Business Report Companies

Tata may be the fly in any Mittal-Highveld ointment

Published

Ministers have been known to get highly irritated by them, but strange and almost pedantic questions keep on flowing from the keyboards of opposition MPs trying so very hard to "uncover" a scandal.

The latest has come from Karel Minne, the Democratic Alliance's spokesperson on public service and administration, who fired off a series of questions to ministers on how much they had spent on parties following debates on budget votes earlier this year.

In an e-mail sent off no less than three times to each media contact, Minne yesterday disclosed that they had spent just under R1.7 million of taxpayers' money on these parties! Shock, horror! Bring on the smelling salts! I am sure that that amount is peanuts compared with what some corporates lash out on their various bashes to celebrate this or that.

Sure, it is what could be called "wasteful and fruitless" expenditure when there are so many other pressing needs facing our society, but it is one occasion when staff, secretaries, managers and contacts can be made to feel they are important to a particular department.

Interestingly, labour minister Membathisi Mdladlana and finance minister Trevor Manuel held no parties at all but wily communications minister Ivy Matsepe-Casaburri got the information technology industry to sponsor her bash.

Land affairs minister Thoko Didiza spent only R1 500 on her party, with the rest being sponsored, presumably by rich white farmers and co-operatives, while safety and security minister Charles Nqakula spent only R19 750 on his party. I won't venture a guess on who sponsored the balance, or whether guests had to make do with pap, wors and Cokes.

According to Minne, the five most expensive parties were held by public service and administration minister Geraldine Fraser-Moleketi (R489 681), social development minister Zola Skweyiya (R242 679), defence minister Mosiuoa Lekota (R172 444), health minister Manto Tshabalala-Msimang (R91 728) and correctional services minister Ngconde Balfour (R62 595).

Never mind the cost of the hours taken to collect this information and submit it to parliament, and the trees felled to provide the paper to print it all out - though replies to questions are mainly being distributed electronically, printed copies are still made for the record. No wonder Trevor Manuel takes an exceedingly dim view of the content of most questions posed to him. LL

Mittal-Highveld

Executives of businesses that are downstream users of steel might have been among the happier readers of newspapers yesterday morning when news broke that Tata Group, the Indian conglomerate, was considering acquiring the steel interests of Highveld from parent Anglo American.

Before Tata made its interest public, the only suitor known to be sweet on Highveld was Mittal Steel South Africa, the country's largest producer of steel.

An acquisition of Highveld by Mittal, should it pass the gaze of competition authorities, would just about wrap up the domestic steel market for Mittal.

This would give it greater carte blanche to set prices using the infamous import-parity pricing model, which has resulted in South African steel prices being among the highest in the world despite local cost advantages from raw material supplies.

Tata's bid puts the heat on Mittal somewhat. One analyst reckons the Tata interest may have been driven by the South African government, which has been in protracted talks with Mittal about the import-parity pricing model.

"With Tata's local interests and the investments it wants to make, it will carry a little more weight with the department of trade and industry than Mittal right now," he says. Although Mittal has embarked on a massive R9 billion capital spending programme, most of it is for Mittal's benefit. "In fact, they have cut jobs quite substantially," says the analyst.

The sticking point for Tata may be its insistence that the vanadium and steel interests of Highveld be split. Tata says high vanadium prices make the Witbank-based company look expensive. While it is possible to separate the two segments in principle, it would require a complicated deal, as well as a second buyer keen to buy the vanadium business. IS

Markinor

This company is one of the country's best-known corporate researchers, but its standards do not seem to be what they once were. A column earlier this year said the same thing.

At that point I had been asked to do interviews on SABMiller and MultiChoice. In both instances the interviewer knew nothing about business or the company they were doing research for. In both instances, I had never covered the companies with any depth, a fact that was passed on to the interviewer.

But despite my trying to send the interviewers to speak to the real experts on the companies, expert opinion was avoided. The questions posed during the interviews were, at times, facile and the end results were probably meaningless.

After the column appeared in the newspaper, Markinor wrote back, defending itself. Thereafter, I expected to be struck off its list of potential interviewees and I expected that the company might tighten up its research procedures. But no. A month or so later someone called asking to interview me about the Development Bank of South Africa.

Again I said that this was not an organisation I covered, suggesting better journalists to speak to. But the interviewee was adamant - I was on her list and it was me she must speak to. Eventually I agreed but the interview was a disaster. The entire questionnaire was set out for a client of the bank, not an independent observer.

The interviewer had not read through the document in preparation and I couldn't answer more than half of the questions.

Determined to avoid a similar situation I was dismayed when I got a call this week from a Markinor interviewer, asking to talk to me about Parmalat, Clover and some other food or dairy company. He said I was on the list of people that he had to speak to.

I don't know how this happened - I have never even glanced at these companies. I refused to do the interview. But companies paying big bucks for Markinor's research need to know that the results they receive may have holes in them the size of small airplanes, especially if what I have been through is indicative of the way most research is conducted. RB