around people who think alike. The greater the power, if you take one or more of the great conglomerates, some of the mining houses, I would dare to suggest that people who have that kind of power, and they do, even though they may not admit it, I think that how they use that power should be a valid evaluation or criticism and I don't think they could simply be by virtue of their responsibility and power and wealth they have a greater responsibility over against policies which could bring harm to the very people that they employ.
MS BERNSTEIN: Mr Chairman, if you read my submission, I deal with both those issues. In my definition of business I do indicate that I'm talking about the firm and I'm talking about business organisations and I'm also talking about what we might call tycoons; the heads of very large conglomerates and that's those three components that you need to think about when looking at business and I think there are different questions to be asked about each one of them.
Yes, I do think business does have some collective interest. There's no doubt that all business has an interest in stability. That's what you were hearing the last two days. They were interested in stability. We won't break the law.
So business definitely has an interest in that and they kind of want an environment in which their investments are sort of as risk free as you can get them. So they kind of -let's put it this way; they want a referee that will ensure their stability. Then they want to go out and kick each other around on the field.
The second point is that, yes, different sectors of business definitely have interest and often you'll see they're in competition with each other and that was the point I was making in opposition to what Prof Terblanche's paper - one of the points of opposition, yesterday.
I think that the manufacturing sector, you cannot sustain an argument that manufacturing in South Africa and the sector had an interest the limited and restricted market that Apartheid created for them. They have an interest in the expanded market.
Their interest would be different say from people who have to deal with hundreds and thousands of labourers as employees. So, their interest differ and sectile organisations get together to promote those interests, sometimes in opposition to each other.
The basic point I'm making is that when you say let's look at business it's not like we can say give us your leader and let's get him to account for what happened over the last century, because it's not possible.
Tell us your manifesto. It's not possible. It doesn't exist. So you put the sort of leading, the senior executives of South Africa's largest corporations in a room; they will have different views on very many topics and that's precisely why it's so hard to think creatively about collective action that business can take where you can get everybody where the lowest common denominator is not so low as to be irrelevant, which is often the case.
So, I agree with what - all that you say about the complexity of business as a sector and I think that has to be - the point I'm making is that that makes it very hard to ask some of the questions that have been asked. What does business think of this that. You can say, what does company X think and what have you done and if it were possible for this Commission to if you like, look at the record of individual companies, I think you would be surprised at what their card would look like at the end of the day, because it's all very well to come here and say; we confess, we were bad. Now we're going to be good boys. That's one approach. Another is to look at how people wrestled with the choices and the complexity ... (intervention).
DR BORAINE: Yes, Chair, I have been told I have one sentence left. That is; I think the very fact that we have called for as many submissions as possible, is that we do understand and appreciate that it's not a uniformity about business.
I think what we're trying to argue is that business like any other institution was influence for good or ill by the system under which they lived and we'd like to know how they coped - what was their role in it? What did they do? What they didn't do?
So that's what we're trying to get at, but to - I would hope that business has a limit and to put it quite harshly and rather unfairly, because you're being muddled now by the Chair, I would think that some businessmen in Nazi Germany would have had to ask some very tough questions about the building of the - of the use of buildings to kill millions of people.
I don't want to compare the two, but I would have thought that business, however keen it was and committed it was to make money, would have had to ask some extraordinary tough questions. I think some did. I think some didn't. Some acted. Some didn't.
DR ALLY: Anne, just a couple of issues of clarification. You describe Apartheid as a system of racial discrimination. Now, don't you think that that is only part of it; that what one - what was the essence of Apartheid was not racial discrimination, but racial domination; that that's what made discrimination possible.
Let me just say that I obviously am using shorthand here and I think that we've had a system of domination, exploitation and economic and racial discrimination, but I'm certainly not going to go into the causes of that.
It's clear that you've actually stirred up more controversy than - of course helped us in the process of understanding. Certainly for myself your unbundling on this issue of business not being a (indistinct) has actually helped me.
We call the Anti-Apartheid Debt Committee to the - sorry. While Komie Naidoo and his colleagues are getting - sitting down, can I please try to assure groups that are still coming that have actually read their submissions and if you can summarise and bring up the pertinent points that you want to get across.
MR RAMASHIA: Yes. Good afternoon. My name is Rams Ramashia. I'm the President of the South African National (indistinct) Coalition, SANCOCO for short. I'm accompanied by Komie Naidoo who is the executive director of SANCOCO and Reverend Dr Multi Fetzili from ASSET.
CHAIRPERSON: Sorry, Sir, before you - before I - can I just ask you to take the oath or the affirmation. Which one? Are all of you going to speak? If you are; can you all stand and Dr Boraine will help you.
Our submission should be seen in the context of the Apartheid Debt Campaign led by SANCOC with its more than ten thousand members and supported by the labour movement, the church organisations, the Human Rights Commission, student organisations and a range of NGO's including Fair Share, AIDC and ASSET.
Our submission should be seen against the background of the fact that financial support for the Apartheid system by lending institution both foreign and international, have contributed towards ensuring that this morally vile and (indistinct) system of Apartheid flourishes.
It provided means and opportunities for gross violation of human rights. Komie Naidoo, my colleague would do the substantial part of the submission which will be complemented the Reverend, Dr Muli Fetzili.
It is a contention of a range of organisations that form part of this campaign, is that is precisely the kinds of resources that South Africa needs to currently spend to eradicate the legacy of Apartheid.
Today for the majority of South Africans we are living through a very bad sequel to a movie that is called - that we could easily call oppression part 2. It is scandalous, we argue, that the very loans that the National Party Government took to engage in acts of terror across our boundaries, to engage in acts of terror against its people, are the very debts today that in democracy and freedom the vast majority of our people have to service.
We think that of all the outrageous things that - since within our transitional process one of the worst indignities and tragedies of injustice is to ask those that suffered under Apartheid, those that these loans in part financed that capacity of the National Party Government to today have to repay it back.
You might think then that perhaps our situation is unique and there is no historical precedent and justification for those that suffered under Apartheid to raise the question of the legitimacy of these debts being serviced.
We want to draw the attention of this Commission to a doctrine that was used by the United States at the turn of the century, called the doctrine of old year's debt, when the United States refused to pay a loan back to Cuba - Spain with regard to Cuba.
Where the doctrine spelled out, simply this; if the despotic power (indistinct) a debt not for the needs or in the interests of the state, but to strengthen its despotic regime to repress the population that fight against it, this debt is odious to the population of the state.
Odious debt (indistinct) and used for ends which to the knowledge of the creditors are contrary to the interests of the nation, do not fulfil one of the conditions that determine the legality of the debts of the state.
The creditors have committed a hostile act with regard to the people. They can't therefore expect that the nation freed from the despotic power assumed the odious debts which are personal debts of that power.
Those that lend money to the Apartheid Government, these include local commercial institutions as well as foreign commercial institutions. Many of the foreign commercial institutions have had their debts repaid since.
"Lenders who finance the arming or enrichment of despotic rulers and the suppression of guarantees of protection from international law."
For years bankers have not exercise the vigilance that would make state debts lawful. The consequences would be breath taking. The Chase Manhattan's, Lloyds and (indistinct) might find that the third world loans were uncollectible, except for the personal estate of the Mark Hosos and Mabutus who contracted and we could add the De Klerks and the Bothas.
The question we have to face however, is that what is the structure currently of this debt and how is this debt made up so that in coming to the TRC we ask that the TRC needs to add its voice to a critical examination of the structure of the debt as it sits today; to look at how in fact this (indistinct) of justice can be addressed.
Five percent of what we could call Apartheid Debt, debt incurred by the National Party Government, is owed to European commercial institutions. We want to be clear that we are not calling for irresponsible unilateral cancellation of the debts.
All the organisations that have been involved in this campaign have engaged to the issue with what we would argue as a high level of responsibility. We argue, however, that would those European commercial institutions, and we know the names, we know the details of when those loans were took, what the interest repayments are and so on; that a compelling case can easily be made for our Government to enter into negotiations to actually cancel those - that slice of the debt.
However, admittedly, that is a small slice of the debt. The biggest slice of the debt where we think a story that needs to be told and we hope that the TRC can help the story to be told. The biggest slice of the debt is owed in a funny sort of way to Government itself.
It is owed to the public investment commission. Now, I want to just for the benefit of others; the commission has the diagram in front of them. If we have Government here, Government has the responsibility to put money into the state pension fund for the worker, civil servants that work with the fund.
The state pension fund then puts the money into something called the public investment commission. The public investment commission is supposed invest the money. The historical practise has been most of the public investment commission resources were loaned back to the Government itself when Government had a deficit and needed to borrow.
So you had a massive flow of capital within this system. Now in 1989, the National Party Government, seeing that the writing was on the wall in terms of a impending democratic Government, cynically changed the structure of the state pension fund.
What it did was, it moved from what was a common practice in other countries of having what is called a pay as you go system towards a fully funded system. So in essence what it means is, private companies have the obligation to have within the pension funds almost enough money to pay out all the employees if tomorrow the company were to crash.
This is not a system used generally by Governments, because the assumption is made that Government will not need to have within its pension fund assets resources to pay out everybody, because the assumption is made that Government as institution is not going bankrupt.
But what the National Party between 1989 was to change the pension fund system such that whereas in 1989 we had less than 7 billion in the public investment commission, that figure then rose between '89 and today to a figure of 135 billion rands.
Now, today 40 percent of our burden in terms of servicing is owed to the public investment commission. We have commission research which has been verified by various economists including Prof Pieter le Roux who is the head of the institute for social and economic research at the University of the Western Cape who also sat on the Smit Commission of the Government to look into the pension funds; that by going back to the previous system of pay as you go without any burden and any threat to any civil servant within the pension fund, we would be able to free up a substantial amount of assets and write off some of the debt as well as be able to allocate and release money for social spending.
The last slice of the debt is owed to local commercial institutions. This is an area where we have struggled in terms of the research that we've been doing to ascertain clearly which local commercial institutions lent money to the Government, when it was lent and so on.
It is a project that if we are going to seriously understand the truth of what happened under Apartheid, we need to actually understand more clearly. If we are serious about reconciliation, then we would argue that there cannot really be reconciliation in this country if children who have not yet even been born will grow up in a world where they in fact have to carry in part the burden of the debts that the previous National Party Government took.
I want to conclude by saying that the submission goes into a lot of technical detail with regard to the economics of the question. We are convinced that the work that we've done and the economic verification that we have done, makes a compelling case of our Government to re-open the question of the debt that was inherited from the Apartheid State; to look at it with vision, with courageousness and with rationality.
MR NAIDOO: ... able to ...(indisinct) and so on to engage in the acts, but those who helped finance the very policy makers that were able to make policies knowing that they could for example have enough as 1 million rand a day to spend in the (indistinct) Namibia as was the case of the expenditure in terms of the destabilisation, for example, against our neighbouring countries.
We approached the Commission fully aware that it is your intention to probe the past so as to facilitate reconciliation. We want specifically to draw your attention to the unique nature of the problem of which brings us here, of the Apartheid debt.
That the Apartheid debts is a unique problem since it is not only a problem of the past, but it is a problem that we are living with today and even more ominously it is a problem which is going to be carried by those who have not yet been born.
We hold the view that really it is an immoral thing to ask those whom you have offend - the children whom you have offend by taking away the privilege of their parents to carry the debt and this is what the Apartheid debt in simple does.
Our problem in this and we hope that you can use the opportunity when you meet, the banking fraternity in South Africa. Our problem is that this institutions even as we speak today, continue to make profit out of that which they did in the '80'2 and so that is why we really think that this is a very serious and it's a very sad thing.
The least we expect from them, even as they parade before you saying they wish they could have done better, is to (indistinct) specifically. In that case, what can they do, with respect, to the profit they're continuing to get out of the - the close to 20 percent which is used to service the debt annually.
Think of the number of classrooms we cannot build, think of the pension fund we cannot increase, because close to one fifth of the budget has to go to that. So we are saying if there is a single thing of the relic of the past which casts a dark shade on the new South Africa and which will continue even in the future; it is the Apartheid debt.
Mr Chairman, all we are saying is, if there is one thing which is going to roll over and withdraw all the success and progress we've made, it is the Apartheid debt and we approach together with the coalition of NGO's approach this Commission, hoping that at last the crime which was done by funding, by oiling the Apartheid machine, which was done by the business sector which we're reminded here that their business is to make profits at all cost.
We hope that through this Commission one day this issue, this crime will have its day in court before you and that they will for the last time answer why they did that and what they wished to do so that that burden is not carried by the future generations in South Africa.
Let me acknowledge that the, I think the 300 billion debt burden and the 39 billion interest annually is of - should be of huge consequence to all South Africans. The problem as I'm sure you are aware of much more than I is that of this debt as you rightly point out, only five percent is to foreign investors and frankly that's the least of problems.
I think we could persuade our people to wipe that debt out and this is not something that only South Africa is looking at, but many many countries in Africa and other parts of the world and I think there's a generous view of this amongst many institutions of the world.
Let me say that we recall the and you make reference to it, that when the African National Congress who enjoys majority in Parliament actually referred us to this and seemed to be very committed to doing exactly what you are placing before us; it seems to me that it would help us if you could bring us up to date as to what the Government's attitude is right now, because frankly it is they, principally more than anyone else who can implement the very recommendations that you are making.
We in turn will obviously be making recommendations, but those will be at the end of the life of this Commission and I would have thought that this matter is so urgent for all of us that action should be a lot sooner than that.
However we think that a lot of energy needs to be added to get Government to take a more courageous position around this issue. Let us just say that we do not believe that there are no solutions to this problem. We believe that it's complex, it's difficult and it's challenging.
On each slice of the debt we believe that there are things that can be done. With regard to the foreign we are quite convinced that if there was a campaign led by the church leaders in our country, together with church leaders in Europe where those European commercial banks are located, backed by President Mandela, we would very quickly; in six months we would argue, those banks it will be in their (indistinct) interest to very quickly say we forgive the debt.
The amounts that are involved, if they look at it from their cost benefit analyst it is not in their interest. So we are saying that our Government together with civil society here, together with civil society in Europe and including the backing of some Governments in Europe, should start negotiations with those five institutions as a matter of urgency. So that - there's a clear path there to eradicate - to deal with the problem.
The second bulk slice of the debt which is the pension fund debt, we are quite convinced that the research that we have done, the formulations that we have put on the table, provide us with the very clear solution in terms of restructuring the current system by which the pension fund actually exists - is currently run and going back to the pre-1989 system before Apartheid book keeping by the National Party, you know, got off the starting blocks with regard to the pension fund.
Now, we're not saying that is a simple matter, you can click your fingers and do it, but all the reasons that have been put forward as concerns by the Ministry of Finance are reasons that we are able to say, but this is the answer to it.
So for example, one of the biggest reasons that build the Minister of Finance and the director general, Maria Ramos have given over the last month, is that we're concerned about the civil servants' pension fund.
Now we are of course also concerned with the civil service pension funds. We have the backing of trade unions who have civil servants within them. Surely they're not going to act against him. So there's a simple point here; that more money than needs to be sitting in this fund is sitting in that fund and the National Party clearly had a reason why they would do it.
One of the reasons was that they were anxious about this new Government coming in, what it would mean. A lot of them had an agenda for ensuring that they get pay outs and so on and they wanted to make sure when they got the golden handshakes there will be enough money in the fund.
The other reason we can speculate that the National Party whose borrowing in the last five, six years increased tremendously, did that partly as an agenda to make it very difficult for the new democratic Government to have the space to spend resources to seriously eradicate the legacy of Apartheid.
So, there we're saying to our Government, we don't blame you for inheriting the system, but we will blame you if you don't actually rectify it and go back to a system that can release substantial amounts of resources that will help bring down the 300 billion debt burden. (Speaker not in mike - silence)
Sorry. With the local commercial institutions we want to say that it is wrong to say that there's absolutely nothing that can be done, because with the locally commercial institutions we're talking about in some cases SANLAM, OLD MUTUAL and so on and they are - their public pension funds in it.
Of course we wouldn't want to touch the integrity of private citizens' pension funds, but we need to go back and look at each of these institutions, find out what profit they made out of lending to the Apartheid Government and then there are a range of mechanism including where we say to such institutions, recognising that in fact you lent to an immoral Government, we want you to give Government a ten year interest holiday where for ten years Government is absolved for the responsibility of paying just at least the interest component.
We would obviously like to see those resources - sorry, those debts also cancelled, but we're saying that there are many things that can be done and we need to look at each case on a specific bases and we have not done that.
As a country we have not done that and we are saying that we owe to our people, we owe to the people - children that are not yet born, to actually do this things with the right kind of resources vision and courage.
MR RAMASHIA: Chair, may I add just briefly by saying that it is true that the African National Congress has given some support to this process, but it has only been at a rhetorical level and if they are very serious about this issue, then I think they will have to translate rhetoric into action and given the fact that the majority of legislators in the National assembly are ANC member, we cannot rely on the fact that the current laws that govern pension fund would not allow them to be able to intervene in this situation, because if they're serious enough about it and they think that something should be done, they have the legislative muscle to change the laws appropriately.
CHAIRPERSON: Thank you. Thank you, Mr Ramashia and your colleagues. You've raise a very important controversial issue. As Dr Boraine said we've received a document from the Cape Town chapter if you like earlier on in the year. So we have started thinking about this and clearly our research department is looking at it and we may proceed then to have further discussion with Government.
MR KESANI: I'm (indistinct) Kesani, the President of the Islamic Chamber of Commerce and Industry and together with me I have two of my colleagues, Mr Bobard and Mr Aref also of the Islamic Chamber of Commerce and Industry.
MR KESANI: Mr Chairman, thank you very much firstly for allowing us to present our submission today. I also want to start off by complimenting you on the choice of venue. This marvellous (indistinct) at one stage refused entry to people of colour and as time went on they then allowed people of colour to come here for only for the people of colour to realise then they couldn't afford their rates.
Also, by going back to our activities - activist days we had a saying for capitalism. At the time that we said that capitalism had two faces and both of them were ugly and as I present my paper I think you'll probably begin to understand why we are saying this.
The implementation of the policies of the Apartheid regime reaped (indistinct) havoc on the Black population of our country. People of colour had every aspect of their lives controlled in that their movements from the cradle to the grave were monitored and restricted.
The schools and hospitals they could be admitted to, the areas of their residence, the places of their work, the skills they could acquire, the market that they could sell their labour to were all governed by statuary legislation.
In this scenario, what was the role of the corporate sector? Was it an innocent bystander, claiming it had no responsibility for the actions of the Apartheid Government, or was big business actively colluding with the Apartheid regime to an act legislation that would restrict the advancement of the Black people?
There was hardly any opposition or protests from the captains of industry to the injustices meted out the Black population. Their silence in fact suggests tacit approval of the policies of the Apartheid Government.
Prof Terblanche called it a conspiracy. We would prefer to refer to it as the unholy alliance of big business and Government. After all the implementation of these harsh laws not benefit their business enterprises resulting in increased profits.
For profit maximisation was to them a greater priority than human rights. The corporate sector's benefits included cheap docile and readily available labour, absence of any form of competition from Black business, mobilisation of capital resources from the Black population for utilisation by big business, the most viable business and industrial areas reserved for big business, employment opportunities and advancement to senior management positions and to the board of directors reserved for Whites to the exclusion of the Black people.
Power remained exclusively in the hands of White people. Corporate social responsibility; what pro-active role did the corporate sector play in ensuring a better life for the Black employees and their families in terms of health, education and housing during the Apartheid era.
Here I make this as a comparison to the benefits received by White employees. I say the role of the big business in social responsibility was minimal. The resources invested in social responsibility programmes was negligible.
Forced removals, the implementation of the group areas act, forcibly removed thousands of people from their homes and businesses causing hardship, aggravation and loss of income. The social fabric of (indistinct) viable communities was destroyed.
The case of example I paid you; district six, the (indistinct) of Durban. Properties were expropriated by the Apartheid Government at way below market prices. Big business benefitted from these force removals in that is snapped up properties directly or indirectly via Government structures such as the community development board at bargain basement prices.
There are numerous instances of properties expropriated by the state from Black business and sold almost immediately to the White business sector. Big business also captured the custom build by Black business over many years of hard work.
These institutions mobilised billions of rands from the Black population and utilised these funds for investments in and loans to businesses owned primarily by Whites and for development of businesses and residential property, hotels, holiday resorts, etcetera for the White community.
There was little or no investments in the Black townships. The financial institutions rational for this was that investment in Black areas posed great risks. Whilst it was good to accept moneys from the Black community, it was risky to invest in or lend to them.
I'm not here for (indistinct). I'm saying that as far as the way forward is concerned, Prof Terblanche talked about our wealth tax, I would prefer a one off payment, a fund to be started off where a levy could be imposed of say between one to five percent on the nett assets of the corporations that benefitted directly from Apartheid and to set up this fund with the idea of providing some form of reparations to those who suffered under Apartheid, to the disadvantaged, to the people in small business, training skills, mentorships, all sorts of things could be provided.
Corporates should have an affirmative action policy that will ensure the rapid employment and advancement of the people of colour in senior management positions and to the boards of directors of big companies.
The corporate sector must be engaged in social responsibility programmes where a goodly portion of their nett income is utilised in providing health, housing and education for their Black employees and their families and contribute it to other forms of social advancement for the Black community.
This was a myth as the Reserve Bank's fee of operations was influenced and controlled by the Apartheid Government. Monetary policy and interest rate policy were driven by a political agenda. How else does one explain the rise and fall in interest rates after and before elections?
The Reserve Bank's claim of being apolitical is another myth. The shares of the Reserve Bank were held by Government and the White corporate sector. Senior management positions at the Reserve Bank from the Governor, Deputy Governor, General Managers, etcetera, were all held by Whites, many of whom were members of the Broederbond and right winged organisations.
Up to the early nineties, Blacks were employed to the best of my knowledge in menial positions; to make tea or as cleaners, drivers and security personnel. Even today there are few senior management positions held by Blacks at the Reserve Bank.
The Register of Banks and Bank Supervision Division. The office of the Register of Banks and Bank Supervision Division, although autonomous are situated at the Reserve Bank. Banking licence, a function of this office, is the approval of banking licences.
In 1987 Pik Botha was directly responsible of granting a banking licence to a bank whose name I do not want to mention, but here is a copy of the Hansard in which he says that if the Government were to grant the Muslim community a banking licence it will help me in my work abroad.
Lifeboats. Where banks experienced difficulties or had liquidity problems, the Reserve Bank would assist by providing a lifeboat such as in the case of Trust Bank where the Reserve Bank advanced billions of rands at an interest factor of one percent at the expense of tax payers.
Yet small Black controlled banks in difficulty were not give assistance by the Reserve Bank. It would appear that these small banks were expandable as their closure would not impact on the country's banking system.
The way forward. We support the view that the Reserve Bank should be independent. However, its actions should be transparent and accountable. Monetary policy and interest rate policy should be set by a committee of experts reporting to the Governor of the Reserve Bank. The committee members should be drawn from the private sector. The Reserve Bank must at all times be apolitical and free of any form of Government pressure or influence. The senior management and middle management positions at the Reserve Bank must be held by competent Black people so as to reflect the diversity of our new democratic society.
A rapid implementation of affirmative action is needed. The powers of the Registrar of Banks must be (indistinct). He too should be guided by a committee of experts who should advise him on various matters relating to banking supervision.
The Reserve Bank must have a policy of assisting the establishment of small Black controlled banks. The current requirement of a minimum, (indistinct) should check to 50 million rand to honourers and not achievable by small companies wanting to establish banks.
I've got here as the last a role of some Black business, but it could be expanded to say that all of some businessmen. There were during the Apartheid era members of the Black business community who collaborated with the Apartheid regime.
These businessmen together with corrupt politicians in the tri-cameral Government were engaged in procuring business contracts, land, houses etcetera for their own benefit to the exclusion of those rightfully of these assets.
The businessmen were also involved in sanctions busting. Sanctions busting exercises by encouraging importation of good from abroad for the Apartheid Government and the private sector and exports of local goods, produce, arms etcetera under various guises, for example made in Swaziland to countries which normally would not purchase goods from South Africa.
MR GLAMINI: Well, that's a very difficult one. I think at the time we're going back pre-'94 that we were aware of certain people and certain activities, but it is very difficult to find concrete evidence, proof that these were the - that these were the activities that these were the people.
I can only say generally there are people who are engaging in bringing in oil, for example, into South Africa at the time when the mass movements called for a boycott of our implementation of sanctions, but it is very difficult.
My next question are on page two of your presentation, where you allege that the business sector did not do anything to oppose or to protest against the Apartheid system and I'm not so sure whether that is accurate.
Some of the presentations that we have had for the past two days and there were - there was an evidence to that effect. I think what struck me was that it was not enough. It didn't go far enough, but yes, I would like your comment whether you still maintain that nothing happened whatsoever?
We believe that the capitalist powers of the day, those who operated in South Africa together with their friends in the capitalist countries, could have rooted the Nationalist Party and it's not a question of we could have done a little more. I think they could have gone for the jugular right at the beginning.
MR GLAMINI: Look, I accept your view, although I still feel that something was done, but for example just one, one recalls amongst others the presentation by the Rupert family and you could see that there were pitiful and direct challenges to the - to what was happening at that time, but as I said that look, I respect your view and that of your chamber.
Also can I check with you your - on page two again, no page three rather under corporate social responsibility? (indistinct) there was a strong evidence of expenditure in the social responsibility area and yes, you refer to it as minimal.
MR GLAMINI: Well, look, I wouldn't like to talk on behalf of the business community, but I'm sure if the statistics were to be revisited, a substantial percentage of the social - corporate social responsibility budget went to the Black communities, because of the nature of the policies governing the social responsibilities, namely that it was meant to assist disadvantaged communities etcetera and by definition it went to the Black communities.
DR BORAINE: Thank you for your presentation. There are a number of first in your presentation. I've been trying for these last two days and before to understand the position of some of the business groupings and individuals who argue quite convincingly that Apartheid was bad for business.
On the other hand there have been some other groupings who have made very forceable statements indicating that in some measures White business, corporate business benefitted from Apartheid and there's quite a lot of confused thinking about this.
What you've done is to set out from page two, or I beg your pardon, page one, very crisply the corporate sector's benefits. The whole question of cheap labour for example. I don't think anyone can deny that this was a fact ... (power failure) ... not only 1985 to 1994.
The second is that you have raised the whole question of the Reserve Bank and you have made a number of very strong criticisms of that bank and it just happens that amongst the banking fraternity who will be speaking immediately after you, will include the Reserve Bank.
You've also gone out of your way to make some suggestions about the way forward and I'm interested in your comments about the proposed wealth tax on the one hand; those who are opposed to any of it at call and your own views which are different of course from Prof Terblanche.
Then a final first is that Ann Bernstein and I had some major differences with her, but I also think that she made some extremely relevant comments. The one comment that she made was that you know you can't just talk about the good guys and the bad guys and there's an area of grey in this here as well.
So far we've heard that the White community of business was evil and Black business was doing its best to off set that. What you are suggesting, which is not a very popular thing to do, is that during the Apartheid era members, some members of the Black business community were in the self same kind of boat.
I think that's another issue that we're going to have to look at and obviously we will try and find out, because you painted with a very broad brush and we'd like to try and get some more specifics and if you have any more specific information relating to any of these that I've referred, I would be very grateful to you.
Finally I've made a lot of comment. I just want to ask one question and that is; and I risk this and I really don't want a long reply, so I don't want to get in trouble here and that is; you have not told us anything at all about your own organisation, about its origins, about the date when it first started, where you see your place and your role, whether you are - will be a separate institutions for all times or whether this was an accident of history, because of the racial situation in our country or whatever?
I really - I mean I - you must forgive me, I don't want a long history, but it would certainly help me if you could just position yourself against the background that we have heard from many other groupings.
MR KESANI: Okay. The chamber firstly was initiated in 1988 and it is unique in the sense that its operations are governed by the laws of the Koran, meaning that all our activities are - have to be within the confines of our religious requirements.
Membership wise we are not a very big organisation, but the membership number is just over 300, but I am glad to say that most of them are paying members. It sometimes makes a difference in having a minority that is paying.
In so far as our activeness, yes, we've been sort of low profile, but on a personal level I am saying that some of our members have been involved in the NGO's and I personally belong to many NGO's myself.
I was also in the forefront of the fight against the group areas act. I was the secretary of the (indistinct) association. If I may say - I don't want to blow my trumpet, but I was one of the first squatters (indistinct), this page in the capital assisting was in 1988 when I was thrown out of the residence that I was living in in Beju. So there has been a long history of struggled politics, but what we're trying to emphasize is that in all the struggle we've had very little co-operation or input from the White business sector and as a banker, as a person directly involved in business, I was very disappointed to learn that the business community, the banking community would not proceed and say here is one of our kind; let's see what is it that we can do to help and to go forward.
You know it was too a question of well, they're in one little area and doesn't really mean much to us. So what, if they are thrown out, that's the scene etcetera and this was the kind of thinking and that's why I said that we are here to express our disappointment in the role of the business sector.
I must tell you that I at the time in fact approached many many business organisations and it was always; we'd like to do something, but you know we can't really approach the Government, because we'll be placed in an embarrassing position and their cosy relationship would be disturbed.
MR MALAN: Chairperson, I just want to make sure, in the submission here, apart from addressing some institutions, you also levelled criticism at business in general, big business, corporate business, for not paying people or for not providing pension funds, paying very low salaries and so on.
MR KESANI: Obviously the submission is to do with corporate sector and the role of the corporate sector. In so far as membership of our side is concerned, our members are by and large one person operations, trade shop keepers and alike.
CHAIRPERSON: Mr Kesani and your colleagues, thank you very much for coming. I don't think there are any further questions. If we have anything further we will write to you and ask for clarification. Thank you.
CHAIRPERSON: Thank you very much, Dr Stals. Before I hand over to Dr Boraine in helping you take the oath or affirmation, you haven't been here to listen to what I've been saying all morning and all afternoon.
DR STALS: Thank you to the Commissioners, also for this opportunity to say a few words. I have prepared a few notes which will be attached to the submission that you have already received some weeks ago.
The attached submission was prepared by the Reserve Bank at the request of the Truth and Reconciliation Commission. As no specific questions were directed to the Reserve Bank by the Commission, the submission covers a general overview of the tasks and functions of the Reserve Bank and of the monetary policies applied by the bank over the period 1960 to 1994.
It should be pointed out that over this period of more than 30 years, four different governors headed the bank and most of the deputy governors and senior staff were responsible for monetary policy at certain times of this extended period, are no longer in the employment of the bank.
The bank's activities were however extensively recorded in more than 120 quarterly bulletins, in more than 30 annual economic reports, in the annual chairman's addresses, in many statements on policy issued by the bank over this period and in numerous speeches and publications by senior officials of the bank.
It is obviously not possible to cover all aspects of policy over this long period in a short submission as we were expected to present to you today. The Reserve Bank would like to emphasize that the bank was created in 1921 by the then Parliament of South Africa as a non-political, impartial institution with a mandate to manage ...(tape ends)
DR STALS: ... the definition of its task, pursue a macro-economic approach guided by overall financial developments such as changes in the money supply, in bank credit extension, in the level and structure of interest rates and by changes in the exchange rate and the level of the official foreign reserves.
Developments outside of the strict financial area such as developments in physical policy, trade an labour markets and political policies pursued by Government, can have important effects on monetary policy, but cannot be controlled by the central bank.
Firstly, the bank was tasked with the administration of exchange controls, extended by the South African Government in 1960, 1975 and 1986 in direct reaction to internal political developments which placed serious constraints on South Africa's international trade and financial relations.
Exchange controls were, however, not unique to South Africa. Most countries in the world use the exchange controls quite extensively as part of macro economic management in a post world war two period.
Scarce resources of foreign exchange had to be conserves and allocated for essential international payments. Today there are about hundred companies in the world where exchange controls are still being used and applied.
Exchange controls were introduced in South Africa already in 1939 as part of the Sterling era arrangements of that time and to an extend that in the 1960 - 1990 period, because of the special South African situation of that time, the application of exchange controls over such an extended period of time undoubtedly created many distortions in the South African economy.
A second are where the Reserve Bank was again involved as an agent for the Government, was with the administration of the debt stand still of the period following upon the foreign exchange crisis of August 1995. A debt stand still committee appointed by the Minister of Finance negotiated various debt standstill agreements with foreign creditors for the gradual and orderly repayment of a restricted amount of foreign debt of South Africa.
The Reserve Bank administered this arrangement with the traditional professionalism expected from a central bank. The foreign banks involved in the debt stand still negotiations made it clear at the time that they had no serious problems with the South African economic and financial situation, but were looking for political reforms in the country.
This message was conveyed to the South African political leaders by the chairman of the South African debt stand still committee and by Dr Fritz Loydwieler, acting on behalf of the foreign banks in a series of meetings with political leaders in South Africa during December 1985.
Subsequently Loydwieler had further private meetings with political leaders to convey similar messages from the international banking community. The forced repayment of foreign debt from 1986 to 1993 had a serious depressing effect on the growth potential of the South African economy.
Indeed a total macro-economic policies had to be geared in economy that was no longer able to run at its full potential. The Reserve Bank made many warning statements about the consequences for long term economic growth and development of the depressed conditions.
"For any lasting solution of our economic difficulties there are at least four basic requirements. Firstly, we must continue to apply an appropriate short term monetary and physical strategy.
"The large capital outflows over the period therefore forced a fairly depressed domestic economy with real economic growth well below the normal optimum capacity of the economy, absorbed a large share of a relatively declining amount of domestic savings and drained the domestic money and capital markets of liquidity which at times had to be replenished by the unhealthy creation of new money in the country."
The persistent deficit of the overall balance of payments had a depressing effect on economic growth and development. Inflationary pressures remained strong because of a pensive domestic demand. Interest rates remained high because of the persistent drain of liquidity from the domestic financial markets.
The economic growth rate averaged less than one percent per annum from 1985 up to 1993. All South Africans, and particularly people from the disadvantaged groups suffered because of these depressed economic conditions.
Unemployment increased year after year as new entrance to the labour market could not find employment. It was particularly those people with a lower level of training and undeveloped skills that ended up in a growing ranks of the unemployed.
The macro-economic consequences of the political system of the time, made the Apartheid policies of the Government ...(indistinct). The rising pressure of adverse economic developments undoubtedly made an important contribution towards the decision to interview major reforms in the early 1990's.
The Reserve Bank always regarded its actions and behaviour to be strictly in compliance with its mandate given to it by Parliament and that is to maintain overall financial stability, even in an adverse political environment.
To the extend that its macro-economic monetary policies were thus overriding impartial objective in mind, delayed the process of political reforms in South Africa, or did not mor actively contribute an earlier enforcement of the inevitable process of change; the bank joins other institutions that already submitted their humble apologies to this Commission and to all the people of South Africa.
Mr Chairman, we have a very comprehensive document, a submission of about 40 pages in which we cover broad policies followed by the bank over this period, but I think what is perhaps more relevant for the discussion here and for the meeting with you, is what I tried to summarise in these few introductory remarks. Thank you.
I've gone through the submission, but I confess immediately I'm not a banker and it takes a little while to absorb some of the intricacies of that and I think we are trying to understand the role of various groupings and institutions in the period 1960 to 1994 and you've certainly, I think, put your finger on most of that in your much more brief presentation and less formal.
In that presentation you make the point that the bank is proud of its record of strict professionalism since 1921. There are people who would argue that the Reserve Bank was part and parcel of the Apartheid Government and that it was dominated or directed by a political agenda.
I specifically braise this, because immediately prior to your presentation, there was another presentation where there was quite sharp criticism of the Reserve Bank and I think it's only fair that I should inform you of that and to give you an opportunity to respond to it, because what we're trying to do is to get at the truth.
DR STALS: I might again emphasize that we're talking about a long period of time of more than 30 years. There four different governors of the bank. There were many Ministers of Finance and the relationship between the Reserve Bank, Government is very much determined by personalities involved; by the governor, by the Minister, by the head of state, but I think it is certainly true to say in general that my predecessors, the people I knew in the Reserve Bank, the experience I've had with the Reserve Bank, the bank always stayed outside of the political agenda.
Yes, certainly from time to time political influences did make decisions in the Reserve Bank more difficult on interest rate changes, but the general attitude, approach, philosophy of the Reserve Bank has always been to be an independent institution outside of the political world.
I would certainly not agree that the Reserve Bank was at times or over the period as a whole dominated by a political agenda; that I certainly do not believe is true. I think the evidence is there. The many many instances where the Reserve Bank had to take unpopular decisions on monetary policy that were not only unpopular with the people of South Africa, but also with the politicians in South Africa.
DR BORAINE: Thank you very much. The - perhaps it would be helpful for us to try - for the Commission to try and understand; there was a debate over the last couple of years or perhaps since the early '90's with the transition alluring ahead and the obvious possible change of Government.
There was a lot of debate as to whether the Reserve Bank should be independent or should be simply a part and parcel of the Parliament of the day. Have you seen any changes in your view, as to the way the bank operates now and say as it operated in the late '80's, early '90's?
In the case of South Africa, I think it is the right way to do it. Government gave the instruction very clearly to the Reserve Bank in the constitution of the Republic of South Africa in the South African Reserve Bank act; that it's your function and your responsibility to protect the value of the currency to make sure that we have a stable financial environment.
You ask me whether there is any difference. Well, I've been governor for about eight and a half years now and I think the present Government has always shown great respect for this autonomy of the Central Bank and for the position of the Reserve Bank to achieve or to strive to the objective of financial stability, determined by Government, but left to us on how we should do it.
The present Government has always shown great respect for this autonomy of the Reserve Bank and I will say my experience is that we have experience, enjoyed a greater degree of autonomy and independence over the past eight years than during many other times in the preceding 30 years or so.
DR BORAINE: Thank you. I only have two final questions and that is; many people who have come before us over the last two days, particularly from the so-called Black organisations have been critical of business in terms of the appointment of senior people in their institutions. Independent companies, the corporate sector generally, the same criticism has been levelled against some banking institutions including the Reserve Bank.
DR STALS: I would think if one goes back in the long history of the period covered in this submission it is a fair criticism. Again within the environment in which the Reserve Bank operated, I think it is understandable, but there certainly has been major changes in the attitude, in the policy and the approach over the past five, six years and gratefully from our side also, with much more success.
So even if we did want to recruit at one stage, it was almost impossible to get people to come and work for the bank. Now, we have made good progress in the bank over the past few years. I think four years, five years ago the total staff at the bank we had about 16 percent from the disadvantaged communities. We now have about 34 percent if I am correct.
We have found it easy - fairly easy to make the necessary transformation at the top level of the bank and that is it the board level of the bank. Composition of the board today, I think is such that we can say at least say we have good representation of all the population groups in South Africa at the board level of the bank.
We have made very good progress at the junior level in the bank. I must say that our attitude was also central banking is a very specialised function. It is difficult to get people from outside the central bank and unfortunately there is only one central bank in every country; to appoint people to senior positions that will have the necessary experiences behind them.
We appointed a number - 120 if I have it correct, young Black people to the bank about three years ago, four years ago. We put them through them through very special training courses. We did a lot of work in the bank itself to establish a special Reserve Bank Training Institute which is so successful that we are now providing training to central banks from the Sadec countries, the other countries in Southern Africa.
It was our experience that it takes about ten years for a junior appointee in the Reserve Bank to reach the level of management. We decided that we will put these cadets, these young people that we appointed in the bank through special crash courses, enhanced management development programme to reach the management status level by - in about five years time.
Many of those people left the bank again after the training we gave them. but I certainly believe that we are now beginning to reap the benefits of this programme and we are promoting quite a number of people from that position to the junior middle management level.
At the level of senior management in the bank, yes, we admit, we have not been very successful. We appointed a few people who left us again, regarded the Reserve Bank as a good place to get some more training experience and left us again and it is very difficult, but even we do our best.
So, the goodwill is there, the intentions are there and we are gradually making progress and I think as with many things in the Reserve Bank, I know we are often accused of going - moving too slowly and I've got to be prepared to apply a big bang approach, but gradualism.
Well, we have the same policy of gradualism in the transformation of the total staff of the bank and yes, we think we make good progress and we think we do it on a bases that maintains the standard - it's a high standard, it's a good quality, the professionalism of the central bank.
The last question I have is; there was a submission before the Commission which suggested that the Reserve Bank was more ready to assist as a life boat, assistance as it were, banks which were sort of establishment banks, to use a phrase.
The one referred to was Trust Bank and yet in their view, in their submission, so-called Black controlled banks who also got into difficulty were not given assistance. They say that the assistance was given at one percent interest factor. I'm not sure if this is factual or not, but I wonder if you care to comment on that?
You can just look what is happening in East-Asia today with Thailand where the Government Central Bank took over 58 banks and financial institutions recently. Indonesia where 18 banks were closed and the central bank took over responsibility for the repayment of the deposits.
So that's just one point I must make is that there's nothing wrong with the central bank providing assistance to banking institutions. As a matter of fact, the first transaction South African Reserve Bank did in 1921 was to provide a special loan to the National Bank of South Africa on the second day after we opened our offices.
But on the - over recent years, I think the assistance to Trust Bank and then Bank Corp and then ABSA was part of that whole process of transforming a bank that had serious problems. From Trust Bank into Bank Corp and from Bank Corp into ABSA and the - with the advantage of hind sight it was a very successful operation and it ended up with a new big banking institution that is sound and well based today.
Trust Bank had at the time 90 000 depositors with a total amount of 26 billion rand on deposit. To have liquidated a bank a like that in any country, anywhere in the world, would have been - could have created a major disaster for the total banking sector.
Now, again there - when we talk about other banks, Black controlled banks, the African Bank was established in 1975. The Indian Bank, Republic Bank was established early 1980's, but before that also in the 1970's. Islamic Banks were established. Now, I think this is a Truth Commission and if you were to like to invite some of the senior officials, top management, chairman of board of directors of some of those banks I mentioned to you and ask them whether they ever received any assistance from the Reserve Bank, I am sure they will be able to tell you that relative to the size of the bank, they received much more assistance than Trust Bank ever received from the Reserve Bank.
So, again, if there is anyone of these banks that feel that they were not well treated over those many years providing assistance, must point to you that even in my time I can remember four banks that were liquidated and not one of those that you mentioned were liquidated.
They were assisted at many many times. So I think it is a little bit unfair and as I say I can only tell the truth to the Truth Commission under oath and say to you, no, that we have never discriminated between any kind of bank or any banking institution when they really needed special assistance from the Central Bank.
MR GLAMINI: Thank you, Chair. Dr Stals, there are two questions. The first question is about; did the bank ever make any political representation to the Government in so far as politics interfered with its goals; that is the goals of the bank with regard to financial stability?
I refer to one incident and that's one of the very few where I as chairman of the debt stand still committee and Frits Loydwieler, the late Frits Loydwieler as mediator for the foreign banks in the debt re-assuring negotiations went to political leaders in South African and took a very clear message to these political leaders from the international banking community on precisely what you're referring to; political representations and the very clear message that the international banking community was looking for political reforms in South Africa and not so much for changes in economic or monetary or physical policies.
So that is one example. I think again I certainly do know that my predecessor, the late Gerhard de Kock had many discussions. I quoted one of the public speeches he made where he said that we need the commitment to political reforms otherwise we cannot solve the economic problems of South Africa.
There were one or two occasions where there were intervention in the Reserve Bank policies which again I think was public knowledge at the time; when a State President instructed the governor of the Reserve Bank that he should not increase the bank rate and for six months we could not increase the bank rate and during that six months period we lost half of the foreign reserves of the country.
Yes, certainly there was a big debate at that time, but that was a special incident of political intervention in the policies of the Reserve Bank and I think the experience of that six months contributed a lot to the more correct attitude of later Prime Ministers, or later State Presidents and later political leaders in the country.
So, the Reserve Bank, yes, I will time 76 years from time to time obviously you will find that there will be differences of opinion between the political leaders and the policies of the Reserve Bank, but that is exactly the time where central bank must stand up and must show its independence and must be prepared to do the right things.
What can the central bank governor do if he cannot convince the Government to accept his policies? Well, the only honourable way is to resign and this has happened many times in many countries in the world, but in the 76 years of history of South Africa it never happened before.
He mentioned the maintenance of law and order as one of those requirements and why I am interested in it is because the way law and order was maintained during those times, to me it leaves much to be desired and I just want to get to an understanding whether Dr De Kock when he put maintenance of law and order as one of the requirements; did he understand the way the Government was implementing that especially in the Black communities, all the repressive mechanisms that were used to make sure that there was law and order?
DR STALS: Yes, I must say again that it is not normal for a governor of a central bank or for the central bank to try and even give advice in public or guidance to a Government on what the political policies should be, but even so with the difficult environment in which we had to operate with the absolute 100 percent certainty that many of the frustrations and the problems for the central bank had a political origin and not a pure economic or financial origin.
I think it was fully justified for Dr De Kock to make that statement at the time, but exactly how much he understood obviously Dr De Kock was a man with a very great interest. He also worked very closely with the Government, with Ministers at the time when he was special advisor of the Minister of Finance.
So I would say I must think, yes, I am sure that Dr De Kock must have known how the system worked, but his general statement there, thirdly law and order must be maintained, well, I think that is in support of the need to have stability; social, political, financial, economic stability in the country.
I think one should really interpret it in that sense and not any endorsement of the way or the specific system that applied in the maintenance of law and order at the time, but more a general philosophical statement that you need law and order in a country if you want economic development.
DR ALLY: Dr Stals, there is actually another history approach to the South African Reserve Bank which would argue that it was profoundly influenced by politics; that you actually cannot separate politics from the South African Bank, even from its very origin as you yourself indicate in your longer submission; that it was during a crisis in the relationship between South African and Great Britain and particularly over the question of who controlled the issue of South Africa's currency.
Should it be the Bank of England or should South Africa have its own independent central Reserve Bank which would have control over currency and that right from the outset there was always a very strong tension around the question of whether this should be a bank like the Bank of England.
The (indistinct) throughout the history of the Reserve Bank that tension plays itself out and that one of the things - one of the criticisms against the Reserve Bank was when the Nationalist Party came into power in 1948, one of the things they set about doing very deliberately and very consciously, was changing the composition of the South African Reserve Bank, its profile.
That before that the Reserve Bank had been very English with the Bank of England playing a very very strong influence and after 1948 it became overwhelming Afrikaner with more and more of its people in leading positions being drawn from the Afrikaner community.
Now, I accept your statements on professionalism and the need to apply those standards, but was that not applied in the context of serving a Government with a particular ideology, especially when the Government itself was quite conscious of the importance of this bank and the importance of changing the nature of - or at least the profile of that bank after it came into power.
I certainly do not agree with what you say why the Reserve Bank was established. I know it was established because of the gold dishes of the time and the fact that the world went of the gold standard and there were huge fluctuations in the gold price and the South African gold mining industry had serious problems to market the gold at this very big fluctuating price.
It was a gold commission that advised the South Africa Government to appoint the central bank. Now, yes, a part of it was also the intension that if you have your own central bank you can also develop the money market in South Africa and you can retain the savings of South Africa within the country in stead of transferring it to London.
It was in absolutely no ways a clash with the Bank of England. Our objective as matter of fact, the Bank of England gave us his - its full support and provided the first governor of the South African Reserve Bank, came from the Bank of England. Mr Klegesh, who was born in Bloemfontein, but emigrated to the UK at the age of eight years and then came back to South Africa.
So, I think the whole development of the - and the second point I must make is, South African Reserve Bank was the third central, no the fourth central bank that was established ... (power failure) ... 1914, seven years before the Reserve Bank, the bank of Japan existed as a kind of a commercial bank, more than a central bank and there was a central bank of Java in Surinama.
The South African Reserve Bank was therefore the next central bank to be established outside of Europe with no moral of a central bank act or law at the time. Therefore it was very much based on the Bank of England law, but that is just on the establishment of the bank.
When I joined the South African Reserve Bank in 1955, almost no Afrikaans was spoken in the bank and the - I think it was a slow gradual process, but throughout the 42 years that I have worked in the South African Reserve Bank and that includes all that whole period that you are referring to, we've always had respect for the two official langues in the country.
Everything we published was published in both langues. Board meetings took place on alternating bases in English and then in Afrikaans. All the background documents were prepared for the one meeting in English, the next one in Afrikaans and I can assure you throughout this period and even up to today, there are, I would say, 50 percent English speaking, 50 percent Afrikaans speaking people in the Reserve Bank.
Yes, it is true that more and more Afrikaans speaking people came to the bank. Yes, and as far as the board of the bank is concerned, just remember, the Government appoint seven members, the shareholders elect seven members to represent shareholders on the board of the bank.
Furthermore, the Government very seldom changed the head of the bank, the governor of the Reserve Bank. Dr De Swart, I don't know if you can remember when Mike De Kock became governor, but he stayed for 17 years and he became governor before the Nationalist Party took over in 1948 and he stayed until 1962 more or less.
DR STALS: Good. So I would just like to say I think we always respected the official languages in the bank and always applied the policy of using both the official langues in all the activities in the bank.
I just wanted to know whether there are any specific policies or practices that you as a representative of the Reserve Bank are apologetic of today and the related one is this allegation that the Reserve Bank accelerated capital flight.
DR STALS: What are we apologetic about, well, maybe we should not have administered the exchange controls on behalf of the Government so well and effectively. Maybe we should not have been so devoted and so hard working at the time with the rescheduling of the South African foreign debt.
Maybe then changes would have occurred at an earlier stage, but that is very difficult again. The debt rescheduling; our philosophy and our approach was, keep the bankers of the world as friends of South Africa, because one day we will need them again.
It gave me great pleasure a few weeks ago - a few months ago to sign a loan agreement for the Reserve Bank in London with 35 banks in the Grocer's Hall, mostly the same banks that we met with ten years ago with the debt rescheduling on this occasion they gave South Africa a new loan of one and three quarter billion dollars.
So, but this is I think more or less what we have in mind that maybe if the Reserve Bank followed different attitude with the some of the policies in the bank, the pressures on the South African economy could have been more at an earlier stage and changes could have occurred earlier and maybe in retrospect with the advantage of hind sight maybe that should have been a policy that we should have followed.
Accelerated the capital outflows? No, I don't know on what occasion when what form of acceleration of capital outflows. Now, I think most of the time we spent many many hours in trying to keep money in South Africa and that was what the whole debt rescheduling was about and that was what all the sanctions controls were about.
So, I can't think of what you may have in mind or may be referring to if you say the Reserve Bank accelerated the capital outflow. It's a little bit difficult to answer that one, but I don't know what exactly the case was that you may be referring to.
Can I ask the Banking Industry to come forward. Whilst they are coming forward, can I just remind people that tomorrow morning we'll be starting at eight thirty. SANLAM will be starting the programme and there may be some re-organisation of the programme. So, please, groupings that are appearing are tomorrow; don't stick to the schedule.
I want to go by our experience yesterday that at the end of the day and of course I'm sure the panel here would also want to leave right now, but it's our job to stay and I would like to appeal to you to actually grant the same courtesy that they've granted you all day in listening to their closing remarks.
MR TAKI: Mr Chairman and Commissioner, I'm here to represent the Banking Industry before your Commission. I could have walked up with dozens of colleagues, but thought it was probably easier if they didn't all come with me, but you might well have notices that the ranks have swirled and that is specifically the Banking Industry.
Mr Chairman, COSAB or the Council of South African Banks has 43 members. That's 43 out of 57 registered banks are member of COSAB and they represent 99 percent of the total assets of the Banking Industry.
So I'm really talking here on behalf of the bulk of the Banking Industry. I hope that the Commission will understand my difficulty in representing an entire industry, because it is made up of many different institutions which over the years have done very different things and being staffed by different people with different attitudes.
So what I'm really presenting is a slice of the Banking Industry. In fact that banks themselves underwent huge change during the late 1980's and early 1990's. A number of the banks were only established in their present form and COSAB itself was only established in its present form in the 1990's.
Just as the cardiovascular system supplies blood and substance to the healthy and to the unhealthy parts of the body, so the Banking Industry as the cardiovascular system of the economy supplies substance to the entire economy whether it be good or bad.
Now, the actual economic conflicts within which they were conducting their business is the economy - the capitalist economy, any capitalist economy develops in a rather haphazard way as millions of individuals within that society response to the specific opportunities which come their way.
Much of the fundamental structure of our economy was determined by those natural processes and had nothing to do whatsoever with Apartheid, but it was only when the Apartheid policies and specific interventions were introduced that they had the effect of intensifying and prolonging many of the flawed structures and practices which were an integral part of the natural economy.
As far as the natural development is concerned, when the White immigrants to this country arrived here, they found South Africa remarkably blessed with mineral wealth and with an abundance of unskilled people.
Until well into the 20th century the abundant supply of unskilled labour kept wage rates low. The economic rent which was earned by the low wage rates and by the mineral wealth, was earned by the owners of the capital and by the managers of the capital and in South African terms that essentially meant people with White skins. ...(tape ends)
... as the economy grew it became increasingly dependent on imports. So a policy of import substitution was established and that policy of import substitution was absolutely conventional wisdom in post war economies.
The problem was that in South Africa the economic logic of import substitution and there was quite a sound economic logic, was aggravated by prolonged political isolation which was a consequence of the Apartheid policies.
This meant that the economy was more severely introverted than would normally have been the case. Other economies which in the 1980'2 were exposed to world market and globalising forces, began the conversion, the transformation of their economies.
We were still isolated from those world market forces and the consequence of it was that the commencement of our globalisation was postponed probably for more then ten years. Somewhere between ten and 15 years, we remained isolated and introverted.
In the 1960's and early 1970's our economy looked like it was performing quite well, but by the mid-1970'2 the weaknesses were becoming very apparent. The common measure of the wealth of a nation is gross domestic product per capita.
It is also true that the structural defects in our economy and the application of Apartheid policies resulted in a very unequal distribution of wealth. The only thing that we can take some comfort in, is that that has been changing from the late 1980's.
For the banks this prolonged and intense isolation had its own set of consequences. Foreign shareholders were squeezed out and the South Africans became wholly South Africa - the banks became wholly South African owned.
The banks responded to the introverted market and made loans to the import substitution industries, including the armour mints industry, the atomic energy commission, to a whole variety of parastatals and also to the central and the home loan governments.
That was the natural market and the banks as the life blood were responding to that market. Senior bank officials participated on government bodies like their have economic advisory council. They dealt in central and home loan government stocks and sanctions busting and unfortunately it became a way of business life in South Africa and banking represented it - participated on bodies involved in sanctions busting.
If I then turn to the specific interventions. Apartheid was build on three pillars; political exclusion, social segregation and economic dependence. Three of the specific economic interventions had a particularly harsh effect on the majority of the population.
The first one which was being referred on numerous occasions over the last two days, was the one of land ownership. Perhaps, and if you don't mind I'm going to use the Apartheid term, Blacks, to refer to Africans. I suspect more to provoke confusion than to avoid it, but Blacks were precluded from owning land anywhere in White South Africa until 1979.
That obviously impacted enormously on the families of Black people, but in economic terms it had a devastating effect on the development of housing stock and it also very badly prejudiced the process of accumulation of capital in the Black communities.
From the banking point of view it meant that Blacks were unable to get mortgage loans. The industry played a very key role in pushing through the lease hold title provisions at the end of the 1970's and before the legislation was passed, they granted loans illegally to individual Black home owners and they also granted loans illegally to White nominee companies.
Once lease hold title became a possibility, the industry granted 6 billion rands worth of home loans to Black people during the first ten years. Today the banks hold more than 11 billion rands worth of home loans to Blacks.
Of those 2 billion are currently 3 months or more in arrear and I think the point is that the entry into this market by the banks was a conscious decision on their part to go outside their main line profit maximising business.
Numerous other obstacles had to be overcome, including the fact that most Black women did not have the necessary legal status to borrow. That was overcome, surely as a results of the banking - the efforts of the banking industry when one of the building societies granted a large number of loans to women before the legal capacity problem had been resolved.
But none of those efforts on the parts of the banks could make good for the fact that the normal process of home building and capital accumulation was totally frustrated for most of the population. The result of that is now obvious in the fact that there is a shortfall of approximately three million houses.
It is also acknowledged that while positive steps were being taken by the industry as a whole, there is no doubt that there are innumerable instances when the laws which were in place at the time, were used by banking staff as an excuse for not serving the majority of the population.
The second specific intervention dealt with employment and the prohibition against the employment of any Black person in the position of supervisor or above, together with the separate and inferior education of Black people in terms of the Bantu education act, very severely inhibited the capacity of Black people to compete in the work place.
Until early 1980's very few Blacks were employed in the banks in managerial or even clerical positions. In about 1983 the banks became very concerned about that situation. It was a combination of political pressure, inadequate number of White to entrance into the Banking Industry and the demand that services be provided by staff of the same race or language group as the clients who were receiving those services.
It was those three forces which (indistinct) the change. Before the appeal of the group areas act, banks moved to employ their Blacks into more senior - move Blacks into more senior positions and once the (indistinct) was repealed changes occurred fairly rapidly.
In 1980 only five percent of clerical staff employed in the Banking Industry were Black and few of them, 20 percent, were so-called non-White. Effectively no Blacks were employed in supervisory of managerial positions.
The third specific intervention related to business activity. Black were prohibited from training for their own account anywhere in White in South Africa. That prohibition effectively condemned Blacks to be hired wage earners of White business or to not being employed at all.
As a consequence Blacks have not established their own businesses at anything like the rate which one would have expected in an economy as developed as ours. Bank loans to Black businesses were severely limited by this prohibition.
From 1976 onwards key players in the industry became acutely aware of the damage which was being caused by the Apartheid system. They became very involved in organisations trying to break the strangle hold of Apartheid, including the Urban Foundation and the CBM.
I've given you some indication of those initiatives on page nine of our submission. It is not intended to suggest that those actions compensated in the remotest way for the damage which was being done by Apartheid, but the story would not be complete without mentioning them.
So, the damage. It is quite clear that the Apartheid system had a devastating effect on the country and on the Black population in particular. That damage - the damage that was done cannot be undone in a year or even in a decade.
The world will not wait while we do the repair work. We are part of a global village and direct competition with countries which see the entire world, including South Africa as their market. So we have to find ways of doing the repair work and the redistribution while we travel.
As I have already indicated, actively or passively, consciously or unconsciously, banks were and still are party to virtually every transaction in South Africa. They were involved in the provision of banking services and lending money to the Apartheid Government and its agencies, to businesses and individuals who were profiting at the expense of the majority.
They were illegally used for taking money out of the country then and regrettably they still are today. At the same time they were involved in the movement of funds from overseas donors to the Anti-Apartheid Movement and in making loans to large numbers of people who were vigorously opposed to Apartheid.
On behalf of the Banking Industry I would like to say that as an industry we deeply regret all acts of omission and in particular of comission which contributed to the damage which has been done. We also acknowledge specific action needs to be taken to address that damage suffered by the worst effected members of our society and that the banks must (indistinct) be key players in that process.
In that then the banks commit themselves to three specific initiatives as their contribution to that process. The first one is housing. It is pertinently obvious that one of the most crucial needs is the provision of housing. In response to Government initiatives that banks have already lent a further seven billion rands on low income housing in terms of the record of understanding signed between the Minister of Housing and the banks and a further two billion rands on pension backed education and housing loans.
This has been done at considerable risk and is testimony to the industry's commitment to playing its role to the full, but we know that much more has to be done and we will continue to work closely with the Department of Housing and its agencies in developing appropriate initiatives to address the housing back log.
The second specific initiative to which we commit ourselves is the recognition of the need to extend banking services to as many people as is economically feasible, regardless of their level of income. Massive investment beyond that which would be justified by pure economic logic has therefor been made in infra-structure to do this.
The logistic acknowledges have been used to provide those services and it is significant that South African banks are regarded as being world leaders in the provision of appropriate banking services for low income communities.
The third specific initiative relates to micro-enterprise. We are keenly aware of the need to develop a vibrant, small and micro-enterprise sector. Central to the development of such a sector is an understanding of its size and needs and the development and mentors necessary for people who have not had the opportunity to trade for their own account in the past.
The banks undertake to work with the Department of Trade and Industry in researching the sector and establishing and funding co-operative ventures to do the necessary training and mentors to address the disadvantages of the past.
In conclusion, on behalf of the industry, I'd like to make the observation that measurable damages have been suffered by the people to whom reparations will hopeful be paid as a result of your Commission.
The problem is that there are very large numbers of South Africans who have suffered immeasurable damages which can never be satisfactorily addressed. The bank programmes which I have mentioned are serious attempts to apply the available resources to employ - to improve the lot of the disadvantage, but we believe it is up to everyone of us and at the end of the day, it actually comes down to individuals and this is a point that I'd like to emphasize; that industries don't have energy, individuals have energy and commitment.
At the end of the day it is up to each one of us as an individual to devote ourselves to making sacrifices and doing whatever we can to rebuild our society in the interest of future generations and we will all thus have to ensure that the things which brought this all to pass, are never allowed to happen again.
One of the problems that our country has experienced is not only the actions or inaction of individuals, but of specific structures designed by individuals, certainly, but structures which of themselves inhibited development.
You've mentioned some of them. So, I just want to put that in that context, because institutions can play and often do play a very positive or very negative role. Let me illustrate that by saying that there is a perception, not saying it is the correct one, that in the Banking Industry, broadly, that certainly in the past, the perception was that if you stuck your neck you got it chopped off.
So there's a danger, isn't there, of a - and you may have some personal experience of that. I'm not sure, but there's a danger of individuals trying to act without the structures themselves being changed. I suppose it's like critics of much of what business and opposition politicians and many of us who played various different roles; that all we were doing was polishing the chains of the oppressed.
So, what I'm saying is that at the hearts of our nation there are institutions which determines its health or its sickness and one of the reasons why this Commission is looking at institutions, whether they be political or media or banking or commerce, generally, is not because we haven't enough to do, but simply because we think that institutions have a very important role to play.
Now, from your presentation, if you look at page three of today's presentation; you actually two fairly breath taking paragraphs and I refer to the fourth paragraph and fifth paragraphs of page three.
"You now have a wholly South African owned bank or banking system and the banks responded by making loans to import substitution, including the armour mints industry, the atomic energy commission, a variety of parastatals, the central and homeland governments.
It is understandable and this is my question to you, including the sanctions busting which I'll refer - come back to in a moment; is it reasonable to say that bearing this in mind it would be understandable, not necessarily correct, but understandable if the Black community saw the Banking Institutions as being no better or no worse than the institutions which they felt abound them in their Apartheid system?
MR TAKI: I don't think there's much debate about the correctness of your reference. There are very substantial perceptual problems of the Banking Industry, the role which it played in the past, the role which it can play in the future.
It's one of the things and obviously it requires substantial changes in behaviour and institutional behaviour within the banks themselves, but it is also going to be a really tough job to change the perceptions.
At the end of the day, we only have one Banking Industry and that is the life blood of this economy. So the real issue is not can we kick out the existing cardiovascular system and get another one. The issue is how do we get this cardiovascular system to serve the needs of the new South Africa.
That is a combination of changes in the way that things are being done, what is done and simultaneously changing perceptions, because unless the perceptions simultaneously change, that system doesn't work effectively.
DR BORAINE: May I say that looking at the proposal that you have for the future, many of which you have already started. That's just the best way to change perceptions. So I am very grateful for the pointing ahead than rather only looking at the past and trying to tinker with that machine.
So I'm very grateful and I'm also grateful for the expression of regret, not because we are looking for people to come and say sorry and all the rest. That's not part of it, but I think that Arch Bishop Tutu is right; that that attitude releases a spirit of co-operation and generosity from those who have been badly hurt.
I think without that there is still a sense of they haven't really changed. They don't really mean it. So I'm grateful to you for that public and to you, obviously, to the people that you represent ... (intervention).
DR BORAINE: I'll put before the Commission in another hearing and you can appreciate, we get a wealth of information, some of which is correct, some of which is totally wrong, but we've got to try and sort it all out.
So I can quote his name. Craig Williams, who on his own public admission was a fairly prominent double agent for the state, he in his submission argues that it was wrong for people to blame people like himself and others and foot soldiers in the army, the security forces; that Apartheid was a system which was encouraged, was taught right throughout society.
We received the full co-operation from the banks. Now, he didn't specify which bank. That was very vague, but is this, I mean, I've looked at your paragraph on page five when you actually say; illegally taking or using money out of the country and still today, etcetera; is that at all possible?
CHAIRPERSON: Dr, sorry, can I just add one other bit from the chair here. We've also had a number of statements from activists in the '80's who talk about being arrested as they withdrew money from banks, either when they put their card in or when going to the till, implying that there was some co-operation with those banks at the time.
MR TAKI: I'm completely unable to comment on the specifics. You have this difficulty, if I can stick with the analogy of the cardiovascular system and if anyone pays with a credit card the only thing that I can guarantee that the credit card was issued by a bank and that banks have been processed the paper and I have no doubt that Craig William had a credit card.
Whether a bank was a party to - whether a bank was a party to, here is my third or fourth ID document under a false name and please can I have a credit card under that false name? I'm obviously completely unable to comment, but you know the reality of life in South Africa is that it would not surprise me.
You're actually talking about a very substantial body of people, the banks staff. There are a total of about a 150 000 bank staff and it would be completely out of the control of a chief executive that that sort of thing didn't happen.
When I say that the banks are being illegally used for taking money out of the country and that is a problem world wide. That is why we have a money laundering act or we need a money laundering act, is because the system is used by the entire population to do whatever they want to do and it would be wonderful if you could actually police it.
DR BORAINE: Thank you. I appreciate that. The question was very vague. That last point I want to make is that in your longer submission on page eight we've been trying to understand the nature of business, the nature of banking, the commercial sector.
When you in 6.2.2 talk about the prohibition in the group areas act against the employment of any Black person in the position of supervisor or above and you give the reasons why there were so few Black people employed by the bank.
On the bases of other comments that you have made and you talk about only in 1983 there seems to be a concern that the so unrepresentative and the need for additional staffing, (indistinct) and so on; do I take it then that what you're really saying is not that you woke up one morning and said, Oh my God, we've got too few Black people here. We really need more, but a recognition that the whole South African way of life was such that Blacks were the last in the queen.
Apart from the laws, there was a natural tendency, it seems to me from listening to a number of business presentations; that out of almost self-interest capital did enter a new approach which said all of South Africa have a right to work in our Industry and therefor the door should be open.
MR TAKI: It was easy enough to see what happened. There was a concern. If you say what drove the concern in many individuals who participated in that process; that's a much more difficult and I'm not a sociologist or a political theorist, but I would suspect that it was a combination of a number of things and the factor is that the 1970's saw a very sharp deterioration in the economic condition of South Africa.
I don't think there's any doubt that the 1976 unrest triggered a pretty high level of concern in - amongst business manager and bank managers in particular. That combination of the rising tension together with the economic decline, you come through in the 1980's.
In the 1980's I don't think that there is much doubt at all that the activity of the organisations like the Sullivan - the participants in the Sullivan Code, the activities of the Urban Foundation, unquestionably had an impact on managerial thinking.
When they then looked around it was a combination of a number of things. It was, guys, we're running out of White people to run our banks for us. We've got a significantly increasing number of Black clients and those Black clients need to be served by people who can actually talk to them in the same language.
Apart from that there were distribution of income. You were already going over 40 percent of the total national income was being earned by the Black community and chaps, the harsh reality of it is that if we think that we can just carry on doing business with White staff serving White clients, we're coming to an end.
DR BORAINE: Can I just and this is not a question or a comment; it's an apology. Unfortunately I have to at another very important meeting I have to go to. So, if you'll excuse me. I'm quite sure my colleagues have lots of other questions they want to put to you and my apologies to the audience as well.
Let me thank you for your very open, wise comments here today on behalf of yourself and your industry and I want to thank all your colleagues for coming here today and showing solidarity with yourself and also as you said for the work the Truth and Reconciliation Commission is doing.
The lesson is that money is not neutral. It can be used for both good and for evil. (indistinct) have been forced to obey orders, is valid neither for a soldier who commits an atrocity or a businessmen who commits fraud.
Dr Johan Rupert's statement on behalf of Rembrandt was a breath of fresh air. He's also documented the embarrassment of his father, the founding chairman, in being associated with the economic (indistinct) of successive Apartheid era administrations.
His was the vision in keeping with other Afrikaners such as Dr Beyers-Naude. At Volkskas, more recently controlled by Rembrandt, was the bank most closely connected with the Apartheid state. On that he was silent.
The Afrikaanse Handelsinstituut has quote accepted moral responsibility and apologises to South Africans negatively effected by the collaboration of the business sector with the Apartheid state. It is recommended that the SASRIA fund of about 9 billion should be used for reparations.
The Council of South African Banks, COSAB, concedes that banking is to any economy what the cardiovascular system is to the body. It continues that measurable damages have been suffered by people to whom reparations will hopefully be paid.
The Islamic Chamber notes that financial institutions mobilised billions rands from the Black population and lend them to the White population. There was little or not investments in Black townships. The rational was it was good to accept moneys from the Black community, but it was too risky to invest or lend to them.
But by far the most comprehensive of today's submission is that of the national campaign on the Apartheid debt. It declares, (1) that financial support of the Apartheid system provided the means and opportunities for gross violations of human rights.
(2) That that democratic government has inherited a debt burden of 300 billion rand and that interest payments alone adversely affected ability for socio-economic investments such as education, housing and health services.
(3) The submission raises the issue and doctrine of odious debt. That the Apartheid Government was internationally judged be illegitimate and consequently professional financiers who funded have no claim on its democratic successor.
The great bulk of the national debt relates to pension fund packages the Apartheid era bureaucrats and operatives who rewarded themselves (indistinct). It is internationally accepted that debt incurred under (indistinct) or for immoral reasons, are unforceable. If professional financiers (indistinct) themselves by funding Apartheid, surely it is they and not Apartheid's victims who should now suffer the consequences.
Thanks to the national debt South Africa is now facing bankruptcy. The country (indistinct) on the brink of a debt trap, accept that countries unlike individuals or corporations do not go bankrupt. They go into a debt spiral, the consequence of which is usually revolution when the gap between rich and poor become intangible.
Yesterday we heard ESKOM's apology for its role in the Apartheid system. Thirdly, no comparable apology was forthcoming from BARLOW RAND, SANCOB or OLD MUTUAL. What is the point, may I ask, in the financial sector in pushing democratic South Africa over the brink into bankruptcy?
Unlike the rest of Africa there is no shortage of capital in South Africa. It is however held by a handful institutions, the insurance and mining houses. Southern South Africa has been left responsible for the foreign loans which financed the massive capital flight of over 25 billion dollars during 1990 - 1994 alone by the same companies (indistinct) assets now worth hundreds of billions of rand.
Thanks to the national debt, the state has no money for socio-economic upliftment. It is obscene that in a country with 50 percent illiteracy, teachers are being retrenched or that nurses are being retrenched or that seven million South Africans live in shacks.
The Black Management Forum rightly indicts the White business sector to right the legacy of Apartheid. What hope is there in improving productivity when kids study by candle light in the most shameful environment. Of ten thousand children who begin school only one matriculates with maths or a science subject.
A million houses at R50 000,00 each would cost 50 billion rand. Old Mutual, a 235 billion rand institution is so cash flush that it proposes to pay its policy holders at 29.3 billion ...(indistinct) bonus and to transfer 50 billion out of South Africa.
Surely massive investments in education, housing and health services would have dramatic economic benefits for the victims of Apartheid, for the economy generally and for the financial institutions in particular. They would be the prime beneficiaries of the subsequent growth in South Africa's appallingly poor productivity, a consequence of lousy labour or of lousy management.
Financial institutions, unlike manufacturing companies, have forgotten that they're partly public organisations. They are corporate citizens, but they're publicly charted to go under the common wealth to the benefit of society. They were never intended to be profit driven licences to (indistinct) money.
Even George Sars voices his alarm about the consequences of capitalism run (indistinct). Should democracy flounder in South Africa, because of the (indistinct) between rich and poor, the casualties will include the financial institutions and their policy holders.
MR CASSIM: Thank you, Mr Chairman. I want to start by raising a controversial point and I don't think this is the appropriate time, but nevertheless I think it is important particularly in so far as the point emerged in the discussion between Ann Bernstein and Dr Boraine.
I want to say that, quite explicitly, that the business sector is not a homogeneous category. That it is very difficult to classify the business sector as a (indistinct) and we have to look at it as heterogeneous, as made up of different groupings, different interests within the business sector and if one wants to arrive at a (indistinct) hear and view, one has to do that sort of analysis which I think is necessary if one is aiming to arrive at a coherent picture.
Now, that doesn't mean that at the same time we cannot address or analyse the link between the Apartheid Government and the economy. Yes, clearly we can and there are ways of doing that, because Apartheid by definition laid the ground rules of the thing which business operated and the environment within which business accommodated itself.
So there are clear links, but at the same time we have to be careful about how we do that. If we do that historically and if we look at two key periods. If we look at the period from 1960 - 1973, then the contrast in characteristics stand out spectacularly. In particular we had a massive generation of wealth and simultaneously the intensification of Apartheid.
Now, that - during that period the growth rate was about 5.5 percent per annum and it was a period in which the dividends of a high growth rate produced very little benefit to the majority of people. In fact it laid the bases for conditions which restricted the accumulation of capital on the part of Black people.
When one looks at a later stage, particularly from 1974 onwards, we had the South African economy suddenly experiencing a decline in its growth rate. It obviously became more difficult to finance the economy.
To put it differently, what happened was that the Apartheid growth model began experiencing problems and the growth process was being arrested and thereby the growth capacity of the economy. In other words, the cost of Apartheid began to outweigh the benefits or the gains. Only in this stance its success was its undoing. So the - if one is looking for a relationship with the business sector, yes, one has to look at particular policies and this unfortunately did not emerge from the discussions that - from the submissions that I heard today.
In particular the relationship and the role of parastatal corporations, because if one looks at the history and development of the way Apartheid policy worked, what we had, we had a highly interventional state and a highly interventionalist economic policy which on the one hand stripped Blacks of economic rights, political rights and economic rights and conferred privileges and benefits to business.
This happened through the protection of local manufacturing industry by tariffs and import controls. The establishment of state corporations, the role of the state corporations, the expansion of these corporations, like ISCOR, FASCOR, ARMSCOR.
The role of the IDC. The role of the IDC was expanded and it invested in mining, in finance. So the success of Apartheid economic policy of the - the success of the historical project of Apartheid was quite remarkable in the way it penetrated the economy and benefitted the economy, because if one looks at a particular example. If one looks at the example of tariffs. Tariffs were deliberately used to keep out low cost food imports and farm production was controlled, priced and distributed by a series of control boards.
I'm using this example, because this example stretches in the field of finance and in the field of industry, but I think it's a pertinent example. Farm production was stable as domestic prices were stabilised above world prices. While we exported surpluses at loss. So clearly in that sense the result is that the agricultural sector prospered while millions of Black South Africans were not able to afford a balanced diet and even suffered from malnutrition. So, there's a clear contradiction in outcome and in the way in which the state intervened in economy. This process certainly did not stop with agriculture. It expanded into industry, into commerce, finance and its undisputable that the Nationalist Government used the power of Government to promote the power of the business sector.
MR CASSIM: This is why today we have cities with a large number of informal sector operations in the cities. The key question here is that it choked the development until 1986, 1985, the potential development of this - any potential development of the small business sector was deliberately choked. So we have a situation, unfortunately where the informal sector was simply regarded as a blot on the urban landscape or as ill health to the economy.
So, there are clear contradictions. There are clear linkages. Unfortunately the governor of the Reserve Bank has left, if you don't mind if I may just spend a moment or two on submission by the Reserve Bank.
The Reserve Bank of South Africa and in saying this I want to quickly (indistinct) my remark by saying that no economist is for financial instability or monetary mismanagement, in fact monetary management and financial efficiency are very important, but the Reserve Bank of South Africa gives the impression that it performed purely an objective economic role.
Now, the point I would like to raise concerns the 1970's where the Reserve Banks's submissions remains strangely silent about the implications of rising Government deficits. The Reserve Banks who was tensibly independent became a prisoner of the Apartheid Government. It allowed money supply to soar - in one that is - to soar by 140 percent.
The national debt of the Government increased by 300 percent and between 1990 - this happened between 1990 and 1988, the great bulk of which was held by the pension funds of Government departments and parastatal corporations.
In a similar event so that goes against prudent macro-economic policy or stable macro-economic policy. In the similar event the commercial banks, it must be borne in minds that commercial banks have made rather substantial contribution on their own behalf to the financing of the Government expenditure and of capital expenditure.
About one fifth of the deficit between 1970 and 1978 was financed by the banks and this included defense bonds by Barclays which amounted to financing the South African defense budget. So if we do probe for relations and linkages then they are there and if one looks at the Reserve Bank, if one looks at the financial system and I take the point, I accept the point that the financial system is central to any economy. It has to function efficiently, it has to efficiently move between savings and investment and that's quite important.
Let me turn my attention briefly to the second issue. The second issue concerns the role of trade unions. In the presentation by Prof Wiehahn I think there was a major omission. The major omission, if one reads South African political economy and the rising development of South Africa's economy, one cannot omit the question of migrant labour.
In fact, the entire bases of the economy is parallel with the rise of migrant labour and it was on bases of migrant labour that huge profits were accumulated to those who build empires and conglomerates which exist today.
This is evidence by the fact that when attempts were being made to form trade unions in the 1970's, many employers refused to allow stop order payments for union membership, which had to be collected by hand.
So, there is enough evidence to show that employers were reluctant to see the emergence of democratic trade unions. Furthermore, the Apartheid Government attempted to drive a wedge between urban and migrant workers and indeed the act of granting trade union rights originally excluded migrant workers.
So, the Government used a variety of measures to limit trade union activity to economic issues and this was a condition of registration. However, with the formation of the congress of South African trade unions, COSATU in particular in 1986, and the May day stay at home campaign is an example where this approach had failed and where the Government had failed to isolate the independent trade union movement from the political struggle.
What this in a larger context also meant was that the cost of Apartheid were getting too high to sustain. In fact Apartheid was becoming physically unsustainable and this is why - and this is the period in the '80's, particularly in the latter part of the '80's where you do get particularly the big corporations and big business playing a very different role and this was seen in the emergence of the central - of the CBM, the many missions overseas to meet with the ANC at the time.
The other omission is that when we look at the period of the '80's and in the - in the submissions today is that in the 1980's were a period when certainly political resistance began to intensify and international began to make itself felt.
When the reform measures, even economic reform measures were based on - were based on the concept of the total strategy. In other words the context of reform was set in the form of the total strategy. The total strategy represented the increasing militarisation of society, of the Government and the society.
This militarisation came to exercise a growing influence over political and economic policies. This was largely because in financial terms it meant in - sorry, in financial terms this meant that the costs of defending Apartheid were increasing and this was coupled with an acute foreign debt situation which made Apartheid physically unsustainable.
It was also a period of massive capital outflow. Investment was declined. So, it was a period where the business sector became more vocal, because and this - the tension or the stress within the business sector and the Government was evident.
So, if one is looking at the history and the dynamic of economic development and the link between Apartheid and the economy, I think one has to look at that relationship as to how it evolved historically.
The other omission that I find and where there is some evidence is that a number of companies were actively involved in dealing - in business dealing with ARMSCOR. Leading business people were willing and active participants in the national security management system.
I just want to conclude and say that the single most important lesson and experience that Apartheid brings to us, is that we should guard against political extremism. Any form of political extremism in the future, either from the left or from the right, because it is this kind of political extremism which Apartheid has left us with that results in the extreme problems that we face today.
To the extend that it has removed the capacity of the current Government, the ability to develop a more interventionalist strategy in so far as redistribution is concerned, because it does face the problems of paying past debt.
In addition there are other constraints. The business sector can play a very important role in the future and particularly as South Africa re-integrates rapidly into the emerging global economy and that re-integration poses new challenges and for Government, business and labour.
In this new global economy that South Africa enters into, the role of these three agents, that is business, Government and labour becomes even more important in so far as we move forward to create a new society.