Board-Ansicht
Mix-Ansicht- Schakale und Hyänen: but sleep well! - Emerald, 17.11.2004, 22:16
Schakale und Hyänen: but sleep well!
-->JOHANNESBURG (Mineweb.com) --"Going out at sunrise every morning, we would locate lions by the vultures circling above a kill. Approaching, you would see the jackals trotting away and hyenas going off in that drag-belly obscene gallop, looking back as they ran.”
Ernest Hemingway was writing about a kill on the African plains. If the vultures were squatting obscenely by the kill, the lions would be gone. There is much of a similar process of scavenging running riot in the South African corporate sector.
For years, a motley crew of investment bankers, led by those carrying the hallmark of big Wall Street names, have been the scavengers of the domestic corporate world. There is no difference in the drama that first unfolded on October 18, when Harmony Gold bid for a full paper take-over of Gold Fields, a combine that could form the world’s No 1 gold digger.
Only time will tell whether the lion was Harmony or Gold Fields, and which of the two the noble antelope. However, the investment bankers will remain unchanged, regardless of the outcome: squatting vultures; trotting jackals and hyenas with obscene, drag-belly gallops.
So far, six investment banks have earned hundreds of millions of rands from the Harmony-Gold Fields engagement. There is little, if any, evidence that a cent of this money has been earned on any value-added activities. On the contrary, there is mounting evidence of conflicts of interest that are reaching bursting point; that investment banks in South Africa are murdering rules of corporate governance. They may even have broken the law. More that a few observers have wept over South Africa’s lack of an Eliot Spitzer, the New York State attorney general. He secured disgorgements of more than $1 billion from Wall Street investment banks, mainly for conflicts of interest. Most of the bulge-bracket Wall Street investment banks have set down roots in South Africa. They have become notorious, like domestic taxi drivers, for hiding their capital, and swooping on deals at the last moment, mopping up the majority of fees. They appear to have learned not a single lesson from Spitzer’s crack down.
There are many case histories to illustrate the point. However, it is yet possible that a presentation made by JP Morgan to Harmony Gold, on August 18, 2004, will become a classic. On August 6, JP Morgan was appointed defense advisor to Gold Fields. On August 12, Gold Fields announced that it intended to merge its non-South African assets into IAMGold, listed in Toronto.
On August 18, JP Morgan’s detailed presentation to Harmony was largely silent on Gold Fields’s international assets. However, JP Morgan was categorically clear in its suggestion that Harmony should merge most of its domestic gold assets (the “quality” ones) with those owned by Gold Fields. The terms proposed by JP Morgan were less favourable than those proposed by Harmony when it announced a bid for all of Gold Fields on October 18.
Yet Gold Fields, no doubt wisely advised by JP Morgan, continues to resist Harmony’s offer, tooth-and-nail. While the apparent conflict of interest may stick out like a dog’s proverbials, the worries are far from over. Among an impressive list of peccadilloes, Gold Fields posted its shareholders “fair and reasonable” opinion documents on the Harmony bid signed off, naturally, by JP Morgan and Goldman Sachs. The Securities Regulation Panel (SRP) then ruled that the two investment banks were not “appropriate external advisors” to Gold Fields.
In Harmony’s words, the “fair and reasonable” document published by Gold Fields was “misleading.” In the August 18 presentation, JP Morgan valued Harmony’s South African assets at much the same figure as the valuation it placed on Gold Fields’s domestic assets. Once Harmony launched its full bid, the “fair and reasonable” figures were materially different. Who is kidding whom?
Given the millions upon millions being paid by Gold Fields to its various advisers, there are apparent issues around the quality of transparency relating to a number of core issues.
Scavengers have a vital role to play in the natural world, as part of the cycle of life and death. In the corporate world, where similar cycles are found, the scavengers should bear themselves out for scrutiny in the full sun, as do the natural ones in the heat of the African plains.
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