Now for the economic cost of Pretoria's Bashir stunt

28 June 2015 - 02:00 By Bruce Whitfield

Where's Mac when you need him? In the aftermath of Shawshank Redemption II, also known as South Africa's get-out-of-jail-free card to genocide-accused Sudanese President Omar al-Bashir, the reasons given for state complicity in his hasty departure have been plentiful and varied. First, it was because more than 1 000 of our soldiers were being held hostage in the region by forces loyal to Bashir and faced elimination if he was not allowed to return home. The military denied the story.So there came another one: South African businesses in other African countries may have been kicked out and lost their right to trade in places concerned that the International Criminal Court in The Hague was a tool of continued post-colonial oppression. Since when did the government care that much about corporate South Africa?story_article_left1Then came the statement from Small Business Development Minister Lindiwe Zulu to the effect that it was a "collective cabinet decision" to let go the man who is believed to be to blame for 300000 deaths in Darfur.Any half-decent propagandist will tell you that when you are in a corner and you need to talk your way out of it, pick a story. Any story. Make it a good one and stick with it.Gauteng Judge President Dunstan Mlambo ruled this week that the government had violated the court order that instructed Home Affairs to prevent Bashir's departure. Had Bashir been travelling with a minor child sans their unabridged birth certificate, perhaps they would have done something. When it came to enforcing a high court order, not so much.For foreign investors, already dissuaded by power shortages and the low-growth trap in which South Africa finds itself rooted, the idea of ploughing money into fixed assets took another bone-crushing body blow.A government ducking and diving on misspending public money is one thing; a government treating a court order with the same disdain as Joburg drivers treat red traffic lights is infinitely more worrying.There is no comfort to be had in collective moral turpitude.Until recently, investors knew that whatever spewed from politicians' mouths, they had the law to fall back on. South Africa's exemplary record of judicial independence provided a reassuring safety net. The fact that the High Court in Pretoria made an order forbidding Bashir's departure amplified that.But this has been wholly undermined by the government's flagrant disregard for its own courts.block_quotes_start Facing an uncertain domestic future, CEO Richard Pike had to become proactive. It was the best thing he could have done for his shareholders block_quotes_endOnce you cross that line and think you got away with it, where does it stop?Not only are foreign investors ably diverting resources to countries they trust more than ours, but a growing number of South African firms are doing the same. According to the UN Conference on Trade and Development, South Africa's outward investment grew to $6.9-billion (R83.5-billion) last year. Reserve Bank data this week also showed a growing trend of investment outside the country.That's bad for domestic growth and for jobs, and gradually undermines the South African economy. For the wealthy, it's great: the companies in which they invest get exposure to the profits those firms generate elsewhere.Take JSE-listed Adcorp. In 2011, the labour-broking and recruitment business was on the ropes. Unions wanted it and its rivals shut down and banned. This even seemed possible. In 2011, 3% of group revenues were non-South African. In four short years, that amount has grown to 45% and earnings have gone from R4-billion a year to R18-billion. The company is four times bigger, and the growth has been outside the country.story_article_right2Facing an uncertain domestic future, CEO Richard Pike had to become proactive. It was the best thing he could have done for his shareholders. He has already created an offshore entity in Singapore in which foreign assets will be housed.The government and its trade union allies might regard offshore expansion at the expense of domestic investment as unpatriotic.For companies staring into the abyss, it's a no-brainer.Indeed, recent corporate activity by South African firms has had a distinct international flavour to it - whether it be the acquisition by Brait of control of UK-based Virgin Active or its purchase of clothing retailer New Look. Woolworths has invested heavily in Australia, as have a growing number of local companies seeking diversification and a currency hedge.A key topic at this week's Sunday Times Top 100 Companies Directors Event in Sandton was getting greater trust and co-operation between public and private sectors. It's something of a stuck record.For years, scenario planner and ex-AngloGold CEO Clem Sunter has been calling for an economic Codesa to hammer out a unified view on the economy. Someone better call it soon, while there is still a private sector to invite.Whitfield is an award-winning broadcaster and writer..

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