JOHANNESBURG (AFP) - A consortium led by ruling party heavyweights has acquired a 15.1 percent stake in South Africa's fixed-line monopoly Telkom, sparking criticism that only a "tiny elite" was profiting from a bid to empower formerly oppressed blacks.
The state-run Public Investment Commissioners (PIC) Tuesday said it had bought the stake previously held by Thintana Communications, consisting of a US-based firm and a Malaysian company, for 6.6 billion rand (one billion dollars, 840,000 euros) at a 15 percent discount.
"The stake will be warehoused for a period of not more than six months on behalf of the Elephant Consortium, a black economic empowerment (BEE) consortium led by businessman, Mr Andile Ngcaba and the Women's Investment Portfolio Holdings," a PIC statement said.
"The Consortium approached the PIC and other funders for finance. Following negotiations ... the PIC yesterday (Monday) agreed to purchase the stake," it said, adding that there would be more talks on exactly how the handover would be effected.
The Elephant Consortium includes Ngcaba, who is the former director-general of the communications department, and Smuts Ngonyama, the national spokesman for the ruling African National Congress (ANC).
The deal has been slammed by trade unions and opposition parties who say it will only enrich a privileged few.
The main trade union federation, which is an ally of the ANC, is one of many who have launched a blistering attack on the deal, saying it would "do nothing to help the overwhelming majority of South Africans" and benefitted only a "tiny elite."
The deal is part of a black economic empowerment drive by President Thabo Mbeki's government, which has pledged to transfer some of the country's wealth to blacks, oppressed and marginalised until apartheid ended in 1994.
However, there has been widespread criticism that the policy is only lining the pockets of top ANC members and people close to the party, making the already rich richer while overlooking hundreds of thousands living in abject poverty.
"This enrichment of the few, this constant bagging of state assets by the same rich and connected blacks ... will lead to trouble for South Africa one day," the influential Business Day newspaper warned in a front-page editorial last week.
"You cannot fob poor people off with water and lights while the party powerful get to own the water and lights."
The weekly Mail and Guardian newspaper wrote a column on "ANC Incorporated", warning that the "ANC left (trade unionists) is growing increasingly impatient with elite deal-making".
But consortium member Ngonyama, who is also the ANC's head of the presidency, defended the deal in an interview with the Sunday Times newspaper.
"It should be a victory as the shares are being brought back to the historically disadvantaged people," he said.
The director of black economic empowerment partnerships in the department of trade industry, Jeffrey Ndumo, said it was a "misconception" that only a chosen few were benefitting from the government's black empowerment drive.
"The tendency is to focus on these deals but people forget that a number of activites are taking place below these big deals. You will find many medium-sized companies who are broadening their black ownership including workers who are also gettig some of the shares," Ndumo told AFP.
Asked to give examples of such medium-sized companies, Ndumo said he did not want to single out any but that there were "a lot of them".
11/16/2004 - 19:37 GMT - AFP