Colonialism returns to South Africa

To fury from the left, big companies are moving from Johannesburg to London. R W Johnsonexplains the

As he announced the Anglo-American Corporation's merger with its Luxembourg-based investment company Minorco and their joint move to a new headquarters in London, the chairman, Nicky Oppenheimer, said it would allow Anglo's, after 81 years in South Africa, to take its "rightful place" among the world's top companies. This should be "a source of pride for South Africa, especially since De Beers and the Oppenheimer family, the main shareholders, remained firmly South African".

Anglo's carefully prepared the political ground for its move. It took the president of the National Union of Mineworkers, James Molatsi, on to its board, along with Mamphela Ramphele, the vice-chancellor of the University of Cape Town, whose autobiography revealed that she had been the lover of the late Steve Biko. With such appointments Anglo's was clearly planning to ingratiate itself with the ANC's new power elite and thus circumvent opposition to its move offshore. Though Molatsi issued a protest - he thought "the timing was wrong" - it was so mild as to virtually legitimise the move, while Ramphele remained silent. Finally, the move got the only go-ahead that really mattered, that of South Africa's de facto president, Thabo Mbeki.

But the newspaper cartoonists are using the image of the chicken run (the phrase for white flight first popularised in Ian Smith's Rhodesia). The deal is bitterly opposed by the Communist Party and the (communist-led) trade union federation, Cosatu, which is bound to lose leverage over the country s biggest industry as a result. Communists and trade unionists more or less openly suggest that the ANC has been "bought" in just the same way that the Afrikaner National Party was. The NP came to power in 1948, pledged to nationalise Anglo's, but nothing ever happened. Many argued that large sums of money quietly changed hands in order to effect this result. Now the cynics ask how much the ANC's election coffers benefited as a result of the Anglo's deal.

Others see it differently. The day before the Anglo's move was announced, FBI agents, testifying in the Squillacote spy case in the US (in which the FBI operated a sting by faking correspondence from Ronnie Kasrils, South Africa's communist deputy defence minister), argued that South Africa in effect has a communist government and, under the ANC, is now "a member of the communist bloc". This, to some investors, dramatised the extent to which the ANC presents a hostile environment to white capitalists.

The Anglo's move is part of a far wider movement by South African companies to list in London. Another South African mining giant, Billiton, is already here, along with the smaller Randgold Resources. The aggressive merchant bank Investec has also listed in London, having just bought Hambro's. Not far behind are South African Breweries, the insurance giant Liberty Life, and Old Mutual, which already runs many unit trusts in London and is shortly to demutualise. The companies themselves deny the notion of capital flight from a black government; they say they need to gain access to international capital markets and to compete as true international players on the world stage. They also argue that they currently trade at far below their real asset value. This is certainly true. Since April the Johannesburg stock exchange, affected by the general shadow over emerging markets and their currencies, has fallen by 40 per cent and the rand by another 20 per cent. As soon as these companies are seen as possessing safe London-based hard currency assets, their share prices and asset values will soar.

In resisting such moves, the left's potential allies are the rising class of black capitalists who are beginning to wake up to the threat such moves may pose to their own enrichment. Most of these fat cats have put on weight via "black empowerment" deals, whereby many companies have floated off some divisions to black interests at preferential prices. These sales produce cash which is often quickly transferred into hard currency in London, but meanwhile the black companies have to borrow heavily to buy. As a result, many have found themselves in dire straits as South African interest rates moved above 25 per cent and asset values plummeted, leaving the former owners laughing all the way to the bank, especially since they got their money out before the rand plunged. But which way the black capitalists jump will be determined entirely by cash: provided they are kept afloat, their vote will go to the highest bidder.

In a larger sense there is a historic continuity. At the turn of the century, the great Randlords - men such as Cecil Rhodes and Barney Barnato - continually criss-crossed the equator by ship, leading a London and South African life, big businessmen in both hemispheres.

Today, international capital markets and the jumbo jet allow many more to play this game. Under apartheid, these included talented South African Jewish entrepreneurs such as Mark Weinberg and Sidney Lipworth (who moved to London to found Abbey Life and a host of other companies which made them billionaires). They were followed by others such as Tony Bloom (who went on to run Sketchleys) and latterly Billiton's Brian Gilbertson and Liberty Life's Donny Gordon. Such moguls live much of the time in London but maintain homes in Jo'burg and Cape Town, moving in hours between worlds which it took weeks or months for Rhodes and Barnato to cross.

This, perhaps, is the best way to understand the Anglo's move. Many of the commanding heights of the South African economy were originated by colonial enterprise in which Britain remained the imperial and controlling mother. Later, as South Africa grew and prospered, South African business went native and even nationalist, cut its colonial links and marched on its own belly and its own feet. Then, with the advent of the ANC and the crumbling of white power, white South African life has been subtly recolonised. Today at least 50 per cent of the SABC radio news is made up of BBC items and the morning news programme is sponsored by the BBC. Similarly, more and more whites are seeking the imperial security of mother London, as South Africa's political and economic future looks somewhat uncertain. It's an ill wind that blows no one any good and, for the moment at least, this historic capital movement seems to offer simultaneous benefits to white capitalists, the City of London (now restored to its 19th-century position as the world capital of mining finance) and at least part of South Africa's new black elite.

"Ironic Victory: liberalisation in post-liberation South Africa" by R W Johnson and David Welsh is published by OUP this month